…credits performance on clampdown on cigarette smuggling
DEMERARA Tobacco Company has recorded a $1.3B before tax profits for the first six months of this year, representing an increase of four per cent over the corresponding period last year.
Chairman of the company, Marcus Steele, noted that gross profit for the period was recorded at $1.8B, reflecting an increase of three per cent over 2018. “These positive results were driven by the excellent trade marketing efforts of the staff members, the on-going and positive distribution efforts by our business partner E.B. Beharry, and the disruption in the supply chain in the illicit trade in cigarettes which flowed from the impact and implementation of some other anti-illicit trade measures by the GRA,” Steele said in a report that was published in the newspapers.
Administration, distribution and marketing expenses totalling $425M (2018: $419M) represented a one per cent increase, signalling strong success by the management in maintaining overhead costs and strengthening our operating efficiencies.
Steele said the company continues to successfully transition into the new operating environment flowing from the new regulatory measures which have been enacted over the last two years by the authorities. “During the specific period under review, the company has shown institutional and operating resilience in managing both the 10s ban which became effective January 2019, and also the new labelling and packaging regime with the GHW component that was rolled out in February of 2019. There is no doubt that it has been a challenging period for the overall industry, but I remain particularly pleased with the overall management by the company’s leadership during the period, and the continuing strong performance as evidenced by the solid business results,” Steele noted.
He said, within all of this, the company continues to be proud of the strength of its brands, and the continuing “loyalty of our business partners, namely our distributor, our retailers and our consumers. Several strategic retailer engagement sessions were executed to ensure a full understanding by our retailers of the tenets of the new legislation and the importance of complying with them.”
Steele said the company continues to be particularly concerned however, with the growing incidence of illicit cigarettes in the country – those that are either not adhering to the required labelling and packaging requirements (pictorial graphic health warning etc.), those that are still being distributed without the required tax stamps, and some based on the price points which they are being sold, are clearly smuggled products that have evaded the tax authorities. “We therefore continue to urge not only the GRA, but the local police and the Guyana Bureau of Standards to actively enforce the laws to ensure that there is full compliance by all importers and distributors of cigarettes in Guyana.”
“The company would however, as always, take this opportunity to congratulate the Guyana Revenue Authority (GRA), the local police and the many other Law Enforcement Agencies (LEAs) who continue to be very vigilant in robustly monitoring the industry for compliance with the law. We are particularly proud with the recent roll out of the latest phase of our Youth Access Prevention (YAP) Program, which has been executed across the entire market, to ensure that our products are not sold to or sold by anyone under the age of 18. As a company, we take this very seriously and have sought to ensure our business partners understand that this issue is paramount. All told, we remain proud of our commitment in marketing and distributing cigarettes in a responsible manner, and once again assure all stakeholders of our commitment to protect this legacy.”
“We remain very hopeful for the future prospects of the wider Guyana economy, and are carefully mapping the opportunities and challenges which may emerge from the changing demographics resulting from the rapidly expanding oil industry. We are confident that we have the portfolio, we have the team, we have the management, and we have the strategic business partnerships, to ensure the continuous delivery of strong shareholder value. The outlook for the company remains very positive. The Board of Directors has accordingly approved the payment of an interim dividend of $19.00 per ordinary share,” Mr. Steele said.