DEPRESSED economic performance and a chronic shortage of coins in the market have negatively affected BAT Zimbabwe, as domestic cigarette sales volumes took a sharp knock.
BAT Zimbabwe's cigarette sales volumes declined by 16% in the first half of the year ended June 30 2013, compared to the same period last year.
This was experienced across most of the company's brands such as Dunhill, Newbury, Everest, Kingsgate and Berkeley.
Company chairman, Kennedy Mandevhani said BAT Zimbabwe's prime brand, Madison, proved more resilient on the market.
"Successive increases in excise duty which impacted cigarette retail prices in 2011 and 2012 have been compounded by coinage constraints, resulting in consumers often paying higher prices than recommended by manufacturers simply due to the unavailability of coins," he said.
Mandevhani said industry cigarette volumes had reduced as a result of the slowdown in GDP growth, and the ongoing general affordability challenges that consumers in the country continue to face.
"Total revenues were US$23,1 million for the first six months of the year... mainly due to manufacturer increases net of excise on key brands in December 2012, which offset on part the impact of lower sales volumes," he said.
Mandevhani said the economy showed signs of stagnation in the first half of this year. He said despite limited growth being achieved in the agricultural and mining sectors, investment in the economy has been constrained by domestic liquidity challenges and restricted availability of external credit lines.
One of the company's highest expenses was the provision for a share-based payment expense of US$10 606 000 as part of compliance with indigenisation laws.
"On a non adjusted basis, operating profit reduced to US$2,4 million, as a result of an IFRS 2 share based payment expense of US$10,6 million.
"This expense represents the fair value of share awards made to employees by our Employee Share Ownership Trust as part of the company's compliance with Indigenisation and Economic Empowerment legislation plus the associated payment of dividends to employees participating in the trust of US$0,4 million," he said.