BAT increases its production by 60%

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BAT Zimbabwe Ltd is currently operating at 60% capacity after the group experienced a volume downturn since the beginning of the year, a company official said.

Staff Writer

BAT MD Lovemore Manatsa told shareholders at an annual general meeting on Tuesday, the market for cigarettes was now tight owing to liquidity challenges with consumers generally having slowed down on non-basic goods.

Volumes fell 16% following an increase in excise duty by the Finance ministry last year. Duty on cigarettes went up from US$10 per 1 000 sticks to US$15. The changes came into effect on December 1 last year, prompting the cigarette maker to effect a 50% price increase.

The group was targeting 700 million sticks at half year against an installed capacity of 2 billion sticks.

He said the southern and eastern regions were not performing well with Mutare being the hardest hit.

Manatsa was however, hopeful his compay would have a good outturn for 2013, which is expected to show a slight increase in performance. “We are in line with the budgeted year-end performance,” he said.

The company said it would continue to promote sales growth across all their products after its net turnover increased by 30% to US$51,8 million from US$39,7 million for the year to December 2012.

Management said cigarettes sales continued to be a major driver of national volumes with the Madison brand contributing 68% as a result of improved marketing and distribution.

BAT has already partially complied with indigenisation regulations after it surrendered a 10% stake to an employee share ownership trust (ESOT).

The company also relinquished 10,74% into a tobacco empowerment trust targeting young indigenous farmers.

Chairperson, Kennedy Mandevhani, said the group was now working towards compliance for the second year, which would see an additional 10% being indigenised.

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