Monopoly cigarette player, Ceylon Tobacco Company PLC (CTC) yesterday said cigarette sales came down in the three-month period to June 30, 2023 (2Q23) when compared with the same period, last year, “due to the tax-led price increases in line with the government’s revenue proposals.”

The company reported turnover of Rs.54.7 billion for the quarter under review, up from Rs. 42.3 billion reported in the corresponding period of the previous year, as a result of sharp increase in cigarette prices due to increase in taxes.

The company paid Rs.40.5 billion in government levies during the period under review, up from 32.1 billion a year ago.

“The growth in products like Beedi and smuggled cigarettes remains a key threat to the turnover of the legal industry and its contribution to the government revenue,” CTC said in a brief note accompanying the interim financial accounts.

“These produces are well posed to grow exponentially due to the widening price gap in comparison to the legal cigarettes, which have been subjected to frequent, sharp tax increases,” CTC cautioned.
“It is anticipated that government’s tax led price increase, specially in the context of the diminishing consumer spending power owing to the macro-economic factors, will continue to impact legal industry volumes for the remainder of the year,” it added.

For the quarter under review, CTC reported earnings of Rs.33.34 per share or Rs.6.2 billion compared to earnings of Rs.17.94 per share or Rs.3.4 billion reported for the same period last year.

For the first half of 2023, the company reported earnings of Rs.65.37 per share or Rs.12.2 billion compared to earnings of Rs.40.28 per share or Rs.7.5 billion on a turnover of Rs.101.7 billion, up from Rs.79.3 billion a year ago.

The directors of CTC recommended a second interim dividend of Rs.33 per share to be paid by September 11, 2023.
British American Tobacco holds 84.13 percent stake of CTC while Philip Morris has 8.32 percent stake in the company as its second largest shareholder.