British American Tobacco (BAT) Zimbabwe says it relied on cost-containment initiatives and strategic pricing adjustments during the first quarter ended 31 March 2026 to cushion the business against rising operating costs and protect profitability.
The cigarette manufacturer reported a 29 percent decline in operating costs during the period, helping offset higher input costs and enabling the company to remain profitable despite a difficult trading environment influenced by global commodity price volatility.
In its latest trading update, BAT Zimbabwe chairman Lovemore Manatsa said maintaining strict cost discipline remained critical to preserving margins.
“These measures will remain central to protecting margins in an environment characterised by geopolitical tensions and energy-related pressures,” said Manatsa.
The group’s first-quarter profit remained steady at $2,7 million, supported in part by stable performance from the New Categories and Tobacco Operations segment.
Despite the reduction in operating expenses, the group continued to face pressure from rising production costs. Cost of sales increased by 20 percent during the quarter as inflation pushed up the cost of imported materials, while manufacturing and logistics expenses also climbed.
To improve efficiency and strengthen operational resilience, the company continued investing in automation and supply chain enhancements.
“These initiatives will be scaled further throughout the year to reinforce operational agility and support sustainable performance,” Manatsa said.
BAT also expanded its route-to-consumer network and strengthened partnerships with distributors during the quarter, a move that improved product availability and market reach.
The company, however, warned that the proliferation of illicit and smuggled cigarettes remains a significant challenge for both BAT and the wider tobacco industry.
Industry growth, BAT said, will depend in part on continued efforts by authorities to curb the illegal cigarette trade.
Looking ahead, the group expects the prevailing macroeconomic stability, supported by policy consistency and regulatory reforms, to create favourable conditions for business growth.
“The company remains confident in the resilience of its business model, and the opportunities arising from Zimbabwe’s evolving operating environment,” said Manatsa.
He added that BAT would continue focusing on innovation, sustainability and inclusive development as it navigates market uncertainties and pursues long-term value creation.