British American Tobacco Zambia (BAT Zambia) recorded an increase in turnover of 34% amounting to K165.2 million in 2018 compared to the K123.3 million recorded in same period in 2017.
In the Abridged 2018 full year results posted on Lusaka Securities Exchange monitored by Money FM News, the Board of Directors says BAT Zambia continues to deepen its footprint in Zambia through renewed investments such as the state-of-the-art machinery in the Lusaka South Multi-facility Economic Zone (LS-MFEZ) valued at US$25million.
BAT Zambia Chairman Michael Mundashi says the company remains committed to continuously achieving on its unarguably well-known operational excellence while simultaneously delivering shareholder value in an increasingly competitive and dynamic business environment.
Mr. Mundashi says the increase in turnover was largely driven by a general volume increase across the portfolio of over 67%.
He says the increase in volumes sold was on the backdrop of the Company being able to compete favourably on price following the commencement of local production at the back end of 2017.
He adds that the Company has in 2018 reaped the benefits of the first full year of local production thereby paying excise taxes at the rate of a local manufacturer.
“The investment in aggressive marketing and distribution initiatives embarked on during the year to regain lost market share also paid dividends in 2018 and added to the continuing positive trajectory of recovery on which the business has embarked on. Turnover in the financial results represents revenue, excluding excise duties. An operating profit of K16.6million was recorded compared to a loss of K9.3 million in 2017. This represents an increase of 278%,” he said.
Mr. Mundashi said the increase in operating profit was driven by the increase in volumes and turnover as earlier highlighted.
He added that coupled with that, the business engaged in smart cost management which enabled it to record savings while at the same time building efficiencies in vital areas of the business, especially in satisfying different stakeholder interests key among them its customers, employees, the government and regulators to mention but a few.
“A loss before taxation of K16.6 million was record during the year 2018 and represents a 50% increase over the loss recorded in 2017of K11.1 million. The loss before taxation was mainly due to high net finance costs driven by foreign exchange losses suffered on the US$15 million loan that the Company contracted in 2017 for the construction of the new factory. The Company is committed to ensuring that this liability is liquidated in the short to medium term in order to arrest the erosion of shareholder value,” said Mr. Mundashi.
He stated that various interventions have been employed and more are still being explored to manage the foreign exchange risk that this necessary liability carries.
“The Directors and management are confident and optimistic that the impact of this risk will be mitigated and managed going forward as the business starts yet another exciting year of continued growth and recovery. Negative cash generated from operations of K58.4 million was recorded during the year compared to a positive K47.3 million recorded in the prior year. This represents a reduction of about 223%,’ said Mr. Mundashi.

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