Legal Cigarette price shot up by 30% within past 9 months due to Excise Duty hike

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 around 30% within past nine months period. As a result, the Ceylon Tobacco Company's domestic sales volume for the first quarter ended 31st March 2019 had reduced by 14.9% in comparison to the same period last year.

The financials further outline that company's contribution to the Government revenue through Excise and other levies for the first quarter was Rs. 26 billion. Further the company has recorded profit after tax at Rs. 4.06 billion for the quarter ended 31st March 2019. Report further outlined that the Company's continuous efforts in managing cost base while focusing on right investments contributed positively to Profit for the period.

“CTC remains committed to create value for the local economy and Government revenue and has launched new products to arrest the leakage of regulated tobacco industry value into duty not paid products owing to macroeconomic factors impacting consumer spending power” the company said in its financial review adding that the growth in low taxed products such as Beedi and smuggled illicit cigarettes remains as a key threat to Government revenue contribution from the regulated tobacco industry.

The report also noted that CTC's flagship Corporate Social Responsibility initiative, the Sustainable Agricultural Development Programme (SADP) continued to focus on alleviating poverty and empowering the livelihoods of families in rural Sri Lanka. It added that the total number of families supported by the Company as at 31st March 2019 stood at 19,664, comprising of 76,396 beneficiaries in 16 districts.

CTC’s directors had recommend a first interim dividend of Rs. 19.00 per share to be paid on 4th June 2019 according to the financials.

Reporting by Devendra Francis