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BAT Zim volumes down 17 percent
24/02/2014 00:00:00
by The Source
Sales to rebound by around 12 percent ... Lovemore Manatsa
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Indigenisation: BAT gives in to pressure

BRITISH American Tobacco Zimbabwe (BAT) volumes dropped 17 percent in the full year to December 2013 in tandem with the economic slowdown but the company expects an improvement in 2014 after government maintained previous duty charges.

Revenues at $44.6 million were 14 percent lower after the company cancelled tobacco exports to Mozambique in June to focus on building its cigarette portfolio.

Managing director, Lovemore Manatsa told an analysts briefing on Monday that volumes for the year under review were 1.3 billion sticks, 17 percent lower than in the prior year after a price increase of 30 percent, which was caused by a 50 percent increase in excise duty in December 2012.

Manatsa however, expects sales to rebound by around 12 percent to 1.450 billion cigarettes for 2014.

Financial director Peter Doona said gross profit in the year increased by $200,000 to $30million driven by cost savings and the business focusing on more viable sales of manufactured cigarettes.

Operating profit was lower at $9.8 million from $17.6 million in 2012 primarily as a result of the empowerment payment expense of $10.9 million.

The company, which employs 170 people has complied with the indigenisation law which requires foreign owned firms to cede 51 percent of their shares to local blacks.

Other income of $4.2 million, mainly from the write-back of payables to a related party accumulated during the hyperinflation period helped the company to an after tax profit of $3.8 million for the year.

The company declared a final dividend of $0.18 per share.

Manatsa said the company expects a stagnant economy in 2014 but constancy in excise duty would allow for pricing stability and volume recovery.

“Increase in capital investment now underway,” Manatsa said without giving figures.

“Key focus areas are further enhancements in manufacturing, employee health and safety and distribution capabilities.”

BAT International Holdings UK Limited holds 42.98 percent in the company while Old Mutual Life Assurance holds 11.97. Employees own a combined 20.76 percent while the rest is held mainly by pension funds.


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