Relaxed Covid-19 regulations drive BAT cigarette volumes

ZSE-listed cigarette maker, BAT Zimbabwe, recorded an uptick in volume performance both on the export and domestic markets during the nine months to September 30, 2021, thanks to strong demand across board coupled with increased investment in its brands and the relaxed Covid-19 restrictions.

In a trading update, chairman Mr Lovemore Manatsa revealed that the company recorded a 44 percent growth in export volumes for leaf and cutrag tobacco on the back of strong demand from the export market.

This also comes as the cigarette maker indicated during a briefing for financial results for the half year to June 30, 2021 that it was looking at increasing export volumes in the region especially after its biggest export market — Mozambique — was badly affected by some unrests.

In line with this, the firm was investing over US$1 million into developing its production capacity and efficiency to meet both local and export demand.

Currently, exports account for 20 percent of the group’s total earnings. BAT exports cutrag and during the half year period the Group increased investment behind its brands and a focused investment in route-to-market strategy, which led to a 27 percent growth in sales volume to 569 million sticks versus the same period last year.

Cut rag exports during the period went up 34 percent to 213 million kilogrammes For the nine-month period, BAT delivered an overall volume growth of 32 percent versus the same period last year mainly attributable to increased consumer demand, increased export of cutrag tobacco and the easing of the Covid-19 lockdown restrictions.

The Group acknowledged the improved economic environment as the country gradually eased lockdown restrictions resulting in increased economic activity and disposable incomes.

“The trading environment for the nine months ended September 30, 2021 showed an improvement driven by the relaxation of the Covid-19 lockdown restrictions. The economy benefited from the decline in the monthly inflation rate and the steady foreign currency exchange rate which resulted in stable pricing in the period under review.

“The Company continues to evaluate its business model to ensure long-term sustainability of the business and value creation for its shareholders,” said Mr Manatsa. During the period under review, the group recorded a volume growth of 25 percent from the sale of cigarettes compared to the same period last year, on the back of increased demand from consumers, increased investment in brands, improved access to the market and product availability.

According to the group, the volume growth coupled with the pricing reviews done during the period, resulted in BAT recording a growth in net turnover of 38 percent in hyperinflationary terms, compared to the same period prior year.

Management remains upbeat the business will continue to deliver value growth for its shareholders on the back its growth strategies lined up.

The anticipated economic recovery in the context of a good agricultural season, adaptation to Covid-19 induced limitations, and continuation of fiscal and monetary policy reforms is also expected to cascade to the business in the long run.- The Herald