BAT profits up 25% on revenue growth

BRITISH American Tobacco (BAT) has experienced a 25% increase in profit after tax to $10,57 million in the year ending December 31, 2017 on the back of an uptick in revenue and a reduction in overheads.

BY TATIRA ZWINOIRA

Speaking to NewsDay after BAT’s analyst briefing yesterday in Harare, BAT financial director, Leslie Malunga said an uptick in other income and a reduction of overheads contributed to the profit growth.

“Our gross profit increased by 8% and then we also had overhead reductions in terms of savings, which then flowed through to the bottom line, so obviously the more you sell, the more revenue you will get. So there are two aspects, revenue and you will also see the other, income, went up that was from royalties from Angola,” he said.

Revenue increased to $36,76 million for the period under review, an 8% increase compared to the comparative period in 2016 of $34,06 million. This was on the back of the sales volumes increasing by 10% in the period under review compared to the prior period in 2016.

The strong performance was driven by increased volumes in all BAT’s categories, with the company’s low value for money segment recording a 460% growth.
The uptick in profit translated to a net profit margin of 28,75% showing the company ended the year in a profitable position. Further, the increase in profit translated to an increase in earnings per share for the period to 51 cents, up from 41 cents in the 2016 comparative.

Administrative expenses were 26% lower to $7,65 million for the period under review from $10,37 million recorded in 2016.

In terms of liquidity, BAT had a current ratio of 1,27, showing the company had more than enough to cover its debt if it became due.

Other income increased by 47% compared to $2,46 million mainly because of royalties from Angola.

BAT managing director, Clara Mlambo said access to foreign currency to purchase raw materials remained difficult and would be the most challenging aspect of their business in 2018.

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