Despite sales volumes continuing to decline due to the price stick that is being wielded against cigarettes and the resulting decline in consumer affordability, the Ceylon Tobacco Company (CTC) has increased its first quarter profit after-tax to Rs.493 million in the three months ended March 31, 2009 from Rs.360 million a year earlier, a quarterly financial statement now with shareholders reveal.

This translated to an earning per share of Rs.2.63 against Rs.1.92 in the corresponding quarter the previous year, it said.

CTC said that although there was reduced consumption of cigarettes, its market share had grown from a year earlier gaining from counterfeit and smuggled cigarettes.

The statement said that gross revenue for the first quarter had grown to Rs.13.66 billion from Rs.13.26 billion a year earlier, a variance of Rs.206 million.

Government revenue from the company comprising levies, duties and taxes had grown by Rs.539 million to Rs.11.4 billion in the three months under review reflecting what CTC called "the effect of the excise-led increases and a better brand mix’’.

Additionally the Provincial Council tax had grown by Rs.34 million to an estimated Rs.740 million the company said.

"Stern action taken by the law enforcement authorities prevented the growth of counterfeit and smuggled cigarettes in the market, thus protecting the government’s revenue base," CTC said.

"During the last three months 165 raids were carried out and 36 million counterfeit and smuggled cigarettes worth over Rs.500 million were confiscated. This was more than the entire volume of counterfeit and smuggled cigarettes confiscated in 2008."

CTC has been focusing on delivering greater efficiency and productivity across the entire value chain to generate additional savings in the context of the current volatility in the business environment and higher tobacco leaf prices.

"These measures have continued to bear fruit and have now resulted in lower operating expenses in the first quarter, the company said.

``These ongoing productivity improvements, coupled with a better brand mix and sales value have mainly contributed towards the company’s profit after tax growth of Rs.133 million for the period."

Ceylon Tobacco declared a first interim dividend of Rs.2.50 per share on April 27 and this was paid on May 15.

CTC directors said they were "confident of delivering a satisfactory return to shareholders" during he current financial year ending December 31, 2009.

CTC is among the highest dividend paying companies quoted on the Colombo Stock Exchange.

The company has a stated capital of Rs.1.87 billion reserves of Rs.15 million and retained earnings of Rs.882 million in its books.

The CTC share traded at a high of Rs.100 and a low of Rs.69 during the period under review against a trading range of Rs.64.75 and Rs.53 a year earlier.