Carreras unbowed by illegal cigarette traders
Cigarette distributor Carreras Limited earned $1.1 billion in the December third quarter, reflecting a 23 per cent boost in profit, despite competition from contraband and higher taxes that repelled buyers.
Sales revenue also climbed above $4 billion from $3.4 billion a year earlier.
Over nine months, company profit also grew 23 per cent to $2.7 billion.
"We continue to invest in our portfolio of brands, namely the core brands Craven A and Matterhorn, which returned solid performances for the period under review, in line with expectations," said Managing Director Marcus Steele at the release of the financial report.
Steele added that industry volumes experienced a decline in consumption after the government implemented a $2 per stick or 17 per cent increase in special consumption tax on cigarettes in May 2016, "making two consecutive years of increases," Steele said in the statement to shareholders.
"We continue to note the inverse relationship between sales volumes and increases in excise, which ultimately leads to the surge in the illicitly traded products in the market," he said.
Carreras previously estimated that the illicit trade costs the Jamaican some $2 billion in leakage of revenue annually.
Administrative, distribution and marketing expenses dropped nine per cent at the cigarette trader, which Carreras indicated was the pay-off from new initiatives to get the product to market in hard-to-reach communities.
"In addition to the efficiencies gained through the supply chain, cost savings were achieved through management's keen attention to other cost-containment and cost-reduction initiatives," said Steele.
Carreras holds $2.18 billion in shareholder equity, with total assets of $4.5 billion.