Ceylon Tobacco revenues languish in 2Q amid volume decline

Ceylon Tobacco Company PLC (CTC) saw its top line easing further in the three months to June (2Q21) from the preceding three months ended in March as cigarette volumes declined by 16 percent from the March quarter due to mobility and other restrictions that took hold from the third week from April, owing to the resurgence of the virus. 
The company reported a turnover of Rs.30.0 billion in the April-June quarter, up 24 percent from the same period last year when the lockdowns were more pronounced. 

CTC reported sales of Rs.34.8 billion in the company’s first fiscal quarter ended in March 2021 as sales languished since reaching a peak of Rs.44.6 billion in the September 2020 quarter, the first full quarter since the re-opening of the economy after a two-month long lockdown that ended in May that year. 

“The company’s performance in the three months ended 30th June 2021 was impacted by the movement restrictions imposed on account of the Covid-19 pandemic third wave, which saw sales volumes decline by 16 percent in comparison to the first quarter of the year,” CTC said in an earnings release. 

Although the company has over the years shown in elasticity to the repeated heavy taxing, cigarette sales haven’t been able to stay totally immune to the virus as the related restrictions buffeted the momentum as pubs, bars and restaurants remained closed and smoking habits were somewhat disrupted due to interruptions to delivery and retailing. 

“The company is committed towards the continuation of business activities subject to strict compliance with employee health and safety guidelines and other directions of the government and is cautiously optimistic of the future in anticipation of effective management of the Covid-19 pandemic and gradual revival of the economy,” CTC said. 

The company reported earnings of Rs.20.90 a share or Rs.3.92 billion for the June quarter compared to Rs.16.56 a share or Rs.3.01 billion in the corresponding period last year. For the six months to June, the company reported earnings of Rs.41.82 a share compared to Rs.37.54 a share in the year earlier period. 

The directors had recommended a second interim dividend of Rs.19.00 a share, payable by September 10, making it one of the highest payout ratios. 

“Robust sales plans to mitigate impacts of the pandemic disruptions and continuous review of the cost base for optimisation facilitated the delivery of profitability and ensured the company’s ability to deliver sustainable value to shareholders,” CTC added.  British American Tobacco International Holdings BV and Philip Morris Brand SARL hold 84.13 percent and 8.32 percent stake each in Ceylon Tobacco Company PLC.