* Excise duty changes resulted in price revision
* Plans to expand to South Sudan to boost growth
By Beatrice Gachenge
NAIROBI, July 8 British American Tobacco Kenya
expects a slowdown in volume growth in the second half
of the year with a rise in excise duty and plans to enter South
Sudan to lift growth, its head said on Friday.
BAT Kenya posted a 14.2 percent rise in pretax profit for
the first six months of the year to 1.6 billion shillings
($17.83 million) from 1.4 billion shillings, buoyed by higher
Gary Fagan area director for BAT East and Central Africa,
said the firm planned to enter South Sudan -- due to declare
independence on Saturday -- in the second half of this year.
"The potential is huge ... but obviously there are a lot of
practices that are being embedded in that market that we are
going to spend time working (on) with the authorities in South
Sudan," Fagan told Reuters after an investor briefing.
"We would like to find a way to work with somebody in South
Sudan who has a distribution network set up; it's far too early
to look at acquisitions."
Kenya, East Africa's leading economy, changed its taxation
model for cigarettes and now has a 35 percent excise duty on the
retail price per pack, or 24 shillings, whichever is higher, on
all cigarette brands.
Previously, the excise duty varied according to price.
"We have rectified their (some brands) pricing, so in effect
... in certain cases there will (be an) impact on the consumer,"
Fagan told the investor briefing.
"We cannot expect to maintain the 20 percent volume growth
with the price movement that is now aligned to the excise
BAT, which exports to Horn of Africa, Zambia, Madagascar,
and Tanzania, among others, also saw an increase in excise duty
in Uganda and Malawi, but expects duties to hold in Mauritius
A weak local shilling boosted the firm's export
earnings, but rising inflation and drought prevailing in the
region posed a challenge, BAT said.
($1=89.75 Kenyan Shilling)
(Reporting by Beatrice Gachenge; Editing by George Obulutsa)
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