Despite continuing regulatory and operational challenges, the Tanzania Cigarette Company (TCC) posted an annual profit for the first time in three years, signalling a turn of fortunes. The company currently has the highest-priced shares on the Dar es Salaam Stock Exchange.
According to TCC's latest annual report, the company's net income for 2019 was Tsh51.2 billion ($22 million), which is a 6.9 per cent increase from Tsh47.9 billion ($21 million) posted in 2018 and Tsh45.3 billion ($19.54 million) registered in 2017.
The improved earnings were driven by a 16 per cent volume growth in export markets and changes in domestic market pricing which triggered "strong" operating cash flows of Tsh74.3 billion ($32.06 million), according to the report.
"This has allowed us to increase gross dividend per share by 22 per cent to Tsh550 ($0.24) for the full year," said TCC board chairman Paul Makanza.
TCC's share price remained the highest on the DSE at Tsh17,000 ($7.3), well ahead of the Tsh10,900 ($4.7) per share for Tanzania Breweries Ltd on June 30.
The tobacco company has been listed on the bourse since November 2000 and its market capitalisation stands at Tsh1.7 trillion ($733.6 million) with 100 million shares issued.
Chief executive Michal Bachan cited the "prohibitive" cost of electronic tax stamps introduced by the government to replace paper stamps in 2018 among the biggest challenges in the company's operating environment.
TCC, which was formerly a state-owned company, holds a 90 per cent stake of the country's tobacco market and is 75 per cent owned by Japan Tobacco International Holding BV. According to its latest financial report, the Democratic Republic of Congo remains its main export market, but the firm also sells in Zambia and Mozambique.
Meanwhile Tanga Cement, also listed on the DSE, last week announced increased net losses in its unaudited trading results for 2019. The firm declared a net loss before tax of Tsh13.8 billion ($5.95 million) compared with Tsh11.5 billion ($4.96 million) posted in 2018. This is despite a three per cent increase in sales revenue from Tsh215 billion ($92.8 million) in 2018 to Tsh221 billion ($95.37 million) in 2019.
The company, which trades under its brand name Simba, has a current market capitalisation of Tsh38.2 billion ($16.5 million). Its share price hit an all-time low of Tsh600 ($0.26) in February last year and has remained at that figure.
According to Tanga Cement board chairman Lawrence Masha, operating profits dropped by 16 per cent in 2019 due to "the adoption of IFRS 16, which increased the 2019 depreciation charge by 27 per cent."