UGANDA
Increased cigarette prices and a change in distribution channel have helped British American Tobacco Uganda Limited (BATU) to enjoy record growth in net profit amidst tough tobacco regulation.
BATU managing director, Mathu Kiunjuri, told shareholders during the annual general meeting on May 9 that the company recorded a 55% growth in net profit to UGX12 billion last year, up from UGX7.8 billion in 2016 and UGX20 billion in 2015.
“There was generally growth in revenues driven by increase in price of cigarette in the second half of last year in response to the new taxes,” said Kiunjuri, adding that the company’s cigarette sales – Dunhill, Sportsman, Rex, and Safari – grew marginally by 0.5% compared with the previous year. Last year, BAT took oversupply and marketing of its cigarettes in Uganda and the rest of East African countries, ending a long partnership with distributors.
BATU exited from the leaf-buying business in Uganda in 2015, leading to the decommissioning of its leaf processing facility in Kampala, closed its cigarette production plant in Jinja, and transferred manufacturing operations to its Kenyan business unit.
Kiunjuri said the company expects to record a further growth in profitability in 2018 citing improved weather conditions for the tobacco crop. “We are also trying to work on our products such that they meet the needs of all our customers. The consumers of 1970’s are different from the current consumers,” he said.
He also said the company is also looking at ensuring that its cigarette portfolio is robust and can compete with any other product on the Ugandan market, and that the company plans to work with URA and the Uganda National Bureau of Standards to ensure that illicit cigarettes, which account for about 23% of the cigarette sales in the country, are eliminated.