BAT LTD KENYA'S ROLLED UP SLEEVES

The times are tough too in Kenya and domestic spending is down so British American Tobacco (BAT) Ltd did the only wise thing to do:Rolled up its sleeves to be atop the situation.

 It is working, but not well enough says the half year figures to June released this week.

Naturally, gross revenue was hit and so down by 9.63% to Kes 17,142m but excise duty and VAT so directly related to products sold refused to go that fast thus complicating issues. The total cost of this dropped by only 6.65% to Kes 8004m.

This meant that net revenue declinef by higher 12.5% to Kes 9138. It was from this potential dive that rolled up sleeves came to the rescue

In view of it, total overhead decreased in double digit and ahead of net income drop. It went down by 15.4% to Kes 6135m leading to only 4.30% decrease in operating profit to Kes 3003m.

Unfortunately, rolled up sleeved could impact on controllable costs and finance charges, once the loans have been taken, are not that controllable. Hence as finance cost rose in multiples from   Kes 70m previously to Kes 210m, the final profit before tax came to Kes 2793, down 8.96%.

However, even that level, BAT reaped from its rolled up sleeves: Profit margin by June was 16.3% slightly higher than 16.2% previously.

There will be no harm though if BAT finds a way to reduce finance charges. Indeed, with working capital closing slightly down at Kes 793m, it is becoming more or less imperative.

BRITISH AMERICAN TOBACCO KENYA.
                          Kes M Half year
                                   2017          2016
Gross revenue.    17,142.     18,968
Duty etc.                 8,004.        8,578
Net revenue.          9,138.      10,394
Overhead.              6,135.         7,256
Operating


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