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Focus on manufacturing efficiency, low raw material pricing and cost management saw BAT Zimbabwe report a 39 percent increase in the operating line at $9,74 million in the six months to June. Revenue in the period was at $21,79 million, an increase of 8 percent from last year mainly driven by marginal pricing gains following the increase necessitated by the December 2014 excise duty review.

This growth in the top-line, according to finance director Mr Peter Doona had been achieved in spite of a 5 percent reduction in volumes.

Gross profit increased 17 percent due to lower costs of sales from raw material pricing, productivity initiatives in the manufacturing operations and lower depreciation.

“Selling and marketing costs increased by $400 000 after we expanded the Madison Usadherere promotion but this was offset by a reduction in admin expenses of $300 000. As a result, operating profit was at $9,7 million for the period.”

Profit for the year was up $7,6 million, an increase of 43 percent from $5,3 million last year.

“Reflecting the results and the available retained earnings, a dividend of 47c was declared.”

On the balance sheet, inventories were down to $5,37 million from $7,09 million which Mr Doona said was due to seasonal factors in particular tobacco leaf ahead of purchases of the 2015 crop in H2.

Bicycles
Trade and other payables increased to $7,76 million from $4,84 million due to the timing of excise payments.

The group had generated $12,87 million cash from operations an increase from $5 million due to the timing of $3 million payment for tobacco leaf and timing of excise payments related to manufacturing payments.

Cash from financing activities of $8,3 million reflects the dividends paid to shareholders, increasing from the same period in prior year following earnings growth.

Going forward, managing director Mr Lovemore Manatsa said the group would increase the rate of capital investment in the second half to complete projects in manufacturing and in distribution.

“We will also focus on marketing activities aimed at recovering volume losses by focus on distribution — more bicycles will be rolled out in remote areas – and cross-channel execution.”

Mr Manatsa, however, said volume recovery will only be achieved if excise is stable at least for the next two years following the increase in December 2014.

On indigenisation, Mr Manatsa said consultations with Government regarding the group’s plan were ongoing with compliance expected to be achieved in year four and beyond. — Wires.