BAT Uganda Profits Fall by 6% Amid Inflation and Illegal Trade

According to reports from Uganda's Independent, the Managing Director of British American Tobacco (BAT) Uganda, Mathu Kiunjuri, disclosed at the annual shareholders' meeting that despite a 6% rise in total revenue to 99.5 billion Ugandan Shillings (27.24 million US Dollars) due to increased sales, the company experienced a 6% decline in after-tax profits. This was largely due to a 15% year-on-year rise in production costs prompted by Uganda's growing inflation rate, compounded by an increase in illicit trade.

Mathu Kiunjuri stated, "Our sustained investments over 95 years in Uganda demonstrate that our business foundation remains solid. However, the escalating rate of illicit trade in Uganda continues to pose a significant threat to our sustainable growth."

Research data reveals that the incidence of illegal cigarette trade in Uganda surged from 23.8% in December 2021 to 29.4% in December 2022. According to Kiunjuri, the government loses up to 30 billion Ugandan Shillings each year due to the illicit cigarette trade. Reports suggest that Uganda is increasingly becoming a source of illegal cigarettes for regional markets like Kenya.

"Uganda's revenue authority has made significant strides in combating the illicit cigarette trade. The government must redouble its efforts, enhancing multi-stakeholder and cross-border cooperation to ensure effective enforcement of anti-illicit trade regulations," said Kiunjuri.

Data from the Uganda Single Market Association indicates that smuggled cigarettes account for about 27% of all smuggled goods in Uganda, with the Supermatch brand constituting over 90% of the seized cigarettes.

Reference:

[1] Smuggling, inflation stall cigarette industry recovery