India’s Group of Ministers within the Goods and Services Tax (GST) Council are being urged to increase the tax on tobacco products to help shore up the country’s disasters-remediation revenue, according to a story in the latest issue of the BBM Bommidala Group newsletter.
Public health groups, doctors and economists are said to be calling for the imposition of the additional tax on all tobacco products, including bidis, to address ‘the crisis and generate funds for the rehabilitation of the people of Kerala affected by recent floods’.
Currently, the tax on bidis is said to amount to 22 percent, while that on cigarettes is 53 percent and that on smokeless tobacco is 60 percent.
The World Health Organization recommends that tobacco-product excise taxes should be at least 75 percent.
Meanwhile, a panel of state finance ministers set up to consider a disaster tax within the GST to help states hit by natural calamities has decided to seek the response of all states on the matter.
It is probably as well that India is looking into raising funds for mitigating the effects of disasters natural or otherwise. The World Health Organization says that the country has nine of the world’s 10 most-polluted cities, as calculated on PM2.5 (fine particulate matter) levels in the air.
Category: Financial
It's the smoker's burden
Little profit in growing
Zimbabwe is forfeiting at least US$27 on every kg of unmanufactured tobacco that it exports, according to a story in The New Zimbabwe quoting the Finance Minister Mthuli Ncube.
Speaking at an investment conference in Switzerland last week, Ncube said that Zimbabwe was one of the biggest producers of leaf tobacco and that the bulk of what it produced was exported in unmanufactured form.
Zimbabwe’s more-than 100,000 growers had produced a record flue-cured crop this year of 252.5 million kg.
But the average price had gone down.
And the average price of about US$3 per kg for unprocessed grower tobacco and US$6 per kg for processed tobacco, compared with between US$30 and US$60 for tobacco cigarettes, Ncube said.
Therefore, by exporting unprocessed tobacco Zimbabwe was forfeiting at least US$27 per kg that could be accruing to the country.
The story said that Zimbabwe was looking for foreign direct investment to boost its economy so that it could become a middle-income country by 2030.Devices vaporized
Philip Morris USA’s domestic cigarette shipment volume during the third quarter to the end of September, at 29,698 million, was 3.7 percent down on that of the third quarter of 2017, 30,828 million.
Marlboro volume was down by 3.2 percent to 25,611 million, while the volume of the company’s other premium brands was down by 6.0 percent to 1,473 million. Its discount-brand volume was down by 6.8 percent to 2,614 million.
In presenting its third-quarter and nine-month results, Altria said that industry-wide domestic cigarette volumes had declined by an estimated 4.5 percent during the third quarter. The 3.7 percent decline in PM USA’s shipments was said to have been driven primarily by the industry’s rate of decline and retail share losses, partially offset by trade inventory movements. When adjusted for trade inventory movements, shipments were said to have fallen by an estimated 5.0 percent.
Meanwhile, PM USA’s cigarette shipments during the first nine months of 2018, at 84,486 million, were down by 6.3 percent on those of the first nine months of 2017, 90,124 million.
Marlboro volume was down by 5.8 percent to 72,793 million, while the volume of the company’s other premium brands was down by 6.2 percent to 4,286 million. Its discount-brand volume was down by 10.2 percent to 7,407 million.
Altria reported that for the first nine months of 2018, industry-wide volumes had declined by an estimated 4.5 percent. The 6.3 percent decline in PM USA’s shipments was said to have been driven primarily by the industry’s rate of decline, retail share losses and trade inventory movements. When adjusted for trade inventory movements, shipments were said to have fallen by an estimated 5.5 percent.
PM USA’s domestic-market retail share during the three months to the end of September, at 50.1 percent, was down by 0.5 of a percentage point on that of the third quarter of 2017.
Marlboro’s market share was down by 0.1 of a percentage point to 43.1 percent, while the share of the company’s other premium brands was down by 0.1 of a percentage point to 2.6 percent, and the share of its discount brands was down by 0.3 of a percentage point to 4.4 percent.
Middleton’s cigar shipment volume during the first three months, at 411 million, was increased by 6.8 percent on that of the three months to the end of September 2017, 385 million, as Black & Mild volume rose by 7.1 percent to 408 million and other-cigar volume fell by 25 percent to three million.
