Uganda’s cigarette seller British American Tobacco Uganda (Batu) Ltd net profits for the six months period to June 30 declined by 50 percent over a sharp reduced cigarette sales impacted by illicit cigarettes on Uganda market and disruptions by Covid-19.
The Uganda Securities Exchange listed tobacco company reported a net profit of Ush3.4 billion ($965,714) for the half-year to June 30, 2021, a decline from Ush6.8 billion for the six months period to June 30, 2020.
“The Covid-19 pandemic continued to adversely impact the business due to restrictions and the general decline of consumer disposable incomes,” says the company Secretary Nicholas Ecimu.
The Batu’s revenues were also impacted by the continued illicit cigarettes on Uganda market. Thus, URA did not collect as much tax from Batu during the period under review.
“Trade in tax evaded cigarettes estimated at 28 percent continues to negatively impact industry revenues and deny government Ush38 billion ($10.7 million) in revenue annually,” Ecimu said, quoting Trade Monitor Quarter 2 2021.
Gross revenue reduced by 41 percent to Ush45.2 billion, driven by a decline in sales volume, compared with Ush75.9 billion in the same period last year.
Total cost of operations reduced by 37 per cent to Ush16.9 billion, driven by lower sales volume and cost management initiatives undertaken to cushion business profitability.
In order to protect Batu earnings which have come under pressure, market watchers advice URA to step up its anti-dumping efforts, a move could also help boost domestic revenue collections from the tobacco industry