BAT To Pay Shareholders Ksh 45 Per Share After Results

British American Tobacco Kenya Plc (BAT Kenya) has reported a significant 19.5% year-on-year (y/y) decline in profit after tax for the financial year ended 31st December 2024, posting net earnings of KES 4.5 billion.

The dip in profitability was primarily attributed to escalating operating costs and adverse movements in net finance costs, which shifted from a net finance income position of KES 97.0 million in FY23 to a substantial net finance cost of KES 829.0 million in FY24.

Rising Costs Weigh Down Profitability

In the period under review, BAT Kenya saw its operating costs rise by 4.4% y/y to KES 18.4 billion. This increase put downward pressure on operating profits, which consequently fell by 7.7% compared to the previous year. The rising costs were driven by inflationary pressures, increased raw material costs, and operational expenses linked to regulatory compliance and production adjustments.

Adding to the company’s financial strain was a significant deterioration in finance costs, which surged to KES 829.0 million in FY24. The sharp increase, largely attributed to unfavorable foreign exchange movements and higher interest expenses, negatively impacted the company’s bottom line. The net finance cost position played a major role in dragging down pre-tax earnings to KES 6.5 billion, marking a 19.2% y/y decline.

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Impact on Shareholders and Dividend Payout

With a tax charge of KES 2.0 billion for the year, BAT Kenya’s net earnings settled at KES 4.5 billion, translating to an earnings per share (EPS) of KES 44.83, a drop from the previous year’s figures. Despite the decline in profitability, the company remains committed to delivering value to its shareholders. In line with this, the board of directors has recommended a final dividend payout of KES 45.00 per share.

The proposed dividend is scheduled to be paid on or about 25th June 2025 to shareholders whose names appear on the company’s register at the close of business on 23rd May 2025. At the current stock price, BAT Kenya’s dividend yield stands at an impressive 13.46%, reinforcing its status as a high-yield stock in the market.

Navigating a Challenging Operating Environment

The decline in BAT Kenya’s profitability highlights the challenging business environment that the company is operating in. Persistent currency depreciation, rising inflation, and increased taxation on tobacco products have exerted significant pressure on margins. Additionally, stringent regulatory policies on tobacco manufacturing and distribution continue to pose challenges for the company’s revenue growth.

Looking ahead, BAT Kenya is expected to navigate these challenges through strategic cost management, operational efficiencies, and potential product diversification. The company remains focused on maintaining a balance between shareholder returns and long-term sustainability in a highly regulated industry. However, continued volatility in forex markets and the rising cost of doing business will be key factors influencing its financial performance in the coming year.

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