Category: Financial

Sampoerna Profit Dips

Photo: Sampoerna
Sampoerna sold 39.9 billion cigarettes in the first semester of 2024, 3 percent less than in the comparable 2023 semester. Net income increased 3 percent to IDR57.8 trillion, but net profit was down 11.6 percent to IDR 3.3 trillion.
Sampoerna President Director Ivan Cahyadi cited a challenging operating environment. “Although economic growth is relatively stable, the purchasing power of adult consumers tends to weaken,” he said in a statement. “The challenges of the tobacco industry are also added by the pressure of double-digit excise rate increases far above the inflation rate, and the widening gap in excise rates between segments.”
Rising taxes combined with declining consumer purchasing power has prompted many Indonesian smokers to shift to lower-taxed cigarettes or illicit offerings. According to Sampoerna, the “Below Volume Tier 1” segment has doubled since 2017 to claim 44 percent of the cigarette market.
“Moving forward, we hope that the government continues to issue a multi-year tobacco excise policy based on clear economic parameters, like inflation rates, as well as considering adult consumers’ purchasing power, to create a conducive and sustainable business and investment climate combined with the continuous effort to combat illicit cigarettes,” said Cahyadi.
“In addition, the government is also hoped to continue implementing policies that will support the continuity of the labor-intensive segment such as hand-rolled kretek cigarette (SKT) and halt the acceleration of downtrading to optimize government revenue from tobacco excise.”
Cahyadi also emphasized the importance of a balanced excise policy based on risk profiles to support innovation in the tobacco industry.
In 2023, Sampoerna invested more than $300 million in smoke-free products factory in Karawang, West Java.
Earlier this year, the company opened third-party operator factories in Jaten, Central Java and Dander, East Java.
Throughout the first semester of 2024, Sampoerna employed, directly and indirectly, more than 90,000 people, of which around 90 percent are working in the labor-intensive SKT segment.
August 1, 2024
Altria Reports Results

Image: Altria Group
Altria Group reported net revenues of $6.21 billion for the second quarter of 2024, down 4.6 percent from the comparable 2023 quarter. Revenue net of excise taxes declined 3 percent to $5.28 billion.
The company attributed the decreases to lower net revenues in the smokeable products segment, partially offset by higher net revenues in the oral tobacco products segment.
“Altria’s momentum continues to build as we pursue our vision to responsibly lead the transition of adult smokers to a smoke-free future,” said Altria CEO Billy Gifford in a statement.
“In the second quarter, our companies’ innovative smoke-free products delivered strong share and volume performance, and we hit meaningful milestones that we believe set us up for future success. Njoy received the first and only marketing granted orders from the FDA for menthol e-vapor products, and we submitted PMTA applications to the FDA for next generation Njoy and On! products.
“Our traditional tobacco businesses also remained resilient, despite a challenging operating environment. Our highly cash generative businesses supported continued investments in our innovative product efforts, and we returned significant value to shareholders during the first half of the year, with more than $5.8 billion delivered to shareholders through share repurchases and dividends.”
July 31, 2024
BAT Reports Results
BAT reported revenue of £12.34 billion ($15.88 billion) for the first half of 2024, down 8.2 percent from the comparable 2023 period. The decline was driven by unfavorable currency exchange rates and the sale of BAT’s businesses in Russia and Belarus following Russia’s invasion of Ukraine.
Reported revenue from new-category products, which include vapes, heated tobacco and nicotine pouches, declined 0.4 percent to £1.65 billion. Smokeless brands now account for 17.9 percent of BAT’s group revenue, up 1.4. percentage points from fiscal year 2023.
Profit from operations was £4.26 billion on a reported basis, down 28.3 percent from the first half of 2023. BAT attributed the decline to its December 2023 decision to write down the value of some of its traditional cigarette brands in the United States to reflect the diminishing outlook for combustible tobacco products, along with its exit from Russia and Belarus.
The company said it’s unlikely to hit its £5 billion revenue target in 2025 for new-category products, blaming fierce competition from illicit vapes in the United States. The U.S. accounted for more than 40 percent of BAT’s revenues in 2023, primarily from traditional tobacco products, according to Reuters.
Tadeu Marroco
In a statement, BAT CEO Tadeu Marroco welcomed the U.S. Food and Drug Administration’s recent marketing authorization of its Vuse Alto device and tobacco flavor consumables but expressed concern about the continued lack of enforcement against unauthorized single-use vapes, which makes it difficult for authorized brands to compete in that market.
Nonetheless, Marroco said BAT is on track to deliver its full-year guidance. “Focusing on ‘quality growth’ is delivering better returns on more targeted investments across all three new categories,” he said. “In H1 2024, we increased organic new-category contribution by £165 million—at constant rates—and I am particularly pleased with the growth of modern oral. We expect to deliver further improvement in revenue and profitability across our new categories for the full year.”

