• Sri Lanka’s Ceylon Tobacco Company said its March quarter cigarette sales were down from a year earlier, leading to an absolute revenue fall as well amid tax hikes and an economic slowdown.
• The Company’s sales volume during the three months ended 31st March 2024 was lower in comparison to the same period last year, mainly due to the tax led price increases in line with the Government’s revenue proposals.

In the March 2024 quarter, Sri Lanka's Ceylon Tobacco Company (CTC) experienced a decline in cigarette sales and revenue due to tax hikes and an economic slowdown. Revenue fell to 45.85 billion rupees, down from 46.93 billion rupees the previous year, while turnover-linked taxes decreased from 34.2 billion rupees to 31.7 billion rupees. CTC attributed the drop in sales volume to the government's tax-led price increases, resulting in lower sales compared to the same period last year. Despite traditionally inelastic demand for cigarettes, the company noted a shift to alternative products like beedi and an increase in smuggling, which contributed to the reduced tax revenues.

CTC reported a profit of 6.8 billion rupees for the quarter, an increase from 5.999 billion rupees last year. This rise in profit occurred despite an overall decline in revenue and tax collections, as the company managed to reduce certain costs even though wages and raw material costs increased. Tax revenues remained almost the same as the September 2023 quarter but were significantly down from the December 2023 quarter when sales had picked up. The decrease in cigarette consumption, while intended to reduce health risks, has not necessarily achieved its objective due to the shift to untaxed alternative products.

Sri Lanka cigarette taxes down amid legal sales fall in 2024 March quarter | Economy Next