BAT Kenya to pump Sh1.4b into local operations

By Standard Reporter

Kenya: BAT Kenya has announced plans to invest Sh1.4 billion in its local operations, as it seeks to position the country as the key source of tobacco for its export markets.

The cigarette manufacturer plans to also reinvest the amount on streamlining its sales network and factory operations in Nairobi and Thika. The move by the firm comes at a time when key markets such as Egypt and South Sudan are undergoing serious political turmoil.

BAT Managing Director Chris Burrel says that the funding of its operations will transform the Kenyan business into a true global trading centre for other markets where political unrest has affected business.

The new investments also follow a decision by the BAT group to consolidate its East Africa leaf operations that led to the migration of Uganda’s leaf processing to Kenya’s Thika Green Leaf Threshing plant.

 “As a result, Thika’s throughput increased by 51 per cent,” Burrel said last week on the sidelines of the BAT Kenyas 62nd Annual General Meeting, where directors announced a final dividend of Sh33.50 per Sh10 ordinary, giving a total divided of Sh37 per share inclusive of the interim dividend already paid.

Farmer performance

He disclosed that leaf production volumes also improved by 26 per cent while the quality index rose by 29 per cent driven by better crop planning and farmer performance.

The firm is also pegging its additional investments on the need to grow its different brands in Kenya “since it grew its market share by 1.6 per cent in 2013, while total domestic volumes grew by 7 per cent.

 According to Burell, the firm achieved another year of strong market share and revenue growth in 2013, posting a gross turnover of Sh31.9 billion and a 15 per cent rise in profit before tax.

“Revenue grew as a result of market share growth of our key domestic brands namely Sportsman and Dunhill. We also benefited from foreign exchange movements, an improved mix and pricing initiatives,” he said.

Burrel also pointed out that the firm would continue re-investing back on its operations that span through its sales team, factory operations, improving export penetration and retaining and attracting the best talent in the market.

“We invested over Sh1 billion in 2013 in the Nairobi manufacturing hub in line with our long term strategy to enhance the capabilities and drive cost competitiveness of the factory,” he said.

BAT’S farmer earnings were slightly over Sh1 billion-an increase of 51 per cent from the previous year.

Business environment

“We noted the Government’s efforts on mitigating illicit trade during the review period and will continue working with them to develop sustainable excise structures to ensure a supportive business environment to meet stakeholder’s expectations.

Contribution to the exchequer in form of Excise, VAT and Corporation taxes reached a record Sh14.5 billion in 2013, an increase of 11 per cent compared to the previous year.” he added.

“We are confident of our ability to continue delivering growth and remain focused and committed to our strategy,” Burrell stated.