BAT Kenya Posts Its 2024 Profit Amid Probe Over Alleged Tax Evasion

BAT Kenya has reported a Ksh4.5 billion net profit for the year ended December 2024, a 19.5% decline compared to the profit posted in 2023.

In a statement shared on Friday, February 21, BAT announced that its total cost of operations increased by 4% to Ksh18.4 billion reflecting the higher cost of doing business, partially offset by benefits from cost-saving initiatives implemented during the period.

At the same time, finance costs rose sharply by 955%, a loss of Ksh 0.8 billion in comparison to an income of Ksh 0.1 billion in 2023. This was driven by exchange losses following c. 20% appreciation of the Kenya shilling against the United States Dollar in Q1 2024.

Profit before tax was 19% lower at Ksh6.5 billion driven by the higher finance costs.

Cash generated from operations increased by 23% to Ksh 10.4 billion reflecting prudent working capital management and proceeds from the sale of modern oral nicotine machinery.

Consequently, the tobacco manufacturer has proposed a final dividend of Ksh45 per share pending approval by shareholders in the upcoming AGM. The dividend payout reflects an increased yield 13% compared to 12% in 2023. 

“The Board of Directors has proposed a final dividend in respect of the year ended 31 December 2024 of KShs 45.00 per share, to be recommended for approval by shareholders at the Annual General Meeting to be held on 25 June 2025,” read part of the announcement by BAT Kenya Company Secretary. 

“The final dividend, when added to the interim dividend already paid, gives a total dividend of KShs 50.00 per share. The dividend, which is subject to withholding tax, will be paid on or about 25 June 2025 to shareholders on the register at the close of business on 23 May 2025.”

Operating environment

The company cited harsh economic environment for its profit drop for the full financial year ended December 2024.

In a statement, it listed unstable operating environment as the greatest challenge it faced in 2024 financial year.

“2024 was a challenging year for the business, largely due to an unstable operating environment. The Company navigated a challenging macro-economic environment across both domestic and export markets.”

In the domestic market, business performance was unfavorably impacted by cost inflation, lower consumer purchasing power driving down trading to lower priced brands, and supply disruption of our modern oral nicotine pouches.

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BAT Kenya leveraged smart pricing, business simplification and brilliant commercial execution to drive revenue growth and partly cushion profitability from this impact.

In addition, the company’s export markets experienced headwinds including forex scarcity, adverse weather, supply chain disruptions and geopolitical tensions, which impacted sales volumes across various markets.

Further, revenues from United States Dollar (USD) denominated export sales were adversely impacted, resulting in foreign exchange losses following the appreciation of Kenya shilling against the United States Dollar.

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BAT Tax Evasion claims

The results come in the wake of an investigation launched by the Kenya Revenue Authority (KRA) following a report that exposed alleged discrepancies in its results. 

The report published by the University of Bath’s Tobacco Control Research Group, in collaboration with The Investigative Desk and Tax Justice Network Africa, highlighted the potential $28 million (approximately Ksh3.62 billion) tax discrepancy involving the cigarette manufacturer for the fiscal years 2017 and 2018.

The Nairobi Securities Exchange-listed cigarette manufacturer British American Tobacco Kenya, however, dismissed the reports of tax evasion.

This follows an analysis conducted by The Investigative Desk and published by the University of Bath’s Tobacco Control Research Group (TCRG) in collaboration with Tax Justice Network Africa, which allegedly uncovered a $93 million (Sh12.1 billion) discrepancy in revenue reported by BAT Kenya for 2017 and 2018.

BAT Kenya’s managing director, Crispin Achola dismissed the claims as “conjecture” and accused the investigative team of misrepresenting the company’s operations.

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