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BAT Kenya has reported a 2 percent increase in profit before tax for the six months ending June 30, 2026, driven by stronger export sales and rising demand for its oral nicotine pouch products despite declining local cigarette sales.
The company recorded a pre-tax profit of KSh4.4 billion, up from KSh4.3 billion during the same period in 2025. Net revenue also grew by 5 percent to KSh12.3 billion, supported by improved export performance and continued growth in sales of oral nicotine pouches introduced in June 2025.
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According to the company, the stronger revenue helped offset weaker domestic cigarette sales, which were affected by reduced consumer spending and inflationary pressures.
Operating costs, however, rose by 7 percent to KSh8.0 billion, mainly due to higher production costs, compliance expenses associated with graphic health warning regulations, and continued investment in its expanding portfolio of smoke-free products.
As a result, operating profit increased slightly by 1 percent to KSh4.3 billion, with efficiency improvements helping to absorb the higher operating expenses.
BAT Kenya Managing Director Sidney Wafula said the company remained resilient despite a difficult operating environment, particularly the continued growth of the illicit cigarette market.
He noted that illicit cigarette trade remains the biggest challenge facing the legitimate tobacco industry, with third-party research estimating it accounted for about 45 percent of Kenya’s cigarette market by the end of 2025.
The company estimates that the illegal trade costs the government about KSh12 billion in lost tax revenue every year while negatively affecting legitimate businesses and their supply chains.
Wafula also attributed the decline in local cigarette sales to reduced consumer purchasing power, adding that higher fuel prices linked to the conflict in the Middle East further affected demand.
He said oral nicotine pouches continue to contribute more to company revenues, while export markets also faced economic and weather-related challenges, although stable exchange rates in key markets helped reduce the impact.
Despite the challenging business environment, BAT Kenya’s board approved an interim dividend of KSh10.00 per share for the financial year ending December 31, 2026.
The company said it will continue investing in smoke-free products through science-based innovation while advocating for evidence-based regulation. It also urged the government to strengthen efforts to combat illicit cigarette trade, saying sustained enforcement is essential to protect tax revenue, legitimate businesses and long-term economic growth.
