British American Tobacco Kenya has doubled its interim dividend payout to shareholders after posting a net profit of Sh2.98 billion for the first half of the year, marking a 39.7 percent increase compared to the same period last year.

The performance was supported by lower operating costs and reduced currency-related expenses, despite flat revenues and a challenging local market.

The board has approved a dividend of Sh10 per share, up from Sh5 last year, bringing the total payout to Sh1 billion. Shareholders listed on the company’s register by the close of business on August 29 will receive the payment on September 26.

This interim dividend follows last year’s final payout of Sh45 per share, bringing the full-year distribution in 2024 to Sh50 per share.

BAT’s net revenue in the first six months of 2025 stood at Sh11.73 billion, nearly unchanged from Sh11.72 billion in the same period last year.

The company noted that reduced consumer purchasing power in the domestic market led to a shift towards cheaper cigarette brands and reduced consumption, affecting overall revenue growth.

However, a 5.5 percent cut in operating expenses to Sh7.5 billion helped offset the sluggish revenue.

This was attributed to lower costs of imported materials, aided by the strengthening of the shilling against the dollar, and ongoing cost-saving initiatives.

“Total cost of operations declined by 6 percent, reflecting prudent cost management, reduced hard currency input costs on account of lower dollar/shilling exchange rates and the benefit of productivity savings initiatives,” BAT said in its financial statement.

Export sales volumes saw a slight rise, despite what the company described as a difficult environment in its overseas markets, where weather disruptions, currency challenges, and geopolitical instability persisted.

“Our export markets faced considerable headwinds, including adverse weather conditions, geopolitical tensions and currency devaluation. Despite these challenges, export sales volumes were marginally higher, reflecting the benefit of favourable geographical mix,” the company noted.

The firm also recorded a finance income of Sh97 million in the half-year period, a significant turnaround from a cost of Sh720 million in the same period last year, thanks to improved exchange rate conditions.

Despite the profit growth, BAT expressed concern over the continued impact of illicit cigarette trade in Kenya. Citing research from a third party, the company said that illicit products now account for 37 percent of the market, resulting in an estimated Sh9 billion loss in tax revenue for the government.

It linked the growth in illegal cigarette trade to weakened consumer incomes, pushing more smokers towards cheaper, unregulated alternatives.

In a key development, BAT confirmed that it resumed selling oral nicotine pouches in June after receiving the necessary regulatory approval from the government.

The product, introduced in 2019 under the Lyft brand, had been pulled from the market a year later after the government declared it should be regulated as a tobacco product.

Although the company sold off the pouch manufacturing machinery at its Nairobi plant last year due to the prolonged marketing ban, it said it will now rely on imports to supply the market following the resumption of sales.