On March 9th, China Tobacco International HK Co. Ltd. released its annual report for the 2022 fiscal year on the Hong Kong stock exchange. According to the report, the company's net profit in 2022 decreased by 46.66% compared to the previous year. However, its new tobacco business saw a 10% increase in sales, and the company's operations in Brazil saw impressive growth.
China Tobacco Hong Kong reported a total operating income of HKD 8.324 billion (approximately RMB 7.3 billion) for the fiscal year 2022, showing a year-on-year growth of 3.23%. However, the net profit attributable to the parent company was HKD 375 million (approximately RMB 330 million), marking a significant decline of 46.66% from the previous year. The basic earnings per share were HKD 0.54.
China Tobacco Hong Kong has explained that the decline in performance is mainly due to weak sales in local cigarette markets in Southeast Asia, caused by increased tobacco taxes and the impact of the pandemic, as well as a weakened demand for tobacco leaves from customers. Additionally, there has been a reduction in suitable tobacco resources available for exportation from China.
Image source: Hong Kong Stock Exchange.
CNTC Hong Kong's new tobacco product exports increased by 47,620 thousand units YoY, accounting for a growth rate of 10%, with total export quantities being 502,390 thousand units. Revenue also increased by HKD 86 million (approximately CNY 75.3 million), resulting in a total revenue of HKD 110 million (approximately CNY 96.33 million), reflecting an 8% increase YoY. However, gross profit decreased by HKD 3.2 million (approximately CNY 2.8 million), representing an 8% decline YoY.
China Tobacco Hong Kong has attributed the growth in sales and revenue of its new tobacco products to its expansion into new markets such as the Middle East, Western Europe, and Eastern Europe. The company has also increased efforts to upgrade its products in response to changing market demands. However, the decrease in profit margin is due to increased investment in marketing resources aimed at gaining more market share.
It is worth mentioning that according to China National Tobacco Corporation Hong Kong's 2022 annual report, its business in Brazil has also grown significantly. Its non-wholly owned subsidiary, CBT, under China National Tobacco Corporation Brazil, exported 29,247 tons of tobacco products to regions outside of China, a year-on-year increase of 33%; revenue was 543 million yuan, a year-on-year increase of 73%; and gross profit was 123 million yuan, a year-on-year increase of 139%.
According to an announcement, China National Tobacco Corporation Hong Kong (CNTC Hong Kong) plans to seize the opportunity presented by the adjustment of China's domestic epidemic prevention policies to continue implementing a dual-wheel development model based on both outward and inward growth. The company will focus on promoting the development of new tobacco product export business and a recovery of cigarette export business.
Reference:
International Chinese cigarette company, limited (Hong Kong) has released their annual report as of December 31, 2022.
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