USSTC’s domestic smokeless products shipment volume during the third quarter, at 213.4 million cans and packs, was increased by 0.4 percent on that of the three months to the end of September 2017, 212.6 million.
Shipments of Copenhagen and Skoal, taken together, were down by 0.2 percent to 195.4 million packs and cans, while shipments of other brands were increased by 6.5 percent to 18.0 million packs and cans.
USSTC’s retail share of the domestic smokeless products market during the three months to the end of September, at 54.1 percent, was increased by 0.1 of a percentage point.
The share of Copenhagen and Skoal, taken together, was unchanged at 50.7 percent, while the share of the company’s other brands increased by 0.1 of a percentage point to 3.4 percent.
Altria said that, in response to a request by the US Food and Drug Administration that it (and several other companies) address the issue of the use of e-vapor products by those underage, it was removing from the market its Nu Mark MarkTen Elite and Apex by MarkTen pod-based products until those products received a market order from the FDA or the youth issue was otherwise addressed.
‘For our remaining MarkTen and Green Smoke cig-a-like products, Nu Mark will sell only tobacco, menthol and mint varieties,’ Altria said. ‘Nu Mark will discontinue the sale of all other flavor variants of our cig-alike products until these products receive a market order from the FDA or the youth issue is otherwise addressed.’
In addition, Altria said it would support federal legislation to establish 21 as the minimum age to purchase any tobacco product [which in the US are taken to include e-cigarettes].
About 80 percent of Nu Mark’s e-vapor volume in the third-quarter of 2018 is expected to remain on the market after the removal of MarkTen Elite and Apex by MarkTen pod-based products and the discontinuation of the sale of flavor variants of Nu Mark’s cig-a-like products, other than tobacco, menthol and mint varieties.
PM USA is said to be ready to deploy its initial lead market plans for IQOS upon FDA authorization, while the FDA has accepted and filed for substantive scientific review USSTC’s modified risk tobacco product application for Copenhagen Snuff submitted by USSTC in the first quarter.
Altria’s 2017 third-quarter reported diluted earnings per share (EPS) were increased by 6.2 percent to $1.03 on those of the third quarter of 2017, while adjusted diluted EPS, which excludes the impact of special items, increased by 20.0 percent to $1.08.
“Altria delivered excellent third-quarter adjusted diluted earnings per share growth of 20 percent and continued to return large amounts of cash to our shareholders,” Howard Willard, Altria’s chairman and CEO, was quoted as saying.
“Our tobacco businesses are successfully executing against their strategies, while making strategic investments to drive long-term success.
“We believe our year-to-date performance positions us well to deliver on our full-year plans. As a result, we are tightening our guidance range to $3.95 to $4.03, representing a growth rate of 16.5 percent to 19 percent.”PMI’s 3Q volumes down
Philip Morris International’s cigarette shipment volume during the third quarter (July-September), at 195,068 million was down by 1.7 percent on that of the third quarter of 2017, 198,465 million.
Shipments were increased by 2.5 percent to 45,840 million in its South and Southeast Asia region and by 0.9 percent to 37,406 billion in its Middle East and Africa region. But shipments were down in each of its other regions: by 1.8 percent to 48,223 million in the EU; by 6.1 percent to 29,801 million in Eastern Europe; by 7.5 percent to 14,186 million in East Asia and Australia; and by 4.1 percent to 19,612 million in Latin America and Canada.
Shipments of heated-tobacco units were down by 11 percent from 9,725 million during the third quarter of 2017 to 8,652 million during the third quarter of 2018.
Heated-tobacco unit shipments increased by more than 100 percent in four of the company’s regions: from 464 million to 1,730 million in the EU; from 180 million to 1,152 million in Eastern Europe; from 247 million to 1,152 million in the Middle East and Africa; and from eight million to 43 million in Latin America and Canada. But shipments fell by 48.2 percent in the East Asia and Australia region, from 8,826 million to 4,575 million. There were no recorded heated-tobacco unit sales in the South and Southeast Asia region, in either the third quarter of this year or last year.
Taken together, shipments of cigarettes and heated-tobacco units during the third quarter of 2018, at 203,720 million, were down by 2.1 percent on those of the third quarter of 2017, 208,190 million.
