BAT Kenya sees net profit rise 14pc on strong exports

Corporate News

BAT Kenya makes cigarettes for other firms, as well as manufacturing its own-brand cigarettes. PHOTO | FILE 

By CHARLES MWANIKI

In Summary

• BAT Kenya has announced a dividend payout of Sh42.50 per share following a 14.25 per cent increase in net profit.
• The company saw total revenues rise by seven per cent to Sh34.12 billion last year from Sh31.92 billion in 2013.

BAT Kenya has announced a dividend payout of Sh42.50 per share following a 14.25 per cent increase in net profit for the 2014 financial year.

The company attributed the increase, from Sh3.72 billion in 2013 to Sh4.25 billion last year, to better performance of contract manufacturing for the Democratic Republic of Congo (DRC) and exchange gains on export sales.

A weaker shilling helped exporters earn more last year, with BAT Kenya saying that the foreign exchange gains on its export sales stood at Sh190 million.

Revenue rose by seven per cent to Sh34.12 billion from Sh31.92 billion.

BAT Kenya makes cigarettes for other firms, as well as making its own-brand cigarettes, and gets most of its manufacturing contracts from the DRC.

Contract manufacturing volumes for the DRC rose by 26 per cent following the 2013 closure of the BAT manufacturing plant in Kampala. In the domestic market, the Dunhill brand led improved volumes with 43 per cent growth.

“Our volumes in DRC have grown very strongly over the medium to long term. If we go back five or six years, our sister company in DRC was achieving a volume of three billion sticks and we are close to double that today,” said BAT area director for East and Central Africa Chris Burrell.

“We believe that there is further volume opportunity in Congo, and that BAT Kenya will be the main beneficiary in terms of contract manufacturing.”

BAT, which has a policy of paying out all its net earnings as dividend, had 4,918 shareholders at the end of December 2014. The shareholder register for the dividend will close on March 27 and payments done on May 5.

BAT Plc, the top shareholder in BAT Kenya with 60 million shares (60 per cent of the company) stands to get Sh2.55 billion in dividends for the financial year, compared to Sh2.22 billion it got for the 2013 financial year.

The company will, however, face challenges this year from higher excise taxes. Proposed regulatory changes to tobacco laws that are tougher on consumption of cigarettes are also likely to affect performance this year.