British American Tobacco Zimbabwe (BATZ) is re-strategising around market expansion, cost discipline, operational efficiency and stakeholder engagement for 2026 after a once-off blocked funds settlement and reduced foreign exchange losses helped the tobacco firm return to profit.
The company posted a profit after tax of US$11,53 million for the financial year ended December 31, 2025, compared to a loss of US$757 432 in the prior year.
However, the turnaround was largely driven by exceptional items rather than core trading performance, prompting BATZ to focus on strengthening its underlying operations as the once-off benefits fade.
The improved result was supported by lower foreign exchange losses, improved operational efficiencies and a once-off blocked funds settlement.
The settlement involved clearing BATZ’s US$16,4 million legacy foreign currency obligations through Treasury Bills issued by the Reserve Bank of Zimbabwe, easing liquidity and foreign exchange pressures.
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The firm also recorded a 293,19% increase in sundry income to US$4,94 million, comprising intercompany write-offs from long-outstanding balances relating to goods received and services rendered between group entities.
However, with the blocked funds settlement being a once-off boost, BATZ is now shifting its focus towards strengthening core operations.
“During the first quarter, the company made solid progress across its strategic priorities, which will continue to guide its focus for the remainder of 2026,” BATZ said in its first-quarter trading update for the period ended March 31, 2026.
“The company broadened its route-to-consumer footprint and deepened distributor partnerships, improving product availability and strengthening its position to capture emerging demand opportunities.”
BATZ said simplification initiatives and enhanced procurement frameworks delivered meaningful efficiencies in the first quarter.
“These measures will remain central to protecting margins in an environment characterised by geopolitical tensions and energy-related pressures,” BATZ said.
“Investments in automation and supply chain optimisation improved reliability and productivity. These initiatives will be scaled further throughout the year to reinforce operational agility and support sustainable performance.”
Under its stakeholder engagement strategy, the company said it continued to engage constructively with policymakers and industry stakeholders to support regulatory clarity and a predictable operating environment.
“This engagement will intensify as the company contributes to reforms aimed at fostering stability, enabling investment and supporting long-term growth,” BATZ said.
The strategic shift comes as the absence of the once-off blocked funds boost began to expose underlying trading pressures during the first quarter.
Sales volumes declined 4% year-on-year due to constrained consumer purchasing power, lower retail footfall and an affordability-driven shift in product mix.
Net turnover also fell 4% on lower volumes and competitive pricing pressures, although value-driven pricing strategies helped cushion the decline.
At the same time, cost of sales rose 20% due to inflationary pressure on imported materials and higher manufacturing and logistics costs, despite operating costs declining by 29% as a result of business simplification and tighter cost controls.
Consequently, profit from operations remained flat at US$2,7 million.
“Looking ahead, the company remains confident in the resilience of its business model and the opportunities arising from Zimbabwe’s evolving operating environment,” BATZ said.
“While geopolitical tensions remain unpredictable and energy constraints are expected to persist, ongoing regulatory reforms and increasing policy stability provide a foundation for sustainable growth.”-newsday
