BAT doubles capital expenditure

HARARE - Cigarette maker British American Tobacco Zimbabwe (BAT Zimbabwe) increased its capital expenditure to $2,2 million in the year to December 2014 from $1,2 million prior year.

During the period under review, the Zimbabwe Stock Exchange-listed group registered a 256 percent increase in post-tax profit to $13,5 million from $3,8 million.

Peter Doona, the BAT Zimbabwe finance director, said revenues were flat at $44,6 million despite a four percent growth in volumes.

“For manufactured cigarettes, our core business, revenues grew by $2,5 million compared to the previous year. This was driven by volume growth of four percent and the impact of an excise-driven price increase in December 2014,” he said.

Doona noted that a non-recurring payment of $10,9 million in 2013 towards the company’s employee share ownership trust saw earnings improving during the period under review despite a slight increase in cost of sales.

The group recorded a 4,4 percent decline in gross profit to $28,8 million from $30,1 million.

“This resulted from higher packaging costs due to growth in sales of our 10s-format brands, salary awards to employees, higher utility charges and an increase in refurbishment and maintenance costs on our manufacturing equipment,” said Doona.

He, however, said the reduction in gross profit was offset by reductions in selling and marketing costs and administrative expenses, which were both down 11 percent to $0,5 million and $1 million respectively compared to the previous year.

In the year to December 2014, the group’s cash generated from operations was $13,6 million down from $25 million in the previous corresponding period.

Doona said cash flows in 2013 had benefitted from the termination of cut rag exports in the year, while 2014 cash flows were also impacted by the timing of payments for excise and tobacco leaf and due to the settlement of payables to related parties.

The group declared a $0,50 final dividend per share.

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