BATZ Reports Resilient Half-Year Results Despite Tax Hikes and Illicit Trade Surge

British American Tobacco Zambia Plc (BATZ) has posted unaudited results for the six months ended 30 June 2025, reporting a profit after tax of ZMW82.3 million, despite significant headwinds from excise duty increases, currency volatility, and the rapid growth of illicit cigarette trade.

The company recorded gross revenue of ZMW581.2 million, broadly in line with the prior year. Operating profit increased to ZMW133.7 million from ZMW119.8 million, supported by disciplined cost management and strategic pricing initiatives. However, profit after tax slipped 2% from ZMW84.3 million in 2024 to ZMW82.3 million, mainly due to a sharp rise in finance costs following a 14% appreciation of the kwacha against the US dollar in the second quarter.

Financial Highlights

• Gross revenue: ZMW581.2m (2024: ZMW580.5m)
• Operating profit: ZMW133.7m (2024: ZMW119.8m)
• Profit after tax: ZMW82.3m (2024: ZMW84.3m)
• Total tax contribution (Excise Duty, VAT, Corporate Income Tax): ZMW217.2m (down 3%)
• Interim dividend: ZMW0.30 per share (2024: ZMW0.12)

The Board approved an interim dividend of ZMW0.30 per ordinary share, more than double the prior year’s ZMW0.12. This reflects BATZ’s commitment to sustained shareholder returns despite a challenging operating environment.

The company highlighted an increasingly difficult trading climate, shaped by high excise duty increases and the expansion of illicit trade. In January 2025, government introduced a 13% excise duty rise on cigarettes, followed by a steep 66% increase in August. BATZ warned that such measures, without corresponding enforcement, fuel the growth of illicit products, which are estimated to account for around 24% of the Zambian cigarette market.

Illicit trade is not only eroding legitimate industry revenues but is also depriving government of an estimated ZMW500 million annually in lost tax revenue. BATZ emphasised that a stable and predictable tax regime, coupled with nationwide enforcement, is critical to curbing this threat.

Cash generated from operations rose to ZMW115.6 million, compared to ZMW71.1 million in 2024. However, after tax payments and financing outflows, cash and cash equivalents fell to ZMW77.2 million, down from ZMW180.9 million at the start of the year. Total net assets stood at ZMW279.1 million, compared with ZMW324.2 million as at 31 December 2024, reflecting dividend payments during the period.

BATZ reiterated its long-term commitment to navigating Zambia’s regulatory and economic challenges while continuing to generate shareholder value. “Despite the headwinds, including unpredictable tax policy and illicit trade pressures, we remain confident in our ability to deliver strong performance and contribute meaningfully to the economy,” said the company in a statement.

The results and dividend notice were issued in Lusaka on 8 September 2025 and approved by the Lusaka Securities Exchange, the Securities and Exchange Commission of Zambia, and the Board of Directors of BAT Zambia Plc.