BAT Kenya has reported a decline in its financial performance for the first half of 2024, with profit after tax dropping by 24.3 per cent year-over-year to Sh2.14 billion, down from Sh2.82 billion in the same period last year.

The company’s factory in Nairobi, dedicated to producing these pouches, has been dormant for nearly five years due to regulatory delays, contributing to a 24 per cent decline in net earnings. In response, BAT Kenya has decided to sell it.

“We continue to engage transparently on a sustainable regulatory framework, to facilitate the resumption of commercial operations on our modern oral nicotine category,” read a statement issued by the company secretary, Waeni Ngea.

Net revenue for BAT Kenya also decreased significantly, falling by 10.7 per cent y/y to Sh11.72 billion. The company attributes this decline to reduced export sales volumes, as well as a shift in the domestic market, where consumers are increasingly downtrading.

Elevated costs

The challenging economic environment has also led to higher finance costs, which have contributed to a 24.3 per cent y/y decline in profit before tax, bringing it to Sh3.05 billion.

These elevated costs, combined with the revenue challenges, have put pressure on the company’s profitability.

Despite these setbacks, BAT Kenya continues to focus on operational efficiencies and compliance with regulatory requirements, particularly in navigating the changing landscape of tobacco and nicotine product regulations.

The company is also exploring new market opportunities and product innovations to mitigate the financial impacts seen in the first half of the year.

The results underscore the broader challenges facing the tobacco industry, including regulatory pressures, shifting consumer preferences, and economic factors that influence market dynamics..