Higher disposable income boosts CTC September profits

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•     Rs.24.9bn in taxes to govt. in Sept.
•     Rs.68.6bn in taxes to govt. Jan-Sept.
•     Third interim dividend of Rs.9 per share

A significant portion of the higher disposable income generated by the measures in the budgets presented by the new regime so far this year appears to have gone for the consumption of tobacco products as the country’s tobacco monopoly, Ceylon Tobacco Company PLC (CTC), a unit of British American Tobacco, posted impressive profits. 

CTC’s net profit for the quarter ended September 30 (3Q15) rose 57 percent year-on-year (yoy) to Rs.3.29 billion, the interim financial accounts released to the Colombo Stock Exchange showed.

The earnings per share improved to Rs.17.58 from Rs.11.18 reported for the corresponding quarter of the previous year. 

The gross revenue (before excise taxes) for the quarter rose 46 percent yoy to Rs.29.92 billion, while net revenue (after excise taxes) rose 43 percent yoy to 
Rs.7.24 billion.

“This performance is primarily driven by the increased levels of disposable income and consumer confidence experienced this year,” CTC said in a brief statement. 

The government this October however raised the excise duties on cigarettes and liquor. 

The directors recommended a third interim dividend of Rs.9 per share to be paid by the November 27, 2015.

The payments CTC made to the government in the form of taxes and levies for the quarter under review rose 48 percent yoy to Rs.24.9 billion.

For the 9 months ended September 30, 2015, the tax and levies paid stood at Rs.68.6 billion, up 30 percent yoy. 

The company’s net profit for the 9 months stood at Rs.8.8 billion, up from Rs.6.6 billion. 

The yoy gross and net revenues rose to Rs.82.8 billion from Rs.64.1 billion and Rs.20.1 billion from Rs.15.9 billion, respectively.

Meanwhile, the company said it didn’t provide for the payments stemming from the Super Gains Tax (SGT) since the enactment of the law containing the tax was post reporting date (September 30, 2015).

The Act requires the tax to be an expenditure in the financial statements relating to the year of assessment 2013/2014.

According to CTC, the tax liability emanating from SGT is estimated at Rs.3.8 billion. “The SGT is payable in three equal installments. The first installment was paid on 30/10/15, the second is due by 30/11/15 and the final is payable by 31/12/15,” the company said.