A combination of reduced raw material prices, cost containment measures and asset disposals saw British American Tobacco Zimbabwe Holdings Ltd record a $15,5 million net profit for the year ended December 31.
As a result, BAT declared a dividend of $0,44c per share bringing the total for 2015 to $0,91c.
Net profit attributable to shareholders grew by $2 million on 2014 figures as revenue recorded a two percent increase on the comparative period in 2014, driven by marginal gains from pricing net of the impact of the excise increase in November 2014.
BAT’s total sales volumes for last year reduced by nine percent compared to the previous year. Sales volumes for local brands declined by 10 percent while global drive brand Dunhill grew by 12 percent although in the context of a lesser market share.
The company leveraged the strength of its brands, distribution networks, manufacturing capabilities and people to consolidate its market dominance with an independent research saying that its market share grew to 82 percent in 2015 up from 81 percent in the comparative period.
However, BAT continues to feel the pressure from the influx of “suspiciously” priced cigarette products which may have an effect of reducing the company’s margins.
The cigarette maker is engaging Government with a view to plug loopholes that the unscrupulous businesses could be exploiting.
“We have seen what we call suspiciously priced products in the market particularly in quarter four, from October last year we started seeing an increase in those products. It is a discussion that we are having with the authorities that we need to manage these suspiciously priced products,” BAT managing director Ms Clara Mlambo told an analysts briefing yesterday.
She said Government could be losing at least $18 million in potential revenue through leakages as some local cigarette firms circumvent payment of excise duty on their products.
Cigarettes are some of the products which attract excise duty.
Excise duty on cigarettes is currently at $20 dollars per 1 000 sticks but some companies are finding ways to avoid paying.
Ms Mlambo said excise charges on a pack of cigarettes translates to 40c a pack and what is worrying is how some companies are selling a pack on the streets for 50c.
“It is an area that we need to deal with as an industry and Government because looking at quarter four last year, the Government probably lost about $2,3 million in excise because of the suspiciously priced products, and translating that to a full year, the Government could be losing around $18 million so that needs to be dealt with,” said Ms Mlambo.
Gross profit improved by 12 percent to $32,4 million, which the company attributed to reduced raw materials prices, productivity initiatives and cost containment measure in the firm’s manufacturing system.
Other income included proceeds from the disposal of a warehouse situated in Ardbennie, from which the company recorded a profit of $1,4 million.