BRITISH American Tobacco Zimbabwe (BAT) will continue to engage government for a sustainable excise duty, which has increased by 186% over the past five years.
BY VICTORIA MTOMBA
Speaking at the company’s analyst briefing in Harare yesterday, BAT managing director, Clara Mlambo said on the consumer front, in the context of a difficult economic environment, it is imperative for the business to secure price stability for its customers.
“In this regard, the company will continue engaging with government for a sustainable excise rate. Notably, in the past five years, cigarette excise duty has increased by 186% making Zimbabwe’s cigarette excise rate one of the highest in the region,” she said.
The excise duty rose between 2012 an 2015, straining consumer affordability and making it difficult for the cigarette industry to grow its volumes.
She said for the second half of the year, trading conditions were likely to remain unchanged.
The company posted a profit after tax of $3,6 million for the six months ended June 2016 compared to $7,6 million recorded during the same period last year.
The company said the trading environment remained constrained during the period characterised by weak consumer demand and an accelerated liquidity crunch driven by generally weak macro-economic performance.
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Cigarette volumes for the local market declined compared to the same period in 2015.
“The company continues to lead the cigarette industry despite sales volumes declining by a significant 20,7% from the previous year for the reasons stated previously. The decrease was experienced in our local brands, which declined by 21% compared to the same period in 2015.
Our global brand, Dunhill, grew by 10% compared to the same period, driven by a small but growing consumer base,” the company said in a statement accompanying financial results.
Revenue for the group was down by 23% to $16,8 million compared to $21,7 million during the same period last year.
Selling and marketing costs decreased by $200 000 compared to the same period in 2015 due to distribution efficiencies and cost containment initiatives. Cash generated from operations was $8 million, a 25% decrease against $10,8 million in the first half of 2015.
The decrease was due to a profit decrease offset by improved collections and decrease in stockholding, BAT said.
