Demtoco records another strong, profitable performance
May 7, 2002
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DEMERARA Tobacco Company Limited (Demtoco) recorded another strong performance in 2001, reporting an after tax profit of $381M, a 48.8 per cent increase over the $256M for 2000.
The Chairman, Mr Hector Casco said the showing is mainly due to a two per cent greater volume of sales, a nine per cent price hike for the ‘Bristol SC’ variant and improvements in internal efficiencies.
He also said:“The results of 2001 could not have been possible without the full commitment and dedication of the staff, coupled with the guidance from the Head Office – British American Tobacco.”
However, Casco told the annual general meeting, at Hotel Tower in Georgetown last Friday, that 2001 was a challenging year.
He said the Guyana economy has shown signs of improvement but the September 11 attacks in the United States have had some diverse effects.
In addition, the decline in remittances and visitors from abroad impacted negatively on the exchange rate, which depreciated by 3.76 per cent, Casco said.
He estimated the Gross Domestic Product (GDP) here to have increased by 1.9 per cent last year, with accompanying of 2.6 per cent but said the positive growth was the result of higher gold prices after September 11.
In light of the profit margin, the directors recommended a final dividend of $8.10 per ordinary share, which, when added to the interim and special dividends totalling $9.75, will bring the total for last year to $17.85, 28 per cent more than for 2000.
Managing Director Michael Harris said Demtoco continues to maintain its position as the market leader by focusing on its customers and consumers of its products.
He said the entire distribution system was modernised to more effectively meet customer needs and ensure adequate market information is readily available.
Mr Harris said Benson and Hedges cigarettes, the company’s leader in the international segment, performed exceptionally well over the year with the ‘Lights’ variant registering credible results, growing by 65 per cent in 2001.
Bristol, their market leader, remains the preferred brand of customers, through its continued support for major national and other cultural events, its sales volume increasing by 1.3 per cent above the previous year, despite the price rise in July.
“We expect solid performance to continue in the next year, barring any serious disruptions in the economy. In 2002, we will continue to channel our resources to meet the needs of the consumers, focus on our main brands and work with our distributors to meet the demands of our consumers,” Harris stated.
He said the company contributed significantly to the national economy, having paid 42 per cent of its gross turnover to the Government, in the form of consumption and corporate taxes.
Harris said total operating expenses included contributions made to non-governmental organisations as well in the form of donations and sponsorships and 15 per cent of the gross turnover was allocated to the investors as dividends.
He said, as a result of slow growth in the economy, Demtoco expects its volumes to stay relatively static this year, reflecting a mature market.
“We will continue to focus on our internal efficiencies and cost reductions. Given our position as a responsible corporate citizen, we have and will continue to meet and discuss with our key stakeholders our positions on the various issues as well as continue to make our contribution to the development of the national heritage,” Harris pledged.
He said their view is that, despite the risks of serious diseases associated with smoking, an informed decision to enjoy “the pleasures of smoking” while balancing those pleasures against the risks is no more for criticism than many other lifestyle choices people make.
Harris noted that every pack of cigarettes manufactured carries a health warning and the choice to smoke or not is exclusively for adults.
The company does not want children to smoke and actively supports programmes to prevent and reduce under age smoking.
Harris said there are ample surveys around the world that demonstrate a remarkably high awareness of smoking risks and there is nothing so powerful about the pleasure of smoking that prevents a smoker from reaching and carrying out a decision to quit.
Moreover, the cigarette market is mature, so advertising promotes a choice between brands for those who have already decided to smoke and social factors, not cigarette advertising, are the principal reasons why people start smoking, he stated.