BAT Zimbabwe battles inflation, volume dip in challenging operating environment

HARARE – British American Tobacco Zimbabwe (Holdings) Limited (BAT Zimbabwe) has reported a challenging operating environment for the three months ended March 31, 2025, citing high United States Dollar (USD) inflation, liquidity constraints, and ongoing electricity supply disruptions.

In a trading update released by the company, these macroeconomic factors are said to have increased pressure on consumers, leading to a decline in overall market volumes.

“Our operating environment remained dynamic and challenging during the reporting period. The macroeconomic landscape was marked by high United States Dollar (USD) inflation, liquidity constraints and ongoing electricity supply disruptions.

“These factors contributed to increased pressure on consumers, reflected by a decline in overall market volumes,” the Zimbabwe Stock Exchange listed company stated.

Despite these headwinds, BAT Zimbabwe stated it remains optimistic and focused on implementing strategies for long-term value creation.

The company’s financial performance for the quarter reflected the difficult economic conditions. Sales volumes experienced a significant 25% decline compared to the same period in 2024.

This reduction was attributed primarily to inflationary pressures and currency dynamics, which negatively impacted consumer purchasing power and behavior.

Consequently, revenue from cigarette sales decreased by 50%, largely due to the lower sales volumes and a shift from Zimbabwean Dollar (ZWL) forward pricing in the first quarter of 2024 to USD pricing in the first quarter of 2025.

BAT, however, reported an increase of 181% in profit from operations. This improvement was supported by effective cost management strategies that resulted in a 7% reduction in operating costs.

The company also benefited from the absence of foreign currency devaluation losses, which had adversely affected the prior year’s results due to the rapid depreciation of the ZWL. The adoption of the USD as the functional currency has mitigated this risk moving forward.

The company stated its continued focus on maintaining profitability through rigorous cost control and prudent financial management.

In response to the prevailing economic challenges, BAT Zimbabwe outlined several strategic actions undertaken during the period.

These include implementing smart pricing strategies, increasing focus on the value-for-money segment, strengthening route-to-market execution, expanding retail coverage, optimizing the brand portfolio through marketing investments in key brands like Rothmans, and continuing business simplification efforts to enhance operational efficiency and reduce costs.

BAT Zimbabwe also addressed the extension granted by the ZSE for the publication of its 2024 Full Year Financial Statements. The company assured stakeholders of its commitment to delivering the financial statements within the revised timeline and maintaining transparency.

“As previously communicated in the Company’s notice dated 8 April 2025, the Company has been granted an extension by the Zimbabwe Stock Exchange (2SE) to publish the 2024 Full Year Financial Statements on 30 June 2025.

“This extension was necessitated by unforeseen complexities related to financial reporting under the new regulatory and currency environment.

“The extension will allow the Company to ensure the Financial Statements are prepared accurately and in full compliance with all relevant regulatory requirements.

“We remain committed to delivering the Financial Statements within the set timeline and maintaining transparency with all our stakeholders,” the company stated.

Looking ahead, the company stated that its focus is on building a stronger and more sustainable business by enhancing consumer value delivery, improving operational efficiency, and leveraging stakeholder engagements to contribute to a stable regulatory and fiscal environment.