Article by Leona Zhu; Edited by Rui Tian - China Tobacco Hong Kong's new tobacco business has seen growth in both sales and revenue in 2022, primarily due to its further expansion in emerging markets such as the Middle East, Western Europe, and Eastern Europe. According to its 2022 annual report released on March 9th, the net profit of China Tobacco Hong Kong decreased by 46.66% year-on-year, while the sales of its new tobacco business increased by 10%, and its Brazilian business also had impressive growth.
The annual revenue of China Tobacco Hong Kong in 2022 was HKD 8.324 billion (approximately RMB 7.3 billion), a year-on-year increase of 3.23%. The net profit attributable to the parent company was HKD 375 million (approximately RMB 330 million), a year-on-year decrease of 46.66%, and the basic earnings per share was HKD 0.54.
China Tobacco Hong Kong explained that the decline in performance was mainly due to the soft sales of the local cigarette market in Southeast Asia affected by the increase in tobacco tax and the pandemic, which led to a weakening of customers' demand for tobacco leaves. Also, the resources of suitable tobacco leaves for export have decreased domestically. China Tobacco Hong Kong's new tobacco products' export volume was 502.39 million sticks, an increase of 47.62 million sticks or 10% year-on-year. Its revenue was HKD 110 million (approximately RMB 96.33 million), an increase of HKD 8.6 million (approximately RMB 75.3 million) or 8% year-on-year. Its gross profit was HKD 3.2 million (approximately RMB 2.8 million), a decrease of HKD 0.03 million or 8% year-on-year.
China Tobacco Hong Kong said that the sales growth of new tobacco and the increase in revenue were mainly due to its further expansion in emerging markets such as the Middle East, Western Europe, and Eastern Europe. At the same time, it has increased efforts to upgrade and iterate products to meet changing market demands. In addition, the decrease in gross profit was mainly due to increased investment in marketing resources to gain more market share.
It is worth mentioning that according to China Tobacco Hong Kong's annual report in 2022, its business in Brazil also saw significant growth. Its non-wholly-owned subsidiary CBT exported 29,247 tons of tobacco products to areas outside China, a year-on-year increase of 33%. Its revenue was CNY 543 million, a year-on-year increase of 73%. Its gross profit was CNY 123 million, a year-on-year increase of 139%.
The announcement shows that in 2023, China Tobacco Hong Kong will seize the opportunity of adjusting epidemic prevention policies in mainland China, continue to adhere to the dual-driven development mode of expansion and internal development, and focus on promoting the development of new tobacco products export business and the recovery of cigarette export business.
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