AT Uganda has called upon the Government to ramp up efforts to curb illicit trade in cigarettes, which it says is impacting the sustainability of its business. In its 2022 performance results announced today, the Company recorded a 6% revenue growth, to UGX 99.5 billion. Profit after tax dropped by 4% from UGX10.3 billion to UGX9.9 billion, driven by a higher cost of operations which more than offset the increase in revenue. The total cost of operations grew by 15% to UGX34.5 billion in line with higher sales volumes and inflationary increases in input costs net of savings, the company said in a statement.
The company also reported that it had paid UGX56.1 billion in taxes (Excise Duty, VAT, Pay As You Earn (PAYE) and Corporation Tax), an increase of 4% from last year.
Despite the tough environment, the company has declared a dividend per share of UGX209- the same as last year. The proposed dividend is yet to be recommended for approval by the shareholders at the Annual General Meeting to be held on 22 June 2023. The dividend, subject to withholding tax, will be paid on or about 7 July 2023 to shareholders on the register as of the close of business on 23 June 2023.
Resilient amidst escalating prevalence of the illicit trade
Commenting about the results, BAT Uganda’s Managing Director, Mathu Kiunjuri said that while the business remained resilient, the company was concerned about the “escalating prevalence of the illicit trade in tobacco products”.
“Worryingly, by the end of 2022, the illicit trade incidence in illicit tax-evaded cigarettes stood at approximately 29%, up from 24% in 2021 (source: 3rd party research), despite the efforts in place to curb it,” he said.
Irene Mwoyogwona: Beyond the Numbers – How Pride Bank's Award-Winning CFO Combines Profitability and Social Impact“We acknowledge and appreciate efforts by the Government to fight illicit trade, including the seizure of illicit cigarettes by the Uganda Revenue Authority, especially at the border towns in the North and Eastern parts of the country. That notwithstanding and on the back of the worsening situation, we call for enhanced action, including through collaboration with the private sector and enforcement agencies to ensure full implementation of the Tobacco Control Act, 2015, and the Tax Procedure (Tax Stamps) Regulations, 2018, which contain measures to address illicit trade,” added Mr. Kiunjuri.
“We also believe that a stable regulatory environment is crucial for sustainable business and economic growth, and this will support continued investment into our business in Uganda,” he added.
BAT Uganda’s Board Chairman, Hon. Dr. Elly Karuhanga said that the board had in 2022 underpaid various strategic interventions in 2022 to help navigate the challenging operating environment punctuated by the impacts of high inflation rates and the Ebola outbreak.
“These mitigations included effective support to our trade partners, excellence in execution by our people and sustained investment in our brands. As such, BAT Uganda’s business fundamentals remain strong and we continue to make progress on implementing our strategy to build A Better TomorrowTM, with our Health, Environment, Social and Governance (HESG) agenda at the centre of our business,” said Mr, Karuhanga.
“Looking ahead, we reiterate our commitment to our continued contribution to Uganda’s socio-economic development and delivery of sustainable returns for our shareholders. This includes partnerships with over 30,000 Ugandan traders in our value chain and remittance of significant tax revenues to the Government, which increased by 4% to UGX 56.1 billion in 2022.”
