BAT Retains Sh350m Interim Dividend

British American Tobacco (BAT) Kenya has retained a Sh350 million interim dividend after net profit for the six months to June rose by 0.71 percent.

The performance which came at a time when many businesses are recording revenue drops due to weakened consumer demand especially on non-priority goods and services was partly slowed by increased operating cost.

BAT’s half year net profit increased from Sh19 million to Sh2.69 billion with rising sales volumes in the Covid-19 environment.

The board has approved an interim dividend of Sh3.50 per share amounting to Sh350 million, being the same as what was paid in the preceding similar period with the payout set for mid-September.

According to BAT, increased investment for own brands and support to trade partners has seen the recovery of domestic volumes. The easing of Covid-19 restrictions also greatly improved the financial performance.

The cigarette maker added that the growth in domestic sales was partly offset by a five percent rise in excise duty affected in October last year and the change in value-added tax in January 2021.

Gross revenue increased by 22 percent to Sh20.25 billion, with the firm attributing this to a recovery in domestic sales volumes, excise duty-led price increases and sustained momentum in exports.

The hikes in taxation saw BAT pay Sh7.7 billion as excise duty and VAT, being 26.7 percent higher than the Sh6.08 billion paid in previous similar period.

“The tax hikes triggered price increases which generated additional pressures on consumer affordability resulting in downgrading to lower priced brands and a high incidence of illicit trade,” BAT said

Operations costs also rose by 27 percent to Sh8.6 billion fueled by higher volumes of cigarettes sold and investment in portfolio transformation.

Finance costs linked to servicing of loans fell to Sh49 million from Sh81 million incurred in the previous similar half year.

BAT is eying new revenue from nicotine pouches in the Kenyan market amid continued resistance from lobbyists who argue that the product, consumed by placing between upper lip and gum, carries the same impact as smoke cigarettes.