CTC Septem­ber net down over lower vol­umes

„Levies to govt. slightly down to Rs.30bn „Vol­umes in first 9 months down 28.7%

Daily Mirror (Sri Lanka) - - BUSINESS NEWS -

Cey­lon To­bacco Com­pany PLC (CTC), a unit of Bri­tish Amer­i­can To­bacco, saw its Septem­ber quar­ter (3Q17) per­for­mance af­fected by lower vol­umes due to higher prices of cig­a­rettes fol­low­ing an ex­cise duty in­crease in fourth quar­ter, last year.

The net profit for the quar­ter un­der con­sid­er­a­tion fell to Rs.3.9 bil­lion from Rs.4.4 bil­lion in the same quar­ter last year on rev­enue of Rs.36.2 bil­lion, down from Rs.39.4 bil­lion a year ago.

The com­pany’s earn­ings per share, which holds a vir­tual mo­nop­oly on man­u­fac­tur­ing and dis­tribut­ing of cig­a­rettes in Sri Lanka, fell to Rs.21.02 from Rs.23.87. MORE ON P4

The gov­ern­ment levies paid by the com­pany by way of ex­cise duty and Value-added Tax (VAT) fell slightly to Rs.30 bil­lion from Rs.30.2 bil­lion.

How­ever, for the nine months ended Septem­ber 30, 2017, the to­tal levies paid stood at Rs.79.9 bil­lion up from Rs.74.9 bil­lion paid in the cor­re­spond­ing pe­riod, last year.

The com­pany said the vol­umes for the first nine months of the year fell 28.7 per­cent from a year ago as a re­sult of the “le­gal mar­ket con­tract­ing due to the per­sis­tent pres­sure on the dis­pos­able in­come of con­sumers fol­low­ing the ex­cise in­crease and in­tro­duc­tion of VAT in the 4th quar­ter of 2016.”

Ac­cord­ing to CTC, unau­tho­rized and il­licit to­bacco prod­ucts con­tin­ued to in­crease with over 2000 raids be­ing car­ried out by law en­force­ment au­thor­i­ties dur­ing the year so far, re­sult­ing in the de­tec­tion and seizure of over 40 mil­lion il­licit cig­a­rettes.

The com­pany said the ap­prox­i­mate il­licit cig­a­rette mar­ket is es­ti­mated to be over 360 mil­lion.\

“This is driven by the gap be­tween the price of le­gal and il­licit prod­ucts avail­able in the mar­ket as well as cur­rent macroe­co­nomic fac­tors that are im­pact­ing con­sumer spend­ing power,” CTC said.

Adding to the woes of CTC is a boom­ing but un­der-reg­u­lated ‘Beedi’ in­dus­try, which of­fers an ex­tremely cheap al­ter­na­tive to cig­a­rettes.

Mean­while, CTC said to cap­ture some of the lost mar­kets and ad­dress con­sumer af­ford­abil­ity it launched mid-length seg­ment in the first week of Oc­to­ber, this year. As a re­sult other op­er­at­ing in­come dur­ing the quar­ter rose 43 per­cent com­pared to the same pe­riod last year.

The di­rec­tors rec­om­mend a first in­terim div­i­dend of Rs.17.50 per share to be paid by De­cem­ber 4, 2017.

Bri­tish Amer­i­can To­bacco Hold­ings (Sri Lanka) BV holds 84.13 per­cent of the is­sued shares of CTC.

Newspapers in English

Newspapers from Sri Lanka

© PressReader. All rights reserved.