Cigarette manufacturer BAT recorded a 16 percent decline in domestic sales volumes resulting in it recording a US$1,4 million loss for the six months ended June 30, 2013. The company’s performance was also affected by the successive increases in excise duty which impacted cigarette retail prices in 2011 and last year.
As a result, its total revenues for the period remained generally stable at US$23,1 million, an increase of just about 0,4 percent from the prior year, largely due to the resilience of its leading brand Madison.
In a statement accompanying the results, BAT Zimbabwe chairman Mr Kennedy Mandevhani said the cigarette manufacturer’s business was also affected by a shortage of coins in the market.
“This has resulted in consumers often paying higher prices than recommended by manufacturers simply due to unavailability of coins,” he said.
The company’s total assets also went down by 11 percent to US$29,8 million during the period under review due to a massive decline in inventories that went down by almost half. Earnings per share for both basic and diluted shares dropped by 69 percent to close at US9 cents.
Mr Mandevhani said the company’s operating profit had gone down on a non-adjusted basis as a result of International Financial Reporting Standards 2 share-based payment expense of US$10,6 million that represented the fair value of share awards made to employees.
“The share awards were made to employees by our Employee Share Ownership Trust as part of the company’s compliance with the country’s indigenisation and economic empowerment legislation (US$10,2 million)plus the associated payment of dividends to employees participating in the trust of US$0,4 million,” he said.
The company’s total assets also went down by 11 percent to US$29,8 million for the period under review compared to the same period last year attributable to a massive decline in inventories by almost half.
Total liabilities increased by 22 percent as provisions for other liabilities and charges astronomically rose by almost 700 percent to US$11 million the period under review from the comparative period last year.
Mr Mandevhani said going forward the company is confident that their strategies remain appropriate in the second half of the year as the country continues to look for economic stability while overcoming challenges presented towards sustainable growth.