British American Tobacco (BAT) says export volumes increased by a weighty 163 percent in the first quarter to March 31, 2022 largely driven by cut rag and leaf tobacco shipments.
The company said its quarterly export volumes for cut rag and leaf tobacco increased significantly, year-on-year, "Export volumes of leaf and cut rag tobacco were up by 163 percent in the three months' period under review compared to prior year due to increased demand of leaf from our export markets," BAT said.
The cut rag tobacco export volume growth coupled with the pricing review during the period, resulted in BAT recording 147 percent growth in net turnover, in historical terms, compared to the same period prior year
However, its cigarette sales remained flat throughout the quarter.
"The company's volumes from sale of cigarettes were relatively flat as compared to the same period last year on the backdrop of shrinkage of consumer disposable income," the company said in a statement.
In the quarter under review, BAT's value-for-money brands such as, Lucky Strike and Madison, contributed 52 percent and 38 percent of the volume performance, respectively.
In its outlook, BAT said it remained hopeful that fiscal and monetary policy reforms will be employed to eliminate the market challenges currently impacting the economic environment.
The cigarette maker also said it would continue to be proactive in its response to the economic challenges while it remained confident that current business strategies would deliver value growth to shareholders.
Given the negative impact of the Russia -Ukraine war on global supply chains, BAT said it was monitoring the situation and in the short term, the business anticipates an increase in the cost of production.
In terms of the operating environment in the first quarter, the listed firm noted the rapid rise of prices which has resulted in increased inflation.
"The trading environment for the three months ended March 31, 2022 was characterised by significant increase in inflation and exchange rate volatility," the statement read.
BAT acknowledged that the environment eroded consumer's buying power due to increased inflation, and this was coupled by an increase in sin taxes by Treasury this year.
"Additionally, the cigarette excise ad valorem regime was changed from 20 percent to 25 percent with effect from January 1, 2022. The challenging economic environment resulted in a decline in consumer spending," BAT said.