Ceylon Tobacco’s 2010 net profit tops Rs. 5 b mark
The Government has earned a record Rs. 56.1 billion from cigarettes in 2010, higher by Rs. 3.7 billion than in the previous year.
Ceylon Tobacco Company (CTC) said yesterday that the total revenue to the State via taxes and levies amounted to Rs. 56.1 billion. This includes taxes by Provincial Councils. Other levies includeExcise special provision tax, Tobacco tax, Social Responsibility Levy , VAT and Nation Building Tax.
The figure in 2009 amounting to Rs. 52.4 billion (up by 8% over 2008) accounted for 7.6% of the country’s total tax revenue and approximately 2.2% of the GDP.
In 2009, the revenue to Government was 90% of CTC’s gross revenue whilst in 2010 it was lower at 88.34%.
The increase in Government Revenue (taxes and levies) is mainly attributed to vigilance and continued efforts of the law enforcement authorities to minimise the presence of illegal and smuggled cigarettes in the local market.
In 2010 the authorities confiscated 74 million illegal cigarettes with a market value of Rs. 1.2 billion via 2,016 seizures. CTC said that this ensures a higher revenue base for the Government from the Company. Improved economic conditions which helped boost sales had played a part too. There were two excise-led price increases as CTC’s gross revenue amounted to Rs. 64 billion, up by over 9% from Rs. 58 billion in 2009. “The positive economy and expansion into North and East helped stabilise sales volumes over the previous year,” CTC said.
The profit after tax reported by CTC in 2010 crossed the Rs. 5 billion mark to Rs. 5.09 billion, up by 24%. The growth in the bottom line in 2009 over 2008 was high at 49%.
On the responsibility front Ceylon Tobacco Company made considerable progress in its flagship initiative, the Sustainable Agricultural Development Programme (SADP). The total number of families in the program grew to 9,090 out of which 2,700 families are from the Eastern Province. The initiative has helped 2,188 families completed the programme after reaching economic self sufficiency.
The consistent delivery of superior financial results is also reflected in the CTC share price at the Colombo Stock Exchange. The share value grew by 92 % in 2010 on the back of a buoyant market helping drive shareholder value.
CTC Chairman Jayampathy Bandaranayke commenting on the strong performance stated “this year has in essence, been a year of great optimism and expectation for our nation and the expectations of the company were no different. With a full calendar year, following the ending of the prolonged conflict, the nation has embraced the concepts of peace and unity; has undertaken to integrate, envision and implement initiatives that will place Sri Lanka on a firm path to accelerated economic and social progress.”
“From a commercial perspective for CTC, the year has been one that is definitive in shaping the marketing context, with the integration of the north and east to the mainstream economy. Yet, 2010 was in no way a year in which commercial activity thrived with ease, it was as in the past, a year in which meticulous planning and effective execution of plans produced these continued momentum of strong results,” Bandaranayake added.
The new CEO at CTC James Yamanaka looks at 2011 with optimism: “The year under review has yielded admirable returns. These outstanding results have been achieved in a year where Global, Regional and Local strategies have optimally integrated to create synergistic effects. Moreover, CTC in 2010 undertook significant steps to improve the quality and productivity of the business. Our strategic focus on growth, productivity, responsibility and developing a winning organisation continues to underline the growth in our revenue and is pivotal in positioning the company towards future value enlargement.”
Investing in CTC shares certainly not up in smoke!
Dividends to shareholders up 24% to Rs. 27.17 per share
WHILST anti-smoking lobbies target fags as burning money, an investment in CTC shares certainly doesn’t go up in smoke.
The Company’s Board of Directors yesterday recommended a final dividend of Rs. 7.22 per share less tax, on top of Rs. 19.95 per share less tax already paid via four interim dividends for 2010. The combined dividend of Rs. 27.17 per share is 24% higher than the Rs. 21.90 paid in 2009.
CTC shareholders also enjoyed a 92% increase in their value with its share price closing 2010 at Rs. 355, up from Rs. 185 in 2009.
The final dividend is subject to shareholder approval at the AGM fixed for 29 March.
Percentage wise, the dividend in 2009 of Rs. 21.90 was high by 49% over what was paid in 2008 whilst the share price appreciation was 180% from Rs. 66 in 2008.
source - www.ft.lk
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