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 86billion in the first six months of 2019 to Shillings 76billion in the first six months of 2020.
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Cigaratte sales were affected by covid-19 shutdowns
British American Tobacco Uganda-BATU has
reported a revenue shortfall in the first six months of 2020 due to disruptions
by the corona-virus 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 86billion in the first six
months of 2019 to Shillings 76billion 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 Covid19, which saw several
businesses closed.
However, even with
corona virus 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 6.8billings Shillings after-tax profits up
from the Shillings 6.7billions 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
7.3bn to Shillings 42.9bn “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 the 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 30billion shillings in revenue
annually.
