Category: Financial

  • Licensing tobacco firms

    Licensing tobacco firms

    Tobacco companies in Papua New Guinea (PNG) will be required shortly to pay a license fee to operate in the country, according to a story in The Post-Courier quoting the Health Minister Sir Puka Temu.

    Speaking yesterday, Sir Puka said a law had been passed to that effect and the grace period had lapsed.

    The Tobacco Act was passed by Parliament in 2016 and certified by the Speaker in 2017 to become effective immediately.

    However, in April 2017, the National Executive Council (NEC) introduced a grace period to give manufacturers and importers time to make the transition to the new legislation.

    “I want to make it clear,” Sir Puka said, “that the Act is mandatory for all importers, manufacturers, and other businesses that deal with the tobacco products in PNG.

    “Sufficient time has been allowed for all operators to make the necessary adjustment.”

    Sir Puka said the purpose of the legislation was to control the manufacture, distribution, sale and use of tobacco and tobacco products, and that it would now be enforced because of the harmful effects of tobacco on people.

    However, the new law cannot be enforced immediately because the license fees have not been set; though Sir Puka said that his department was in the final stages of setting the fees.

  • Vaping saves money

    Vaping saves money

    Smokers in New Zealand can now improve their physical and financial health considerably by switching to vaping.

    According to a story in The Bay of Plenty Times, a January 1 tax increase was at least partially responsible for taking the retail price of a pack of 20 cigarettes to more than NZ$20, and in the case of some brands to more than NZ$25.

    The excise tax increase behind the price rise is part of a series of annual increases, the last of which is due to be imposed on January 1, 2020.

    In the face of the latest price hike, many smokers are switching to vaping as a cheaper option or because of the associated health benefits.

    Shosha [a large retail group offering, among other items, vaping devices and e-liquids] vaping store manager Harinder Singh said more people were switching to vaping than ever due to the huge financial savings and health benefits. Most vapers, he said, could expect to pay NZ$60 a week less than they were paying as smokers.

    Meanwhile, Mihi Blair of Hapai Te Hauora Maori Public Health said the organization was urging smokers, particularly wahine, to vape as a way of kicking the habit. “Whanau who are wanting to learn more about vaping or going smoke-free should contact Quitline,” Blair said.

    Quitline was expecting an influx of calls and texts from people seeking support this month because such people often said their key motivation was to save money, according to Quitline’s communication manager Calvin Cochran.

  • Santa Fe supports growers

    Santa Fe supports growers

    Santa Fe Natural Tobacco Company (SFNTC) has donated $100,000 to the Carolina Farm Stewardship Association (CFSA) for the creation of the Hurricane Relief Partnership for Carolina Sustainable Farms.
    SFNTC is a subsidiary of Reynolds American, which is an indirect, wholly owned subsidiary of British American Tobacco.
    SFNTC, a member of the non-profit CFSA, said that the new hurricane relief partnership had two key purposes:

    • To provide access to low-cost capital and financial planning to between 30 and 50 small sustainable farms in North and South Carolina that suffered damage due to the impact of Hurricanes Florence and Michael; and
    • To create an endowment fund to guarantee availability of low-cost financing for small sustainable Carolina farms in the event of future catastrophic weather events.

    “The Hurricane Relief Partnership for Carolina Sustainable Farms marks the beginning of a new strategy in building the financial resilience of our region’s sustainable agriculture community,” said Roland McReynolds, CFSA’s executive director.
    “The probability of disasters in future years presents a long-term threat to the survival of sustainable family farms serving the markets for local and organic agricultural products in this region.
    “These farms, some of which are SFNTC’s grower partners, are not reliably served by the safety net that exists for large-scale conventional commodity production. Yet the contributions they make to their communities — enhanced soil and water quality, biodiversity, healthy food, economic growth — are vital, and when one of these farms is lost, it has long-lasting negative effects.”
    According to a press note on the Reynolds American website, CFSA will work with the Natural Capital Investment Fund (NCIFund) to leverage SFNTC’s donation to create up to $250,000 in low-cost microloans for small, sustainable farms in North and South Carolina affected by the hurricanes.
    ‘CFSA will also partner with the Rural Advancement Foundation International-USA to support its work to assist farmers in accessing state and federal disaster relief programs, and to provide financial counselling to farmers receiving NCIFund loans under the Hurricane Relief Partnership program,’ the note said.
    McReynolds added that CFSA would use funds that were not expended as part of the 2018-19 NCIFund loan guarantee agreement as a guarantee pool for weather-related farm losses beyond 2019.
    The association would solicit also other contributions to this endowment, with a goal of building a larger guarantee fund to support greater availability of low-cost, low-underwriting microloans for this population of small, sustainable farms in future years.

