May 17, 2022 News
…says illegal trade of cigarettes remain major hurdle
Kaieteur News – Demerara Tobacco Company (DEMTOCO) has recorded an after-tax profit totalling $2B for last year even as Chairman of the entity Kathryn Abdulla lamented that the illicit trade in cigarettes remains a significant challenge.
Abdulla was at the time delivering remarks at the company’s Annual General Meeting (AGM) held at the Pegasus Hotel recently.
“Our company delivered earnings per share of G$86.59 versus G$75.24 prior year and total dividend payments totalling G$2.007 billion were distributed for 2021.”
She told shareholders, “we generated profit after tax of G$2.026 billion versus G$1.760 billion (2020) which represented an increase of 15.1 percent.”
According to Abdulla, overall the company saw growth in revenue of 8.4 percent, with a favourable movement in operating profit of 13.9 percent mainly driven by increased revenue and efficiencies in operating costs.
She said for the reporting period, DEMTOCO made considerable progress strategically and financially, noting that clarity around the full impact of the pandemic and for life to return to some semblance of normality continues to take longer than expected.
“However, the determined manner adopted by both the Board and Management in confronting the challenges and impacts of what many argued was a more difficult year than 2020, was admirable,” she stated.
According to the Chairman, the company’s 2021 results demonstrate the resilience of not only “our core business but also the wisdom of the acceleration of our business transformation and our commitment to building “A Better Tomorrow”.
Abdulla noted too that as the entity continues to strengthen itself, it will focus on three key priorities: releasing funds to support growth agenda, maximising marketing spend effectiveness and generating cash to continue to
deleverage the balance sheet.
Fight against Illicit trade
Notably, Abdulla said, cigarettes are among the most commonly traded products on the black market due to high profit margins, relative ease of production and movement and low detection rates and penalties.
She said, illegal traders do not pay tax and provide the cheapest available cigarettes, often at less than half the legal price.
“Unlike legal tobacco, illegal tobacco is not required to meet manufacturing standards or quality controls and is not subject to excise; the illicit product may be sold without health warnings or age verification.”
She said that as a responsible company, however, DEMTOCO adheres to all local laws and regulations regarding the distribution, marketing and sale of our products and “fully supports all initiatives which seek to eliminate the illicit tobacco trade.”
DEMTOCO, she said, remains committed to improving the legal tobacco landscape and will continue to drive awareness through active engagement with our regulators, government and the private sector.
Increased sustainability and responsibility
Increasingly, business is moving beyond seeking only to deliver ‘shareholder value’ and is embracing a wider purpose that serves the interests of all stakeholders.”
According to Abdulla, the expectation for a broader society is that businesses should play a more active role in addressing and finding solutions to crucial social, economic and environmental issues.
Evidence of these expectations, she said, can be found in the increasing focus being channelled towards environmental, social and governance (ESG) targets.
“We at DEMTOCO welcome this shift. It is aligned to our company’s purpose, our sustainability agenda and the decision-making approach that the Board encourages,” Abdulla said.
Also commenting on the issue of illicit trade in cigarette was the company’s Managing Director, Vijay Singh, who in his report said the unprecedented crisis which came with COVID-19 has undoubtedly contributed to the rise in smuggling worldwide, affecting all aspects of society. “Criminal networks that smuggle for profit continued to thrive as they re-organised themselves amidst restrictions in order to sustain their operations.” Singh said in his report.
He added that illicit trade continues to be a threat to the company and for this reason it remains one of our main priorities.
“We are aware of the dynamic environment in which we operate and the continuing fight against this trade is critical. We see it as a significant and growing problem for governments, law enforcement agencies, our business, our partners and those who operate legally.”
Singh said DEMTOCO has been committed to fighting the trade in illicit tobacco and as part of their efforts, the company continued in 2021 to dialogue with both local and regional law enforcement agencies to support efforts to combat this criminal trade, with the aim of countering the detrimental effects which it has on the overall society.
“Though there are laws which govern the packaging and labelling of tobacco products along with associated penalties, we continue to see non-compliant brands being sold across the country.”
He did note that “it is encouraging to see the Guyana National Bureau of Standards, the Guyana Revenue Authority and the Customs Anti Narcotic Unit taking a stance against this illegal trade. We do believe there are opportunities for further collaboration to ensure the right type of enforcement is applied throughout the supply chain.”
Singh lamented that consequences of the illicit trade range from national security, economic loss from tax evasions, trademark infringements, undermining of brand investments, and detrimental quality issues associated with poor manufacturing conditions.
Jun 25, 2022Guyana’s Trevon Prince is through to the boys under20 800m finals which is scheduled for today at the National Stadium in Jamaica. Prince is competing at the Jamaica National Trials which is being...
Kaieteur News – One day in 1971, a friend, Balwant Persaud, who I met when he was in high school (Guyana Oriental College... more
Kaieteur News – The Georgetown Chamber of Commerce and Industry (GCCI) is out of order … again. Its latest snafu... more
Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]