Higher illicit cigarette sales weigh on CTC’s 4Q performance

Ceylon Tobacco Company PLC (CTC) reported a decline in revenue and profit for the three months ended December 2024, its fiscal fourth quarter, attributing the weaker performance to the increased presence of lower-priced smuggled cigarettes.

CTC reported revenue of Rs. 55.96 billion for the October–December period, down by about 4.5 percent from the same period a year ago.

However, net revenue, measured after government levies on sales, came in at Rs. 16.86 billion for the same period, down by around 4.2 percent from the corresponding period in 2023.

The company was unequivocal about what brought its sales down.

“The company’s sales volumes during the three months ended on 31st December 2024 were lower in comparison to the same period last year,” it said in an earnings release.

“The decline in volume is consequential to the high prevalence of smuggled cigarettes in the market with significantly lower prices,” the company added.

The company has long raised concerns about illicit cigarettes entering the market and has pointed out the significant revenue losses to the government, as such products evade taxes.

The high incidence of smuggled cigarettes and the raids to confiscate them were driven by the repeated tax hikes on CTC, Sri Lanka’s sole cigarette manufacturer, which pushed the retail price of a stick significantly higher.

This has prompted people to seek cheaper alternatives in the market, which largely operate outside the legal framework of the country.

The company has therefore taken steps to export tobacco leaves to partially offset declining domestic sales.

CTC reported earnings of Rs. 41.68 per share or Rs. 7.81 billion, for the three months, compared to Rs. 45.58 per share or Rs. 8.54 billion in the corresponding period in 2023.

For the full year ended December 31, 2024, the company reported earnings of Rs. 158.24 per share or Rs. 29.64 billion, up from Rs. 147.64 per share or Rs. 27.66 billion in 2023.

The company declared a cash dividend of Rs. 29.10 per share, its fourth interim dividend, to be paid on March 12, 2025.

CTC’s share closed at Rs. 1,416.00, down Rs. 14.00 or 0.98 percent.

Source: Daily Mirror