  • Universal results improved

    Universal results improved

    Universal Corporation’s results were improved due to strong sales volumes, in part because of higher carryover sales and higher African Burley production volumes, said chairman, president, and CEO George C. Freeman III in announcing yesterday the company’s half-year results to the end of September.
    “We have completed a significant portion of our crop purchases for the fiscal year,” Freeman was quoted as saying. “Burley production volumes are up in Africa, and crops outside of the United States are coming in as expected.
    “Hurricane Florence caused significant damage to the United States’ flue-cured tobacco crop during the second fiscal quarter. The most severely hit area was eastern North Carolina where we estimate up to half of the crop was still in the fields and most of that remaining crop was destroyed.
    “However, our farmer base is largely located outside of what was the storm’s direct path, which should mitigate the impact on our results in the second half of the fiscal year.
    “Despite the recent supply disruptions in the United States, we believe that we are on track for a strong year with volumes above those of last year. Customer demand has exceeded our expectations in certain origins, and we believe some customers are capitalizing on attractive buying opportunities that we have been able to offer due to our strong market position and efficient operations.
    “Our uncommitted inventories remain within our target range at levels lower than those of the previous fiscal year at this time.”
    Freeman went on to say that Universal was exploring opportunities to expand its services in its core tobacco business, while exploring also growth opportunities outside that business, leveraging its strengths and expertise.
    Universal reported net income for the first half of fiscal year 2019 of $44.6 million, or $1.76 per diluted share, which was increased from $29.7 million, or $1.16 per diluted share during the same period of the previous fiscal year. The first half of fiscal year 2019 was said to have included non-recurring tax benefits that reduced income taxes and increased net income by $7.8 million, or $0.30 per diluted share.
    Operating income of $62.7 million for the six months to the end of September 30 was said to have been increased by $11.6 million or 23 percent on that of the six months to the end of September 30, 2017, $51.2 million.

  • ILO funding move welcomed

    ILO funding move welcomed

    The International Labour Organization (ILO) no longer relies on funding from tobacco companies and affiliated organisations, for the time being, according to a note posted on the website of the Framework Convention Alliance (FCA).
    ‘In its Decision concerning contracts that had tied the ILO to an industry whose products kill more than seven million people each year, the Governing Body of the ILO adopted an integrated strategy to address decent work deficits in the tobacco sector,’ the note said.
    ‘The Governing Body has directed the ILO director general “to continue efforts to mobilize various sustainable sources of funding from the public and private sector with appropriate safeguards”.’
    The FCA said it was confident the ILO would apply appropriate safeguards to its future fund-raising efforts to ensure that it no longer accepted funding from the tobacco industry.
    ‘The FCA also commends the ILO for its continued dedication to protecting the rights of workers within the tobacco sector and for the commitment it has shown in thoroughly addressing the issue of funding from tobacco companies.
    ‘The ILO’s contracts with the Eliminating Child Labor in Tobacco Growing (ECLT) Foundation and with Japan Tobacco International (JTI) expire in June and December 2018, respectively.
    ‘Rejecting funding from tobacco companies will allow the ILO to maintain its impartiality and enhance its capacity to address the issues that trap workers in systemic poverty including unfair contracts, collusion by companies over leaf prices, and inflation of the costs of farm inputs.
    ‘Other UN agencies should take note. The ILO has set an important precedent by taking the issue of tobacco industry funding seriously and addressing it institutionally. It has positioned itself to go further in addressing the root causes of systemic poverty in the tobacco sector, free from the undue influence of tobacco companies, consistent with Article 5.3 of the World Health Organization’s Framework Convention on Tobacco Control (WHO FCTC) and the Model Policy for agencies of the United Nations system on preventing tobacco industry interference.
    ‘The Governing Body has also directed the ILO director general to organise a tripartite meeting as a matter of urgency, to further develop and implement the integrated strategy. This upcoming tripartite meeting presents an opportunity to expand protections for workers within the tobacco sector and completely shut the door on any undue tobacco industry influence.’

