BAT Roots For Enforceable Rules In Tobacco Industry


buy more about geneva;”>Speaking at the 13th Annual General Meeting of BAT Uganda Ltd recently the Managing Director, Jonathan D’Souza, said the Company acknowledges the health risks that come with smoking, and believes that regulation of the industry is necessary, but must be balanced and enforceable.

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Mr D’Souza said: “We endeavor to work closely with industry stakeholders and regulators, sharing information that is required to help policy formulators understand the operating environment and develop appropriate policy and regulatory frameworks.”

He noted that the sector contracted 75,000 local tobacco farmers in 2012, and affects millions of Ugandans in the tobacco value chain. “With $70 million in annual export earnings and Shs 80 billion in annual tax contributions, we believe there are a number of stakeholders who should have input to regulation,” he added.

The Company states that the operating environment remains fluid, especially with the prevalence of unethical competition, both in leaf growing and the cigarette business, where illicit trading continues to depress duty-paid cigarette sales.

“Following the price increase in October 2012, our cigarette sales were impacted by a sharp rise in availability of illicit product – mainly from South Sudan – leading to a 20 percent drop in weekly sales,” said D’Souza.

BAT Managing Director, Jonathan D’Souza with Nagenda

He added: “The size of the illicit cigarette market has increased, and it will take urgent, continuous and regular action by all relevant stakeholders to mitigate this.”

Meanwhile, in 2012, BAT Uganda realized a gross profit of Shs83 billion, compared to Shs82 billion in 2011. Operating profit for the 12 months to 31st December 2012 was Shs30 billion compared to Shs40 billion in 2011, largely reflecting the one-off insurance reimbursement received in the prior year.

In view of the lower profitability in the second half of 2012, BAT Uganda’s directors did not recommend the payment of a final dividend following the interim dividend of Shs141 per share paid in October 2012.

D’Souza said the management is executing plans to ensure the recovery of our cigarette market share, as well as engaging with the Ministry of Trade, Industry & Cooperatives, and other industry players to ensure streamlining of the tobacco growing sector.

“This should see less volatility and an improvement in return from the tobacco growing side of the business. We are also investing in training our field staff and driving to increase the productivity and scale of our farmers, to better their livelihood and reduce our costs & risk profile,” he added.

During the ceremony, BAT Uganda’s directors, paid tribute to the late Dr. James Mulwana, who was the Chairman of the Board between 1997 and 2013.

The late Mulwana was, among other things, remembered for “guiding BAT Uganda’s Board through substantial growth and transformation, from a privately held Company with limited Government investment, into a robust, sustainable and responsible public listed Company.”


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