This archive report was first published on 18 July 2019.
On July 18, 2019, British American Tobacco (BAT) Kenya announced a 25% increase in its half-year net earnings, driven by higher revenue from excise tax changes in Kenya and South Sudan tobacco sales.
The company's net profit for the period stood at Sh2.53 billion, compared to Sh2.07 billion in the same period last year, with gross revenue rising by 10% to Sh19.2 billion.
According to BAT Kenya, the increase in gross revenue was driven by excise-led pricing impacts in Kenya and Somalia, coupled with growth in cut rag sales to Sudan.
However, the company noted that it saw lower sales volumes in Kenya and the Democratic Republic of Congo due to price increases making its products less affordable for users, as well as high incidence of illicit cigarette sales in Kenya.
Furthermore, BAT Kenya highlighted the issue of tax evasion on tobacco products, which it estimated cost the government an estimated Sh2.5 billion per year in revenue.
The company also warned that affordability is likely to persist as a problem due to an increase in cigarette excise duty this year, which went up by 5.15% this month due to the annual inflation adjustment.