  • NGP portfolio heating up

    NGP portfolio heating up

    Imperial Brands’ volume shipments of cigarettes and other tobacco products calculated as ‘stick equivalents’ (SE) during the 12 months to the end of September, at 255.5 billion, were down by 3.6 percent on those of the 12 months to the end of September 2017, 265.2 billion.
    Within that overall volume, US-market volume was down by five percent to 22.1 billion.
    In announcing its preliminary results for the year to the end of September, the company said that while its volume was down by 3.6 percent, it had outperformed industry volumes across its footprint.
    It had achieved share growth in many of its priority markets, while its Growth Brand share had risen by 0.7 of a percentage point.
    And it had enjoyed strong performances from ‘tobacco Specialist Brands: Backwoods, Kool, Rizla, Skruf and Premium Cigars’.
    An improved price/mix had delivered tobacco net revenue growth of 0.9 percent.
    Meanwhile, Imperial said it was delivering strong growth in next generation products focused on smoker conversion.
    It was delivering a satisfying, safer experience with a trusted brand, blu, supported by leading-edge science
    And it had a strong innovation pipeline focused on reduced risk products in the categories of vapor, heated tobacco and oral nicotine.
    Pulze, the company’s first heated tobacco product, was planned to be launched in early 2019.
    Tobacco and NGP (next generation products) net revenue was down by 0.3 percent, from £7,757 million to £7,730 million; tobacco and NGP adjusted operating profit was down by 1.1 percent, from £3,595 million to £3,557 million; distribution adjusted operating profit was increased by 17.3 percent from £181 million to £212 million; total adjusted operating profit was increased by 0.1 percent from £3,761 million to £3,766 million; and adjusted earnings per share were up by 1.9 percent from 267.0p to 272.2p.
    ‘FY18 was a successful year of delivery against our strategy and I’m pleased with the progress we are making in creating something better for the world’s smokers,’ said chief executive, Alison Cooper.
    ‘In NGP our main focus is on transitioning smokers to blu, a significantly less harmful alternative to cigarettes.
    ‘NGP also offers additive opportunities for our shareholders and the success of the international rollout of my blu has put us in a strong position to further invest and accelerate sales growth in FY19.
    ‘In tobacco we focus on providing smokers with an evolving portfolio of high-quality brands.
    ‘Following our additional brand investment in tobacco over the past two years, we have increased Growth Brand volume, share and revenue in our priority markets.
    ‘Our financial delivery was strong, with revenue and earnings growth, high cash generation and a further dividend increase of 10 percent.
    ‘Capital discipline remains central to all our activities, providing funds for investment and enhancing returns.
    ‘We have the strategy, assets and capabilities to realise the significant opportunities presented by a changing environment and to generate growing returns for our shareholders.’

  • Results webcast scheduled

    Results webcast scheduled

    Universal Corporation is scheduled to webcast a conference call on November 8 following the release of its results for the second quarter of fiscal year 2019 after market close on that day.
    The conference call will begin at 17.00 Eastern Time and will be hosted by Candace C. Formacek, vice president and treasurer.
    A live webcast of the conference call will be available online on a listen-only basis at www.universalcorp.com, while a replay will be available at the same site through February 8.
    A taped replay of the call will be available also from 20.30 on November 8 through November 22 at (855) 859-2056, using the telephone replay identification number 4048119.

