FINANCIALS: BAT Posts 15% Profit Growth, Pays Out Extra Shs 40 to Shareholders

BAT Uganda Managing Director, Mathu Kiunjuri during a virtual press conference.

British American Tobacco Uganda (BAT Uganda) will give out Shs 15.7 billion (Shs 320 per share) as a first and final dividend to its shareholders for the year ended December 31, 2019.

This is in comparison with Shs 13.7bn as dividends for the previous year where Shs 280 per share was given to the company’s shareholders.

The dividend was approved during a virtual Annual General Meeting (AGM) held Thursday. The meeting ratified Shs 15.7bn and this was paid out on June 19 in line with the company’s 100% dividend pay-out policy.

During a press event on Thursday, BAT Uganda Managing Director, Mathu Kiunjuri said the pay-out was a timely income injection for Ugandan shareholders amidst economic impacts of the COVID-19 pandemic.

Kiunjui revealed that BAT Uganda delivered strong financial results in the year under review. 

Gross revenue increased by 7% to Shs 164.3bn, driven by volume growth owing to a revamped portfolio and improved distribution efficiencies.

Profit from operations increased by 13% to Shs 22.4bn as a result of growth in net revenues while total cost of operations increased marginally due to inflationary increases and portfolio transformation expenses.

Profit after tax increased by 14% to Shs 15.7bn.

A revaluation gain of Shs 1.4bn was recognized following an independent revaluation of the Company’s properties in line with its accounting policies.

This year marks 20 years of the Company being listed on the Uganda Securities Exchange (USE).  

As has repeatedly been cited previously, Kiunjuri said despite the company’s strong performance in 2019, BAT Uganda remains concerned by the impact of illicit trade in tobacco products. 

“According to independent third-party research, approximately 19% of cigarettes sold in Uganda are illegal,” he said.

“These worrying levels of illicit trade not only impact consumers who unknowingly purchase these products but also government revenues and the legitimate tobacco market”. 

He said that tax-evaded illegal cigarettes continue to deprive the government in excess of an estimated Ushs 30 billion every year, revenue that is desperately needed to support the country’s economic recovery given the adverse impact of COVID-19.

“We call upon the Ugandan authorities to ratify the WHO’s Protocol to Eliminate Illicit Trade in Tobacco Products. Ratification would provide a robust framework for the implementation of global standards in fighting illicit trade, optimising benefits of the Uganda Revenue Authority’s Digital Tracking System (DTS) and helping to tackle illicit financial flows.”

BAT Uganda Chairman, Dr. Elly Karuhanga commended BAT Uganda for its resilience and delivering strong business results on the back of a challenging operating environment.

“BAT Uganda continues to contribute to Uganda’s socio-economic development through the remittance of significant tax revenues to the Government”.

In 2019, the company’s tax payments increased by Ushs 6 billion to Shs 96 billion in the form of Excise Duty, Value Added Tax and Corporation Tax.

2019 performance driven by sale of good product mix (more high value product). Very good dyear in Uganda. Could be better if the illicit trade is contained. 

Philemon Kipkemoi, the Non-Executive Director BAT Uganda is optimistic the Digital tax stamps recently rolled out by government (URA) will curb illicit trade. He however added that stringent border controls are needed to stop the supply chain.

Commenting on the impact of Covid-19 on the business, Kipkemoi admitted that Covid related restrictions have negatively impacted the operations of BAT.

“As a business we kicked in the business continuity plan, to keep our staff and third party partners safe This was through providing PPE, educational and materials on safety. We have also reviewed processes to keep ahead of the game so we still have a head start when Covid gone,” he said.

He said business was constrained by closures of trading outlets as well as subdued demand from their consumers. 

BAT Uganda is a member of the British American Tobacco Group, the world’s first largest quoted tobacco company by global market share, with brands sold in more than 180 markets.  

Through its sister companies within the BAT Group and its partners, BAT Uganda is the largest single buyer of Ugandan tobacco leaf supporting the livelihood of over 13,500 tobacco farmers.

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