BATU issues largest dividend

May 18, 2015

British American Tobacco Uganda (BATU) will pay out its largest dividend following a 240% jump in after tax profit to sh36.8b on the back of higher leaf and cigarette sales.

By Samuel Sanya

British American Tobacco Uganda (BATU) will pay out its largest dividend following a 240% jump in after tax profit to sh36.8b on the back of higher leaf and cigarette sales.


 Company net revenue increased 27% to sh270b, with tobacco sales accounting for sh205b or 76%.

BATU handed over its leaf business to Alliance One International shedding 300 jobs in the process.

 Paul Sine, the BATU finance director revealed at a media briefing that the company will sell off tobacco leaf worth sh74b still in stores in 2015 as it focuses on cigarette marketing and distribution.

“With the closure of our leaf operations, a source of considerable volatility, risk and overhead cost has been removed,” Elly Karuhanga, the BATU chairman said in a statement.

“We will now focus on the more profitable cigarette business through improving our distribution capabilities, building brand equity and growing value and market share,” he added.

BATU will issue its shareholders with a final dividend of sh748 per share to its 1,304 shareholders in June 2015.

BATU will pay out all its net profit in line with its 100% dividend policy.

Karuhanga cautioned that increasingly stringent regulatory regimes, increased taxation, shilling depreciation and illicit cigarette trade will make 2015 a challenging year.

Dadson Mwaura, the BATU managing director noted that illicit cigarette trade estimated at 15%, erodes government taxes to a tune of sh12b annually. He noted that sections of the Tobacco Control Bill that is before parliament are impractical.

The Tobacco Control Bill has caused significant fiction between the ministries of health, agriculture and trade.  Among other things, the new bill seeks to repeal the Tobacco Act which contains sections that protect farmers from exploitation.

Mwaura argued that a requirement in the bill not to sale cigarettes within a 500 meters radius of a restricted area is not practical in urban areas. “We are not against regulation, but it must be fact based,” he said.
 
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