Tue | Jan 22, 2019

Carreras profit rises with cigarette prices

Published:Wednesday | February 17, 2016 | 12:00 AM
Inside the corporate offices of Carreras Limited, at Ripon Road, New Kingston.

Carreras Limited, the island's largest cigarette distributor earned $889.4 million net profit after tax for its third-quarter ending December 2015, or 44 per cent higher than a year earlier due primarily to the higher cost of cigarettes.

The company continues to profit despite heavy government taxation and illicit imports, which dwindled its volume sales.

"Volume recovery is however anticipated from various strategic initiatives implemented by management, as well as from the authorities continued drive to stem the influx of illicit cigarettes into the Jamaican market, which we believe will contribute to the creation of a sustained contestable space for the company's brands," said Managing Director Marcus Steele in his statement accompanying the financial report.

Steele thanked the police for the seizure of 154 master cases of counterfeit cigarettes valued at some $65 million in December, which represented the largest confiscation of counterfeit cigarettes in the market.

The company ultimately controlled by UK-based British American Tobacco Plc earned $3.5 billion in operating revenues in the December quarter or 28.5 per cent higher y/y. The company's improved performance was also attributable to a reduction in administrative costs down 4.4 per cent y/y to $321.5 million.

Over nine months its overall volumes decreased relative to 2014, due mainly to a general reduction in consumption resulting from the price increase implemented by the company in March 2015. This price increase followed the Government's implementation of an excise tax increase in the same period.

Prior to the release of its December results, the company advised the market last month that it would begin restructuring its trade marketing and distribution operations effective January 31 to improve efficiencies amid a changing business and economic climate.