Photo: BAT
July 25, 2024
Smoke-free Product Sales Boost PMI Income

Photo: PMI
Philip Morris International’s operating income jumped 34.2 percent to $3.44 billion for the quarter that ended June 30. On an adjusted basis, operating income rose 3.5 percent to $3.66 billion. Net revenues were $9.47 billion, compared with $8.97 billion in the comparable 2023 quarter.
During the quarter, PMI shipped 157.6 billion cigarettes, 35.5 billion heated tobacco units and 4.2 billion oral smoke-free products, a category that excludes snuff, snuff leaf and U.S. chewing tobacco.
The smoke-free business accounted for 38.1 percent of PMI’s total quarterly revenues, up 2.7 percentage points from the comparable 2023 period. Oral smoke free products experienced the largest volume gains, growing by 20 percent from second quarter last year.
This growth was driven by primarily the popularity of Zyn nicotine pouches in the U.S., where shipments reached 135.1 million cans, representing growth of 50.3 percent versus the prior-year quarter. The company expect Zyn sales to reach 580 million cans in 2024.
Scrambling to fulfill ferocious U.S. demand for Zyn, PMI recently announced a $600 million investment in a new nicotine pouch factory in Aurora, Colorado.
Quarterly heated tobacco product sales were strong in Japan, following an expansion of the IQOS product range, as well as Greece, Hungary and Spain. In Japan, Philip Morris grew its market share for heated tobacco by more than 3 percentage points to more than 29 percent.
The company will begin a trial of IQOS in Austin, Texas, USA, in the fourth quarter of this year, according to Chief Financial Officer Emmanuel Babeau.
“The excellent momentum of our smoke-free business continued with an outstanding second-quarter and first-half performance,” said PMI CEO Jacek Olczak in a statement.
“The powerful combination of excellent underlying performance and proactive measures across all categories enabled our business to outperform once again, and we are on track for a strong 2024. As a result, we are raising our full-year guidance, despite currency headwinds.”
July 23, 2024
KT&G Investor Wants New CEO Pay Structure

Photo: bong
KT&G shareholder Flashlight Capital Partners has demanded a revision of CEO compensation plan to normalize stock price.
“In the recent past, KT&G’s former CEO was awarded a significant amount of compensation despite a 21 percent drop in KT&G’s stock price, while the KOSPI [The Korea Composite Stock Price Index] surged by 27 percent,” said Flashlight Managing Partner Capital Sanghyun Lee in a statement. “In March 2024, we urged the KT&G board to link the CEO compensation to stock performance, but no action has been taken so far,” Lee added.
Under the plan proposed by Flashlight Capital, the CEO will receive a base annual pay of KRW100 million ($72,199) and be granted shares based on stock price milestones over the next three years. For instance, if the stock price doubles, the CEO will be awarded shares worth KRW10 billion.
“Many of the current KT&G board members are under police investigation for potential bribe charges,” Lee highlighted. “Given that KT&G’s stock price is over a 50 percent discount compared to industry peers, we believe doubling the stock price is highly achievable, provided the board act promptly and decisively.”
Flashlight Capital has proposed an extraordinary general meeting for shareholder approval and requested a response from the KT&G board by the end of July.
July 16, 2024
Pyxus Completes Strong Fiscal 2024

Photo: Pyxus International
Pyxus International reported sales and other revenue of $2 billion in fiscal year 2024, up 6.1 percent over its 2023 results. The company attributed this growth to “consistent execution” and an increase in average pricing of 10.5 percent, partially offset by slightly lower volume of 4.4 percent compared to fiscal 2023. Operating income increased 46.3 percent to $137.2 million, reflecting a more favorable business mix as well as improved operating efficiencies.
“We achieved strong fiscal year 2024 results through our continued identification and capture of opportunities for growth, acceleration of our operating cycle times, improved working capital efficiency and increased availability of our total liquidity,” said Pyxus’ President and CEO Pieter Sikkel in a statement.
“Our discipline is enabling a significant reduction of long-term debt that strengthens our capital structure and demonstrates our ability to achieve near-term operating and financial objectives while ensuring that the business remains positioned for long-term success.”
For fiscal 2025, Pyxus anticipates sales to range between $2.1 billion and $2.3 billion and adjusted EBITDA to range between $165 million and $185 million. The company believes it is well positioned to successfully navigate an industry operating environment for fiscal 2025 that, due to the El Niño weather phenomenon, is generally expected to have a short-term negative impact on margins.
June 6, 2024
BAT Expects Lower First-Half Profit

