Source: Business environment still challenging: BAT – DailyNews Live
Ndakaziva Majaka 23 February 2018
HARARE – Zimbabwe’s largest cigarette manufacturer, British American
Tobacco (BAT), anticipates the business environment to remain challenging
in the short to medium term, despite government overtures to improve the
business climate.
BAT managing director Clara Mlambo yesterday said while President Emmerson
Mnangagwa’s government has adopted a deliberate policy stance to attract
investment and improve the doing business environment, the operating
environment remained challenging.
“While we are optimistic about the future and encouraged by the new policy
changes and pronouncements, the business environment is expected to remain
challenging particularly in view of foreign payments, cash availability
and disposable incomes.
“The president has openly declared that the country is open for business
and this gives us hope, however, in the meantime, the situation remains
difficult,” Mlambo told an analysts briefing of the company’s 2017
financials.
Notwithstanding the notable GDP growth for Zimbabwe in 2017, the domestic
economy continues to experience headwinds, chief amongst these being
balance of payment pressures, which continue to constrain the ability of
companies to make payments for critical foreign supplies.
The cash liquidity challenges, in addition to resurgent inflation at the
back end of the year have put pressure on the consumers.
Meanwhile, BAT’s total sales volumes for the year ended December 31, 2017
increased by 10 percent compared to 2016.
“This strong performance was driven by increased volumes in all categories
with the company’s Low Value for Money segment recording a 460 percent
growth. Our Global Drive Brand, Dunhill, achieved a growth of one
percent,” Mlambo said, pointing out that this was despite the
unrelentingly difficult and challenging economic conditions the country is
going through.
Revenue increased by $2,7 million, an eight percent increase on 2016
mainly driven by the strong sales performance.
“Consequently, gross profit was up by $2,0 million (eight percent)
compared to the same period in 2016, in line with the volume increase
combined with effective cost management measures taken by the company,”
she said.
Selling and marketing costs increased by $800 000 compared to 2016 as a
result of increased investment into marketing activities supporting of the
cigarette manufacturer’s Ascot brand.
“Administrative expenses were $2,7 million lower than the previous year
which is 26 percent lower compared to 2016, driven by a reversal of
tax-related provisions, once off restructuring costs and savings
initiatives implemented during the year under review.
“Other income increased by $800 000 (47 percent) compared to the same
period in the prior year, as a result of increased income from royalties.
Operating profit grew by $4,7 million (39 percent) compared to 2016, to
close at $16,6 million,” the BAT boss said.
Net profit attributable to shareholders for the period was $10,6 million
compared to $8,5 million in the previous year or a 25 percent growth.
The board declared a final dividend of $0,29 per share.
“This, together with the interim dividend of $0,22 per share declared
during the previous year, will bring the total dividend for 2017 to $0,51
per share,” Mlambo said. – Financial Gazette
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