BAT blames low disposable incomes for 6% cigarette sales decline

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By Alois Vinga

LISTED cigarette manufacturer, British American Tobacco (BAT) has blamed low disposable incomes for prompting a 6% decline in disposable incomes.

The realisation comes against a backdrop where most citizens are earning salaries which are way below the Total Consumption Poverty Lines.

Despite the cost of living having risen beyond unimaginable levels with most companies having resorted to indexing prices against the obtaining exchange rates, salaries have continued to lag behind in most cases not matching the profit margins being raked in by employers.

Presenting the group’s performance for the period ended June,  30 2022, BAT chairman , Lovemore Manatsa revealed that poor salaries took a knock on cigarette sales.

“In a challenging operating environment, volumes from the sale of cigarettes declined by 6% due to shrinking disposable incomes amidst increasing inflation and currency devaluation in comparison with the same period last year,” he said.

During the period, export volumes of cut rag tobacco were up 74% compared to the prior year due to increased demand of leaf from our export markets.

Revenue increased 71% to ZW$6,9 billion from ZW$4 billion when compared to the same period in 2021.The increase in revenue was driven by price increases effected during the period last year.

These factors resulted in a gross profit increase of ZW$2,8 billion .

“Selling and Marketing season increased costs by ZW$314,3 million compared to the same period in the prior year driven by additional marketing investments aimed at driving sales volumes and general increase in costs due to inflation.

“Administrative expenses were ZW$214,6 million 42% higher than the same period last year .This was driven by a general increase in costs due to inflation .Other losses increased by ZW$580,9 million due to the rapid devaluation of the Zimbabwean dollar,” Manatsa said.

Operating profit declined by ZW$1,4 billion versus the same period in the prior year., representing a 149% decrease.

The group contribution to the Government Treasury through various taxes    was ZW$3,5 billion for the half year ended June 30 2022.