By Alois Vinga
LISTED cigarette manufacturer, British American Tobacco (BAT) has acknowledged the positive impact of the foreign currency auction system for improving raw materials supplies and alleviating prolonged economic challenges bedeviling productivity.
Presenting a trading update Wednesday BAT board chairman Lovemore Manatsa said the foreign currency trading platform stands the opportunity to boost productivity.
“The foreign currency auction platform has opened access to foreign currency required for raw materials imports and has brought about stabilization of the exchange rate which will alleviate some of these challenging trading conditions,” he said.
The remarks come shortly after the Zimbabwe dollar eased by a marginal 0,39 % against the US$ in this week’s Reserve Bank of Zimbabwe (RBZ) foreign currency auction, with the exchange rate for US$1 shifting to $81,67 from $81,35 the previous week.
Total foreign currency allocation was higher at US$28,29 million from US$27,8 million, with the main auction accounting for US$26,51 million. SMEs took up US$1,77 million, up from US$1,67 million in the last auction.
Since the auction’s inception in June this year priority allotments have been biased in favour of raw materials imports and other productivity boosting needs.
Meanwhile, during the nine months period ending September 30 2020 , BAT saw sales volumes going down by 8 % for reasons attributed to Covid19 induced cut down on consumer spending.
“The company’s total sales volumes for the period under review decreased by 8% compared to the same period in prior year mainly due to depressed consumer spending and the adverse impact of the Covid-19 pandemic,” Manatsa said.
The company’s products like the Premium Brand, Dunhill returned to the market and it recorded an increase of 962% versus the same period in prior year.
The Aspirational Premium brands, Newbury and Kingsgate volumes declined by 33% compared to same period in prior year.
The Value for Money segment, (Madison and Everest) and Low Value for Money brand (Ascot), saw a decline of 5% and 43% respectively.
Despite the volume decline, net turnover, in hyper-inflation accounting terms, increased by 31% (1 038% in historical terms) compared to the same period in prior year driven by price increases taken during the period as well as revenue generated from the export of cut-rag tobacco.