BAT Kenya posts Sh6.5 billion pre-tax profit
The company has urged the government to intensify enforcement efforts locally, and collaborate with relevant agencies of neighboring countries to get rid of the illicit trade menace at source.
The British American Tobacco (BAT) Kenya has posted a pre-tax profit of Ksh 6.5 billion driven mainly by higher financial costs for the period ended December 31, 2024. This was a drop of one per cent compared to what it posted in a similar period in 2023.
The drop in profitability was occasioned by the challenging business environment largely cost inflation, low consumer purchasing power and supply disruption of modern oral nicotine pouches.
BAT Kenya Chief Executive Officer Crispin Achola said the company leveraged smart pricing, business simplification, and brilliant commercial execution to drive revenue growth and partly cushion profitability from this impact.
“The company leveraged smart pricing, business simplification, and brilliant commercial execution to drive revenue growth and partly cushion profitability from this impact,” the financial report said.
According to the financial report for the period under review, BAT Kenya’s export markets experienced headwinds including forex scarcity, adverse weather, supply chain disruptions, and geopolitical tensions, which affected sales volumes across various markets.
It also revealed that the US dollar denominated export sales revenues were adversely impacted, resulting in foreign exchange losses following the appreciation of Kenya shilling against the dollar.
During the period illicit trade in tax evaded cigarettes (estimated at 37 per cent based on third party research) continues to adversely affecting domestic revenues and deprive the government of an estimated Ksh 9 billion annually.
BAT Kenya urged the government to intensify enforcement efforts locally, and collaborate with relevant agencies of neighboring countries to get rid of the illicit trade menace at source.
The report also revealed that prolonged regulatory uncertainty resulted in the suspension of our modern oral nicotine pouch sales in the domestic market, subsequently impeding our ability to commercialise our oral nicotine pouch factory in Nairobi.
This resulted in the Company accepting offers for disposal of related machinery to protect shareholder value. We continue to engage transparently for a sustainable regulatory framework, which will facilitate the resumption of our modern oral nicotine category.
“Despite these challenges, our business demonstrated resilience, delivering strong results. We remain confident in navigating the operating environment and driving sustainable shareholder value,” the report said.
According to the report, the net revenue increased by 1 per cent to Ksh25.7 billion driven by a strategic pricing benefit, partially offset by the impact of foreign exchange losses on our export sales.
The total cost of operations increased by 4 per cent to Ksh18.4 billion reflecting the higher cost of doing business, partially offset by benefits from cost saving initiatives implemented during the period.
While the finance costs rose sharply by 955 per cent, a loss of Ksh 0.8 billion in comparison to an income of Ksh 0.1 billion in 2023, driven mainly by 20 per cent appreciation of the Kenya shilling against the United States dollar in Q1 2024.
The cash generated from operations increased by 23 per cent to Ksh 10.4 billion reflecting prudent working capital management and proceeds from sale of modern oral nicotine machinery.
