BAT Zimbabwe volumes in the year to December 2013 fell 17 percent to 1,301 billion sticks produced a year earlier due to a reduction in market size. This follows the 30 percent price increase taken on “value for money” segment in December 2012 against a 50 percent excise increase to US$15 per mille, the group finance director Mr Peter Doona told analysts yesterday.
The industry cigarette volume decline was “exacerbated by economic stagnation, lack of disposable income and lack of coinage for change” which has resulted in consumers often paying higher prices than those recommended by the manufacturer.
Revenue was down 14 percent to US$44,5 million largely due to the discontinuation of Cut Rag exports in July last year. On cigarettes, gains made from price increases net of excise on key brands in December 2012 offset the impact of lower sales volumes.
Dunhill volume grew 48 percent to 9,1 million sticks, boosted by the new “switch” variant. Mr Doona said the market was also “responding very well” to the Everest 10s launched in July last year and the Madison 30s launched about four months later.
Operating profit was down to US$9,8 million from US$17,6 million as a result of the share-based payment expense of US$10,9 million associated with the employee share ownership trust awards to employees. Profit after tax came in at US$3,8 million for the year
This represents US$0,18 per share, which the board has declared to be paid in full as a final dividend.
Despite lower disposable income, BAT is forecasting to increase volumes by 100 million sticks in the financial year to 1,4 billion sticks, chief executive Mr Lovemore Manatsa said.
“In terms of exercise (duty), we managed to engage the Ministry of Finance and other relevant authorities and there was no EPI in the 2014 National Budget,” said Mr Manatsa.
“This therefore means we get a chance or opportunity to rebuild our volume base.”
Going forward, Mr Manatsa said BAT would focus on growing volume and value in 2014.
The company will also continue implementing the Employee Share Ownership Trust and Tobacco Empowerment Trust as part of Indigenisation compliance, he said.
BAT has more than 4 000 small scale farmers and 120 large scale under its growers scheme. This year, the company is expecting about 26 million kilogrammes of tobacco that was grown under the scheme, said Mr Manatsa.