The tobacco industry of Karelia ended the first nine months of this year with higher figures compared to the corresponding period of 2021. In particular, the group increased its turnover by about 7% to around 959 million euros, while its gross results increased by 10.4% to more than 100 million euros. During the period under review, sales abroad (EU, other countries in Europe, Africa and Asia) amounted to 145.1 million euros.

Profit before tax increased by 10.8% to 103.4 million euros, while net income amounted to 79.4 million euros (+20.3%). Karelia Tobacco has equity capital of €653 million and total liabilities of €153.7 million, of which €142.3 million is short-term debt. The total amount of cash reserves of a listed company is about 346 million euros.

For the fourth quarter of this year, the tobacco industry expects sales to be at about the same high levels as in the corresponding period last year. Due to the rising cost of raw materials, mainly tobacco and filters, Karelia expects this to negatively impact gross profit margins as it continued to increase selling prices in most markets where it operates abroad. However, according to the nine-month financial report, price stability in the Greek and Bulgarian markets, necessary to maintain significant market shares acquired in recent years, is putting pressure on gross margins.

Net profit amounted to 79.4 million euros.

How are the prospects for the band’s path expected to unfold? The tobacco industry estimates that inflationary pressures are not expected to ease until at least the first half of 2023, while further increases in raw material and packaging purchase prices are inevitable. According to the tobacco industry, several countries in which the company operates, including Bulgaria, have announced increases in taxation on tobacco products, which predicts a significant increase in retail prices for its products. This, coupled with increased pressure on consumer purchasing power, “limits any further increase in production to cover inflated raw material costs to the bare necessities,” the company said in its nine-month financial report.

On the other hand, the expected further increase in interest rates by central banks in both the eurozone and the US is expected to significantly strengthen the financial return on the placed cash reserves of 346 million euros. This amount includes pledged deposits of EUR 45.5 million, which were pledged to provide guarantees to the bank. The Company has the opportunity to use these free funds, replacing the pledged deposits with the pledge of other financial instruments.

It is noted that for the 2021 financial year, the Karelia tobacco company decided to pay dividends in the amount of 30.3 million euros, or 11 euros per share, which is higher compared to 2020. The dividend yield is 3.95%.