BAT bullish on growth

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BRITISH American Tobacco Zimbabwe (BAT) says it remains optimistic about growth despite mounting economic and political concerns.
The country has a history of contested and violent elections, as well as poll “high jinks” by elected officials, which have affected economic stability and growth. The country’s harmonised elections are set to be held in August this year.
“Being an election year, it is going to be a difficult and challenging year based on what we have already seen in the first four months of the year on the economic environment, bearing in mind that we still have a positive outlook and we see a strong year for BAT. Our volume expectations are to grow in 2023,” managing director of BAT, Sivenasen Moodley, told The Financial Gazette in a recent interview.

This comes as the country has been facing a number of serious challenges, including electricity shortages and a rising local cost of doing business.
All this coupled with imported inflation, largely a result of the Russia-Ukraine war, has affected the country’s growth targets. BAT cigarette sales were down 6,7 percent during the year ended December 31, 2022 due to tight liquidity of the Zimbabwe dollar.
It also comes as the Reserve Bank of Zimbabwe has lately implemented a tight monetary targeting framework to curb inflation, which analysts say has been driven by money supply growth. BAT said it sold 1 054 million cigarette sticks in 2022, compared to 1 130 million in 2021.
“This volume drop was driven by a shortage of RTGS in the market, which made it difficult for customers to purchase our products,” chairman Lovemore Manatsa said in a statement accompanying results.
“Further, the group established that the smart pricing mechanism implemented by the company resulted in higher pricing compared to competitor trade prices in US dollars.
The group recorded a 50 percent increase in revenue to $24,3 billion from $16,23 billion in the comparative period, driven by price reviews and revenue generated from cut-rag tobacco and leaf export sales.
Manatsa said the two income streams generated a gross profit of $18,3 billion, representing a 74 percent growth compared to the prior year. He said the group’s earnings per share increased to $287,43 from $277,11 in the year prior.
The company reported a 3,74 percent growth in profit for the period under review on the back of the increased top line. After-tax profit increased to $4,99 billion from $4,81 billion in 2021. The cigarette manufacturer was not spared the inflationary pressures and liquidity challenges that characterised the operating environment during the period under review.
BAT contributed $17,5 billion for the fiscal year that ended on December 31, 2022, to the Zimbabwe Revenue Authority, up from $11 billion in 2021.
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