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Oliver Kazunga Senior Business Reporter
BAT Zimbabwe’s tax contribution to the Government increased by 59 percent to $17,5 billion last year buoyed by solid growth in the profits generated before taxation following price adjustments.
In 2021, the cigarette manufacturer’s tax contribution amounted to $11 billion.
BAT Zimbabwe chairman Mr Lovemore Manatsa said, in a statement accompanying financial results for the year to December 31, 2022, that taxes were drawn from various tax heads including excise duty, corporate tax, value-added tax (VAT), customs duty, pay as you earn (PAYE) and withholding tax.
“BAT Zimbabwe’s contribution to the Zimbabwe Revenue Authority (Zimra) in the year under review, increased from $11 billion in 2021 to $17,5 billion for the year ending 31 December 2022.
“Key contributors of the group’s increased tax payments were excise duty, corporate tax and PAYE, driven by increases in the selling price of our products and profit generated before taxation and rising inflation,” he said.
During the year under review, BAT Zimbabwe recorded 1 054 million sticks compared to 1 130 million sticks in 2021, resulting in negative volume performance for the period.
However, despite increased power shortages and reduced disposable income, the group was able to deliver a strong performance that was only 6,7 percent short of the previous year.
“This volume drop was driven by a shortage of RTGS in the market, which made it difficult for customers to purchase our products.
“Further, the group established that the smart pricing mechanism implemented by the company resulted in higher pricing when compared to competitor trade prices in United States dollars,” said Mr Manatsa.
Separately, he said export volumes of cut-rag tobacco declined by 43 percent during the period under review compared to prior year as a result of decreased export market demand.
In terms of revenue performance, Mr Manatsa said his organisation recorded a 50 percent increase in revenue amounting to $24,3 billion compared to 2021.
This was driven by price reviews and revenue generated from cut-rag tobacco and leaf export sales.
“These two income streams generated a gross profit of $18,3 billion which represents a 74 percent growth when compared to the year prior.
“Profit before tax for the year was finalised at $9 billion which reflects a 20 percent growth compared to the same period in the prior year,” he said.
“However, the revenue growth did not translate into similar growth in profit before tax due to the impact of exchange losses.”
In the outlook, BAT said it remains confident that it is in a good position to navigate erratic economic conditions through the implementation of effective business strategies, the equity of its brands and the workforce.
“The group will continue to deliver growth and value for its shareholders,” said Mr Manatsa.
Online Reporter