Author: Marissa Dean

  • RLX Technology Net Revenue Decreases

    RLX Technology Net Revenue Decreases

    Image: Mongkol

    RLX Technology announced its unaudited financial results for the second quarter ended June 30, 2023.

    Net revenues were RMB378.1 million ($52.1 million) in the second quarter of 2023 compared with RMB2.2 billion in the same period of 2022. The decrease was primarily due to the discontinuation of our older products and the negative impact of illegal products in the market after regulators’ special action ended in April, which disrupted users’ adoption of our new products that comply with national standards.

    Gross margin was 26.1 percent in the second quarter of 2023 compared with 43.8 percent in the same period of 2022. The decrease was primarily due to the imposition of a 36 percent excise tax, which came into effect on Nov. 1, 2022.

    U.S. GAAP net income was RMB204.7 million in the second quarter of 2023 compared with U.S. GAAP net income of RMB441.6 million in the same period of 2022.

    Non-GAAP net income was RMB86.2 million in the second quarter of 2023 compared with RMB634.7 million in the same period of 2022.

    “During the second quarter of 2023, we continued to firmly execute our core strategy amid the challenging market environment,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement. “Specifically, we remained dedicated to offering compliant, high-quality products while developing new products to meet users’ evolving needs. Though the recent resurgence of illegal products has had a lingering impact on our sales, we believe the impact will be temporary rather than a major trend that could derail our recovery trajectory. As a trusted e-vapor brand for adult smokers, we remain confident that, supported by regulatory oversight, our premium products will continue to win users’ trust and gradually supplant inferior and harmful illegal products. Moving forward, we will continue prioritizing product innovation, harm reduction and quality control initiatives while further enhancing our product portfolio as we strive to create sustainable value for all stakeholders.”

    Chao Lu, chief financial officer of RLX Technology, commented, “In light of the external challenges, especially the disruptions from illegal products, we deepened our focus on efficiency and profitability improvement during the second quarter. Thanks to our supply chain optimizations and product design enhancements, our topline improved sequentially to RMB378.1 million, and our gross margin rebounded by 1.9 percentage points from the first quarter of 2023. We also strengthened cost control, which helped significantly narrow our non-GAAP operating loss. Notably, our operating cash flow turned positive for the first time since the new regulations were enacted. We believe our strong cash position will continue to support us in navigating the evolving markets, and we will pursue further gains in cost optimization and efficiency improvement to accelerate the pace of recovery.”

    The company hosted an earnings conference call at 8:00 a.m. U.S. Eastern Time on Aug. 18, 2023 (8:00 p.m. Beijing/Hong Kong Time on Aug. 18, 2023).

    A live and archived webcast of the conference call will be available on the company’s investor relations website at https://ir.relxtech.com.

    A replay of the conference call will be accessible approximately two hours after the conclusion of the call until Aug. 25, 2023.

  • Egypt: Measures to End Tobacco Monopoly

    Egypt: Measures to End Tobacco Monopoly

    Image: efesenko | Adobe Stock

    Tobacco producers and authorities in Egypt are implementing measures to end the distributors’ market monopoly, according to Ahram Online.  

    The price of locally produced cigarettes has almost doubled over the last three months. The Eastern Company, which holds a 75 percent share of the market, responded by increasing supply.

    “The Eastern Company has increased supply in the market from 20 percent to 30 percent,” said Hani Aman, CEO of the Eastern Company.

    The prime minister also held a meeting involving the minister of finance to review available stock and plans being implemented by the Eastern Company to increase production and help stabilize the market.

    The meeting was used to look at measures being taken to provide necessary raw materials for manufacturing, according to Cabinet spokesperson Nader Saad.

    The current crisis was partly caused by a hard currency shortage, affecting the import of necessary raw materials.

    Aman stated that it will take efforts of four parties to end the crisis. The first is Eastern Company; regulatory bodies are the second—these are already intensifying efforts to combat monopolization and traders’ exploitation of the market crisis.

    “The third party is the merchants whom I call upon to cease stockpiling cigarettes, particularly given the ineffectiveness of such practices in light of the measures taken by regulatory entities,” Aman said. “The fourth participant is the consumer. I appeal to consumers to refrain from purchasing quantities beyond their actual needs and to avoid hoarding.”

    “Authorities have confiscated over 200,000 packs of cigarettes in various locations, including Basateen, Matariya, Bab Al-Bahr, Tanta, Alexandria and Sayeda Zeinab,” said Ibrahim Imbabi, head of the Tobacco Division at the Federation of Egyptian Industries, who believes the current measures are not enough.

    “I have proposed channeling the confiscated quantities to national gas stations [many of which sell different tobacco brands], thereby ensuring that prices remain stable. This approach would also involve a restructuring of the distribution network, with the Eastern Company directly supplying retailers instead of relying on distributors.”

