Sri Lanka’s Ceylon Tobacco Company PLC (CTC) in their latest quarterly financials outline that the Government increasing the Excise duty on cigarettes in August 2018 and March 2019 lead to a price increase of legal cigarettes.

As a result, the Ceylon Tobacco Company's sales volume for the fourth quarter ended 31st December 2019 had reduced by 19% in comparison to the same period last year.

The financial further outline that company’s revenue has reduced by Rs.2.3 billion in comparison to the same period last year.

Further, the Company’s profit after tax has reduced by Rs.1.26 billion for the quarter ending 31st December 2019, comparison to the same period last year.

“This was largely due to a reported reduction of other operating expenses in the fourth quarter of 2018 arising from a reduction in constructive liability of CTC key business partners with regard to changes in tax regimes over the past few years,” the company said.

The company further noted that the growth in smuggled illicit cigarettes remains as a key threat to the turnover of the legal industry and its contribution to the Government revenue and added that with regular tax hikes targeting only legal cigarettes, the ever-widening price gap between legal and smuggled cigarette has resulted in price pressured consumers choosing smuggled illicit cigarettes as a cheaper alternative, thereby driving exponential growth in the illegal segment.

CTC’s directors had recommended a final interim dividend of Rs. 12.13 per share for 2019 according to the financials.