British American Tobacco Kenya (BAT Kenya) has posted a modest increase in its half-year financial results, signaling resilience despite a tough operating environment marked by illicit trade and reduced consumer spending.
BAT Kenya reported a 2% rise in profit before tax for the six months ending June 30, 2026, reaching KSh 4.4 billion, up from KSh 4.3 billion recorded during the same period in 2025. Net revenue also saw a notable 5% increase to KSh 12.3 billion, driven largely by a rebound in export sales and strong uptake of modern oral nicotine pouches introduced in June 2025.
The company noted that while new product categories and exports boosted revenue, domestic cigarette sales declined. This drop was attributed to reduced consumer purchasing power and the continued growth of illicit cigarette trade, which has significantly affected legitimate market players.
Rising Costs and Marginal Profit Growth
Operating costs rose by 7% to KSh 8.0 billion due to:
- Increased raw material and production expenses
- Compliance costs linked to stricter health regulations
- Investments in expanding alternative product lines
Despite these pressures, BAT Kenya managed a slight 1% increase in operating profit to KSh 4.3 billion, supported by efficiency improvements and productivity gains.
According to the company, illicit cigarette consumption accounted for approximately 45% of the local market by the end of 2025. This trend continues to threaten the sustainability of the legal tobacco sector. BAT Kenya estimates that the government loses around KSh 12 billion annually in tax revenue due to illegal trade, which also disrupts legitimate businesses and supply chains.
Managing Director Sidney Wafula highlighted the company’s ability to remain stable despite economic challenges, including inflation and high fuel costs linked to global tensions. He emphasized that the firm’s adaptability has been key in navigating a rapidly changing market landscape.
Dividend Declaration and Future Outlook
The board has approved an interim dividend of KSh 10.00 per share for the financial year ending December 31, 2026, reaffirming its commitment to shareholder value.
Looking ahead, BAT Kenya plans to:
- Expand its portfolio of smoke-free products
- Invest in science-driven innovation
- Advocate for balanced regulation to support harm reduction
The company also urged the government to strengthen enforcement measures against illicit trade to safeguard public revenue and ensure fair competition.
