BAT eyes recovery Mrs Mlambo
Mrs Mlambo

Mrs Mlambo

Conrad Mwanawashe Business Reporter
BRITISH American Tobacco Zimbabwe expects to build on the growth momentum that started in the second half of the year to recover from a 25 percent revenue decline recorded in the full year to December 2016.

Driven by a decrease in sales volumes, revenue declined to $34 068 in the 12 months under review compared to $45 265 the comparative period in 2015.

Volumes were down by 21,3 percent compared to the same period prior year attributable to the weak consumer demand, driven by the general performance of the economy, the company said.

Profit after tax decreased by 45 percent.

BAT Zimbabwe managing director Clara Mlambo however said strong recovery in the second half of the year has continued through to January.

The second half of 2016 contributed about 57 percent to total profit for the year.

“At half year in 2016 our profit was about $3,6 million. Now when you look at the results you can see that we had a much stronger second half of the year closing at just about $8,5 million,” said Mrs Mlambo.

“We did have confidence at the end of the first half in the plans that we were putting in place to address the challenges we were seeing in the environment.

“And we did see those plans bearing fruit because of that stronger performance within the second half.

“Even when I look at the December performance, even from a sales point of view, yes sales were down during the year but we actually saw a very good recovery in December in terms of our sales versus the greater part of last year,” she added.

Mrs Mlambo said January performance was encouraging and better than expectation.

“We see growth in 2017. But we obviously do not have the crystal ball and we do know that there will be challenges in the market. We have now put some of the plans in place during the course of 2016 which will start bearing fruit in 2017,” she said.

Commenting on the nine percent increase in selling and marketing costs, Mrs Mlambo said the increase was a result of financing growing brands.

“We are actually very impressed by the results of this investment because, on the one hand, total industry volumes went down and this was due to the pressure on the consumer disposable income.

The consumers’ wallet was under severe pressure last year. A lot of other challenges in the market such as the liquidity crunch that we faced where the consumers even if they did have money they did not have the actual physical cash for a period of time to be able to purchase quite a number of goods.

“So that had an impact on total industry volumes. The pie got smaller. But while the pie was getting smaller we managed to hold on to our market share,” she said.

But BAT Zimbabwe, as with other industries in the country, will have to navigate challenging trading conditions in 2017 related to foreign payments for raw material imports and strain on consumer disposable income.

“Consumer disposable income is not going to get any better in 2017 we believe it will be even more punitive to the consumers’ wallets than 2016 so therefore we also need to make sure that we have a portfolio in place to address these consumer challenges,” said Mrs Mlambo

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