• BAT Zimbabwe swung back to profit with US$4.3 million after tax in HY2025, reversing a US$12.8 million loss in HY2024
• Despite profitability, sales volumes contracted 14% and revenue dropped 28% to US$13 million, driven by weak consumer spending, illicit trade, and rising competition
• Heavy taxation and affordability challenges continue to erode BAT’s dominance, forcing operational streamlining and raising the need for diversification into reduced-risk products to remain competitive

Harare- Cigarette maker and distributor , British American Tobacco Zimbabwe (BAT) has posted a profit after tax of US$4.3 million for the half year ended 30 June 2025, a reversal from a US$12.8 million loss recorded in the same period last year according to the latest financial update.

The rebound was primarily technical,2025 marked the company’s first half-year reporting cycle in USD, free of hyperinflationary distortions that previously crushed the bottom line.

In HY2024, BAT booked a staggering US$15.9 million monetary loss due to inflation accounting rules. By contrast, the adoption of the US dollar stabilised reporting and gave a truer reflection of operating performance.

The move was designed to protect value in a volatile currency environment, align sales with its USD functional currency, and cover hard-currency input costs. But the transition also raised retail prices, making cigarettes less affordable for consumers and accelerating a shift toward cheaper illicit alternatives.

The turnaround came with a sharp decline in sales volumes, highlighting the stabilising impact of Zimbabwe’s shift to United States dollar reporting.

Volumes contracted by 14%, weighed down by liquidity shortages, tight monetary conditions, and weak disposable incomes that forced households to cut back on discretionary spending such as cigarettes. BAT’s market share has gone down from 86% in 2017 to 80% by 2023 and now further projected way below 75% due to an influx of foreign cigarettes and new entrances in the market.

As a result revenue dropped 28% to US$13 million, from US$18.1 million a year earlier.

The profit rebound was largely technical. This was BAT’s first full half-year reporting cycle in USD, free of hyperinflationary accounting that had previously crushed the bottom line. In HY2024, the company booked a US$15.9 million monetary loss under IAS 29 inflation adjustments. The removal of these distortions gave a clearer reflection of underlying performance in 2025.

BAT’s trajectory reflects Zimbabwe’s wider economic swings. After dollarisation in 2009, profits surged from US$172,000 to US$5 million by 2012, before political shocks, tax burdens, and currency changes pushed the business into losses. The reintroduction of the Zimbabwe dollar in 2019 triggered renewed instability, with record losses of ZWL6 billion in HY2023. While the COVID-19 pandemic briefly lifted demand, recurring policy shocks and exchange volatility have weighed heavily on performance.

To survive, BAT has streamlined its operations, undertaking staff rationalisation in recent years to keep costs aligned with declining demand.

Tax Burden and Illicit Trade

Taxes remain a heavy burden. In HY2025, BAT paid more than US$8.1 million in excise duty, corporate tax, VAT, PAYE, and other levies.

Taxes paid for the period under review including Excise Duty, Corporate Tax, VAT, Customs Duties, PAYE, and Withholdings Tax which came to a total of over USD81 million,'' company chairperson Lovemore Manatsa said.

While the company is one of the country’s largest contributors to the fiscus, high taxation has also made its products less affordable, fuelling demand for smuggled brands.

Competition from rivals such as Savanna Tobacco, Gold Leaf, and Rudland & George has further eroded pricing power in a price-sensitive market.

Global Context

BAT Zimbabwe’s struggles mirror global industry trends. Cigarette volumes are falling worldwide amid stricter regulation, higher excise taxes, and health concerns.

Globally, BAT Plc is offsetting this decline through investment in new categories such as vapes, heated tobacco, and nicotine pouches , now major growth drivers in markets like the US, Europe, and Asia.

In Africa, the battle is more about affordability and illicit trade. BAT Kenya, for example, has faced similar pressures, with growth increasingly dependent on diversification beyond traditional cigarettes.

Looking ahead, BAT Zimbabwe must balance protecting shareholder value with defending its market position. To remain a dominant player, it may need to replicate its parent company’s global strategy: diversify into reduced-risk products, invest in efficiencies, and advocate for stronger anti-smuggling measures. Until then, its resilience will be tested by the twin forces of a battered consumer base and an industry in transition.

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