  • JT's cigarette volumes up

    JT's cigarette volumes up

    Japan Tobacco Inc.’s domestic cigarette sales volume during the three months to the end of September, at 23.8 billion, increased by 1.3 percent on that of July-September 2017, 23.5 billion.
    In announcing its consolidated results today, JT said that despite increased demand ahead of a tax-led retail price revision, cigarette industry volume had decreased 1.1 percent during the quarter, impacted by the expansion of the reduced-risk product (RRP) category and the underlying ‘natural decline trend’.
    But JT’s cigarette sales volume had increased 1.3 percent led by a solid performance by the MEVIUS brand and the extra demand ahead of the price revision, estimated by JT as equivalent to about 0.4 of a month’s sales.
    JT’s cigarette market share during the third quarter increased by 1.5 percentage points to 62.5 percent from that of the third quarter of the previous year, and increased by 0.9 of a percentage point on that of the second quarter of this year. JT said that it had achieved cigarette market share gains for three consecutive quarters.
    Core revenue during the third quarter, at ¥172.2 billion, was increased by 15.8 percent on that of the third quarter of 2017, ¥148.7 billion. At the same time, adjusted operating profit increased by 19.5 percent to ¥69.3 billion.
    Meanwhile, Japan Tobacco International’s total shipment volume during the three months to the end of September, at 114.5 billion, was increased by 9.3 percent on that of the July-September 2017, 104.8 billion.
    Within that total, GFBs (global flagship brands) shipment volume was increased by 2.1 percent to 70.6 billion, from 69.2 billion.
    The shipment volume growth of 9.3 percent was said to have been driven by acquisitions in Ethiopia, Greece, Indonesia, the Philippines and Russia.  ‘Excluding acquisitions and inventory adjustments, total shipment volume declined 1.1 percent,’ JT said. ‘Quarterly volume increases and market share gains in France, Germany, Iran, Poland, the UK, the USA and several emerging markets did not offset the impact of industry volume contraction, notably in Russia and Taiwan. GFB shipment volume increased 2.1 percent, driven by Winston (+ 4.8 percent) and Camel (+ 0.9 percent).
    ‘Core revenue and adjusted operating profit core revenue increased 9.0 percent driven by volume contribution from acquisitions and a strong price/mix. Adjusted operating profit grew 9.5 percent including investments to strengthen the business foundation in the markets where we made acquisitions.’
    Including the results of its other businesses, JT’s July-September revenue increased by 9.7 percent to ¥600.5 billion, while its adjusted operating profit increased by 12.7 percent to ¥193.2 billion. Operating profit increased by 11.8 percent to ¥174.8 billion.
    In announcing the three-month and nine-month results, JT group president and CEO, Masamichi Terabatake, said that the group’s solid performance in the third quarter was mainly driven by robust pricing gains in the international tobacco business, leading it to revise upwards its forecast for adjusted operating profit at constant foreign exchange for the full year.
    “With strong momentum in our business, I am confident that the JT group is well positioned to achieve its mid- to long-term objectives, but we will continue to monitor the impact of currency movements and geopolitical risks,” he was quoted as saying.
    “Our total market share increased in Japan, demonstrating the resilience of our business and the strength of our brands. As for reduced-risk products, establishing a low-temperature heating category is taking longer than expected. We are therefore increasing our efforts to communicate the differences and benefits of the product compared to a high-temperature heating category.
    “In light of a changing regulatory environment and consumer trends, we are convinced that demand for the low-temperature heating products will grow further. Establishing this category remains our first priority to achieve a leading position, and as we expect the RRP market to be more competitive, we will invest for future growth.
    “We will continue to provide a range of choices within our portfolio strategy, including conventional tobacco products as the platform of the group’s profitability and RRP as our future growth driver.”

