LISTED cigarette manufacturer, British American Tobacco (BAT) registered a 50 percent growth in revenue and 20 percent growth in profit before tax despite challenges in the financial year ending December 2022.
The 2022 business-operating environment was complicated because of exchange rate volatility and constant reviews of exchange rates and interest rates by the Reserve Bank of Zimbabwe to mitigate the resurgent inflation.
In a statement accompanying the company’s financials, group chairman Lovemore Manatsa said BAT recorded ZW$24.3 billion in revenue, a 50 percent increase from ZW$16.2 billion recorded in 2021.
Manatsa attributed the increase to the price reviews and revenue generated from the cut-rag tobacco and leaf export sales.
“These two income streams generated a gross profit of ZW$18.3billion which represents a 74% growth when compared to the year prior,” said Manatsa.
“However, the revenue growth did not translate into similar growth in profit before tax due to the impact of exchange losses.”
Profit before tax for the year was finalised at ZW$9.0 billion, which reflects a 20% growth, compared to the same period in the prior year.
In spite of the growth in revenue and profit, the group volumes declined by 6.7% from 1 130 million in 2021 to 1 054 million for the year under review due to power shortages and reduced disposable income.
“This volume drop was driven by shortage of RTGS in the market, which made it difficult for customers to purchase our products,” he said.
“Separately, export volumes of cut-rag tobacco declined by 43% during the period under review compared to prior year as a result of decreased export market demand.”
Zimbabwe has been experiencing under massive load shedding because of low water levels in Lake Kariba last year as well as reduced generating capacity because of obsolete thermal power stations.
To deal with this some companies have resorted to using other alternative energy such as solar power and generators. However, those using generators are still prone to the threat of increased expenditure as fuel energy is costly.
Further, Manatsa said the group established that the smart pricing mechanism implemented by the company resulted in higher pricing when compared to competitor trade prices in United States Dollars (USD).
Meanwhile, BAT Groups earnings per share increased to ZW$287.43 from ZW$277.11 in the year prior.
In his outlook, Manatsa said the group would continue delivering growth and value for its shareholder in the 2023 financial year against the projected headwinds for the year.