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Senior Business Reporter
CIGARETTE manufacturer BAT Zimbabwe has posted a profit after tax of $5,3 million in the six months to June underpinned by an aggressive  cost-cutting strategy and lower share-based payments to meet the country’s ownership regulations.During the same period last year, the firm recorded a $1,4 million loss.

“After the deduction of income tax expenses, net profit for the period is $5,3 million compared to the six months ended June 30, 2013 with a loss of $1,4 million.

“On a non-adjusted basis, operating profit increased by $4,6 million to $7,0 million, primarily as a result of a reduction in expenses associated with our Employee Share Ownership Trust.

“Results in the previous period were impacted by a material provision made for the value of awards made to employees,” said BAT

Zimbabwe chairman Kennedy Mandevhani in statement for financial results ending June 30, 2014.

Despite recording a 12 percent decline in revenue to $20,3 million in the first half due to the discontinuation of non-core cut rug sales in 2013, cost of sales dropped to $6,5 million from $7,1 million last year.

BAT’s trademark brands maintained sales volumes despite a slowdown in economic activity, said Mandevhani.

He said administration expenses and marketing costs also declined during the period under review.

Gross profit reduced by $2,2 million to $13,8 million.

“This resulted from an increase in depreciation charges and refurbishment costs from upgrades to our manufacturing equipment, higher packaging costs due to growth in sales of our 10s-format brands, salary awards to employees and higher utilities charges.”

On dividends, Mandevhani said the company continues to hold the interest of its shareholders in the highest regard and the returns achieved for their investment in the business.

“As such, having regard to our dividend policy, and in view of the profit for the period, the board is declaring an interim dividend of $0,30 per share, which includes $0,04 to be paid from historical retained earnings,” he said.

Mandevhani said on the outlook trading conditions were expected to remain challenging in the second half of the year as Zimbabwe  continues to search for economic development and growth.