British company records US$383m loss in Zim, cites inflation, bad environment

British American Tobacco (BAT), a British multinational company that manufactures and sells cigarettes, tobacco and other nicotine products recorded losses in Zimbabwe due to “challenging operating environment, shrinking disposable incomes amidst increasing inflation and currency devaluation”.

In its Condensed Financial Results For the Half Year Ended 30 June 2022, the company which was established in 1902, headquartered in London, England cited the “challenging operating environment” among other economic and financial issues as a major setback in its business in Zimbabwe.

Express Mail Zim understands that BAT’s operating profit declined by ZWL1.4 billion (90%) (US$382 513 7 according to the official exchange rate of the end of June) versus the same period in the prior year.

“In a challenging operating environment, volumes from the sale of cigarettes declined by 6% due to shrinking disposable incomes amidst increasing inflation and currency devaluation in comparison with the same period last year,” read part of the commentary on financial performance which is based on inflation adjusted figures.

The company’s export volumes of cut rag tobacco were, however, up by 74% in the period under review, compared to the prior year due to increased demand of leaf from our export markets.

Revenue increased (71%) to ZWL6.9 billion from ZW$4 billion, when compared to the same period in 2021.

“The increase in revenue was driven by price increases effected during the period. These factors resulted in a gross profit increase of ZW$2.8 billion (160%) compared to the same period in 2021.

“Selling and marketing costs increased by ZWL3143 million (65%) compared to the same period in the prior year, driven by additional marketing investments aimed at driving sales volumes and general increase in costs due to inflation.

“Administrative expenses were ZWL214.6 million (42%) higher than the same period in prior year. This was driven by a general increase in costs due to inflation. Other losses increased by ZWL580.9 million (548%) due to the rapid devaluation of the Zimbabwean dollar in the period under review,” read the latest financial statement.

It was established that the “operating profit declined by ZWL1.4 billion (90%) versus the same period in the prior year. Net loss attributable to shareholders for the period under review was ZWL678.6 million, compared to a net profit of ZW$1.4 billion in the same period in prior year, representing a 149% decrease. The Group’s earnings per share decreased from ZWL99.3 (149%) to negative ZWL32.9 generated in the same period in 2021.

“Cash generated from operations was a positive ZW$2 billion which is a 24% increase from prior year due to increased inflows as a result of price reviews effected during the period under review.”