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Oliver Kazunga Senior Business Reporter
CIGARETTE manufacturer, British American Tobacco has posted a $13.5 million profit after tax for the year ended December 2014 from $3.7 million recorded in prior year.The company’s chairman Kennedy Mandevhani, in a full year financial statement released at the weekend said: “After the incorporation of finance income and the deduction of income tax, there was a net profit attributable to shareholders for the year of $13.5 million.”

He said cash generated from operations was $13.6 million, down from $25 million in the previous year.

Cash flows in 2013 had benefited from termination of cut rag exports in the year, while 2014 cash flows were also impacted by the timing of payments for excise and tobacco leaf and due to the settlement of payables to related parties, added Mandevhani.

He said capital expenditure increased to $2.2 million from $1.2 million in the prior year.

Meanwhile, the company’s revenues were flat at $44.6 million while revenue from core business grew by six percent to $2.5 million compared with the previous year.

This, he said, was driven by volume growth of four percent and the impact of an excise–driven price increase last December.

Mandevhani said growth in cigarette revenue was offset by the impact of the discontinuation of non-core cut rag sales in 2013.

During the period under review, gross profit declined by 4.4 percent to $28.8 million from $30.01 million.

This resulted from higher packaging costs due to growth in sales of the firm’s 10s-format brands, salary awards to employees, higher utility charges and an increase in refurbishment and maintenance costs on manufacturing equipment.

“The reduction in gross profit was offset by reductions in selling and marketing costs of $0.5 million and administrative expenses of $1.0 million compared to the previous year, driven by strong management focus on cost control,” he said.

Mandevhani said results in the previous year were affected by a material expense of $10.9 million in liabilities for the value of awards to employees by the Employees Share Ownership Trust. Despite the prevailing economic climate, where formal employment and consumer spending continues to fall, he said the cigarette producer was able to deliver impressive set of results.

“In 2014, ongoing liquidity challenges were worsened by the appreciation of the United States dollar by around 210 percent against the South African rand, the currency of Zimbabwe’s main trading partner in the region. The results demonstrate strength and resilience in the underlying business.

“The focus on cost-effectiveness allowed the company to create value for our shareholders and value for the nation through our contribution to the fiscus,” he added.

Mandevhani said total industry cigarette volumes were generally stable in 2014 following double digit volume reductions in 2012 and 2013 adding that BAT Zimbabwe continued to lead the sector delivering total volume growth of four percent year-on-year.

“While our local Zimbabwean brands grew by four percent, our global drive brand Dunhill, continued to show a rapid rate of growth of 37 percent from a small but growing consumer base,” he said.

On the outlook, he said trading conditions were expected to challenging going into 2015 as the country continues to look for economic growth and stability.