LEADING cigarette manufacturer and distributor, British American Tobacco Zimbabwe (Holdings) Ltd, yesterday said it had spent $13,5 billion retrenching its bloated workforce.
Company secretary Sim Munjanganja said the difficult economic environment facing Zimbabwe had caused the retrenchments.
He said as a result of the difficult trading environment and realignment of the overall domestic market, a cost reduction programme had been embarked on.
“After the reporting period some 131 of our employees have been retrenched at a total cost of $13,5 billion,” Munjanganja said. “Long-term this will improve productivity.”
Kennedy Mandivhani leads BAT.
Munjanganja said as a result of the realignment for, the board had decided not to declare an interim dividend.
BAT shares are currently trading at $16 000 on the Zimbabwe Stock Exchange.
The company is capitalised to the tune of $279 billion.
“The situation will be reviewed going forward,” Munjanganja said.
He said although net turnover increased by 503% compared to the first half of 2003, operating profits on a historical cost basis increased by 260% to $31,49 billion.
“The decline in operating margins has resulted mainly from pressure on our cost base as a result of a decline in volume and a revision of our remuneration policy to make it more competitive,” Munjanganja said.
Pre-tax profit at the company rose by 135% to $24,4 billion.
Income attributable to shareholders at $16,98 billion was up by 128% and earnings per share rose by a similar amount to 97 678 cents per share.
Munjanganja said the year began with a major downturn in domestic shipments mainly due to depressed demand and a realignment of the exchange rate following the monetary policy announcement in December.
“Major retailers found themselves overstocked to the extent that they had problems shifting the stock which affected their ability to meet their financial commitments,” he said. “In a bid to protect cash-flow the company strictly enforced its credit terms which resulted in sales declining by 37% over the same period last year.”