BAT profit rises by 41pc to Ksh.5.5B on lower costs, taxes
BAT Kenya has announced a 41 per cent growth in profit for the year ended December 31, 2020 to Ksh.5.5 billion from Ksh.3.9 billion in 2019.
The higher earnings have been achieved on the back of a lower cost base and reduced tax liabilities following relief on corporation tax by government.
Cost of operations in the year reduced by three percent to Ksh.17.8 billion driven largely by the company’s pro-active cost savings initiatives undertaken to cushion its business from the pandemic.
Meanwhile, BAT’s tax liability reduced by Ksh.2 billion to Ksh.16 billion on the back of the temporal reduction of corporation tax and value added tax (VAT) and lower sales volumes.
Nevertheless, BAT revenues reduced by two per cent to Ksh.38.8 billion with its domestic sales slumping by 24 per cent from effects of the COVID-19 pandemic.
The fall in local sales was however mitigated by higher export sales in the period.
“Net revenue increased by five per cent ot Ksh.25.3 billion, driven by higher export revenues and lower excise duty and value added tax (VAT), which reflects the impact of the decline in domestic sales volumes and the reduction in the rate of VAT in April 2020,” BAT said in a statement on Thursday.
Subsequent to the significant rise in earnings, the board of BAT has recommended a Ksh.41.50 final dividend payment to be approved by shareholders at its Annual General Meeting (AGM) on May 12.
The final dividend declaration adds to an initial Ksh.3.50 interim dividend payout at the half year stage taking the total dividend to Ksh.45 for the year.
BAT has pegged its future growth to the manufacture of alternative tobacco products.
“BAT remains committed to reducing the health impacts of its business through offering new categories of potentially reduced risk products. We have invested significantly in a new factory based in Nairobi to manufacture modern oral nicotine pouches,” the company added.