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LISTED cigarette producer, British American Tobacco (Zimbabwe), says it is in the process of engaging the government over full compliance with the indigenisation laws during the second half of this year.

Managing director Lovemore Manatsa told analysts at the company’s headquarters yesterday morning that the engagement was “work in progress.”

“In terms of indigenisation, we’re now working on certification or compliance for Year 4 and beyond. This is work in progress. Our normal anniversary for that is October 28 of each year. So we’re carrying out consultation with the government right now in the hope that we’ll be fully compliant,” said Manatsa.

During the first half of this year, BAT successfully carried out a re-assessment of share register to achieve Indigenisation Compliance to Year 3, with a new certificate awarded in April 2015 and valid until December 2015.

In terms of its first half financials presented yesterday, the group announced a net profit of $7,6 million for the first half ended June 30, 2015, up 43 percent from $5,3 million recorded in the prior comparable period. Profit growth was achieved despite volumes going down five percent from the same period last year, as the company improved on production and distribution efficiencies.

Said finance director Peter Doona: “Volume reduction is attributed to a general consumption decline due to economic factors and the excise-driven price increase in December 2014. Against this backdrop, BAT Zimbabwe’s market share has grown steadily to over 82 percent in the first half of the year.

“Despite the volume reduction, the company has delivered profit growth, driven by marginal pricing gains (net of excise) and cost of sales efficiencies.”

Although volumes were generally down, the Dunhill brand recorded growth of four percent compared to the same period in 2014. BAT’s revenue for the period under review increased by $1,5 million, up eight percent from the prior comparable period, a development the finance director said was “driven by marginal pricing gains net of the impact of the December 2014 Excise increase and offsetting the impact of the five percent volume reduction.”

Gross profit increased by 17 percent to $2,3 million as cost of sales benefited from raw material pricing, productivity initiatives in the company’s manufacturing operations and lower depreciation charges.

Selling and marketing costs increased by $0,4 million. In terms of outlook, the MD said they are hopeful of an improvement in volumes to the extent that there is a stabilisation in excise duties.

“Excise stability is a key enabler for volume recovery following the increase in December 2014,” said Manatsa. BAT is also planning to increase in the rate of capital investment in the second half as projects in manufacturing, environmental health and safety and its distribution fleet are expected to be completed during the period. Earnings per share for the first half just ended increased to 37 cents, up from 26 cents in the prior period in 2014. BAT has declared a dividend of 47 cents per share, with the total dividend at $8,3 million. – BH24.