TCC 2017 PROFIT TUMBLES ON WEAK EXPORTS

TANZANIA Cigarette Company (TCC) profit plummeted 34 per cent in 2017 due to weak export performance and increased operating expenses. 

The cigarette maker said in their financial statement made public this week that the profit for the year declined from 68.7bn/- in 2016 to 45.4bn/- as exports to DR Congo and Zambia fell by 24.2 per cent.

"Export volume to our key markets of the Democratic Republic of Congo (DRC) and Zambia came under significant pressure in 2017 (-24.2pc). A variety of issues drove this performance in 2017," TCC Board Chairman, Paul Makanza is quoted as saying in the statement.

He expressed optimism that sales volumes in the two significant markets would rebound in a short time as the problems that led to the decline have been resolved. "We are confident that these issues have largely been resolved and we have already begun to deliver positive results which are expected to continue into 2018 and beyond," he said.

"We expect our export volume to return to growth in 2018 driven by the momentum achieved in the DRC at the back end of 2017 and volume recovery in Zambia. We will monitor developments in the DRC especially the national elections due at the end of the year."

"Our commitment to growth across the region is unchanged as we seek to leverage on the investments made in 2017 to realise opportunities in 2018." The Board Chairman said also marketing, selling and distribution expenses increased 11 per cent on prior year as part of our long-term investment strategy, and administration expenses increased 33 per cent mainly due to investments in people and one-off business realignment costs.

During the same period domestic performance provided a measure of stability to the business with gross turnover growing by 1 per cent and net profit declining by a more moderate 10 per cent, he said. Domestic volume grew marginally versus prior year (0.2 per cent) due to tight macro- economic conditions.

"We are optimistic about future prospects for the business, subject to a conducive business environment; specifically, higher rates of economic growth that drive disposable income for the majority of our consumers; stable and predictable excise tax regimes, a low inflationary environment, and stable exchange rates."

DailyNews