Total shipments were increased in three regions: by 0.8 percent to 49,953 million in the EU; by 3.3 percent to 38,558 million in the Middle East and Africa; and by 2.5 percent to 45,840 million in South and Southeast Asia. Total shipments were down in the other three regions: by 3.1 percent to 30,953 million in Eastern Europe; by 22.3 percent to 18,761 million in East Asia and Australia; and by 3.9 percent to 19,655 million in Latin America and Canada.
PMI’s reported and adjusted diluted earnings per share (EPS) during the third quarter of 2018, at $1.44, were increased by $0.17 on those of the third quarter of 2017.
Net revenues, at $7.504 billion, were up from $7.473 billion.
Operating income, at $3.156 billion, was up from $3.088 million.
In announcing PMI’s third-quarter and year-to-date results, CEO André Calantzopoulos said the company’s third-quarter demonstrated that its underlying business performance was in good shape. “Excluding distributor inventory movements, our total shipment volume was up in the quarter and year-to-date, reflecting the continued growth of our heat-not-burn products as well as the solid performance of our combustible products,” he said.
“Our total market share was up by 0.5 and 0.6 points in the quarter and year-to-date, respectively.
“In addition, supported by our leading brand portfolio, pricing was strong. As a result, we continue to forecast currency-neutral EPS growth for the full year of 8-9 percent.
“We remain focused on our smoke-free transformation and are very encouraged by the continued progress of our smoke-free products and initiatives, especially across the EU and Russia.
“As previously announced, this quarter existing IQOS device and consumable inventories were rightsized in Japan ahead of the upcoming global launch of our new IQOS 3 and IQOS 3 Multi devices.
“Importantly, our worldwide in-market sales of heated tobacco units this year remain set to almost double and we continue to anticipate shipments of approximately 41-42 billion units.”
“Overall, as we stated recently at our Investor Day, our business is showing great momentum. As we enter this year’s final quarter, I am confident that the strategies and initiatives we have put in place set the stage for an even better business performance in 2019.”Strong revenue growth
British American Tobacco said today that it was continuing to deliver good market share gains against a backdrop where expectations remained unchanged for industry volume to be down around 3.5 percent for the full year.
‘In the US, we are performing well, with growing value share and pricing in line with expectations,’ BAT said in a note posted on its website. ‘US industry volume decline remains in line with historic ranges and is expected to be down around 4.0-4.5 percent for the full year, with a slight improvement in H2’
The company was delivering an update ahead of analyst and investor meetings during the ‘coming weeks’ in which it said it would discuss the progress of the business and the opportunities ahead.
Also as part of its update, BAT said its geographic expansion in respect of Tobacco Heating Products (THP) was continuing to progress well, with THP revenue expected to grow substantially. In Japan, where the THP category remained flat, glo’s share was now at 4.4 percent, up from 3.3 percent at the start of the year.
‘BAT’s global vapor business is expected to deliver double digit volume and constant currency revenue growth in 2018, on a representative basis, with Vuse in the US continuing to perform well driven by the launch of our pod-mod product, Alto, and the reintroduction of Vibe,’ the company said. ‘Vype continues to grow share, with ePen3 showing promising initial results in the UK and Canada
‘THP and vapor revenue is showing strong growth and is expected to reach £900 million of reported revenue in 2018, led by THP. The revision from the previously announced revenue target of £1 billion is largely driven by a reduction in planned year-end stocks in Japan as the THP category remains flat and the effect of the Vuse Vibe recall in the US.
‘In Oral Tobacco, we expect strong constant currency revenue growth on a representative basis, with good performances in both the US and Europe, following the continued success of Epok.’Cigarette sales leap
Japan Tobacco Inc.’s domestic cigarette sales volume during September, at 9.4 billion, was increased by 24.7 percent on that of September 2017, 7.5 billion, according to preliminary figures issued by the company today. The September 2017 figure was down by 13.6 percent on that of September 2016.
Volume during January-September, at 64.2 billion, was down by 8.7 percent on that of January-September 2017, 70.3 billion. The January-September 2017 volume was down by 11.8 percent on that of January-September 2016.
JT’s market share stood at 63.1 percent during September (up from 62.2 percent in August), at 61.9 percent during January-September, and at 61.3 percent during January-December 2017.
JT’s domestic cigarette revenue during September, at ¥56.2 billion, was increased by 24.8 percent on its September 2017 revenue, ¥45.0 billion, which was down by 13.2 percent on its revenue of September 2016.
