ZIMBABWE Stock Exchange-listed cigarette processer, British American Tobacco (BAT) Zimbabwe, says it is confident of posting solid financial results for the full year to December after third-quarter revenue rose 31%.
BY TATIRA ZWINOIRA
In a trading update for the quarter ended September 30, BAT chairman Lovemore Manatsa yesterday said while economic turbulence would continue, measures like the introduction of a foreign currency auction system in June were important steps towards calming market jitters.
“While the trading conditions are expected to remain challenging for the rest of 2020 mainly driven by macro-economic variables and the effects of the COVID-19 pandemic, the company believes that it will deliver value growth for its shareholders,” Manatsa said.
“The foreign currency auction platform has opened access to foreign currency required for raw materials imports and has brought about stabilisation of the exchange rate which will alleviate some of these challenging trading conditions,” he said.
Manatsa spoke as BAT defied threats posed by depressed demand, the COVID-19 scare and hyperinflation to report a 31% on turnover.
In March, President Emmerson Mnangagwa declared COVID-19 an emergence and ordered the closures of businesses, schools and other services.
The loss of income due to firm closures affected consumer buying power, leading to slowdowns in sales across most firms dealing with pastime products like cigarettes.
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Manatsa did not provide full details to the financial statements released yesterday, but said COVID-19-induced lockdowns and depressed demand affected volumes.
“The company’s total sales volumes for the period under review decreased by 8% compared to the same period in the prior year mainly due to depressed consumer spending and the adverse impact of the COVID-19 pandemic. The premium brand, Dunhill, returned to the market and resultantly, it recorded a significant increase of 962% versus the same period in prior year,” he said.
“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% 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,” he said.
In its financial results for the half year ended June 30, 2020, BAT overturned an $18,82 million loss to a report a profit-after-tax of $73,77 million after revenues increased as management maintained an eagle’s eye on overheads.
BAT also reported exchange losses due to currency volatilities during the half year.
Currency volatilities that affected the market before June parked a serious erosion of wages, with implications in the way consumers choose how to spend.
In the past four months, however, the Zimbabwe dollar has stabilised steadily against the greenback at US$1;$81, leveraging on the foreign currency auction system.
The auction system has also defused a rampaging parallel market rate, which has declined from rates of up to US$1;$120 before the launch of the auction system.
