Kampala, Uganda | THE INDEPENDENT | Shareholders of British American Tobacco Uganda (BATU) will earn nearly 50% less in dividends for the year ended December 2021 owed to reduced profit.
Financial results released on Feb. 25 shows that the cigarette firm recorded a sharp drop in net profit from Shs 19.9billion in 2020 to Shs 10.2billion last year citing slow economic recovery and increased incidences of trade in illicit cigarettes.
BATU has proposed a dividend payout of Shs 209 per share, equivalent of Shs 10.2billion, nearly 50% less of the Shs407 per share, equivalent of Shs 19.9billion paid last year.
BATU usually pays 100% of its profit as dividends to shareholders owed to the fact that the current anti-tobacco law restricts it from any form of corporate social responsibility or advertising to tame cigarette smoking.
The company saw its gross revenue decline by 42% to Shs 93.8billion driven by reduction in sales volume. This impacted on the excise duty and value added tax, leading to a 41% decline to Shs 48.6billion during the same period under review.
BATU’s cost of operations reduced by 40% to Shs30billion driven by low sales volume and tax management initiatives meant to cushion business profitability.
However, Nicholas Ecimu, the company secretary said BATU’s performance demonstrates its resilience amidst an exceptionally challenging operating environment.
He said 2021 saw a sharp increase in illicit tax-evaded cigarettes following the implementation of anti-tobacco regulation three years ago.
“Illicit trade in tax evaded cigarettes, estimated at 24%…continues to adversely impact legitimate industry revenues and deny the government tax revenues in excess of Shs30billion,” he said.