British American Tobacco Revenue Increased by 50%

April 19th, 2012 00:00

British American Tobacco Uganda (BATU) after posting Ushs 216bn ($87.9m) in 2011 will pay off its largest dividend to shareholders.

BATU will have to pay Shs141 ($0.05) dividend on account on top of the advised dividend of UShs309 ($0.12), thus bringing the total to approximately Shs450 ($0.177) per each share. Which will constitute a 95% increase in interim dividend to shareholders in comparison to UShs228 ($0.08) per share a year ago. While presenting these results BATU announced a turnover of Shs2.9m ($1,143) within March 26-29 2012. The figures are supposed to be vibrant as shareholders might look to unload and may not be able to respond to the growing demand, according to tobacco industry experts.

Net income at BATU increased to Shs22bn ($8.6m) in 2011, a boost of about Shs11bn ($4.3m) from Shs11.177bn ($4.4m). After profits have grown by 5% form 2010, the sudden increase in earnings demonstrates the decrease in operating costs at tobacco processing facility. “The 20% improvement in operating income repulses the effect of the increase in profit as well as main efforts by officials in reducing operational cost growth through productivity savings despite significant difficulties in inflationary pressures in 2011,”said company’s representative.

American Tobacco Revenue

BATU exports tobacco despite the fact that shipment volumes have decreased by 20% as a result of an oversupply of tobacco leaf in the world market. The company also faced a lift in sales of its brand Sportsman. “Profit increase of Shs 11.5 billion was due to the raise in cigarette sales volumes by about 22%, as we haven’t changed cigarette prices in spite of a near 12% increase in excise taxes on tobacco products during previous year,” he added.

This happened mostly due to a 12.5% increase in excise taxes in July and a cigarette volume growth was possible mostly due to the continued attempts of the Uganda Revenue Authority in eradicating the number of illicit cigarettes.

These days the country is still facing economic problems which are associated with a world slowdown; this would still hinder activities of many businesses across the country. BATU will have to proceed facing the challenge of illegal trade, especially among the most popular brands.
The taxation policy might become tougher as the world actions against tobacco use spreads. Many countries have already run beyond taxation and regulations that require 90% of the cigarette package to contain health graphic warnings.

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