Carreras Limited is reporting that it closed its fiscal year in March 2020 on a high note, posting a 5.2 per cent increase in profit after tax amounting to $3.58 billion up from $3.41 billion the previous year.

The company explained that its strategic imperatives along with a continued focus on realising efficiencies throughout its operations, especially its route-to-market structure, played a significant role in the achievement of the results.

“The strong performance continued as the company boasts a 9.5 per cent growth in operating revenue delivering $14.13 billion versus $12.91 billion for the same period last year,” Carreras said in a news release yesterday.

Commenting on the results, newly appointed Managing Director Raoul Glynn said the company has a long history of delivering in spite of the odds.

“One of the many aspects of the business that has impressed me since my return is the level of growth that the company has been able to achieve despite challenging times,” he is quoted in the release.

“There is clear evidence of an effective business strategy that is delivering results, essentially strong investment in consumer relevant innovation, a relevant brand portfolio and an innovative route-to-market structure which has yielded good results, complemented by robust employee and stakeholder engagement,” he added.

Glynn also said the internally implemented strategies did not stand alone in achieving the results, but instead worked in tandem with the fact that tobacco excise remained the same since 2017.

“It would be remiss of us not to highlight the equal and integral role of the Government’s strong stewardship as it relates to excise. With no increase since 2017, we are seeing a recovery in legal volume and, as a result, an increase in Government revenue,” he said.

According to Carreras, the performance is driven mainly by a recorded 10.2 per cent increase in volumes compared with the previous year. The volume leap was due to the company’s recent focus on preserving and driving sales, grooming product offerings which addressed the purchasing power of consumers while ensuring that its core brands remained relevant and innovative across its consumer base.

Consumer purchasing power was on the rise over the period. Higher tax revenue enabled the Government to reduce taxes in key areas and Carreras was able to capitalise on this surge in economic activity.

The positive performance can also be evidenced in the total equity figures which reached $1.77 billion as at March 30, 2020, growing by $437.0 million (32.7 per cent) versus the 2018/2019 financial year. Profit of $3.58 billion and distributions to shareholders totalling $3.11 billion are the main components accounting for this change.

Carreras also said value generation for its shareholders is a consistent priority and is demonstrated in the dividend yield of 9.7 per cent (9.0 per cent in 2019) as well as the shareholders’ return on equity of 202.2 per cent (255.1 per cent in 2019).

“Total assets at the end of the financial year were $4.23 billion, compared to $3.49 billion the previous year. Increases were noted in cash and cash equivalents, accounts receivable and inventories,” the company said. “Furthermore, due to the adoption of the IFRS 16 standard, right-of-use assets, which were not present in the previous period, contributed $222.4 million to the increase in total assets.”

The company emphasised that the results clearly indicate that it has employed an effective business strategy: strong investment in consumer relevant innovation, a relevant brand portfolio and an innovative route-to-market structure, complemented by robust employee and stakeholder engagement.