• Sales volumes have experienced a 7% decline
• Conversely, revenue has witnessed a remarkable surge of 120%
• The primary challenges persist in the form of a currency crisis and high interest rates

Harare- Cigarettes manufacturer, British-American Tobacco has reported a 7% decline in sales volumes during the nine months ended 30 September 2023 according to the Group’s latest trading update. However, due to an inflationary environment, revenue jumped by 120%.

Following a record low performance in terms of profitability and volumes in HY2023, the cigarettes manufacturer continues to experience a downward trajectory, as indicated by its latest trading update. In the first half of the year, from January to June 2023, the company's loss doubled from ZWL3 billion to ZWL6 billion with taxes accounting for nearly a quarter of the generated revenue of ZWL71 billion.

These figures depict a challenging situation for the Group.

BAT maintains a significant market share in the tobacco manufacturing industry, currently accounting for approximately 80% of the market. This represents a decrease from its previous market share of 86% in 2017. The company prides itself on a diverse portfolio of tobacco brands, which includes popular names such as Benson & Hedges, Dunhill, and Rothmans.

Since its establishment in 1960, BAT has played a prominent role in the tobacco industry. The company went public and became listed on the Zimbabwe Stock Exchange in 1961. Following the dollarization of the Zimbabwean economy in 2009, BAT experienced a period of profitability, benefiting from its higher market share and competitive brand offerings.

It is worth noting that during this period, the company had to contend with challenges such as the smuggling of cheap and substandard cigarette brands. Despite these obstacles, BAT managed to maintain its position in the market and capitalize on its strengths and currency stability to generate profits.

However, since the reintroduction of the Zimbabwe dollar in 2019, BAT has indeed faced substantial challenges in maintaining its financial stability. The increased risks of smuggling and the government's resurgence in taxation on corporates through Mthuli Ncube's Austerity for Prosperity initiative have further compounded these difficulties.

As a consequence, BAT has been grappling with the task of navigating these complex circumstances and establishing a strong presence in the market. The combination of currency fluctuations, smuggling risks, and heightened taxation has created a highly challenging operating environment for BAT.

In 2019, following the full-scale introduction of Zimbabwe dollars, BAT encountered an exceptionally challenging environment characterized by hyperinflation, shortages of essential commodities such as fuel and foreign currency, and an excessive liquidity of Zimbabwe dollars in the market. These circumstances had a profound impact on the company, leading to a substantial loss of ZWL18 million. This marked the onset of a crisis for BAT, setting off a series of subsequent challenges that the company had to confront.

With increased electricity tariffs, reduced export receipts, a resurgence in electricity blackouts, and a continued currency crisis exacerbated by unattainable interest charges, the company is facing a gloomy outlook. In such a toxic economic atmosphere, there is a pressing need for management to carefully consider how to navigate these challenges effectively