BAT Kenya grew net revenue and profit in the first half of 2026, even as illicit cigarettes continued to eat into its home market.
Revenue climbs on exports and nicotine pouches
British American Tobacco Kenya reported net revenue of KES 12.3 billion for the six months to June 2026, up 4.6% from the same period last year. Export sales and a rebound in modern oral nicotine pouch sales drove the gain, offsetting weaker volumes and consumer downtrading at home. Gross revenue, which includes excise duty and VAT collected on the government’s behalf, rose 2.6% to KES 19.0 billion.
Operating costs rose faster than revenue. Total cost of operations climbed 7% to KES 8.0 billion, a jump the company linked to higher input costs and the expense of complying with graphic health warning rules, alongside continued investment across its product range. Even so, operating profit edged up 0.8% to KES 4.3 billion, helped by productivity savings that absorbed some of the cost pressure.
Profit before tax rose 1.7% to KES 4.4 billion, lifted by that operating profit growth and a rise in finance income to KES 136 million from KES 97 million a year earlier. After tax, profit reached KES 3.1 billion, up 3.1%, pushing earnings per share to KES 30.75 from KES 29.83.
Illicit trade keeps squeezing the legal market
BAT Kenya’s biggest headwind remains a market it cannot tax or track. Citing third party research, the company estimates illicit cigarettes made up 45% of the domestic market in 2025, up sharply from 37% the year before. That shift costs the Kenyan government roughly KES 12 billion in lost revenue annually, according to the company, and it has pushed BAT to rely more heavily on exports and newer product categories just to keep net revenue growing.
Weaker consumer spending compounded the problem. Fuel prices rose amid the ongoing Middle East conflict, squeezing household budgets and nudging price sensitive smokers toward cheaper, untaxed alternatives. Export markets faced similar macroeconomic pressure, though currency stability in key markets softened the blow.
Cash flow tightens as dividend holds steady
Cash generated from operations fell to KES 3.4 billion from KES 3.6 billion, and net cash from operating activities dropped to KES 2.1 billion from KES 2.7 billion, partly reflecting higher tax payments. Financing activities used KES 6.0 billion in cash, well above the KES 4.0 billion spent a year earlier, largely due to a KES 6 billion dividend payout during the period. As a result, cash and cash equivalents closed the half at KES 2.2 billion, down from KES 4.1 billion.
Shareholders’ funds fell to KES 12.6 billion from KES 15.5 billion at the start of the year, tracking the dividend payment and a smaller addition from retained earnings. Despite the tighter balance sheet, the board approved an interim dividend of KES 10 per share, unchanged from 2025, payable around 25 September 2026 to shareholders on the register at the close of business on 28 August 2026.
BAT Kenya H1 2026 results (KES, year on year)
| Metric | Change | H1 2026 |
|---|---|---|
| Gross revenue | +2.6% | 19.0 billion |
| Excise duty and VAT | -1.0% | 6.7 billion |
| Net revenue | +4.6% | 12.3 billion |
| Operating profit | +0.8% | 4.3 billion |
| Profit before tax | +1.7% | 4.4 billion |
| Profit after tax | +3.1% | 3.1 billion |
| Earnings per share | +3.1% | KES 30.75 |
| Cash from operations | -5.9% | 3.4 billion |
| Interim dividend per share | flat | KES 10 (2025: KES 10) |
What comes next
BAT Kenya says it will keep leaning on exports and its smokeless product line, including the recently relaunched oral nicotine pouches, to offset the drag from illicit trade at home. Management has also renewed calls for tougher enforcement against untaxed cigarettes, arguing that government efforts so far have not matched the scale of the problem. Until that enforcement gap closes, the company’s growth story will likely keep depending more on what it sells abroad than on what it sells at home.
