Ashenheim
Andrew Green, Staff Reporter
CARRERAS GROUP Limited earned more from investments and foreign exchange gains than from its basic operations for the first six months of its current financial year as a new tax has taken effect.
Earnings per share for Carreras Group Limited advanced by 60 cents to $3.32, for the six months ended September 30. Net profit was $1.61 billion, for the six months ended September 30, up a satisfying 21.9 per cent from the similar period last year. This came about despite a 2 per cent fall in its gross operating profit to $1.27 billion.
The Carreras unaudited results showed a 19 per cent increase in revenue to $2.69 billion. But the cost of earning that revenue soared 48 per cent to $1.43 billion.
"Taxes have increased," said Mark Walters, vice-president for treasury at Dehring, Bunting & Golding Limited. "The gross operating revenue was impacted by $676 million in special consumption tax and $462 million in new excise taxes."
TOBACCO CONSUMPTION
Finance and Planning Minister Dr. Omar Davies announced the imposition of a 23 per cent excise tax on tobacco consumption, in his April Budget presentation. The tax is to help finance the new National Health Fund.
"Sales for the first two months following the new additional tax were down over the previous year by as much as 25 per cent," said board chairman George Ashenheim at the Carreras annual general meeting in September. He said there had been a recovery in sales from June. And Group profit was boosted by a massive 71.6 per cent increase in interest and other investment income, which grew to $1.04 billion for the six month period.
As well, there was an 86 per cent increase in exchange gains to $384 million and other income rose 63 per cent to $62 million.
"Carreras is known for their management of cash," Mr. Walters said. "They are very efficient."
Carreras Group Limited is incorporated in Jamaica and is a 50.4 per cent subsidiary of Rothmans Holdings (CARICOM) Limited, which is incorporated in St. Lucia. The ultimate parent company is British American Tobacco p1c, incorporated in the United Kingdom and the Cigarette Company of Jamaica is its most important subsidiary.
CIGARETTE OPERATIONS
Sans Souci Development Limited is its other main subsidiary and, "If a willing buyer came along, I am sure they would look at the offer," Mr. Walters said. The Group has divested most of their other businesses and now focus on their cigarette operations, he said.
Administrative and marketing expenses climbed 13 per cent to $600 million for the six months. When deducted, this left a net profit before exceptional items of $2.16 billion, up 33 per cent from the year before.
After income tax and exceptional items are deducted, the company was left with a $1.61 billion profit, up 22 per cent. Net of its $1.8 million payment to minority interests, Carreras was left with $1.61 billion.
And the Group faces another challenge as the Cigarette Company received further tax assessments for $5.7 billion in April. Mr. Ashenheim said the company's counsel's view is that there is no proper basis for the assessments so no provision was made for that.
