Local cigarette manufacturer, British American Tobacco Uganda (BAT-U) had its gross profit rise by 70 percent in the year ended December 2017 to Shs18 billion, up from Shs11 billion earned in the year 2016, the company says in its financial statement.
The company attributes the rise in gross profits to the increase in prices of cigarette derived from increase in excise duty and lower operational costs.
However, the company’s gross profit in the year 2017 was far less than Shs29 billion and Shs69 billion earned in the years 2015 and 2014, respectively.
The financial statement further shows that the company’s net revenue increased to Shs69 billion in the year ended December 2017 compared to Shs65 billion it realized in the year ended December 2016. The company attributes the increase to excise driven price increment.
But the statement notes that the 2017 net revenue figures were far much less when compared to Shs179 billion and Shs270 billion realized in the years 2015 and 2014, respectively.
The company says excise duty, value added tax payments and corporate tax charges increased by Shs7 billion to Shs82.5 billion relative to the previous period.
Mathu Kiunjuri, the BAT-U Managing Director, says cigarette sales grew marginally by 0.4 per cent in 2017 compared to 2016. “The stability in the sales volumes performance is attributed to the marketing and distribution activities carried out during the year,” he says.
The company’s flagship brand, Sportsman, continued to register strong performance as sales grew by 12 per cent Kiunjuri says, but adds that illicit trade in cigarettes continues to impact the company’s cigarette sales as well as government revenues.
The statement shows that BAT Uganda’s return on equity improved by 55 per cent in 2017 mainly driven by increase in the profits after tax.
Based on that the Board of Directors has maintained 100 per cent dividend pay-out policy and recommended a dividend pay of Shs246 per share. BAT Uganda is listed on the Uganda Securities Exchange (USE).
The company says the enactment of the Excise Duty (Amendment Act 2017) had its business experience some challenges following the imposition of different rates for locally manufactured products and those imported from the East African Community (EAC) member states.
BAT-U Board Chairman Elly Karuhanga says that despite Uganda’s economy witnessing a slowdown in economic activity in 2017, the company has maintained a strong market position and improved business results.
