Cigarette manufacturer BAT Kenya reported an 8.4 percent net profit growth in the half-year ended June, helped by higher sales.
The company’s net income in the review period stood at Sh2.9 billion, rising from Sh2.6 billion a year earlier as net revenue increased 12.3 percent to Sh14 billion.
The Nairobi Securities Exchange-listed firm raised its interim dividend 42.8 percent to Sh5 per share, up from Sh3.5 per share the year before.
“The board of directors has approved an interim dividend in respect of the year ending December 31, 2022, of Sh5 per share,” BAT said.
“The interim dividend, which is subject to withholding tax, will be paid on or about September 16, 2022, to shareholders on the register at the close of business on August 12, 2022.”
The cigarette manufacturer said its sales grew on the back of higher prices in the local market and increased exports.
BAT said rising inflation is hurting the purchasing power of consumers, causing some to resort to lower-priced and illicit cigarettes.
“For the company, this is triggering downtrading to lower priced brands and exacerbating the prevalence of illicit trade in tax evaded cigarettes,” the company said.
“Illicit trade continues to adversely impact industry revenues and deny the government in excess of an estimated Sh4 billion per annum in revenue.
“We continue to contribute to national dialogue on the regulatory and fiscal framework, and work with relevant agencies to fight the illicit trade menace.”
BAT paid higher taxes in the review period and expects to make even larger contributions to government revenues going forward after levies on cigarettes went up.
The excise tax increased five percent in November last year and subsequently by 10 percent this month. The company paid Sh7.77 billion worth of excise duty and value-added tax in the review period, up from Sh7.7 billion a year earlier.
BAT says it is among the victims of the rising cost of doing business mainly due to global supply chain hiccups that have raised the cost of shipping and a wide range of commodities including petroleum products.
The company’s cost of operations increased 15 percent to Sh9.9 billion. BAT says it is keen on developing tobacco-free oral nicotine pouches to serve as an alternative to cigarettes which have attracted increased regulations over the years to protect public health.