DEMTOCO records 5.8% increase in profits despite illegal cigarette trade 

  – lauds Govt for support, but urges more action

Labelling the illegal cigarette trade as a threat to not only their company but to the country’s business community as a whole, Demerara Tobacco Company (DEMTOCO) has called for more to be done to arrest this illegal trade.
In a statement proclaiming that they have increased revenue by 5.8 per cent to $7.7 billion, Managing Director of Demerara Tobacco Company Limited, Vijay Singh noted that this illegal trade could grow by 10 per cent by 2024, making it unmanageable in the market.

“The company believes that the rapid increase and far-reaching presence of illegal cigarettes will negatively impact their business, and Government revenues and further incentivise criminal activities in the communities,” Singh said.
“The company has seen a similar situation play out in neighbouring Suriname, in which, the trade, left unchecked, ruined the revenue streams for the Government and the legitimate industry,” he further explained.
Singh acknowledged that in Guyana, DEMTOCO has been receiving support from various law enforcement agencies. However, the Managing Director made it clear that much more has to be done at an accelerated and urgent pace as the illicit traders are increasing their market share on a daily basis.
In the meantime, Singh said that the company remains committed to raising awareness of this issue through active engagement with regulators, the Government, and the private sector. In fact, the threat of illicit trade was also highlighted in his report at the company’s 89th Annual General Meeting.
“Despite the challenges posed by the illicit trade, the company’s premium brand, Dunhill, grew significantly by 11 per cent, driven by continuous innovation that the brand offers which consumers embraced, and its Pall Mall brand experienced a 7 per cent growth,” Singh said.
“Demerara Tobacco Company’s Managing Director urged shareholders to highlight this plight to ensure public awareness is at its peak. The company remains committed to ensuring sustainable growth through continuous improvements in their portfolio, distribution, and retention of the best talent in the market.”
Notwithstanding the threat from the illegal cigarette trade, DEMTOCO was able to record strong operational performance for the second consecutive year, achieving 3.6 percent volume growth compared to the previous year.

“The company’s revenue growth increased by 5.8% to G$7.7 billion, mainly driven by improvements to portfolio mix and volume increases, resulting in a 2.5% increase in earnings per share,” the company statement said.
The Managing Director also highlighted that “share price at the close of the financial year stood proudly at G$3,000 representing a 50 per cent increase which solidifies the confidence of our shareholders and commitment of management to deliver on expectations”.
DEMTOCO, which distributes popular brands of cigarettes including Bristol and Pall Mall, has over the years been warning about the threat of the illegal cigarette trade. This illegal trade, coupled with tightening regulations, have previously seen the company weather various storms including decreasing profits.
In 2017, the company had recorded a 9.5 per cent decrease in pre-tax profit when compared to 2016. The pre-tax profit for 2017 stood at $2.5 billion. In the three years preceding 2018, DEMTOCO had been recording declining profits. In 2017, after-tax profit stood at $1.4 billion, whereas the company had raked in $1.5 billion in 2016 and $1.6 billion in 2015… all before it started turning its fortunes around in 2018.