•  Net profits up 17% YoY to Rs.3.7bn 
•  Pays Rs.27.5bn in govt. levies 

Sri Lanka’s monopoly cigarette player, Ceylon Tobacco Company PLC (CTC) saw its net profit for the March quarter (1Q18) increasing little over half a billion rupees with a surprising 11 percent year-on-year acceleration in volumes.

The CTC interim financial accounts filed with the Colombo Stock Exchange showed the company recording earnings of Rs.19.95 per share or Rs.3.7 billion for the March quarter, up from Rs.17.07 per share or Rs.3.2 billion a year ago. 

On a YoY basis, this translates into a 17 percent increase.

The volume gain resulted in the net turnover increased 14.2 percent YoY to Rs.8 billion.

“Stable prices contributed to arrest the decline of legal market volumes created by persistent pressure on the disposable income of consumers, following the 43 percent price hike in the fourth quarter of 2016,” CTC said in an earnings release.  According to analysts, the introduction of the mid-length John Player Navy Cut at a price point of Rs.40 in October last year, also had a positive impact on volumes during the quarter. During FY17, volumes slid 18 percent YoY.

Meanwhile, the company paid little over Rs.30 billion to the government in excise duties, levies and income taxes for the quarter compared to Rs.26.1 billion paid during the same quarter of the previous year.

Government levies for the period rose 15.5 percent YoY to Rs.27.5 billion while income tax expense rose 8 percent YoY Rs.2.5 billion. For the last financial year (FY17), CTC paid Rs.117.3 billion to the government in levies and taxes.

“CTC remains committed to investing in the company’s brands with a predominant focus on infusing value into the mainstream brand, John Player Gold Leaf to address consumer affordability, as well as to safeguard both industry and government revenue,” the company said.

Meanwhile, CTC said 700 raids were carried out by law enforcement authorities during the quarter under review, resulting in the detection and seizure of over 1 million smuggled illicit cigarettes.

The smuggled illicit cigarette market is estimated to be over 450 million illicit cigarettes per annum. 

The trend is expected to grow due to the widened gap between prices of legal and illicit cigarettes available in the market as well as current macroeconomic factors that are impacting consumer spending power.

British American Tobacco Holdings (Sri Lanka) BV holds 84.13 percent stake in CTC. 

The directors recommend a first interim dividend of Rs.18 per share to be paid on June 05, 2018.