Although the West Indian Tobacco Company Limited (Witco) achieved profit for 2015 of $515.5 million—an increase of 5.4 per cent over the previous year—chairman Anthony E Phillip said the trading environment remains challenging for the cigarette maker.
In the company’s annual report posted on the T&T Stock Exchange, Phillip said Witco’s “solid performance was underpinned by efficient cost management and has facilitated the payment of three interim dividends to date, which total $3.70 per share.
“This, together with the proposed final dividend of $2.18 per share, will bring the total dividends payable for 2015, to $5.88 per ordinary share. The share price during the period ranged from $121.33 to $126.29,” he said in his statement to shareholders.
Phillip said the company’s financial achievements took place against a backdrop of economic challenges for T&T because of a decline in gross domestic product (GDP). He said the company had been affected by reduced consumer spending but continued to supply 25 tobacco brands in 137 variants to locally and in 16 contract markets across the region. However, sales in the local market experienced some contraction due to the entry of “potentially illicit products.”
“It should be noted that there is a trend globally towards the commoditisation of tobacco products, which has opened the door to the rise in illicit products,” the Witco chairman said.
“Illegal cigarettes are estimated at 23.77 per cent of total consumption in the Central American and Caribbean region and generate losses of millions of dollars in unpaid taxes which should accrue to the region’s governments.
“At the same time, this funding is fuelling other criminal activities across the region. Panama’s Free Trade Zones are reputed to be the second largest source of illegal cigarette flows to the Americas, with an impact mainly concentrated in Central America and Colombia.”
Phillip called for steps to be taken to avoid the breaches in border control which contribute to this illegal activity. While he acknowledged that the tobacco industry is a controversial one, he said Witco operates in a responsible manner and ensures compliance with business and guiding principles, as well as the laws of T&T.
“Sound regulation is important and, where it is developed with all stakeholders involved, can help to ensure an orderly marketplace that serves the interests of both consumers and governments. Unintended consequences of flawed regulation in the form of retail display bans and plain packaging must be avoided as these measures can result in consumers switching to inferior and illegally trafficked products,” he said.
Phillip said Witco will support any efforts by the Government to enact tougher antismuggling laws and create special anti-contraband task forces for “stronger enforcement, which will lead to more seizures, arrests and convictions.”