Ceylon Tobacco 1Q25 revenue hit by illicit cigarette trade

Ceylon Tobacco Company PLC reported subdued revenue for the quarter ended March 2025, as the sales continued to be pressured by the widespread availability of smuggled cigarettes sold at significantly lower prices.

The company reported a turnover of Rs.45.65 billion in the January-March quarter, the company’s first fiscal quarter, compared to a turnover of Rs.45.85 billion in the same period in 2024.

The revenue, which is arrived after the government levies on the turnover, was recorded at Rs.14.15 billion, virtually unchanged from the same period last year.

The company said the sales volume was lower in comparison to the same period in 2024, contributing to the slippage in the turnover.

“The decline in the volume is consequential to the high prevalence of smuggled cigarettes in the market that are available at significantly lower prices,” the company said releasing its interim report.

CTC has raised concerns about the high prevalence of smuggled fags, which appears to be eating into the company’s dominant share in the market, as the smuggled sticks come at lower prices.

The successive governments’ hefty sales and corporate taxes on tobacco products, which reached a whole new level after the country fell into the economic crisis, have forced people from the company’s cigarettes to cheaper smuggled ones and also other alternatives such as beedi.

Meanwhile, the company also saw its raw material cost slumping by as much as 55.9 percent to Rs.478.0 million for the quarter from the same period a year ago.

The other operating expenses conversely rose sharply by 50.7 percent to Rs.1,459 million in the quarter from a year ago.

While it continues to cite the inflationary impact and also the higher marketing costs, CTC noted that such cost escalations were partially offset by the savings initiatives run across its business.

The company reported earnings of Rs.35.65 a share or Rs.6.68 billion for the March quarter, compared to profits of Rs.36.33 a share or Rs.6,81 billion in the corresponding period in 2024. It booked an income tax of Rs.4.96 billion, up from Rs.6.81 billion a year ago.

The company declared a first interim dividend of Rs.32.0 a share, to be paid by May 29 and its shares ended 2.25 percent or Rs.30.75 higher at Rs.1,399.75 yesterday.

British American Tobacco International Holdings B.V. has an 84.13 percent stake in CTC while Philip Morris Brand SARL has an 8.32 percent stake, being the company’s second largest shareholder.