Ceylon Tobacco says cigarette sales down 13% in March quarter

• Turnover down marginally; earnings down 3% YoY
• Coughs up Rs.25.93bn for govt. as taxes for the quarter

Sales at Sri Lanka’s monopoly cigarette player, Ceylon Tobacco PLC (CTC), fell during the March quarter (1Q20) due to excise-led price increases and business interruptions caused by COVID-19 lockdowns.

The government increased excise duty on legal cigarettes in August 2018 and March 2019. CTC said excise-led increase particularly resulted in the increase of 72mm category prices.

The company said its cigarette sales fell 13 percent during the quarter under review from a year ago. However, despite the double-digit sales drop, both turnover and contribution to the government revenue through excise, other levies and taxes were reduced marginally.

The turnover for the quarter under review edged down to Rs.34.23 billion from Rs.34.28 billion a year ago while revenue CTC coughed up for the government during the period by way of excise and other levies fell to Rs.25.93 billion from Rs.25.98 billion.

The firm’s net profit for the three months under review edged down to Rs.3.93 billion from Rs.4.06 billion, recording a 3 percent decline form a year ago.

Accordingly, the earnings per share weakened to Rs.20.98 from Rs.21.68 a year ago.

CTC said the decline in profits was largely due to the reduction of volumes.

Meanwhile, the company said from March 20, 2020 onwards they have been operating their business strictly in conformity with government guidelines and directives issued from time-to-time with regard to the implementation of curfew, work from home arrangements and health and safety measures. 

“During this period the primary focus of the company has been to ensure the continuation of business activities subject to health and safety of employees as well as the work force of all extended value chain partners,” a company statement said. 

As such CTC has implemented work from home policy for all office-based employees utilizing IT capabilities to facilitate seamless remote working conditions. 

“All other employees have been engaged on a need-only basis to carry out limited critical responsibilities subject to taking all necessary health and safety precautions. 

Whilst acknowledging and appreciating the timely and effective measures being taken by the government to contain the COVID-19 pandemic in Sri Lanka, the management is committed to take decisions and measures in order to ensure that CTC continues to support the government with much needed revenue and deliver shareholder value,” the company statement added.

British American Tobacco Holdings (Sri Lanka) BV has 84.13 percent stake in CTC, while the world’s largest cigarette maker, Philip Morris, has 8.32 percent stake in CTC, being the second largest shareholder. CTC directors have recommended first interim dividend of Rs.19.00 per share to be paid by June 4, 2020.