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BAT expects its business to peak up in the second half.

CIGARETTE manufacturer, BAT Zimbabwe, is planning to improve sales during the second half of the year by increasing its distribution footprint in the country, the company has said.

The company’s performance for the half year to date has been flat as the economic environment shows no sign of improving. BAT, however, expects its business to peak up in the second half.

The company said it was leveraging on the competitiveness of its products after reducing expenses for the year to December 31, 2014 by 50 percent, mainly due to a decline in indigenisation costs.

Managing director, Lovemore Manatsa, said the company had a number of initiatives and strategies that would be implemented during the remainder of the current year.

“The initiatives will assist us in achieving our numbers. They include a Madison consumer and trade promotion which is expected to excite the consumer and traders, thereby boosting volumes,” he said at the company’s Annual General Meeting on Wednesday last week.

One of BAT Zimbabwe’s key strength has been its effective distribution network.

Expenses for the year to December 2014 plummeted from US$24,5 million in 2013 to US$12,1 million, dragged down by a 99 percent decline in the indigenous employee share ownership trust expenses which amounted to US$109 000, against US$10,9 million incurred during the year to December 2013.

Administrative, selling and marketing costs eased by a combined US$12 million in line with the company’s objective to reduce operational costs.

Consequently, the company’s operating profit rose by 82 percent from US$9,8 million to US$17,8 million.

The AGM approved directors fees amounting to US$22 000 and auditors’ fees of US$77 221 for outgoing auditors Pricewaterhouse Coopers. Directors were reappointed while KPMG was appointed as the firm’s new auditors.

Analysts say while tighter regulations and increasing excise duties by government could affect growth for tobacco companies, it was crucial to take into consideration global developments where cost cutting measures within the industry have resulted in tobacco companies improving profitability.

Source : Financial Gazette

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