British American Tobacco (BAT) Uganda has announced that it will be processing its tobacco leaf in Kenya two weeks after its management disclosed that it was closing down its Kampala factory.

The cigarette maker has said it will be decommissioning its Kampala plant which does not have the capability to continue processing the crop to international standards.

This, it said, is mainly because the equipment has become obsolete and the location of the plant is restrictive and no longer suitable for its crop processing operations.

“We will therefore be processing our 2013 crop in Kenya at an existing facility belonging to our sister company, BAT Kenya. The improved quality and efficiency realised should result in an improved market for our leaf, which will benefit the shareholder in due course,” said BAT Uganda in a statement.

BAT Uganda, which is listed on the Uganda Securities Exchange (USE), said that with a stable tax environment and continued focus on combating illicit trade, it is anticipated that there will be no loss in government revenue from this decision.

Two weeks ago, the company disclosed that it would close the tobacco-processing plant on Jinja Road, next to the Ministry of Internal Affairs headquarters, a move that would render the workers jobless.

READ: BAT closes factory in Uganda

It however said that will continue with its annual investment of over Ush14 billion ($5.4 million) in loans to strengthen farmers productivity.

BAT Uganda’s profit after-tax dropped to Ush12.19 billion ($4.57 million) in the twelve months to December 2012 from Ush22.08 million ($8.27 million) over the same period the previous year and the last price of the stock was Ush2,265 ($0.98) at the USE.

READ: BAT Uganda profits drop as firm faces threat from illicit trade

The firm did not recommend the payment of a final dividend following the interim dividend of Ush141 ($0.05) per share which was paid in October 2012.

BAT Kenya on the other hand, which is listed on the Nairobi Securities Exchange, gave investors a final dividend of Ksh29 ($0.34) for the period ended December 2012, bringing the total pay-out for last year to Ksh32.50 ($0.38) up from Ksh30.50 ($0.37) paid for the year ended December 2011.

Its share, which is the most expensive at the NSE last traded at Ksh530 ($6.38) meaning that this year it has appreciated by 11.56 per cent when compared to its closing price of Ksh493 ($5.92) at the end of last year.

The cigarette maker posted a profit after tax increase of 5.58 per cent to Ksh3.27 billion ($37.93 million) as at December 2012 from Ksh3.09 billion ($35.92 million) posted at the end of December 2011.