CTC reports 11% slump in tobacco excise revenue in 1Q

Tuesday, 16 May 2017 00:10 - - {{hitsCtrl.values.hits}}

Government excise earnings from Ceylon Tobacco Company PLC (CTC) during the first three months of 2017 has dipped 11% compared to the same period last year, to end at Rs. 19.73 billion. Government excise earnings from tobacco in Q1 2016 was Rs. 22.17 billion.

Following the 45% hike in cigarette prices last year, Sri Lanka has turned into a hotspot for illegal tobacco smugglers, with over 35 million sticks valued at Rs. 1.7 billion detected already this year. Over 320 million illicit sticks are estimated to have penetrated the market, resulting in Rs. 13 billion in losses to state revenue.

A further 12,000kgs of smuggled beedi wrappers have also been confiscated by authorities during the first three months of this year, equivalent to 24 million beedi sticks.

Over 216 million beedi sticks are estimated to have been produced during this period, as the high price of legal tobacco products compel consumers to downgrade. The sharp rise of tobacco smuggling and incidence of illicit consumption have defeated the government’s agenda to reduce smoking since the government’s focus has only been placed on excessive taxes on legal products.

During the first quarter of 2017, Ceylon Tobacco Company’s Profit After Tax stood at Rs. 3.19 billion as against Rs. 3.05 billion a year earlier, as the Company put in place several cost rescaling initiatives including the closure of two depots in Anuradhapura and Sigiriya, plus, a 20% head count reduction.