British American Tobacco Kenya Limited (BAT.ke) HY2022 Interim Report
The rising cost of commodities globally continues to impose inflationary pressure on already stretched consumer disposable income. The steep increases in excise duty rates (+5% in November 2021, and +10% effective July 2022), coupled with the rising cost of inputs, is placing further pressure on consumer affordability and purchasing power.
For the Company, this is triggering downtrading to lower priced brands and exacerbating the prevalence of illicit trade in tax evaded cigarettes. Illicit trade continues to adversely impact industry revenues and deny the Government in excess of an estimated KSh 4 billion per annum in revenue. We continue to contribute to national dialogue on the regulatory and fiscal framework, and work with relevant agencies to fight the illicit trade menace.
We remain committed to our evolved strategy and purpose to build A Better TomorrowTM by reducing the health impact of our business, through offering alternative innovative products, including tobacco-free oral nicotine pouches.
- Gross revenue increased by 8% to KSh 21.9 billion primarily driven by pricing benefit in the domestic market and growth in export sales following economic recovery in some of our key markets.
- Total cost of operations increased by 15% to KSh 9.9 billion primarily driven by higher input costs due to global supply chain challenges.
- Profit before tax was up 8% to KSh 4.2 billion driven by higher revenue, partially offset by higher cost of operations.
- Taxes in the form of Excise Duty, VAT, Pay As You Earn (PAYE) and Corporation
- Tax increased by 2% to KSh 9.4 billion reflecting higher excise duty rates and profitability.
The Board of Directors has approved an interim dividend in respect of the year ending 31 December 2022 of KSh 5.00 per share. The interim dividend, which is subject to withholding tax, will be paid on or about 16 September 2022 to share-holders on the register at the close of business on 12 August 2022.
By Order of the Board