DEMTOCO profits pegged at $1.4B
Demerara Tobacco Chairman Marcus Steele addressing the company’s 84th Annual General Meeting (AGM) at the Pegasus Hotel in the presence of directors, and other officials of the company
Demerara Tobacco Chairman Marcus Steele addressing the company’s 84th Annual General Meeting (AGM) at the Pegasus Hotel in the presence of directors, and other officials of the company

– company says not against tobacco regulations

THE Demerara Tobacco (DEMTOCO) recorded a profit before tax of GYD$2.5B in 2017 – a decline of 9.5 per cent when compared to 2016, its Chairman Marcus Steele disclosed when the company’s 84th Annual General Meeting (AGM) was held at the Pegasus Hotel on Tuesday.

DEMTOCO shareholders present at the AGM

After paying more than GYD$1.105B in taxes for the year ended December 31, 2017, the tobacco company recorded a profit of GYD$1.416B. Steele said “undoubtedly” 2017 was a challenging year not only for DEMTOCO, but also for the Guyanese people. “In the first instance, the Guyanese economy experienced significant challenges, including a reduction in sugar and gold revenues, which invariably impacted employment levels and had a direct effect on the general level of disposable income among the country’s citizens,” the Chairman explained, while noting too that the country experienced a GDP growth rate of 2.1 percent.

Compounding the situation, Steele said, was the significant level of volatility in the foreign exchange market, which impacted foreign currency transactions, including DEMTOCO’s performance. On the legislative front, the chairman told the directors and shareholders present at the AGM that, 2017 represented a fundamental change in the local regulatory landscape of the tobacco industry with the passage and promulgation of the Tobacco Control Act, and the introduction of tax stamps for all tobacco products.
“As a result of these key macro-economic and industry-related realities, the company experienced a 5 per cent volume decline over 2016, with gross revenues also declining by 4 per cent when compared to the previous year. Profit before tax amounted to GYD$2.5B – a decline of 9.5 per cent as compared to last year,” Steele reported.
However, despite the economic challenges, DEMTOCO paid four interim dividend payments totalling GYD$54.46 for the reporting period. At the AGM, it was agreed that a final payment to the value GYD$7.07 be paid per share. The tobacco company currently has the highest share price on the Guyana Stock Exchange, and according to Steele, it is a result of the strategy employed by the company.

Currently, the tobacco company is on the verge of instituting measures that would allow it to effectively transition into the new regulatory environment. The chairman made it clear that while DEMTOCO is not up in arms against regulatory measures, such he argued, should be balanced and enforceable.

“These measures will certainly impact the way we have operated our business and so we take this opportunity to urge the government to provide the requisite clarity and to exercise the comprehensive public education and raise awareness which is required to minimise dislocations and anxiety during the enforcement of the Act,” the chairman urged.
DEMTOCO is also putting measures in place for use of the tax stamps which are being introduced by the Guyana Revenue Authority (GRA). By September 2018, all tobacco products being distributed in Guyana will be mandated to have the tax stamps. It comes after years of engagement and consultation between GRA and the tobacco company. However, Steele believes that there is a better avenue that can be taken.

Pall Mall – on display at the AGM

“While the government views the introduction of tax stamps as a tool to protect and increase their revenues from the tobacco industry, the business had proactively implemented a tax code measure on its packaging to demonstrate to the authorities that there is a more robust and cost-effective approach to track and trace the validity and authenticity of our products. The adoption of this platform by the government for our products remains on the table as we do believe that much savings can be attained by the Government of Guyana if this recommended solution is accepted,” Steele posited.
However, he emphasised that despite the challenges being faced in the local market, the company’s brands remain the choice for consumers.

That aside, it was proposed and agreed that Steele, who was appointed under By-Law 18(7) of the company’s By-Laws as a Director of DEMTOCO, be appointed director.
Managing-Director of Demerara Tobacco Company, Maurlain Kirton; Director – Country Manager for The BAT Group’s Interest in the Caribbean, Raoul Glynn; Director and Senior Vice-President of Laparkan Trading (Guyana) Company Ltd, Chandradat Chintamani; and DEMTOCO Secretary, Michael Partab were among the company officials present at the AGM.

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