Local cigarette distributor Carreras Limited not only surpassed its 2020 financial year (FY) record revenue of $14.13 billion, but grew its top line by 13 per cent to $15.75 billion for its 2022 FY ending March 31, 2022.

This comes as the local company not only clawed back sales from the illegal trade, but expanded its distribution agreements with multinationals and inked a landmark distribution deal with Supreme Ventures Limited (SVL) which included a micro sales network with small entrepreneurs. The SVL partnership expands the reach of both companies to more than 10,000 points of sale across the island. Both companies are listed on the Jamaica Stock Exchange (JSE) with Carreras having a market capitalisation of $46.75 billion and SVL’s market cap at $79.87 billion.

“We know our category; we know our market; we know our consumers. This combined with our superior world-class portfolio, fit for business route-to-market structure, and the best commercial workforce in Jamaica, we will continue to drive Carreras to exceed expectations beyond levels it has ever seen before. This is the Carreras way,” stated managing director of Carreras Raoul Glynn in an e-mail with the Caribbean Business Report.

Despite a 13 per cent rise in operating expenses to $2.24 billion and a rise in income tax to $1.36 billion, Carreras’ net profit grew nine per cent to a historic $4.07 billion. This was the highest normalised net profit for the company in its history as it exceeded the 2013 FY figure of $6.54 billion which included a $5.08-billion refund on the pension surplus relating to its former superannuation scheme. The company paid out $4.13 billion in dividends to its shareholders during the year.

At the start of March, Carreras introduced the Craven A Super King Size which was a pack of cigarettes 35 per cent longer in length and resulted in an additional two puffs without an increase in the price. While this was a welcomed relief for its customers amid the 10.8 per cent point to point inflation, the company has been relatively mum on vaping products which has been growing globally as seen with its parent company British American Tobacco plc (BAT). BAT owns 50.40 per cent of the company with Jamaican shareholders owning the remainder.

BAT grew its new categories segment revenue by 51 per cent to £2.05 billion ($398.81 billion) and added an additional 4.8 million consumers to reach 18.3 million consumers. New categories includes vapour, tobacco heating products (THP) and modern oral products. Unlike the traditional combustible products, the new categories segment is still unprofitable with BAT reducing losses by nearly £100 million. Vuse, its number one vaping brand by value share, achieved profitability in the United States market in the second half of 2021. The conglomerate aims to achieve £5 billion in revenue and profitability by 2025 with 50 million consumers by 2030. New categories only made up eight per cent of BAT’s £25.7 billion in revenue achieved for its 2021 financial year ending December 31. The Altria Group had to write down more than US$3 billion on its investment in its vaping subsidiary Juul Labs in 2020.

“We are focused on Super King Size and ensuring the consumer get the most out of this innovation. It is a great product which gives the consumer so much more of what they want. We have another huge innovation scheduled for the next few months and then we are ready for vaping. Jamaicans are already consuming such products and Carreras will seek to actively participate in that market, which also complements the rest of our portfolio,” Glynn explained.

While the company has made strong strides in its FY, it had seen several shifts at the board and executive level. Michael Bernard and Oliver Holmes both retired from the board in September and November, respectively, with Matthew Hogarth resigning from all publicly listed company boards in August. Paul Hanworth, Novar Patrick McDonald and Patrick Smith were all elected as directors at the company’s November annual general meeting.

Legal counsel Bjorn Spence and head of finance Rogelio Paredes were transitioned to new roles in the BAT group in March. The latest executive to demit office was legal and external affairs manager, Cammeca Cookhorn, who resigned on Tuesday after only taking up the role in March 2021. Apart from Glynn who was appointed in February 2020, the entire executive roster at Carreras has only been at the company for less than two years.

“Bjorn and Sashelle [Gooden] are both great promotions earned by them both and really doing well in their new roles. Very proud of them. We will always support team members growth and development. One of my legacies as a leader is to ensure the development of the team, and Jamaica has talent,” said Glynn on the shift of executives and his role in developing talent.

While the company is being mindful of the rate at which it expands itself, it is currently spending big to maintain its role in the market. Carreras spent $200.46 million on capital expenditure during the year which included the addition of electrical vehicles and modernising its fleet of vehicles with more fuel-efficient ones which will also reduce its carbon footprint. It nearly doubled its inventory base to $1.13 billion to limit vacuums in the market for illicit dealers and to account for the global supply chain disruptions.

Carreras’ total asset base grew by three per cent to $5.23 billion with cash and cash equivalents of $1.7 billion. Total liabilities increased by six per cent to $3.14 billion while shareholders equity was marginally down to $2.09 billion. The stock closed at $9.63 on Wednesday and remains up 20 per cent year to date.

“Our team is quite energised by what the future holds. Our brands are quite strong and resilient, and we feel confident that our loyal adult consumers in Jamaica are ready for some innovation. As these adult users move toward newer formats to engage with nicotine and non-nicotine experiences, Carreras is poised to meet those expectations with quality, affordability and an adherence to science at the forefront,” Glynn closed.