Photo: BAT
Declining sales of cigarettes and growing competition from illegal vapes in the U.S. will likely dent British American Tobacco’s 2024 earnings, the tobacco manufacturer said in a pre-close trading update on June 4.
Analysts estimate BAT will make £27.60 billion ($35.35 billion) in total organic revenue and adjusted operating profit of £12.48 billion for the year, according to The Wall Street Journal.
BAT noted that while the U.S. was showing some early signs of recovery, traditional cigarette volumes were down around 9 percent so far this year across the industry.
Chris Beckett, head of equity research at Quilter Cheviot, told Reuters BAT’s anticipated decline in first-half revenue and profit was “more pronounced” than expected.
The company expects half-year revenue and adjusted profit from operations to fall by low single digits, but says it is on track to deliver its guidance for the full year.
“We expect our performance to be second-half weighted, mainly driven by wholesaler inventory movements related to continued investment in our U.S. commercial actions, as well as the phasing of new launches,” said BAT CEO Tadeu Marroco.
“Our guidance also reflects ongoing macro-economic pressures, particularly in the U.S. market and continued lack of effective enforcement against the growing illicit vapor segment. As a result, we expect our H1 revenue and adjusted profit from operations to be down by low-single digits on an organic, constant currency basis.”
June 5, 2024
ITC Reports Growth in Cigarette Business

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ITC reported gross Revenue of INR694.46 billion ($8.34 billion) for the 12 months that ended March 31, up 6.8 percent over the comparable period a year earlier. Net revenue of conglomerate’s cigarette businesses was up 7.1 percent.
“After a period of sustained growth momentum, the business witnessed consolidation in volumes on a high base amidst subdued demand conditions in the overall consumption space, even as illicit trade remained at elevated levels,” the company wrote in a statement.
“Differentiated and premium offerings saw robust traction during the year. Sharp escalation in leaf tobacco prices and other inputs, along with increase in taxes were largely mitigated through improved mix, strategic cost management and calibrated pricing.”
During the reporting period, ITC launched several new cigarette brands, including Classic Alphatec, Classic Icon and Gold Flake Indie Mint.
The company continues to be concerned about the strength of the illicit market. While recent stability in cigarette taxes has enabled the legal cigarette industry to claw back some of the volumes lost to illegal traders, India remains the world’s third largest illicit cigarette market, according to ITC, with tax-avoiding products accounting for roughly one-third of the market.
The company said it continues to engage with policy makers for a framework of evidence-based regulations and taxation policies that balance India’s economic imperatives and tobacco control objectives.
May 23, 2024
Universal Income Up

Photo: Taco Tuinstra
Universal Corp. reported sales and other operating revenue of $2.75 billion in fiscal year 2024, up 7 percent over that recorded in 2023. Operating income grew 23 percent to $222 million. The company’s tobacco operations contributed sales and operating revenues of $2.44 billion, $180.5 million more than in 2023.
“Universal Corp. had a positive finish to a strong fiscal year 2024 with notable financial and operational performance in both the fiscal year and quarter ended March 31, 2024,” said chairman, President and CEO George C. Freeman III in a statement.
“Fiscal year 2024 was an exceptional year for our tobacco business, as a favorable product mix, strong customer demand and the sale of larger crops in Africa, compared to fiscal year 2023, drove our strong operating results. Fiscal year 2024 was also a significant building year for our ingredients business.”
While expecting leaf tobacco supply and demand to return to a more balanced position over time, Freeman said tobacco supply remains tight and green tobacco prices elevated. “We continue to leverage our diverse global footprint and financial flexibility to manage these conditions and to execute our tobacco strategies,” he said.
“For example, during the fourth quarter of fiscal year 2024 and into the first quarter of fiscal year 2025, we accelerated buying in Brazil to ensure access to the tobacco we need for our customers [also see “The Great Scramble,” Tobacco Reporter, May 2024].
“This accelerated buying, combined with higher green tobacco prices, resulted in increased use of working capital and higher debt levels at March 31, 2024. We expect most of the net impact on working capital from our accelerated buying strategy to naturally unwind over the next two years.”
May 23, 2024
Revenue and Income Up at RLX Technology

Photo: RLX Technology
RLX Technology reported net revenues of RMB551.6 million ($76.4 million) in the first quarter of 2024, up from RMB188.9 million in the same period of 2023. Gross margin was 25.9 percent, compared with 24.2 percent in the 2023 period. U.S. GAAP net income reached RMB132.6 million, compared with U.S. GAAP net loss of RMB56.3 million in the same period of 2023.
“We started 2024 with a steady first quarter,” said Ying (Kate) Wang, co-founder, chairperson and CEO of RLX Technology in a statement. “Our international business is developing positively as we refine our regional strategies. Despite challenges posed by regulatory changes across various regions, we continue to identify opportunities and leverage our core strengths to prudently enter potential markets.
“Domestically, we are encouraged by the positive impact of China’s recent regulatory crackdown on illegal products, but much progress remains to be made. We remain committed to collaborating with regulators and advocating for a well-regulated and healthy e-vapor industry. As a trusted e-vapor brand for adult smokers, we are dedicated to optimizing our product portfolio with premium, compliant, and innovative products that meet our users’ needs and drive growth in this evolving industry.”
The first quarter marked RLX Technology’s fifth consecutive quarter of sequential revenue growth, according to Chief Financial Officer Chao Lu. “With our resilient business model, effective regional strategies, and consistent strong execution, we are confident of sustaining this growth trajectory and delivering sustainable value to our stakeholders,” he said.
May 17, 2024