Carreras projects more sales for Christmas
Cigarette distributor Carreras Limited expects a recovery of volume sales during Christmas, which should equate to heavier smoking and stronger revenues.
However, the company has put a rider on its forecast.
"For the third-quarter ending December 2016, we anticipate a recovery of volumes going into our peak sales period. This is expected, provided that the domestic market continues to benefit from the authorities' success in containing the influx of illicit cigarettes into the domestic market," said Managing Director Marcus Steele in the statements accompanying the Carreras' second-quarter earnings report.
The British-owned cigarette trader made $826 million net profit on revenues of $3 billion for its September quarter, or 8.3 per cent higher profit than a year earlier. Over six months, the company earned net profit of $1.68 billion on revenues of $6.37 billion, or 21 per cent higher profit.
CORE BRANDS DOING WELL
Steele said core brands Craven 'A' and Matterhorn "returned creditable performances" year-to-date. For Dunhill, Rothmans, Newport and Pall Mall, those brands did well "based on expectations," he added.
Overall, volumes sold at half-year remained flat relative to the 2015 period, a performance Carreras linked to the latest tax hike on smokes.
"As predicted, the higher trade demand for cigarettes that was realised in the first quarter ended June 2016, consequent upon the excise lead price increase implemented on May 2016, was tempered in the September quarter. During this period, the trade depleted excess inventory quantities," said Steele.
Bottom line growth was partially due to a squeeze on spending. Administrative, distribution and marketing expenses, totalling $970 million, represented a nine per cent reduction year-on-year.
"The company continues to reap the benefits of efficiencies gained through the supply chain, the result of the successful implementation of a new route-to-market structure on February 2016," Steele said. "This, along with other reduction and containment initiatives, continue to be focal points for management."
Carreras, incorporated in Jamaica, is a 50.4 per cent subsidiary of Rothmans Holding Limited. Its ultimate parent company is British American Tobacco Plc.