CTC says cigarette sales down in first quarter

The sales slowed at Sri Lanka’s monopoly cigarette player, Ceylon Tobacco PLC (CTC), during the March quarter (1Q19), as CTC had to jack up the prices of some of its products, as a result of the government hiking the taxes in two instances within a span of nine months.

CTC said that led to a 14.9 percent decline in domestic sales during 1Q19 compared to the same period, last year.

The government increased the excise duty on cigarettes in August 2018 and March 2019, which prompted CTC increase the prices of its products by around 30 percent during the past nine months.

The lower volumes resulted CTC reporting a lower turnover of Rs.34.3 billion for the quarter under review, compared to Rs.35.6 billion reported for the same period, last year.

Total indirect taxes to the government from CTC, excluding the income taxes, also fell to Rs.26 billion during the quarter, from Rs.27.5 billion a year ago.

Despite the decline in the top line, the CTC was able to contain its costs during the period and as a result, the pre-tax profit rose to 6.8 billion, from Rs.6.2 billion a year ago.

The company reported earnings of Rs.21.68 per share or Rs.4.05 billion for the quarter under review, compared to Rs.19.95 per share or Rs.3.75 billion reported for the same quarter, last year.

British American Tobacco Holdings (Sri Lanka) BV holds an 84.13 percent stake in CTC, while the world’s largest cigarette maker Philip Morris has a 8.32 percent stake in CTC, being the second largest shareholder.

The directors recommend a third interim dividend of Rs.15.77 per share for 2018, subject to the approval of the shareholders at the Annual General Meeting to be held shortly.

The directors recommend a first interim dividend of Rs.19 to be paid on June 4, 2019.