Carreras Limited’s new marketing thrust is bearing fruit, manifesting itself in growth in operating revenue of J$3.4 billion for the first quarter of 2022, a two per cent increase when compared to 2021.
This was mainly attributable to the increase in volumes achieved for the quarter when compared to the same period last year as well as the impact of Carreras portfolio mix.
Raoul Glynn, Carreras managing director, says the strong investment behind the company’s brands and Route to Market activities is expected to continue to bear fruit in the coming cycles.
According to him, “this quarter brought with it the strongest activation of our flagship brand Craven A since its launch more than 60 years ago. Bringing to the loyal consumer a product with 25 per cent more consumption moments, while ensuring we maintain the same blend and satisfaction our loyal consumers demand, was key.”
This, in addition to Carreras’ commitment to rewarding customer loyalty by giving this benefit at the same price, understanding and recognising that they are already highly stretched and illicit products continue to infiltrate the market with products at less than half the price of the legal brands.
Strategic initiative countering illicit cigarette trade
Glynn admits that, “This investment in our consumers [has] borne fruit driven by the level of revenue increases which have been realised in the quarter, and this is expected to continue throughout the coming year. The illicit trade continues to permeate our trading environment and the company has employed other strategic initiatives to counter the effect [of] these activities.”
He discloses that a multi-industry approach to tackling the illicit trade has been adopted by the company and is now being rolled out. This approach seeks to drive awareness, and advocate for stricter border controls and legislative changes for the imposition of stricter penalties and sanctions.
At the same time, Carreras is commending the efforts and support of the Jamaica Customs Agency (JCA) and the Jamaica Constabulary Force (JCF), specifically, the Counter-Terrorism and Organised Crime Investigation Branch (C-TOC) for their commitment to the fight against the illicit trade.
Carreras says it is working hard alongside stakeholders of the industry to ensure that future tobacco regulations are balanced, practical and fair whilst giving its commitment in supporting and complying with such regulations set out for governing our marketing and distribution of its products.
The Carreras MD advised shareholders that budget year 2022 will be one of broad investment within the company, as it seeks to revitalise its core brands and maximise on opportunities presented, saying the investments being made will enable the company to deliver more sustained results into the future.
Increased operating costs hurting Carreras
Profit before other income for the first quarter of 2022 was J$1.56 billion, which is five per cent or J$82 million lower than the first quarter of 2021, indicating an increase in operating costs. Overheads grew by 20 per cent totalling J$638 million compared to J$532 million in the corresponding period in 2021.
This increase in overheads is partially explained by the rising cost of inputs namely, electricity, fuel, and maintenance as well as the investment in core business which the management believes will lead to stronger performance in the coming periods and propel Carreras to continued growth and delivery in all key performance indicators (KPIs).
Net profit for the period closed at J$696 million while earnings per stock unit for the period was 14.4 cents (2021: 17.8 cents). The Carreras board of directors has approved an ordinary interim dividend payment of $0.13 per stock unit, totalling J$623.4 million, to be paid out of accumulated profits on September 7, 2022, to stockholders as shown on the register of members as of August 24, 2021.
This is in keeping with Carreras’ dividend policy and demonstrates its continued commitment to enhancing shareholder value.