British American Tobacco (BAT) Uganda Limited posted gross revenues of Shs 86.2 billion and a profit before tax of Shs 9.7 billion, according to its half year results released this week.
Commenting on the results the six months ended 30 June 2019, BAT Uganda Managing Director, Mathu Kiunjuri said the performance is attributed to growth in volumes due to distribution efficiencies.
“I am pleased to report that in the first half of 2019, gross revenue increased by 17% to Shs 86.2 billion driven by growth in volumes due to distribution efficiencies and portfolio transformation,” he said.
Profit from operations increased by 11% to Ushs 9.8 billion due to the growth in revenues, partly offset by higher cost of operations. The increase in cost of operations was in line with volume growth, inflationary increases and additional investment in our brand portfolio, Kiunjuri said.
“Profit before tax increased by 9% to Shs 9.7bn in line with growth in revenues, offset by finance lease costs recognized in line with revised accounting standards.”
The company’s contribution to government revenues in the form of Excise Duty, Value Added Tax and Corporation Tax increased by 19% to Shs 50.2bn. However, illicit trade in tax-evaded tobacco products continues to pose a threat to Government revenues and shareholder value.
Also commenting on the results, BAT Uganda Chairman, Elly Karuhanga said: “BAT Uganda remains committed to building a sustainable partnership with the Government of Uganda, contributing to economic growth and delivering value for its shareholders”.
“Whilst we applaud the Government of Uganda for steps taken to address the cost of doing business in this market, we reiterate that the trade in illicit tax-evaded cigarettes continues to pose a threat to the legitimate tobacco industry and sustainability of Government revenues.
According to third party research findings, the market saw an increase in illicit tax-evaded cigarette sales in the first quarter of this year, standing at 22.2%. This translates to an estimated loss in Government revenue of Shs 30 billion annually.”
“We therefore continue to engage the relevant Government agencies to tackle illicit trade in cigarettes and put in place necessary measures to protect legitimate businesses and safeguard government revenues.”
“Going forward, I am confident that with the exceptional quality of talent within the Company and our partnerships with over 30,000 business partners, we have the right strategy in place to deliver business growth and continued value to all our stakeholders in the years ahead.”