British American Tobacco (BAT) Zimbabwe posted an increase in after-tax profit to $7,6 million for the half year compared to $5,3 million over same period last year due to an increase in revenue and reduction in cost of sales.
BY VICTORIA MTOMBA
During the period, revenue increased to $21 798 000 from $20 277 000 due to marginal pricing gains net of the impact of the December 2014 excise increase and offsetting the impact of the 5% volume reduction.
Cost of sales went down to $5 654 000 from $6 472 000.
Speaking at the company’s analyst briefing, finance director Peter Doona said increases in selling and marketing costs were offset by reduction in administration expenses of $0,3 million compared to the same period last year.
“The factors above have resulted in growth in operating profit to $9,7 million for the six-month period.
“After incorporation of finance income and reduction of income tax, profit for the period is $7,6 million, up from $5,3 million in the same period last year.
Reflecting the results and the available retained earning the board has declared an interim dividend of $0,47c,” Doona said.
BAT managing director Lovemore Manatsa said trading conditions were expected to be challenging as disposable income continues to stagnate.
He said the company would increase motorbikes for agents into areas that they have never been before as the economy continues to get more informal.
Manatsa said the company was on course to be compliant with the indigenisation legislation stipulating that locals should have at least 51% shareholding in all foreign-owned companies operating in Zimbabwe.
The law stipulates that companies must attain 26% during the first year of implementation, 36% in the second year, 46% in the third year and 51% in the fourth year.
Manatsa said 49,78% shareholding in the company was now in the hands of locals.
“In terms of indigenisation, we are now working on certification of compliance for year four and beyond and this is work in progress.
“Our normal anniversary for that is October, we are in full consultation with government and we hope we will be fully compliant for year four and beyond,” he said.
Foreign-owned companies are compelled by the Indigenisation Act to sell at least 51% of their shareholding to locals achieved over a four-year period.