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Agenda:

  • Financial performance
  • Operating Environment

Key highlights:

  • Sales volume increased to 569 mn sticks increased by 275%
  • Contribution to government revenues rose to ZW$ 828 increased by 379%
  • Revenue rose to ZW$ 14bn, 63% increase
  • Profit after tax increased to ZW$ 470 mn, an increase of 209%
  • 34 % increase in Cut rag exports in H1 2021- 213 million KGs
  • 209% increase in Earnings per share from ZW$7.39 to +ZW$22.79

The BAT Analyst briefing which was hosted by the company secretary, Ms Phyllis Chenjera, commenced at exactly 12.30, ended at around 13:15 and the meeting had over 48 virtually present participants. Ms Chenjera started off the meeting by greeting everyone, acknowledging the presence of the company board members and she went on to introduce them, Mr. Lovemore Manatsa, Mrs. Rachel Kupara, Mr. Contantine Chikosi, Mr.  Edwin Manikai, Mr. Kimesh Naidoo, Mr. Vincent Kaloki and in absentia Mrs. Christelle Supparayen-Romeo.

Ms. Chenjera hands over to Mr. Kaloki who is the company finance director and he gives the financial analysis of the company during the first half of 2021. Generally the BAT financial performance improved, the numbers in H1 2021 update shows clearly signs of financial health in comparison to the same period the previous year. As Mr Kaloki highlighted in his presentation, the company revenue advanced significantly by 63%, the half year volume performance also showed signs of improvement as the sales volume showed an increase every month compared to H1 2020. The non current assets decreased but this was mainly because some assets were disposed off during the period. Overally, total value of assets increased but this was mainly driven by cash and cash equivalents  assets. Total equity and liabilities increased driven by the good financial performance during H1 2021.

After Mr. Kaloki came  Mr. Kimesh Naidoo, the managing director who talked about the operating environment. Mr  Naidoo started off with a Covid 19 briefing  noting the increased covid 19 cases and also just the vaccine optimism and he highlighted that the company is working on a structured manner to ensure continued activity in the trading environment. He assured of the company’s support to both its employees and customers by providing PPEs among other things during this pandemic. Despite Covid the Company has been working tirelessly and continues to proactively review its business model and related strategies to ensure the long-term growth and sustainability of the business. Mr Naidoo went on to comment on the financial performance and he highlighted that the increase in revenue was driven by growth in operating profit. He also highlighted that the operating efficiency has improved mainly due to upgrades of machines during the analyzed period, currently sitting at 40% level but aiming at 60 % by year end.

Mr Naidoo also highlighted 5 priorities to deliver on 2021 Full year results:

  1. Portfolio transformation
  2. Volumes & pricing
  3. Our people
  4. Stable fiscal environment
  5. PMD( Primary manufacturing department) upgrade

The BAT is looking into 1.5 million dollars for capital endorsement in order to expand their company. While maintaining a strong control environment BAT aims to deliver 2021 volumes at right value, improve employee well being, increased efficiencies and ensure no excise shocks. The biggest competitive challenge for BAT has been illicit market which is the increase d illicit trade but  the company is engaging with the government and ZIMRA to come up with solutions for this.

The economic environment is expected to improve from the impact of the COVID-19 pandemic and expected to expand by 4.5% in 2021 supported by mining sector, the Government’s drive for vaccinations and economic activity which appears to be steadily returning to normal. Zimbabwe’s reduced inflation rate since the month of February 2021 coupled with the continued access to foreign currency by companies from the weekly Foreign Currency Auction are reflective of the improving macro-economic factors.

In conclusion, BAT remains confident that its brand portfolio and route to consumer/ market is sustainable to enable the business to deliver value growth to our shareholders.

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