Nairobi, June 3-9, 2003 (Financial Standard) - British American Tobacco Kenya (BAT) is planning to invest Sh500 million in its Industrial Area-based factory in the next financial year, board Chairman, Evanson Mwaniki, has said.
Mwaniki said the firmís strategy is to manufacture a wide range of products, including international brands, for export markets in Eastern, Central and the Horn of Africa.
The money will go into machinery and training to enhance the plantís capacity to cope with increased production.
Speaking during the companyís 51st Annual General Meeting last week, Mwaniki said the BAT management is confident that the economy will record better performance this year.
Last year, he said, total cigarette consumption in the local market declined by seven per cent compared to the previous year.
Due to the adverse economic and challenging market conditions prevailing in 2002 - especially because of the acute price competition in the lower priced market niche-domestic sales volume declined, reducing the market share to 68 per cent.
The cigarette makerís gross turnover of Sh9.4 billion was nine per cent less than that of 2001. However, the companyís underlying profit increased by 18 per cent to Sh1.46 billion. BAT paid Sh4.3 billion in taxes to the Government, making it the second highest taxpayer after Kenya Breweries Limited.
Mwaniki attributed the performance to the prudent price adjustments across its brand portfolio, cost reductions in company overheads, supply chain logistics, restructuring and efficiencies in procurement.
During the period, Mwaniki said, an additional 1.8 billion sticks will be moved into the local market.
Currently, the companyís Burrus & Sons brand is being exported to Somaliland. Other brands will follow in the second half of the year, he said.
The firm called on the Government to review the current excise tax system to curb tax evasion. Mwaniki said lack of a level playing field due to the prevalence of "unethical competition" was a major threat to tobacco manufacturing in the country.