More Jamaicans turned to cigarettes and vaping devices during 2024 as Carreras Limited experienced an 11 per cent uplift in its revenues to a historic $19.55 billion.

This was one of the key highlights at the company’s 63rd annual general meeting (AGM), which was held on Wednesday at the AC Hotel. Carreras is a distributor of several cigarette brands such as Rothmans, Matterhorn, Craven “A” and Pall Mall which have been staples in the Jamaican market for over six decades. These products combined with the company’s near 100 per cent dividend policy has made it a favourite amongst dividend investors on the market.

However, the company has not been seeing any significant increase in cigarette volumes sold with Managing Director Franklin Murillo’s presentation noting that volumes of cigarettes, which are also known as combustibles, only grew at a compounded annual growth rate (CAGR) of three per cent between 2017 to 2024. The company’s 2024 annual report noted that revenue for combustibles increased by ten per cent with 2024 being the fourth consecutive year of delivering stable volumes.

“Let’s keep in mind that for six years, we made no price adjustments on our cigarettes. So, in 2024, we adjusted the prices in order to cover the inflation that we have been covering for a few years. So, a steady volume with expenses being flattish…allow us to continue the growth that we had over 2023. So, that’s more or less the summary of what happened,” Murillo responded when asked about the reasons for the increase in revenue during 2024.

As a subsidiary of British American Tobacco plc (BAT), Carreras has begun to introduce newer products to the market as part of the overall push to move to more non-combustible products. The first product introduced under this multi-category focus was Vuse in September 2023. Vuse is an electronic cigarette that is manufactured by by R J Reynolds Vapour Company and Nicoventures Limited, both BAT subsidiaries.

Vuse exceeded Carreras’s initial market share and volume expectations during 2024, with Carreras estimating that Vuse has a 65 per cent market share of the vapour-based products in the Jamaican market. The strong performance of Vuse resulted in the company introducing newer devices which had double the number of puffs than the 500 puff and 1,500 puff devices at launch. Vuse now has six flavour offerings with Murillo noting that the year-to-date performance has seen sales increase by 70 per cent year-on-year as distribution and coverage improves along with greater product activations.

According to BAT’s 2024 annual report, “Vapour products are battery-powered devices that heat e-liquids to produce an inhalable aerosol [vapour].”

BAT’s main vapour product is Vuse which falls under the new categories or smokeless segment which contributed 13.3 per cent or £3.43 billion of BAT’s £25.87 billion in global revenue. The other products in new categories include heated products such as tobacco heated products (THP) like Velo and herbal products for heating (HPH), modern oral products like Velo and traditional oral products like Grizzly. BAT has also been pushing beyond nicotine-based products and has developed products such as functional shot brand like Ryde and other non-nicotine-based products.

When asked by investors about the introduction of these smokeless products to the Jamaican market, Murillo noted that the consumers would dictate the trend and when these other products could be introduced. BAT acquired Vuse in 2017, but it did not hit Jamaican shores for another six years.

In the interim, the company is focusing on improving its operations from a sustainability and operational standpoint. Carreras has introduced a take back scheme for Vuse pods to reduce the environmental impact while placing greater emphasis on ensuring that minors don’t gain access to the product. The company also spent $33 million on ESG (environmental, social and governance) initiatives during 2023.

Carreras also moved its operations to Ferry Industrial Estate, St. Andrew during November 2024. This move saw the company move from leasing two offices and a warehouse to one central location which is situated in a strategic point to its more than 10,000 points of sale across Jamaica. The company has added solar panels to the roof of the new building and continued the shift of its delivery fleet which now includes nine electric vehicles and 28 hybrid vehicles.

“The synergies we’ve seen from having all of our people under one roof in terms of walking from one office to the other instead of making calls from one location to the other is immeasurable. In terms of our operational point of view, logistically, from Ferry, it’s easier for the salesmen to actually get out in the morning. We are looking at the combined hub to give us some actual savings along some lines,” said Finance Director Verona Williamson on some of the positives related to the move.

All of these moves were positive wins for Carreras which grew its profit before tax (PBT) by 37 per cent from an adjusted $5.97 billion to $8.19 billion in 2024. Net profit also grew by 38 per cent from an adjusted $4.51 billion to $6.23 billion. This strong showing allowed for Carreras to pay a historic $1.31 per share or $6.36 billion in dividends related to its 2024 financial year, with a $0.54 dividend totalling $2.62 billion paid on April 3.

Carreras’ first quarter (January to March) saw revenue improve 63 per cent to $4.40 billion with PBT rising 148 per cent to $1.90 billion. Net profit grew 149 per cent to $1.41 billion with earnings per share of $0.2910. However, Q1 2023 saw a change in Carreras’ stock management strategy which resulted in lower revenues then.

Despite these positives, Carreras continues to tackle the illicit market which the company estimates at 20 to 27 per cent of the market share and a loss of nearly $3 billion in government revenue. The company is also seeking to address the concerns of shareholders regarding the Ministry of Health’s push to add new legislation against tobacco companies like Carreras.

“Even though the minister has strong words, his intention is not to ban the sale of vapes in the market. So, Carreras will still be able to sell its products. The elements that he is planning to introduce has more to do with displaying and promotions, etc, both around FMC [factory made cigarette] and vapes. So, we would still be able to sell the product to adult consumers. It may be a little bit challenging to do so. However, we continue to advocate and make representation because this is a reduced risk product which falls into tobacco harm reduction,” noted Imega Breese McNab, legal and external affairs manager.

Carreras’ asset base stood at $9.93 billion at the end of March with $4.57 billion in cash and $3.31 billion in receivables. Total liabilities and shareholder’s equity were $7.37 billion and $2.55 billion, respectively.

Carreras’ stock closed on Thursday at $15.36 which leaves it up 18 per cent in 2025 with a market capitalisation of $74.55 billion. Carreras’ stock traded at $8.96 exactly one year ago, with the stock hitting a new all-time high of $16.50 on May 8.

The increase in the stock price coincides with the improved dividend payments made to shareholders. Carreras will pay a $0.26 dividend totalling $1.26 billion to be paid on June 18 to shareholders on record as of May 27.

Hiram Murillo, the newly appointed managing director of The West Indian Tobacco Company (WITCO), the manufacturers of Carreras’ cigarette brands, was elected a director on Wednesday. However, Murillo was absent from the meeting. WITCO has had a difficult year with the BAT subsidiary deferring a dividend consideration for Q1 2025.