BAT Uganda Upbeat Despite Share Price Sinking to New Low

Source from:  By JULIUS BARIGABA Special Correspondent  08/21/2007

The share price of British American Tobacco Uganda last week sank to an all-time low on the Uganda Stock Exchange but company officials remained optimistic that their restructuring efforts would bear fruit. BATU shares traded at Ush320 ($0.18), down Ush50 ($0.03) in less than three weeks and down from Ush505 ($0.3) around this time last year, representing a 36 per cent erosion of the share price in the past 12 months. The company's managing director, Serhat Eroglu , told The EastAfrican he was optimistic that BATU's results will improve this year on the back of higher tobacco leaf export volumes and ongoing cost-cutting measures. "We have cut costs and are increasing production and efficiency," Mr Eroglu said. "We want to export 16 million kilogrammes by December; if we can achieve this volume, our cost will be lower and we will be competitive in the export market." Company secretary Isaac Ampeire conceded that BATU's performance on the stock exchange was always going to remain poor, considering that the company's financials have been in the red over the past three years. "The situation of our financials hasn't changed, but things could change when we announce our half year results," said Mr Ampeire. The company will announce its 2007 half-year results on August 29. Having downsised staff to 128 - down from over 400 last year - and increased farmers under contract from under 30,000 to 47,000, company officials say BATU is on the way to putting out the fire in its house. Even as the company is going through a rough patch on the stock market and dividend fronts, officials say it still enjoys a comfortable place in the market regarding the quality of its product. "In terms of quality, nobody can complain about Ugandan tobacco," Mr Eroglu said. "We only have to keep our costs low and make sure that the product is available. This year we should be back to business." He said all-year-round availability of the processed leaf on the market is one of the strategies BATU will pursue by transforming the former processing plant premises in Jinja into a storage facility that can hold up to 6,000 tonnes of processed high value tobacco, ready for export on demand. BATU has taken a great deal of flak for poor performance results since 2004 and also had to deal with anti-tobacco campaigners in recent times, developments that have slowed its marketing drive and affected its recovery path. The head of research at the Uganda Securities Exchange, Harriet Kiwanuka, said if the company can survive the current anti-tobacco campaign, its fortunes could turn round. Enditem