BAT Kenya Posts Ksh 12.3 Billion Revenue as Export Growth Cushions Domestic Market Slump

BAT Kenya has reported positive unaudited financial performance for the six months to June 30, 2026, despite increasing challenges posed by the smuggling of cigarettes, inflationary pressures, and lower local sales of cigarettes.

The tobacco manufacturer said a recovery in export sales helped offset declining demand in Kenya’s domestic market.

Net revenue for the company is reported at 5% higher at Ksh 12.3 billion, whereas the cost of running the business increased by 7% to Ksh 8 billion in financial results for the period ended July 25, 2026.

Operating income is up by 1% at Ksh 4.3 billion, while pre-tax profit increased by 2% to Ksh 4.4 billion.

The Board of Directors has recommended an interim dividend of Ksh 10 per share for the financial year ending December 31, 2026.

The company attributed the improved performance to stronger export sales and growing sales of its modern oral nicotine pouch products launched in June 2025.

However, it acknowledged that the operating environment remained difficult due to persistent illicit cigarette trade, constrained consumer spending, inflationary pressures and macroeconomic challenges linked to the ongoing Middle East conflict.

Managing Director Cites Resilience Amid Difficult Trading Environment

Commenting on the results, BAT Kenya Managing Director Sidney Wafula said the company remained resilient despite the difficult business environment.

“Despite a challenging operating environment marked by the continued rise in illicit cigarette trade, the company delivered resilient performance during this period. These results reflect the agility of our business in navigating an increasingly complex and dynamic environment,” Wafula noted.

He noted that illicit cigarette trade continues to pose the greatest threat to the legitimate tobacco industry in Kenya.

“In the domestic market, the growth in illicit cigarette sales estimated at 45% as at the end of 2025, according to third-party research, remains the most significant threat to the sustainability of the legitimate industry and supported value chains. This denies the Government much-needed revenue estimated at Ksh 12 billion annually,” Sydney Wafula stated.

The company also linked weaker cigarette sales to the rising cost of living and elevated fuel prices.

“Consumer disposable income was further constrained by elevated fuel prices associated with the ongoing Middle East conflict, resulting in lower cigarette sales volumes. Modern oral nicotine pouch sales continue to contribute to the Company’s revenue following the launch in June 2025,” Wafula added.

Export Markets Drive Revenue Growth

BAT Kenya said export market recovery played a key role in boosting revenue during the first half of the year.

While some export destinations experienced similar macroeconomic challenges and adverse weather conditions, stable currencies in key markets helped cushion the impact on revenues.

“Our export markets were exposed to similar macroeconomic challenges and adverse weather conditions, while currency stability in key markets helped moderate the impact of adverse macros on revenue,” BAT stated.

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The company explained that operating costs rose mainly because of higher input costs, compliance with graphic health warning regulations and investments to support its multi-category product portfolio.

Nonetheless, productivity improvements and operational efficiencies helped absorb part of the increased costs, allowing operating profit to rise.

Profit before tax also improved due to stronger operating earnings and higher finance income.

Board Resolves to Pay Interim Dividend

The Board resolved to pay an interim dividend of Ksh 10 per share, as part of its dedication to ensuring sustainable shareholder value.

“In line with our continued commitment to deliver sustainable shareholder value, the Board of Directors has approved an interim dividend of KShs 10.00 per share for the year ending 31 December 2026,” the board declared.

BAT Kenya also reiterated its commitment to building a smokeless future through innovation and evidence-based regulation.

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“We remain focused on advancing BAT’s purpose of realising A Better Tomorrow by Building a Smokeless World. This includes accelerating Tobacco Harm Reduction through science-based innovation, alongside continued advocacy for progressive, evidence-based regulation,” BAT said.

The company urged authorities to intensify efforts against illicit cigarette trade, saying coordinated enforcement is necessary to protect government revenue, legitimate businesses and economic growth.

“Whilst effort has been made by relevant Government agencies to address illicit cigarette trade, the continued proliferation highlights the urgent need for decisive, sustained and coordinated action to reverse this trend. We remain committed to supporting efforts aimed at strengthening enforcement to create a more predictable, compliant and sustainable operating environment that safeguards public revenues, legitimate businesses and economic growth,” BAT noted.

BAT Kenya, listed on the Nairobi Securities Exchange since 1969, said it continues to play a significant role in Kenya’s economy through tobacco farming, cigarette manufacturing, exports and employment.

The company exports more than 75% of its output to eight African countries, works with about 2,200 contracted farmers and says it has contributed over Ksh 100 billion in taxes to the national government over the past six years while continuing to invest in sustainability initiatives and community development.

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Photo of British American Tobacco Kenya Premises. PHOTO/The Trading Room