BAT Kenya posts Sh7.7b full-year profit

BAT Kenya Plc Board of Directors Chairperson Rita Kavashe and Managing Director Crispin Achola during the launch of the 2023 BATK Sustainability Report held at BATK's headquarters in Nairobi. [File, Standard]

BAT Kenya has announced an 18 per cent increase in profit before tax for the year ending December 31 2025.

This is despite recording a decline in its revenue, mainly due to the increasing penetration of illicit cigarettes in the domestic market.

During the period under review, profit before tax rose to Sh7.7 billion, up from Sh6.5 billion recorded in 2024. BAT said this growth was largely supported by effective cost management, lower operating expenses and improved finance income during the period. The board proposed a total dividend payout of Sh70 per share, subject to shareholder approval at the Annual General Meeting scheduled for June 12.

BAT Kenya Managing Director Crispin Achola said the domestic market continues to be adversely impacted by illicit trade, with illegal cigarettes now taking up to 45 per cent of the domestic market, an increase from 37 per cent in 2024.

As a result of illegal trade, the company’s net revenue declined by 10 per cent to Sh23.2 billion from Sh25.7 billion the previous year. Achola said illicit activities not only undermine the industry revenues but also deny the government tax revenue of about Sh12 billion annually.

“Revenue was supported by stable export sales, which represent approximately half of the company’s revenue, and the resumption of sales of our oral nicotine pouches in the second half of the year,” Achola said.

Also, the total cost of operations fell by 15 per cent to Sh15.7 billion, reflecting lower sales volumes, productivity improvements and cost-control measures implemented during the year.

The company said these initiatives helped offset inflationary pressures and cushion its profits. During the year, BAT Kenya recorded finance income of Sh200 million, compared to an exchange loss of Sh800 million in the previous year. This improvement was attributed to the stability of the Kenyan shilling against the US dollar and prudent cash management.

The company called for stronger enforcement measures to combat illicit trade, including enhanced border controls, stricter penalties and improved inter-agency collaboration.