BAT Uganda profits drop by 65 percent

The cigarettes importer and marketing company reported a profit of Shs7.8 billion in 2016, down from Shs20.2 billion at the end of 2015.

What you need to know:

  • BATU is listed on the Uganda Securities Exchange (USE) with each share trading at Shs30,000.
  • BATU is also faced with the challenge of complying with the Tobacco Control Act 2015 that came into force in May 2016.

Kampala – British American Tobacco Uganda (BATU) has blamed the increased taxation and a tough economic environment for the decline in its 2015 net profit position.
The cigarettes importer and marketing company reported a profit of Shs7.8 billion in 2016, down from Shs20.2 billion at the end of 2015.
About Shs9.8 billion of the decline was contributed by the discontinuation of the tobacco leaf export businesses that was halted at the end of 2015. That meant there was no income earned from the earnings exported tobacco leaf in 2015.
With the exclusion of the leaf business from the financial statements released on Monday, BATU’s profit was down by 25 percent.
“Profit after tax from continuing operations dropped by 25 percent reflecting the impact of excise-driven price increases in the domestic market. Cumulative increases for 2015 and 2016 amounted to 40 percent. This increase coupled with a tough economic environment impacted negatively on consumer disposable incomes,” a statement from the company reads.
BATU doesn’t produce any cigarettes in Uganda. It imports cigarettes from a related company, British American Tobacco Kenya. It mostly markets and sales products in Uganda. In its financial statement, it shows that total cigarette sales generated Shs139.2bn in 2016, down from Shs141bn in 2015.
BATU is also faced with the challenge of complying with the Tobacco Control Act 2015 that came into force in May 2016.
“We are currently, within the transition period with compliance by the tobacco industry expected from 18th May 2016. We support regulation of the tobacco industry that is balanced and does not lead to unintended consequences such as high illicit trade as well as negative impact on the sustainable industry and government revenues,” the statement reads.
BATU is listed on the Uganda Securities Exchange (USE) with each share trading at Shs30,000. The board has recommended a dividend payout of Shs156 per share.