SMOKE SIGNAL: Ceylon Tobacco's sales which rose steadily for four quarters have fallen sharply.
ECONOMYNEXT - Profits at Sri Lanka's Ceylon Tobacco Company Plc, fell 8 percent to 1.84 billion rupees in the December 2015 quarter from a year earlier, while revenues and taxes to the government were back to levels seen last year.
Ceylon Tobacco reported earnings of 9.79 rupees per share for the quarter. In the year to December earnings were 56.7 rupees per share on total profits of 10.6 billion rupees which were up from 8.6 billion rupees.
In the December quarter gross revenues fell marginally to 23.70 billion rupees from 23.738 billion rupees a year earlier, tax revenues to the government also fell to 17.44 billion rupees from 17.916 billion rupees a year earlier.
Sri Lanka's economy recovered from a 2012 balance of payments crisis in the last quarter of 2014 and in 2015 a budget expanded deficit with a state salary hike and banks started to lend accumulated up excess liquidity (foreign reserves bought by the Central Bank).
CTC revers rose steadily from 20.4 billion rupees in September 2014 to 26.9 billion rupees in June 2015 and 29.9 billion rupees in September 2015.
But in December revenues were back down to 23.7 billion rupees.
There were tax increases in October 2014 also in October 2015. In September Sri Lanka's rupee fell to in a failed float and has continued to depreciate. The rupee is down to 144 to the US dollar from 131 in the beginning of the year.
Tax revenues which were rose as much 22.6 billion rupees in the September quarter, plunged to 17.4 billion rupees in the December quarter.
Whether the declining spend on cigarettes is a temporary reaction to the tax hike or a more permanent decline in disposable income from the currency collapse is not yet clear.
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