British American Tobacco Kenya posted a sharp rise in full-year earnings on Thursday, reporting 18 per cent increase in pre-tax profit to Sh7.7 billion for the year ended December 31, 2025, even as revenues declined by 9.8 per cent.
The company reported a pre-tax profit of Sh6.5 billion a year earlier.
Net revenue fell 10 per cent to Sh23.2 billion, from Sh25.7 billion a year earlier, as the surge in smuggled and counterfeit cigarettes continued to eat into legitimate sales volumes in the domestic market.
The company said illicit trade now accounts for 45 per cent of the Kenyan cigarette market, up from 37 per cent in 2024.
Export sales, which now account for nearly half of the company revenues, were stable providing a vital cushion against weakness in the domestic market.
Cost of operations fell 15 per cent to Sh15.7 billion, outpacing revenue decline thereby widening margins.
A sharp turnaround in the finance line, from Sh829 million foreign exchange loss in 2024 to Sh196 million in net finance income in 2025, added more than Sh1 billion to pre-tax profit.
Operating profit rose slightly by 2 per cent to Sh7.5 billion, indicating that much of the headline earnings growth was boosted by currency gains.
The Nairobi-listed tobacco manufacturer delivered solid net profit growth, with profit after tax rising 17 per cent to Sh5.3 billion from Sh4.5 billion a year earlier. Earnings per share increased to Sh52.46, up from Sh44.83.
Cash generation remained robust, with cash from operating activities of Sh6.6 billion and a closing cash position of Sh6.2 billion, up 15 per cent from Sh5.4 billion at the end of 2024.
The board proposed a final dividend of Sh60 per share to shareholders on the company’s register at the close of business on May 8, 2026, payable on June 12, 2026, subject to approval at the Annual General Meeting on June 12, 2026.
Combined with the Sh10 per share interim dividend paid earlier, the total payout for the year amounts to Sh70 per share, a 40 per cent increase from the Sh50 per share distributed in 2024.
Commenting on the performance, BAT Kenya Managing Director, Crispin Achola said:
“Despite elevated levels of illicit cigarettes in the domestic market, the company delivered strong underlying performance. Revenue was supported by stable export sales – representing approximately half of the Company’s revenue – and the resumption of sales of our oral nicotine pouches in the second half of the year.”
”Profitability was positively impacted by currency stability and proactive cost management initiatives that more than offset inflationary pressures”
The company highlighted the relaunch of its oral nicotine pouches in the second half of the year as part of a broader shift toward reduced-risk products aligned with the parent group’s global smokeless strategy.
With nearly one in every two cigarettes smoked in Kenya now estimated to be illicit, BAT Kenya warned that the illicit trade was not only eroding its own revenues but also costing the Kenyan government of an estimated Sh12 billion in annual excise and tax revenues.
BAT Kenya Managing Director, Crispin Achola said:
“In Kenya, the domestic market continues to be adversely impacted illicit trade. Illicit cigarette prevalence now represents 45% of the domestic market, a drastic increase from 37% in 2024 (according to third-party research). This illicit activity not only undermines industry revenues but also deprives Government of an estimated Sh12 billion annually.”
The company made an explicit call on authorities for stronger border controls, enhanced market surveillance, and stricter penalties for offenders.
“The scale and acceleration of this challenge requires urgent, coordinated and sustained enforcement action including stronger border controls, enhanced market surveillance, stricter penalties for offenders, and improved inter-agency collaboration.”