  • ZYN factory going up

    ZYN factory going up

    Swedish Match’s snus shipments in Scandinavia during the three months to the end of September, at 66.6 million cans, were increased by about eight percent on those of the three months to the end of September 2017, 61.7 million cans.
    During the same periods, shipments of moist snuff in the US were down by about six percent to 31.7 million cans, while shipments of snus and nicotine pouches outside Scandinavia were increased by 97 percent to 6.9 million cans.
    Swedish Match’s share of the Swedish snus market was down by 2.2 percentage points to 63.2 percent, while its share of Norway’s snus market was down by 1.1 percentage points to 51.0 percent.
    The company’s US cigar shipments during the three months to the end of September, at 427 million pieces, were increased by about five percent on those of the three months to the end of September 2017, 405 million pieces.
    During the same periods, the company’s chewing tobacco shipments, excluding contract-manufacturing volumes, fell by about seven percent to about 1,526,000 pounds.
    Swedish Match reported that, in local currencies, sales increased by 10 percent for the third quarter, while reported sales increased by 16 percent to SEK3,388 million.
    Also in local currencies, operating profit from product segments (excluding other operations and larger one-time items) increased by 13 percent, while reported operating profit from product segments increased by 19 percent to SEK1,317 million.
    Operating profit amounted to SEK1,305 million, while profit after tax amounted to SEK959 million.
    Earnings per share increased by 32 percent to SEK5.55.
    In presenting Swedish Match’s three-month and nine-month results, CEO Lars Dahlgren (pictured) said that the company had delivered another quarter of very strong financial results. Sales and operating profit in local currencies had increased for the two largest product segments, snus and moist snuff, and Other tobacco products, while the Lights product segment had had a relatively stable year-on-year performance.
    ‘Snus and moist snuff product segment sales grew by 12 percent and operating profit increased by 17 percent in local currencies, with strength coming from both our Scandinavian snus business and our snus and nicotine pouches outside Scandinavia,’ he said.
    ‘Both the Swedish and Norwegian snus market grew at a robust pace compared to the prior year. In particular, we noted an acceleration of category volume growth in Sweden. Intense competitive activity and product innovations within the premium segment have been positive for the development of the snus category. We also believe that the exceptionally warm summer contributed to higher snus consumption this year.
    ‘The changeover to plain packaging in Norway has gone smoothly, but it is still early to assess if there will be any longer-term category implications.
    We estimate that total Scandinavian snus market growth, measured on a volume basis, was close to seven percent during the quarter. On balance we are relatively pleased with the performance of our more recent product introductions in the Scandinavian snus market, but overall our portfolios have lagged category growth in both Sweden and Norway during the quarter. Despite the loss in market share, we estimate that the underlying (excluding V2 Tobacco and Gotlandssnus) volume growth for our Scandinavian snus business reached four percent, a strong growth rate relative to historical levels.
    ‘For international snus and nicotine pouches, we have now for two consecutive quarters reported positive operating results, stemming from strong volume growth for ZYN, improved pricing, and reduced marketing spending for US snus.
    ‘With the acquisitions of V2 Tobacco, and more recently Gotlandssnus, we have expanded our portfolio to include a range of unique snus products that not only provide growth opportunities in Scandinavia, but also present an ability to expand our international snus portfolio. In September, we introduced V2’s Thunder Xtreme, a range of strong snus products in the US.
    ‘Construction efforts directed towards our new ZYN production facility in Owensboro, Kentucky, continue according to plan.
    ‘Other tobacco products (cigars and chewing tobacco) had another good quarter, with sales and profit growth in cigars more than offsetting declines in sales and profits for our US chewing tobacco business in local currencies.
    Cigar shipment growth continued to be driven by our rolled leaf assortment despite the price increase taken earlier in the year.
    ‘Given the rapid growth within the rolled leaf segment, we are facing increasing challenges in securing certain tobacco supplies but we have implemented measures that we expect will improve the situation during the first half of 2019.
    ‘The acquisitions of V2 Tobacco and Oliver Twist (with their chew bags and tobacco bits) delivered positive contributions to both sales and operating profit…’

  • Half dead is quite unique

    Half dead is quite unique

    The Finnish Medical Association says the import of snus should be banned in response to the proposal by the Ministry of Social Affairs and Health working group on tobacco reduction, according to a report by the broadcaster YLE (Yleisradio Oy) relayed by the TMA.
    In May, the working group that was tasked with reducing tobacco use in Finland proposed limiting daily imports from 1 kg to 100 grams.
    “Selling snus is illegal in Finland. Therefore, it would be more logical to completely prohibit its import, instead of just reducing the allowed amount,” the FMA said.
    However, the Finnish Shipowners’ Association argued that the proposed restrictions would decrease the revenues of ferries between Finland and Sweden, the only EU country where the sale of snus is legal, by €50 million annually.
    Finland has a goal of phasing out all tobacco and nicotine products by 2030.
    Other proposals to achieve this include increasing tobacco taxes and raising the limit of buying tobacco products from the current 18 years to 20 years.