By Our Reporter
British American Tobacco (BAT) has recorded a drop in net profits from Ushs 36.75 billion in 2014 billion to Ushs 20.29 billion in 2015. This resulted in a 34% dip in net revenue to Ushs 178.73 billion. The company’s cost of operations was also down 34% to Ushs 141.34 billion from Ushs 214.7 billion the previous year. The slowdown in profitability was attributed to the discontinuation of leaf business in September 2014. BAT Uganda now only focuses on selling cigarettes.
Cigarette revenues rose marginally by 6% owing to higher prices in the second half of 2015. The high prices resulted from a 29% increment in excise duty on cigarettes issued in the Financial Year 2015/16 Budget.
BAT’s total assets declined to Ushs 72.64 billion in 2015 from Ushs 218.04 billion previously while total liabilities reduced by 83% to Ushs 25.53 billion. Shareholders’ equity also plummeted to Ushs 47.11 billion from Ushs 63.53 billion.
The company’s directors recommended a dividend of Ushs 413 per share which is 45% lower than FY2014 dividend of Ushs 749. This dividend will be subject to shareholders’ approval at the company’s Annual General Meeting scheduled for 13th May 2016. If approved, the dividend is expected to be paid on or about 21st June 2016 to shareholders on the company’s register as at 31st May 2016.
BAT is poised to face new risks with renewed focus on cigarette sales including regulation (the Tobacco Control Law 2014 which is expected to take effect this year) and illicit trading. BAT is expected to capitalize on its 70% market share to boost revenues. It is worth noting that cigarette revenues have experienced a dropping trend since 2012 registering only a marginal rise of 6% in the past year.
