Coronavirus smokes BATU revenues

Kampala, Uganda | THE INDEPENDENT | British American Tobacco Uganda-BATU has reported a revenue shortfall in the first six months of 2020 due to disruptions by the coronavirus pandemic.

In its financial statement issued on Wednesday, BATU says its gross revenue fell by 12 percent as a result of low sales in cigarettes occasioned by the pandemic. The revenues fell from Shillings 86 billion in the first six months of 2019 to Shillings 76 billion in the first six months of 2020.

It says the “pandemic put severe pressure on consumer affordability and adversely impacted the trading environment as retail outlets closed.” Some smokers didn’t have the means to buy cigarettes because of the nationwide lockdown to contain the spread of Covid-19 which saw several businesses closed.

However, even with coronavirus affecting the cigarettes maker, BATU managed to make profits. It says in its financial statement that in the first six months of 2020, it made 6.8 billings Shillings after-tax profits up from the Shillings 6.7 billions it made in the first six months of 2019. Low revenues mean government taxes were hit too.

BATU says that its payments to government in terms of excise duty, Value Added Tax (VAT) and Corporation tax reduced by Shillings 7.3 bn to Shillings 42.9 bn “in line with lower sales revenues.”

Government has already indicated it will miss the annual revenue target for the 2019/2020 financial year by as much as 3 trillion shillings.

Despite poor sale of cigarettes, BATU says there areas in its businesses that improved, including cutting on costs of operations driven by lower sales volumes and prudent cost management measures.

For the shareholders of BATU, they will still smile to the bank earning Shilling 140 per share up from Shillings 137 per share last year.

It says however that it would continue working to achieve a friendly regulatory environment which will support recovery and working with relevant government agencies to ensure stability and predictability in the regulatory environment which will support our economic recovery.

BATU warns that illicit trade in cigarettes continues to impact the industry and government revenues. It estimates that illicit trade in tax-evaded cigarettes denies government 30 billion shillings in revenue annually.

******

URN