British American Tobacco group Chief executive officer Jack Bowles

WHILE other companies continue to rebound from novel coronavirus restrictions being lifted, the same fortunes weren't experienced by the West Indian Tobacco Company (WITCO) whose revenue declined by 14 per cent to TT$182.15 million ($4.16 billion) as domestic sales in Trinidad and Tobago declined on lower volumes.

The company attributed this to the slow economic recovery following the removal of COVID-19 restrictions in April which haven't manifested to date.

The company's sales were buffeted by increased export sales to other Caribbean countries such as Barbados, Jamaica and The Bahamas. WITCO manufactures brands such as Craven A, Rothmans, Matterhorn, Pall Mall and Lucky Strike Red (formerly du Maurier).

WITCO's net profit shrank by 37 per cent to TT$60.29 million ($1.38 billion) as distribution costs and other operating expenses climbed faster during the period. This left it with an earnings per share of TT$0.24 compared to TT$0.38.

Although the super king size variant was introduced during the quarter, customers in the twin-island republic were hesitant to accept it — especially as purchasing patterns shift for lower-priced products. WITCO has taken the decision to address the consumer preference in the shortest possible time regarding its new-sized products, while addressing the positive reception to ultra-low-priced offers.

Its sister company Carreras introduced the larger-sized option, which it described as a larger pack, at no additional cost for its customers. The transition for all sized packs began on April 1. Carreras will consider a dividend at its board meeting on August 9.

Despite the adjusted sales mix impacting the value sold in the period, WITCO's management remains optimistic about the second half of the year as it plans initiatives to address consumer confidence in its domestic market and leverages its robust distribution network to ensure products are always available. WITCO's first six months' revenue was down seven per cent to TT$384.20 million while its net profit shrank 19 per cent to TT$152.34 million.

WITCO's total assets declined by two per cent year over year to TT$794.63 million, with its cash balance at TT$314.04 million. Its total liabilities increased by 15 per cent to TT$220.03 million while shareholders' equity closed the period at TT$574.60 million. WITCO declared a dividend of TT$0.39 to be paid on August 24 to shareholders on record as of August 5. This payment totals $98.56 million compared to the stock price that has declined 21 per cent year to date to TT$22.58, which left it with a market capitalisation of TT$5.71 billion.

Diana Hernandez Gonzalez resigned as a director on July 31 with finance director of British American Tobacco's Latin America North and Caribbean operations Andrés Lorenzo being appointed on August 1.

British American Tobacco hit by Russian exit

Despite British American Tobacco plc's (BAT) revenue rising by four per cent on a constant currency basis to £12.87 billion ($2.41 trillion) within expected guidance, its profit from operations dropped 25 per cent to £3.68 billion as it took a £957-million (US$1.15-billion) impairment hit from its decision to transfer its Russian operations.

The Lucky Strike maker didn't find any luck during its first half-year performance as it recognised the impact from its Russian subsidiaries which made up 2.6 per cent of group revenue. While it made its decision to exit the market clear on March 11, it still has not entered into an agreement to dispose of the shares in the subsidiaries now classified as held for sale.

Despite the impact on its accounts, BAT Ukraine has resumed manufacturing of products for its domestic market while a few other associated businesses reopened. The subsidiary is looking to resume full operations once it is safe to do so.

Although its full-year guidance for global tobacco volumes forecasts sales to be down by three per cent, it continued to invest more than £1 billion in its new categories segment which it expects to fuel the next wave of its growth. New categories include vapour, tobacco heating products, and modern oral products — which all experienced volume growth in the first half of the year. Progress remained on track for its innovation hub in Trieste, Italy, which will be the site for the manufacturing and innovation of the new categories products.

BAT's total assets grew by 11 per cent to £151.87 billion and equity attributable to shareholders 15 per cent to £72.07 billion for the period. BAT shareholders should receive a dividend payment of £0.5445 on August 17, totalling £1.23 billion. BAT's stock price traded down two per cent on the London Stock Exchange to £33.74, which gave it a market capitalisation of £76.08 billion.

"We are not immune, of course, to the increasing macroeconomic pressures exacerbated by the conflict in Ukraine. However, we are well-positioned to navigate the current turbulent environment due to our powerful brands, operational agility, and continued strong cash generation.With this strong start to the year, I am confident in achieving our full-year guidance. While understanding that there is more to do, these results demonstrate the strong progress we are making in our Faster Transformation towards A Better Tomorrow," said Group Chief Executive Officer Jack Bowles in the half-year release.

BY DAVID ROSE Observer business writer davidr@jamaicaobserver.com

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