BAT Uganda Posts Gross Revenue of UGX162Bn in its 2020 Performance Report

BAT Uganda today announced its full year results for the year ended December 31st, 2020 —posting gross
revenue of UGX162 billion, profit before tax of UGX29 billion and contributions to government tax revenue
of UGX91 billion.

While commenting on the results, BAT Uganda’s Managing Director, Kirunda Magoola said, the company’s business continues to show resilience despite the difficult operating environment, largely resulting from the ongoing pandemic, which had adverse effects on the economy and the trading environment. Adding that, “To facilitate business continuity and build resilience, we continue to focus on ensuring employee health and safety and contributing to national dialogue on stability and predictability in the regulatory environment, which will support economic recovery.”

Also commenting on the results, BAT Uganda Chairman, Hon. Dr. Elly Karuhanga said: “The resilient performance of our business reflects our commitment to build a sustainable business that contributes to Uganda’s economic growth and deliver a better tomorrow for our stakeholders.” Adding that, as the economy struggles to get back on its feet following the devastating impacts of the pandemic, it will be prudent for the government to consider a sustainable and predictable tax regime, to curb the growing illicit problem that continues to cause disruptions to the legitimate tobacco trade.

This multi-pronged focus underpinned the delivery of strong financial results for the full year 2020. Profit before tax increased by 30% driven by growth in profit from operations and higher net finance income. Gross revenue however reduced by 1% due to lower sales volumes, reflecting the impact of the pandemic. Net revenue increased by 5% to UGX79 billion primarily driven by an improved product mix on the back of lower sales volumes and cost saving initiatives undertaken to cushion the business from adverse impact of the pandemic.

The company’s total cost of operations reduced by 5% to UGX50 billion.

Reflective of the COVID-19 impact and importantly, an increase in the incidence of illicit trade in cigarettes, the company’s contribution to government revenues reduced by 5%. “This is a significant change compared to the 6.1% increase recorded in 2019 and clearly illustrates the impact of tax-evaded cigarettes to industry and Government revenues,” said Magoola.

Estimates show that the government loses approximately UGX30 billion in revenue annually, according to Trade Monitor Q4 2020.

Towards the end of 2020, BAT commissioned third-party research which found that 17.4% of cigarettes sold in the Ugandan market were illicit. Further, about 44% of illicit cigarettes sold in Uganda are smuggled across the border; primarily tax-evaded cigarettes from Kenya.

“To address this problem, we believe that a multi-pronged approach would be most effective, including enhanced factory, border and supply chain control processes. To facilitate this and augment the benefits of URA’s digital tracking system, we call upon the Government to urgently ratify the World Health Organization,” Magoola emphasized.

Protocol to Eliminate Illicit Trade in Tobacco Products. As part of our commitment to Uganda, we will continue to devote resources and engage with the relevant stakeholders to address illicit trade and facilitate a wholly legitimate cigarette market.”