THE Financial Services Commission (FSC) has approved the winding up of the Carreras Group Limited Superannuation Fund even as profits decline said Chairman Richard Lewis in the company’s unaudited first quarter results.

This approval comes on the heels of Carreras’ shrinking profit margin which has seen its total operating income fall to just under $2.6 billion for the quarter ending June, 30 2011. This represents a decline of over 13.5 per cent after achieving almost $3 billion in total operating income for the same period last year.

A superannuation fund is one which is reserved to pay workers’ pensions when they retire from service.

Contributing to the decline in profits were a fall-off in sales, increased marketing and distribution costs, security, electricity and fuel costs. Additionally, one-off people related expenses incurred during the quarter contributed to an increase in administrative expenses.

The company’s management has since introduced initiatives which it says will assist in offsetting some of these increases in future.

Given those expenses, net profits declined from $674 million to $523 million, a fall-off of just over 22 per cent from the same quarter last year.

Despite these negating factors, Carreras Group Limited was able to soften the impact of its expenses incurred through the increased generation of capital earned from its existing interests and investments.

“Interest and other investment income reported were $35.2 million for the first quarter represent ing an increase of 26.6 per cent… This is in line with our expectation given the company’s higher cash holding position,” said Lewis.

Carreras expects that its cigarette sales volume will continue to fall even as they have amped up marketing initiatives. This is as a result of the continued effects of the excise increase levied by the government last year.

“It is expected that volumes will continue to be challenged going forward especially within an environment where consumers’ disposable income is already being stretched to meet basic needs.”

Those challenges notwithstanding, the company was able to pay shareholders an interim dividend of $1.50 per stock unit for payment out of accumulated profits.

Up to press time, efforts to get information on the implications for workers previously signed up to the superannuation fund were unsuccessful.