EBritish American Tobacco( BAT) Kenya has recorded sh 2.5 billion profit after tax in its half year results.

The company recorded a gross revenue of Sh 19.2 billion and paid sh 9.3 billion to the Government in terms of revenue due to the high taxation imposed on smokers

As result the Company has recommends an interim dividend of Sh 3.50 per share of their shareholders.

The cost of a single stick of cigarette has increased upto Sh 15,this is after the finance minister Henry Rotich imposed more taxation on tobacco during this year budget reading.

“I am pleased to report that BAT Kenya continues to grow shareholder value despite the difficult trading environments in Kenya and many of our export markets, challenges that have continued to grow, said Beverly Spencer- Obatoyinbo, Managing Director.

Gross revenue increased by 10.1%, driven by exercise-led pricing impacts in Kenya and Somalia, coupled with growth in cut rag sales in Sudan.

Profit before tax increased by 25.8%, reflecting the impact of a higher operating margin and lower finance costs as a result of the improved business performance and further improvements in working capital management

Despite performance, sales volumes in Kenya have continued to decline owing to the high levels of tax evaded illicit cigarette sales in Kenya, which stood at 14.1% at the end of 2018.

A predictable and stable tax environment in Kenya is critical for the growth of business and vital, not only for encouraging long term investment but also for the sustainable growth of manufacturing –one of pillars of H.E.President Uhuru Kenyatta “Big Four” agenda.

Obatoyinbo said the company is disappointed by 15% increase in exercise duty rates in cigarettes, wines and spirits, which was proposed in the Finance Bill 2019.

“Our latest data on illicit trade suggests that a marginal decline in the overall incidence of illicit trade in the last six months has been offset by a significant increase in the volume of illicit cigarettes coming across the Ugandan border, which now accounts for approximately 70% of all tax-evaded cigarettes in Kenya. We are therefore extremely concerned that this latest excise shock will exacerbate the problem by increasing the  affordability challenges that our adult consumers currently face and could even incentivize new foreign entrants into the illicit space, undermining Government efforts to address the problem”, she said.

“As much, we continue to engage the relevant Government agencies and urge them to redouble their efforts towards combating illicit trade in cigarettes and put in place the necessary measures and safeguards to protect the consumer, facilitate growth in sales of duty –paid cigarettes and recover the estimated Sh 2.5 billion of Government revenues lost to illicit tax –evaded cigarettes”, she said.

“As we continue into 2019 and onwards, BAT Kenya remains committed to building a sustainable business which contributes to economic growth and delivers value for its shareholders”, said George Maina, BAT Kenya Chairman.

In the first half of 2019 launched a Sh 600million to transform Nairobi manufacturing hub into a modern and great space to work for employees.

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