Cigarette sales spur Batu growth

Thursday March 29 2012

By Ismail Musa Ladu

British American Tobacco Uganda, a listed firm at the Uganda Securities Exchange has posted a 5 cent growth on the back of a difficult year characterised by high inflation and a weak foreign exchange regime.

The results released early this week for the period ended December 31, showed that Batu grew its revenue from Shs212 billion In 2010 to Shs223 billion supported by a prudent contract system with core suppliers.

“Batu normally does long term agreements with suppliers. This means that in case prices change, it continues to transact business at the fixed prices agreed on earlier,” Arthur Nsiko, a research analyst with African Alliance—a brokerage firm, said when contacted yesterday.
Such contracts also hedge it against foreign exchange volatilities, protecting it from undue losses emanating from inflationary pressures - as witnessed in the better part of the previous year.

However, Batu’s company secretary, Isaac Ampeire, said the 5 per cent revenue growth was supported by the growth in cigarette sales by 20 per cent, with the strongest performance coming from BAT’s flagship brand - Sportsman.

Overall performance was also boosted by the its ability to ability to maintain selling prices irrespective of a 13 per cent increment in cigarette taxes in the year under review.

Tobacco leaf exports benefited from a weaker shilling, though the export shipment volumes were lower by 23 per cent principally due to the current improved global tobacco supplies.
According to published results, the firm’s day-to-day operation revenue grew from Shs32 billion in 2011 to Shs40 billion in the period under review.

This, according to the company secretary reflects the impact of the growth in revenue as well as the focused efforts by management in minimising operational cost increases in spite of significant inflationary pressures in 2011.