Revenue during January-September, at ¥383.0 billion, was down by 8.5 percent on that of January-September 2017, ¥418.6 billion, which was down by 10.3 percent on its revenue of January-September 2016.PMI to webcast results
Philip Morris International is due to host a live audio webcast at www.pmi.com/2018Q3earnings from 09.00 Eastern Time on October 18 to discuss its 2018 third-quarter results, which will be issued about 07.00 the same day.
During the webcast, which will be in listen-only mode, CFO Martin King will discuss the results and answer questions from the investment community and news media.
The audio webcast may be accessed also on iOS or Android devices by downloading PMI’s free Investor Relations Mobile Application at www.pmi.com/irapp.
An archived copy of the webcast and the slides and script will be available until 17.00 on November 16 at www.pmi.com/2018Q3earnings.Altria to webcast results
The Altria Group is due to host a live audio webcast from 09.00 Eastern Time on October 25 to discuss its 2018 third-quarter business results. The company will issue a press note containing its business results about 07.00 the same day.
During the webcast, which will be in listen-only mode, Howard Willard, Altria’s chairman and CEO, and Billy Gifford, vice chairman and CFO, will discuss the results and answer questions from the investment community and news media.
The webcast can be accessed at altria.com or through the Altria Investor App.
Pre-event registration is necessary and can be made at www.altria.com/webcasts.
An archived copy of the webcast will be available on altria.com or through the Altria Investor App. The free app is available for download at www.altria.com/irapp or through the Apple App Store or Google Play.Vapers to get fair deal
UK vapers are to be given the chance of accessing life insurance at rates close to those paid by non-smokers, according to a press note put out by the UK Vaping Industry Association (UKVIA) and the insurance adviser Future Proof.
Until now, vapers – and people who have quit smoking by using nicotine replacement products – have been paying the same premiums as smokers, despite their having switched to less harmful products.
Currently, a 40-year-old smoker who takes out £200,000 of life cover over 25 years can be expected to pay £38.09 a month, whereas a non-smoker would pay £16.06 a month for the same level of cover.
But Future Proof is said to have launched the UK’s first ever price-comparison site especially designed for vapers, a site that will allow them to be separated from smokers and to access tailored insurance packages. The offer applies to former smokers who have been smoke-free through vaping for a year.
According to the press note, a 40-year-old vaper with a 25-year, £200,000 policy, would pay £18.77 a month, much less than a smoker would pay but more than a non-smoker, non-vaper would pay.
David Mead, chief executive of Future Proof, was quoted as saying that his company had wanted to bring an easy-to-use price-comparison site to help vapers save money. “The biggest winners are people who have only been vaping and people who have not been using tobacco products for at least 12 months,” he said.
Meanwhile, a UKVIA spokesperson described the initiative as “fantastic news for vapers all across the UK who will finally be given fair treatment”…
“Vaping has been recognised as being at least 95 percent less harmful than smoking and it is a great sign to see the insurance market is finally acknowledging this evidence and is moving away from treating vapers as smokers.”
The vaper friendly life insurance comparison site is here: https://www.futureproofinsurance.co.uk/life-insurance-for-vapers.Doing well out of tobacco
The value of Romania’s exports of unmanufactured and manufactured tobacco fell during the first six months of this year, while the value of the country’s imports of these products rose, according to a story in The Business Review citing figures from INS (Institutul Național de Statistică).
During the first six months of 2018, Romania reportedly exported unmanufactured and manufactured tobacco worth €338.6 million, a figure that was down by 5.3 percent on that of the same period of 2017.
Meanwhile, unmanufactured and manufactured tobacco imports during January-June 2018, at €193.3 million, were 13.4 percent higher than those of January-June 2017.
Despite the fall in exports and the rise in imports, Romania recorded a tobacco-trade surplus of €145.3 million during January-July 2018.
The Review said that the best estimations of Romania’s leaf tobacco production was about 600-800 tons of Burley and 500-1,500 tons of flue-cured Virginia. It suggested that the high level of variation in the flue-cured estimation reflected the possibility that some leaf tobacco grown in Moldova was shipped to Romania.
The Review reported also that Romania had posted the biggest price increases in the EU during the past 17 years, with the prices of alcohol and tobacco having become eight times more expensive than they were in 2000.
