Harare - British American Tobacco Zimbabwe recorded a 6% decline in volumes from the sale of cigarettes for the half year ended 30 June 2022 owing to shrinking disposable incomes amidst increasing inflation and currency devaluation in comparison with the same period last year.
Zimbabwe has been experiencing a rise in inflation for some time now and the local currency has continued to depreciate against the US$ despite measures put in place by authorities to stabilise it and this has resulted in the shrinking of disposable income for most citizens.
“The economy experienced resurgent inflation driven by instability in exchange rates, which gave rise to price increases. Demand was constrained by low disposable incomes, as salaries and wages are being eroded by inflation,” Chairman Lovemore Manatsa said in a statement accompanying the Group’s financial results.
However, export volumes of cut rag tobacco for the half year were up 74% compared to the prior year driven by increased demand for a leaf from the Company’s export markets.
The Group’s revenue increased by 17% to ZW$6.9 billion from ZW$4 billion in 2021, buoyed by price increases effected during the period.
“These factors resulted in a gross profit increase of ZW$2.8 billion compared to the same period in 2021,” Manatsa said.
Selling and marketing costs for the period grew by 65% to ZW$314.3 million driven by additional marketing investments aimed at driving sales volumes and a general increase in costs due to inflation.
Administrative expenses were ZW$214.3 million, 42% higher than the same period last year due to a general increase in costs due to inflation while other losses increased by ZW$580 million due to the rapid devaluation of the Zimbabwean dollar in the period under review.
Operating profit for the period declined by 90% while net loss attributed to shareholders was ZW$678.6 million compared to a net profit of ZW$1.4 billion in the same period last year, representing a 149% increase.
The Group’s cash generated from operations was a positive ZW$2 billion which is a 24% increase from the prior year due to increased inflows as a result of price reviews affected during the period.
Meanwhile, The Group’s contribution to the Zimbabwe Revenue Authority (ZIMRA) for the half year in taxes was ZW$3.5 billion with key contributors to the increase being the increase in the Excise Duty and Corporate Tax driven by the increases in selling prices and currency devaluation.
Going forward, the Group’s focus will be on business continuity in the face of frequent policy changes, and rising global and local inflation.
“We remain committed and confident that our business strategies will deliver value growth for our shareholders,” Manatsa said.
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