British American Tobacco Kenya plc has posted a 1% increase in revenue from Sh25.56 billion in 2023 to Sh25.72 billion in 2024, driven by strategic pricing benefits.
However, this growth was partially offset by foreign exchange losses on export sales, reflecting the appreciation of the Kenyan shilling against the US dollar.
The company’s operating profit declined by 9% to Sh7.31 billion, primarily due to cost inflation and lower consumer purchasing power in the domestic market. These factors led to a shift towards lower-priced brands and supply disruptions of modern oral nicotine pouches.
Additionally, the export markets faced challenges such as forex scarcity, adverse weather conditions, supply chain disruptions, and geopolitical tensions, which impacted sales volumes and resulted in foreign exchange losses. On the other hand, finance costs recorded the largest increase, surging from Sh97 million in 2023 to Sh829 million.
This was driven by exchange losses following a 20% appreciation of the Kenyan shilling against the US dollar in the first quarter of 2024. This sharp increase in finance costs contributed to a 19% decline in profit before tax, which stood at Sh6.48 billion.
However, despite these challenges, the company demonstrated prudent financial management, with cash generated from operations increasing by 23% to Sh10.4 billion, reflecting effective working capital management and proceeds from the sale of modern oral nicotine machinery. The company’s total assets also decreased to Sh17.62 billion from Sh18.25 billion in 2023.
Additionally, shareholders’ funds also declined to Sh15.73 billion, primarily due to a reduction in retained earnings and revaluation surplus. The company’s net working capital managed to improve to Sh7.57 billion, indicating stronger liquidity management.
In response to the challenging environment, BAT Kenya has focused on addressing significant issues such as illicit trade in tax-evaded cigarettes, which continues to impact domestic revenues and deprive the government of an estimated Sh1 billion annually. The company has urged the government to intensify enforcement efforts and collaborate with neighbouring countries to combat this issue.
In addition, regulatory uncertainty has led to the suspension of modern oral nicotine pouch sales in the domestic market, prompting the company to dispose of related machinery to protect shareholder value.
The company remains committed to engaging with regulators to establish a sustainable framework for this product category.
Despite these challenges, the company has proposed a final dividend of Sh45.00 per share, bringing the total dividend for the year to Sh50.00 per share. This reflects an increased yield of 13%, indicating the company’s commitment to delivering sustainable shareholder value.
The dividend will be subject to withholding tax and is scheduled for payment on or about 25 June 2025, pending shareholder approval at the Annual General Meeting.
