Ceylon Tobacco reports marginal recovery in 1Q

Ceylon Tobacco Company PLC (CTC) has reported a marginal recovery in business in the first quarter of 2021 as against decline a year earlier as well as in 4Q of 2020.

CTC’s turnover amounted to Rs. 34.76 billion, up 1.5%, reflecting a marginal recovery from the prolonged impact of COVID-19 pandemic. 

The company said sales volumes were increased by 3.8% in comparison to 1Q of last year. Government revenue through Excise and other levies rose by 1.6% to Rs. 26.3 billion. 

Pre-tax profit was Rs. 6.68 billion, marginally lower from Rs. 6.69 billion. Post-tax profit remained unchanged at Rs. 3.9 billion in 1Q. The Directors recommend a first interim dividend of Rs. 19 per share (same as last year) to be paid by 10 June.

In FY20, CTC turnover amounted to Rs. 132 billion, lower as against Rs. 141 billion in FY19. Pre-tax profit was Rs. 25.4 billion, down from Rs. 28.7 billion whilst after tax profit was Rs. 15.57 billion, as against Rs. 17.3 billion in FY19. Revenue to Government was Rs. 110 billion.

In last quarter of 2020 CTC saw a depressed economy with curtailed consumption due to restrictions faced by consumers and retailers to access the products as a result of the intermittent curfews imposed to contain the second wave of COVID-19. 

Total volumes during the quarter reduced by 19% and consequently, the company’s turnover and the Government revenue through Excise and other levies for the quarter reduced by 18% and 15%, respectively in comparison to the same period of last year.

A year earlier (1Q of 2020), CTC sales volume declined by 13% due to the impact of the excise led cigarette price increases during 2019, particularly the increase of 72 mm category prices. Sales were further impacted due to product access restrictions faced by consumers and retailers as a result of the island wide curfew intermittently imposed to contain the COVID-19 pandemic. The company’s profit after tax for the quarter ended 31 March 2020 was down by 3% to Rs. 3.9 billion. 

In its note accompanying 1Q interim results of FY21, CTC said it was committed towards the continuation of business activities subject to strict compliance with employee health and safety guidelines and other directions of the Government and was cautiously optimistic of the future in anticipation of effective management of the third wave of the COVID-19 pandemic and gradual revival of the economy.