BAT Kenya has announced a decline in its financial performance for the first half of 2024, with profit after tax falling by 24.3 percent year-over-year to Sh2.14 billion, down from Sh2.82 billion during the same period last year.
The company’s Nairobi factory, which produces these pouches, has been inactive for nearly five years due to regulatory delays, which has contributed to a 24 percent drop in net earnings. In light of this situation, BAT Kenya has made the decision to sell the factory.
“We continue to engage transparently on a sustainable regulatory framework, to facilitate the resumption of commercial operations on our modern oral nicotine category,” read a statement issued by the company secretary, Waeni Ngea.
BAT Kenya reported a significant decline in net revenue, which dropped by 10.7 percent year-over-year to Sh11.72 billion. The company attributes this downturn to decreased export sales volumes and a shift in the domestic market, where consumers are increasingly opting for lower-priced alternatives.
Additionally, the challenging economic environment has led to higher finance costs, resulting in a 24.3 percent year-over-year decline in profit before tax, bringing it down to Sh3.05 billion. These elevated costs, combined with revenue challenges, have placed pressure on the company’s profitability.
Despite these difficulties, BAT Kenya remains committed to enhancing operational efficiencies and complying with regulatory requirements as it navigates the evolving landscape of tobacco and nicotine product regulations. The company is also seeking new market opportunities and product innovations to offset the financial impacts experienced in the first half of the year.
These results highlight the broader challenges facing the tobacco industry, including regulatory pressures, changing consumer preferences, and economic factors that affect market dynamics.
