Sri Lanka cigarette sales up 10-pct amid consumption boom
ECONOMYNEXT – Sales in Sri Lanka have picked up 10 percent in the June 2015 quarter from a year earlier amid higher consumption, the island’s cigarette monopoly Ceylon Tobacco Company said as profits rose 20 percent.
Net profits rose 20 percent to 3.0 billion rupees in the quarter, giving earnings of 15.63 rupees per share. In the 6-months to June CTC reported earnings of 29.41 rupees per share on total profits of 5.5 billion rupees, up 21.4 percent from a year earlier.
The stock closed at 915.50 up 15.50 rupees on Tuesday.
CTC, a unit of British American Tobacco, said gross revenues rose 19.8 percent in the June 2014 quarter from a year earlier to 26.952 billion rupees due to a combined 10 percent rise in volumes and a price increase coming with a tax hike in October 2014.
CTC told shareholders than volume increase came from "a higher level of consumer confidence and an increase in disposable income."
In the March 2015 quarter also CTC reported an 11 percent volume gain.
Sri Lanka’s credit growth picked up in the last quarter of 2014 and in January the state gave a steep credit funded salary increase to state workers and other subsidies, driving the recurrent expenditure and the budget deficit up.
Excise taxes rose 21 percent to 20.4 billion rupees in the quarter, with value added tax consolidated into excise this year, under the steady destruction of the value added tax system seen in the country over several years.
CTC said it is now carrying 80 percent pictorial warnings on their packs after a new law was passed by the new administration.
CTC went to court against the then health minister Maithripala Sirisena repeating tactics deployed BAT and other tobacco giants in other countries to prevent greater awareness that smoking causes cancer, erectile dysfunction and heart attacks.
However the former health minister made it part of his campaign for election as President and promptly requested parliament to pass a law to impose 80 percent pictorial health warnings on pack.
Cigarette and military hardware have the rare distinction of being two products that kill when used as directed by the manufacturer. Most other consumer goods cause death when mis-used, over-used.