The Demerara Tobacco Company (DEMTOCO) is pushing to have the necessary legislation in place to ensure a level playing field with regard to tobacco trading in Guyana.
Passage of the Tobacco Control Bill in the National Assembly, over the years, has been subjected to numerous delays. However, it was last reported back in December that the draft legislation was still in a preparatory phase. There have since been several comments about its importance, including calls made by former Health Minister, Dr Leslie Ramsammy on the importance of having such legislation in place.
Shareholders at the 83rd AGM of DEMTOCO on Wednesday
According to Managing Director of DEMTOCO, Maurlain Kirton, one of the challenges the company is facing is the existence of illicit traded products. She noted that while the company is not opposed to competition, it must be on a balanced playing field.
“The push for the company has been for balanced regulations – I’m sure you heard about the impending passing of a tobacco bill. The company is supportive of the passage of a tobacco bill. The concern of the company has to do with a balanced regulation,” Kirton explained to this newspaper on the sidelines of DEMTOCO’s Annual General Meeting (AGM), which was held on Wednesday at the Pegasus Hotel, Georgetown.
This concern was also raised by Chairman Felicio Ferraz, in his report. He pointed out that the widely-available smuggled brands of cigarettes made it exceptionally difficult for the company.
“Smuggled brands, which avoid the tax net of the Revenue Authority, continue to pose a challenge to the company,” he stated. In addition, he noted that most of the smuggled brands do not comply with existing product regulation.
Nevertheless, Ferraz went on to outline in his report that despite this challenge and others that the local Private Sector faced, DEMTOCO managed to achieve a profit before tax of $2.8 billion in 2016. This, however, represents a 2.3 per cent decline when compared to figures from the previous year.
The Chairman outlined that for the third consecutive year, Guyana has experienced a decline in the growth rate of its Gross Domestic Product (GDP), moving from 5.2 per cent in 2013 to 2.6 per cent in 2016. Ferraz said DEMTOCO’s portfolio performance reflected the need by customers for more affordable offers, compounded with other factors.
“Fortunately, (the) company has made a substantial investment in a sustainable portfolio of products catering for Guyanese discerning consumers. One of our Global Drive Brands, Pall Mall, acted as an obvious choice for Dunhill & Bristol consumers who are seeking quality products at a lower price,” he stated, adding that the impact on revenue was a reduction reflecting a two per cent year-on-year decline.
Last year, the company introduced Bristol Vibes – a new menthol product that was launched in October, adding dynamism to the Bristol family. Additionally, the Bristol brand in 2016 had two ‘limited edition packs’ commemorating Guyana’s 50th Independence anniversary from April to June and the New Year’s edition in November and December.
Moreover, the Chairman noted that the Board of Directors approved the fourth interim dividend of $12.62 per share which, together with a proposed final dividend of $8.63 per share, brings the total dividend for the year to $66.68 per share, representing a return of 6.5 per cent on the current share price. According to the Chairman, once the final dividend is approved, payment will be made.
He went on to outline that the company continued to uphold high standards in delivering its responsibility through its voluntary International Marketing Principles and Corporate Social Investment Programmes. He added that the company has also been campaigning and educating retailers nationwide that tobacco products should only be sold to persons above the age of 18, an initiative which its trading partners have supported.
Ferraz concluded that while the economic, business and wider environment continued to remain challenging for 2017, the company will continue to progressively drive and sustain shareholder value going forward.
“(DEMTOCO) has provided high-quality tobacco products to Guyana for over 83 years. With our wealth of knowledge and experience, we are indeed the industry leader, and will continuously seek to explore opportunities to satisfy consumer moments. Moreover, the company will persistently engage regulators with respect to the introduction of balanced regulation, which safeguards consumers’ rights of choice and smoking experience,” Ferraz stated.
