British American Tobacco Uganda (BATU) held their 13th Annual General Meeting with little to celebrate as 2012 profits and dividends suffered under an influx of illicit cigarettes and improper tobacco leaf trading that affected revenues.The company’s after tax profit fell to sh12b at the end of 201
By Samuel Sanya
British American Tobacco Uganda (BATU) held their 13th Annual General Meeting with little to celebrate as 2012 profits and dividends suffered under an influx of illicit cigarettes and improper tobacco leaf trading that affected revenues.
The company’s after tax profit fell to sh12b at the end of 2012, 45% lower than the sh22b level recorded the year before. Shareholders received an interim dividend of sh141 per share, down from sh309 per share the previous year.
“The outlook was bright for the first half of the year 2012. However, that changed during the harvest period starting in June when farmers whose crop we had sponsored sold to other competitors,” said Jonathan D’Souza, the BATU boss.
“Players must abide by the rules. If not, the law should take its course,” he added.
D’Souza made the comments at the Kampala Sheraton Hotel at the sidelines of the meeting. The drop in profits has increased liquidity on the BATU counter, with outstanding offers growing to 3,092 at 2,265 per share by close of business on Tuesday.
BATU has over 1,396 shareholders on the Uganda Securities Exchange holding just 2.1% of the company’s stock. Some 20 shareholders hold the remaining 97.9% of the company’s stock, making the counter very illiquid and its shares very valuable.
Paul Claude Sine, the BATU finance director, noted that a share split would be expensive as the company battles to provide higher returns this year.
The company exported 10.8 million kilogrammes of packed leaf in 2012, 10% higher than 2011, but is still holding significant 2011 crop, which has a lower flavour and global demand.
A 13% increase in excise duty further reduced sales. Illicit cigarette from South Sudan at 30% shrunk corresponding government taxes by sh150b every week with falling sales, according to D’Souza.
Stanbic Bank continues to dominate trade at its sh30 per share price. The counter had the highest turnover at sh82m from the sale of 2.7million shares.
Huge outstanding bids for 20.6 million shares against a smaller 9.2 million outstanding offers are likely to see prices rise as demand continues to outstrip supply.
The All-Share Index dropped to sh1707, from sh1.716, largely due to the cross listed counters. The Local Share Index appreciated marginally to sh250.79, from sh250.26 as total turnover capped at sh133m ($51,687).
Quarterly trading reports indicate that turnover hit sh19b for the three months leading to March 2013, largely due to Umeme contributing 77% of the total. The Umeme share price has appreciated to sh340 per share from sh315 at the start of the month.
BATU dividend drops 67% due to illicit cigarette trade