  • Public Meeting on PMTA Process

    Public Meeting on PMTA Process

    Credit: JHVEPhoto

    The U.S. Food and Drug Administration will hold a two-day public meeting on the agency’s premarket tobacco product application (PMTA) process on Oct. 23–24, 2023.

    The meeting will be held on the FDA’s White Oak Campus in Silver Spring, Maryland, and will be in a hybrid format with the option to attend virtually.

    Staff from the Center for Tobacco Products’ Office of Science will present on topics related to the PMTA process and be available to respond to questions received from stakeholders on the topic, according to a press note.

    Additional information, including registration and question submission processes, will be available soon.

  • Indonesian Customs Seizes Millions in Goods

    Indonesian Customs Seizes Millions in Goods

    Image: Tobacco Reporter archive

    Customs in Batam, Indonesia, have seized illicit goods worth IDR1.37 trillion ($89.35 million) in the first half of 2023, including tobacco products, illegal cigarettes, e-cigarettes and alcoholic beverages containing methanol, according to 2Firsts.

    The operation was a result of tax operations aiming to ensure compliance of retail tax paying sellers as part of the area’s free-trade zone and free port, according to Anbang Puriyongo, director of Batam Customs.

    Three individuals have been named as suspects and undergone trial, according to Puriyongo. He called on citizens to report suspicious activities and actively participate in creating a fair trading environment.

    “We will further enhance inter-department coordination and cooperation, leveraging the latest technology,” Puriyongo said. “We aim for such actions to continue in the future, creating a better trading environment for Indonesia.”

  • Zimbabwe Approves New Agrochemicals

    Zimbabwe Approves New Agrochemicals

    Photo: Taco Tuinstra

    Kutsaga, formerly the Tobacco Research Board, approved new agrochemicals for tobacco crops to help support farmers in producing high-quality crops for global markets, according to the Zimbabwe Independent. The new agrochemicals will boost tobacco quality, according to Kutsaga.

    “As over 90 percent of the Zimbabwean tobacco crop is exported, the tobacco must meet stringent international agrochemical regulations for international acceptance and maintenance of markets, especially in an increasingly competitive global market,” Kutsaga said.

    “Furthermore, compliance with global health standards, correct and safe use of crop protection agents as well as good agronomic practices in tobacco production is key to sustainable agriculture.”

    A number of agrochemicals have also been recalled due to safety concerns.

  • Share of Tobacco Producers Drops

    Share of Tobacco Producers Drops

    Image: Tobacco Reporter archive

    The share of leading tobacco producers in the Russian market dropped by 2.5 percentage points in the first half of 2023, according to research from the National Research Center of Competencies Against Illegal Turnover of Industrial Products reported by Tass.

    “According to results of the survey, the market share of products of the top 4 (country’s largest) manufacturers dropped by 2.5 percentage points,” the center said. “It stood at 83.3 percent.”

    Product share not related to the top 4 companies in the region was 16.7 percent compared to 14.2 percent in the previous year’s research. Counterfeit product share totaled 3.2 percent.

    “The decline in the share of illegal turnover of such products by 8 percent was also registered,” according to the center. “The overall share of the illegal turnover of tobacco products across the country stands at 13.3 percent in terms of the total number of smokers in the country.”

    Following Russia’s military invasion of Ukraine in 2022, tobacco multinationals vowed to withdraw from Russia or substantially scale back their operations, although some have found it difficult to do so as Moscow tightened restrictions on such transactions.

  • Former CTP Official to Lead Truth Initiative

    Former CTP Official to Lead Truth Initiative

    Kathy Crosby | Image: Truth Initiative

    Truth Initiative has named Kathy Crosby as its new CEO and president effective Oct. 2, 2023. Crosby is succeeding Robin Koval, who has served as CEO and president since 2013 and is retiring after a decade. “Kathy’s impressive background, extensive experience and passion for public health make her an exceptional choice to lead our organization,” said Truth Initiative board chair Mike Moore in a statement.

    Crosby joins Truth Initiative from the U.S. Food and Drug Administration’s Center for Tobacco Products (CTP), where she served as director of the Office of Health Communication and Education for the past 12 years. In this role, she spearheaded impactful public education, research and evaluation, and regulatory communication programs that have been instrumental in advancing the successful implementation of the Tobacco Control Act. With a 25-year career in behavior change marketing and advertising, Crosby brings a wealth of experience from both private and nonprofit sectors where she held various senior leadership roles; prior to her tenure at the FDA, she served as senior vice president and group campaign director of the Washington office of the Ad Council and as vice president of strategic planning at Arnold Worldwide, where she helped launch Truth Initiative’s iconic truth campaign.

