Eastern Company revenues are expected to rise by around EGP 350m in the current fiscal year (FY) after applying the new tax on its products, according to Daily News Egypt’s analysis of data provided by the company.
The company said in a presser on Thursday that the increase in prices of most of its cigarette lines will raise revenues of its value-added tax (VAT) by around EGP 500m a month.
In addition, the price hikes will increase the company’s revenues by around EGP 50m per month, according to a statement to the Egyptian Exchange (EGX).
The company’s fiscal year starts in July.
Eastern Co. announced last week the new prices of its products after applying the VAT, indicating that its cigarette prices have increased by 12.5% to 25%.
VAT implementation across Egypt began on 10 September 2016, after President Abdel Fattah Al-Sisi issued Law No. 67 of 2016 for the VAT.
The price of Cleopatra king size cigarettes will be raised by 21.7% to EGP 14 from EGP 11.5, while Cleopatra soft packs and regular Cleopatra packs’ prices will rise from EGP 12.5 to EGP 14.5 and from EGP 12.75 to EGP 15.5, respectively, the company highlighted in a statement to the EGX.
The prices of Mondial, Boston, Light, and Belmont will become EGP 15 instead of EGP 12, according to the statement.
Prices of Super and West cigarettes will be EGP 17 instead of EGP 15, while Black Label’s price will increase by 12% to EGP 18 from EGP 16.
Eastern Company indicated that prices were adjusted on 23 November, in accordance with the VAT’s implementation.
The company last reported a profit of EGP 1.04 billion in the three months ending in September 2017, a rise from EGP 427.3 million in the same period of 2016, while its sales surged by 65.67% year-on-year to EGP 3.17 billion in the period from July to September, compared to EGP 1.9 billion last year.
Meanwhile, tax on cigarettes is expected to officially increase in early December, Egyptian Finance Minister Amr El-Garhy said in a television interview last week.
El-Garhy had previously said that applying VAT on tobacco will boost total tax allocation for FY 2017/2018 by EGP 4 billion.
The draft law was sent to President Abdel Fattah Al-Sisi on Wednesday for approval, to be published in the country’s official Gazette, El-Garhy added, pointing out that it will be applied starting Thursday or Friday.
The minister attributed the anticipated hike in cigarette taxes to the high costs of production in the tobacco industry.