Amid increases in duties and prices and an overall contracting of its income streams, Carreras recorded a 26.7 per cent decline in net income during the September 2009 quarter when compared to the corresponding period in 2008.

The company recorded $570 million net income for the July to September 2009 period, $208 million less than the $778 million net profit earned in the comparative period last year.

Carreras has attributed this loss to a combination of sales decline in cigarette volumes coupled with the additional 42 per cent excise tax levied on the product by the government in its 2009-2010 budget resulting in an increase in the price of the product.

In the comparative period last year, a 100 per cent special consumption tax increase was also levied on the product.

“These excise led price increases were implemented within a very challenging macroeconomic environment and have resulted in a significant impact on the company’s sales volume and its consequential impact on the financial performance of the company,” the board of directors said in a statement.

Total operating revenue declined to $2.5 billion in the September 2009 quarter 2.3 per cent less than the similar period in 2008, while investment and other income also declined by 50.4 per cent over the period from $108 million to $53 million.

Precipitated by a decline in the exchange rate, exchange gains for the company declined 79 per cent from $2.4 million in the September 2008 quarter to $518,000 in the three-months ended September 2009.

Carreras, which is 51 per cent owned by British American Tobacco (BAT) has the exclusive rights to sell their brands, including Craven A, Rothmans and Benson and Hedges in Jamaica.

However, the illicit smuggling of cigarettes have continued to affect the company’s profits. On June 15 this year, the Customs Contraband Enforcement Team (CET) of the Jamaica Customs, raided a store on King Street, Downtown Kingston and seized 3,958 cartons of counterfeit cigarettes valued at $16 million.

In the note to the financial statements, the board of Carreras indicated that it plans to “work with the government to manage both illicit trade in cigarettes and taxation on the industry to ensure long-term sustainability of the business for all stakeholders”.

“As we continue to face the challenges of the economic downturn, we continue to place greater emphasis on improving our marketing and distribution capabilities and on managing the main risks to the business,” the statement said.

The company’s distribution and marketing expenses increased 15 per cent from $153 million in the September quarter of 2008, to $180 million for the similar period in 2009.

Despite the deterioration in the income streams overall, cash and cash equivalents increased from $1.3 billion in the 2008 quarter to $1.4 billion this year.