    Crosby’s career at the FDA includes roles within the executive leadership team responsible for shaping national policies aimed at reducing tobacco-related disease and death. Her contributions encompass diverse areas, such as policy development, cutting-edge social science research, regulatory actions, communications and strategic outreach. Notable accomplishments under her guidance include her involvement in the formulation of health warnings for cigarette packages and advertisements, groundbreaking research on health equity, regulations for emerging tobacco products and the implementation of stringent marketing restrictions on newly authorized tobacco products.

    As the first director of health communication and education at the FDA’s CTP, Crosby oversaw vital initiatives that contributed significantly to reducing tobacco use. These include the creation of a comprehensive communication office, development of tailored advertising campaigns targeting at-risk populations, establishment of the Tobacco Education Resource Library, execution of a robust conference exhibit program and the launch of the FDA’s Vaping Prevention and Education Resource Center.

    “I’ve dedicated the last 25 years to using public education communications as a means of creating behavior changes that will help people live healthier lives—a passion that began when I worked on the first truth campaign,” said Crosby. “Leading Truth Initiative feels like I’m coming home, and I can’t think of a better time or place to continue advocating for positive change. The opportunity has never been greater to help people leave tobacco behind, and I eagerly look forward to the work ahead.”

    Koval said, “Kathy is an exceptional leader with a proven track record in public health communication, social science research and tobacco prevention. With her highly relevant experience and accomplishments, Kathy is well poised to lead Truth Initiative into the future, build on the organization’s lifesaving legacy and continue to make a significant impact on the health and well-being of our nation’s youth.”

  • ITC Revenue Up 11 Percent

    ITC Revenue Up 11 Percent

    Image: Tobacco Reporter archive

    ITC has released its financial results for the quarter ended June 30, 2023.

    Excluding the company’s agriculture business, gross revenue was up 10.6 percent year-over-year; profit before tax was up 18.2 percent year-over-year.

    The company saw continued strong performance by the cigarettes segment. Net segment revenue was up 10.9 percent year-over-year. Deterrent actions by enforcement agencies and relative stability in taxes helped sustain volume clawback from illicit trade.

    Agribusiness segment revenues were up 31 percent year-over-year, excluding wheat exports. Strong customer relationships and agile execution in leaf tobacco and value-added agri-products drove growth and margins.

    Amid a challenging operating environment and high base effect in some of its operating segments, the company sustained its strong growth momentum during the quarter driven by focus on customer centricity, accelerated digital adoption, execution excellence and agility.

    Gross revenue stood at INR168.43 billion, representing a de-growth of 7.3 percent year-over-year while profit before tax, at INR65 billion, grew by 18.2 percent year-over-year. Profit after tax grew by 17.6 percent year-over-year to INR49.03 billion.

  • Secretariat Laments Industry Pressure

    Secretariat Laments Industry Pressure

    Image: Olexandr

    The Framework Convention on Tobacco Control (FCTC) Secretariat has warned participants in the 10th session of the Conference of the Parties (COP10) to the FCTC and the third Meeting of the Parties (MOP3) to the Protocol to Eliminate Illicit Trade in Tobacco Products against tobacco industry offers of travel and technical support.

    The convention Secretariat insists there is a fundamental and irreconcilable conflict between the tobacco industry’s interests and public health policy interests. In a statement on its website, the convention Secretariat reiterated its invitation to parties to observe Article 5.3 of the FCTC and urged them to be mindful of the recommendations 4.9 and 8.3 of the guidelines for implementation of FCTC Article 5.3.

    COP10 will take place Nov. 20–25 in Panama City. MOP3 will take place Nov. 27–30.

  • Ispire Appoints Top Executives

    Ispire Appoints Top Executives

    Image: CrazyCloud

    Ispire Technology has appointed Michael Wang as its co-chief executive officer. Wang previously served as chief financial officer. Concurrently, Daniel J. Machock was appointed as the new chief financial officer.

    Wang has assumed the role of co-chief executive officer alongside Tuanfang Liu. This strengthened leadership structure is designed to refine Ispire’s strategic direction and spearhead the company’s future growth. Ispire’s decision to elevate Wang stems from his record in strategic and financial leadership.

    “Having been deeply involved with Ispire’s progress, I look forward to partnering with Tuanfang to further the company’s growth and expansion,” said Wang in a statement. “Together, we share a mutual vision of global development and pioneering innovation within the company.”

    With extensive 25-year experience in financial strategy, including at Appetize Technologies and Chrome River Technologies, Ispire expects Machock to bolster its financial footing.

    “I am honored to take on the role of CFO at Ispire,” said Machock. “Eager to harness my financial expertise, I deeply value the company’s unwavering dedication to innovation in the cannabis vaping arena and am committed to contributing to its continued success.”