Monetary losses drag BAT Zimbabwe to after tax loss
Listed cigarette manufacturer, BAT Zimbabwe, earned an inflation adjusted after tax loss of $678 million.
The loss was largely a reflection of hyperinflation related monetary losses incurred during the period of $2,2 billion.
Total revenues increased by 71 percent in inflation adjusted terms to $6,9 billion, comprised of domestic cigarette sales of $6,5 billion and cut rag export sales of $415 million. The group attributed the rise in revenues primarily to price increases effected during the period.
Sales volumes were reported at 6 percent lower, with the company citing falling disposable incomes as the cause. However, the group’s gross profits climbed by 160 percent to $4,6 billion and net operating profit increased to $3,6 billion.
The group’s price increases appear to be well above what would have been necessitated by the cigarette excise tax hike and general inflation. It is highly likely that some component of the price hikes has been a result of maneuvering by BAT to reposition some of its cigarette brands.
Net operating cash flows for the half year period stood at $1,2 billion, while net cash flows were at $1,6 billion.
Total assets decreased marginally to $7,6 billion, and total liabilities where at $3,2 billion.
The group reported that it contributed $3,5 billion to the government coffers in various taxes during the half year period.
Looking ahead, the concern will be continuation of economic trends that are eroding local disposable income, and the pull of the “value for money” alternatives under the circumstances. The monetary losses are also concerning, but are likely related to hard-currency liabilities to related entities.
If it is not already the case, the group would be expected to follow other large scale consumer linked manufacturers in establishing more direct distribution channels to the informal retail sectors where hard currency use is more prevalent.-ebsuinessweekly
