Sri Lanka tobacco monopoly profits fall as sales drop
EconomyNext – Sri Lanka’s cigarette monopoly, Ceylon Tobacco Company, said December 2014 quarter net profit fell 21 percent to 1,988 million rupees from a year ago as sales fell 7.3 percent to 23.7 billion rupees.
A stock exchange filing said earnings per share for the December quarter fell to 10.61 rupees from 13.46 rupees previously.
EPS for the 2014 financial year ending 31 December 2014 were 46.01 rupees (48.80 rupees in 2013) as net profit fell 5.7 percent to 8.6 billion rupees from the year before with sales down 1.7 percent to 87.9 billion rupees.
Dividends paid by CTC, a unit of British American Tobacco Holdings (Sri Lanka) BV, rose to nine billion rupees in 2014 from 8.6 billion rupees in 2013.
Ceylon Tobacco Company said it paid 73.6 billion rupees in taxes to the government during 2014, down four percent from 2013, mainly driven by a contraction of the domestic market by 11 percent.
CTC said demand for its cigarette brands had been reduced by growing sales of ‘Beedi’ a cheaper alternative which now contribute to 42 percent of total tobacco consumption in Sri Lanka.
"The growth of the non-regulated segments had a direct impact on the decline of the legitimate cigarette consumption."
A CTC statement said export sales revenue increased by 213 million rupees during 2014.
The firm is trying to increase exports as regulations in the home market get tougher.
A new law is coming requiring pictorial health warning of the health risks of smoking covering 80 percent of the front and back surfaces of cigarette packs which CTC said it will comply with.
The firm had lobbied to restrict the health warning to 60 percent in the current law which it said it was compliant with from 1 January 2015.
But it had faced a counter lobby to increase the size of the warning, which Sri Lanka’s new government had supported when in opposition and has pledged to implement after winning power in the January 8 presidential poll.
CTC also said it was awaiting further clarification on the base and application of the one-off Super Gain Tax announced in the new government’s interim budget 29 January, to determine its impact on cash flow and ability to distribute a final dividend for 2014.