Cigarette smuggling hurting DEMTOCO …but profits pegged at $2.8B for 2016

Chairman of Demerara Tobacco Company, Felicio Ferraz delivering his report at the Annual General Meeting yesterday

DEMERARA Tobacco Company says smuggled brands of cigarettes, which avoid the tax net, continue to be one of its biggest challenges even as it announces a $2.8B before tax profit for the year 2016.
In his chairman’s report at the company’s Annual General Meeting held on Wednesday at the Pegasus Hotel, Felicio Ferraz said that the widely available smuggled brands of cigarettes made it exceptionally difficult for the company, but despite the challenge it was able to deliver the $2.8B profit, which represent a marginal decline of 2.3% from that of 2015.
Ferraz said the company continued its efforts to invest and reward customers for making the adult choice of selecting its brands. “The economic, business and wider environment continue to remain challenging for 2017.However,I am fully confident that with the vision and guidance of the Board of Directors, the exceptional execution and delivery of both management and staff, our resilient portfolio and the continued focus on efficiencies, the company will progressively drive and sustain shareholder value for the years to come,” Ferraz said.
Meanwhile, Managing Director of the company, Maurlain Kirton,said they were able to deliver a sustainable performance for the financial year 2016, despite the potential of tobacco regulation and difficult macro-economic circumstances.

“The above was primarily exemplified in the high rate of consumers seeking less costly alternatives within our portfolio. Pall Mall fulfilled its role of retaining consumers seeking quality products at an affordable price.”
Earlier this year the World Health Organisation said that weak regulation of tobacco products in some countries allows powerful companies to market those products unfettered, and to recruit young smokers. According to a report issued by WHO on January 16, 2017,its International Health Regulations and Framework Convention on Tobacco Control provide legal frameworks to countries for responding to public health emergencies and the global tobacco epidemic.
The contention of the WHO, the United Nations health agency, was contained in a wider report in which the body highlighted the use of the law to improve health. The body issued the report based on studies it conducted in conjunction with the International Development Law Organization (IDLO), the University of Sydney, and the Georgetown University in Washington, DC.

The passage of tobacco legislation here has been in the making for years. Guyana signed onto the WHO’s Framework Convention on Tobacco Control (WHO FCTC) on 15,September, 2005. However, while other sister Caricom countries including Barbados, Jamaica,and Trinidad and Tobago have enacted tobacco legislation, the Tobacco Control Bill here has been delayed for passage in the National Assembly. It was touted for passage in the National Assembly in 2016,but has since remained under discussion.
The proposed tobacco control legislation is expected to see a ban on smoking in public places, while cigarette advertising will be disallowed and graphic and text health warnings will have to be displayed on at least 75 per cent of the packaging on tobacco products. The legislation seeks to ban smoking at all indoor workplaces, public transport and strictly regulates the sale of cigarettes while creating reporting requirements for manufacturers, wholesale distributors or importers, with stiff accompanying penalties, as well as imprisonment.
Last year, DEMTOCO described the draft tobacco bill as “draconian”, mainly the recommendations made in the bill. The company, as reported in some sections of the media, was particularly concerned with the imposition of a ban on public smoking and to prohibit advertisement and sponsorship from the tobacco industry, among other things. It has also called for consultation with the authorities on the crafting of legislation.