LISTED cigarette manufacturer, British American Tobacco (BAT) has registered a 12 % volume decline owing to depressed disposable incomes in the economy.
Presenting the group's performance for the year ended December 31, 2020 recently, BAT chairman, Lovemore Manatsa acknowledged the positive impact brought about by the Reserve Bank of Zimbabwe auction system in stabilising prices but noted that poor incomes decimated the opportunities.
"High inflation eroded the disposable income of consumers, thereby depressing domestic demand. The Company's total sales volumes for the year under review declined by 12% compared to the previous financial year," he said.
This saw revenue in the Value for Money segment of Madison, Everest and Ascot volumes declining by 8% and 47% respectively.
This was attributed to shrinking consumer disposable incomes due to the challenging economic environment and the Covid-19 pandemic's impact on sales.
In the Aspirational Premium segment, Dunhill Kingsgate and Dunhill Newbury volumes declined by 45%.
During the period under review, selling and marketing costs increased by $149 million which was 118% higher in comparison to the same period in prior year driven by additional marketing investments and strategic initiatives implemented by the company in a bid to respond to the consumer preferences.
Despite the drop in volumes, revenue increased by $597 million or up by 40% when compared to the previous year driven by price increases as well as revenue generated from the export of cut-rag tobacco.
The two revenue generating streams resulted in a gross profit increase of ZW$18 million or a growth of 2% when compared to the same period in 2019.
"As a result of all the above, operating profit increased by $282 million (1,077%) versus an operating loss of $26 million recorded in the prior year.
"Net profit attributable to shareholders for the period under review was $61 million compared to a net loss of $124 million in 2019, recording a growth of 149%," said Manatsa.
The Company's earnings per share increased to $3.51 from a negative $7.15 generated in the previous year.