BAT sees drop in volumes due to Covid-19

Business Reporter
CIGARETTE manufacturer, British American Tobacco (BAT) Zimbabwe, has started exporting cut rags to generate foreign currency for the business amid projections of drop in volume due to the disruptive impact of Covid-19.

In a special trading update for the quarter ended March 31, 2020, the company said the operating environment continued to be challenging, characterised by the lack of foreign currency for imports as well as the widening gap between the interbank rates and parallel market rates.

The business prospects have been further dampened by the outbreak of the global coronavirus, which has also affected Zimbabwe, prompting authorities to implement lockdown measures to curb its spread.

“The business expects a drop in volumes in the second quarter due to trading for a few days in April and reduced operations last month,” it said.

The company said it started cut rags exports in March to assist in foreign currency generation.

BAT, however, said it will continue to monitor the price movements at the auction floors and how these would impact on its operations.

The company noted an improvement in the power supply, which has enabled less usage of generators to power the business operations.

In the quarter under review, the company recorded a 10 percent increase in volumes, compared to the same period last year, driven by various efficiencies from the new trade marketing tools it has adopted.

“Turnover, on a historical cost basis, increased by 703 percent compared to the same period last year driven by price increases, which were taken to manage the inflationary pressures,” it said.

Concerning the economic slowdown as a result of the global and domestic lockdown, which were intensified starting in March, the company said it has put in place measures to ensure that it recovers from the disruption.

This includes implementing all the necessary precautionary measures in terms of the guidelines issued by the Ministry of Health and Child Care and the World Health Organisation to ensure that its employees are adequately protected.

This year’s selling season opened on March 22 and last week the Tobacco Industry and Marketing Board indicated that close to 40 million kilogrammes of the golden leaf had been sold at the auction floors.