TCC shareholders set for 23 percent increase in dividend

Dar es Salaam. Tanzania Cigarette Public Limited Company (TCC Plc) has increased its dividend for shareholders by 23 percent after the company braved challenges to register double-digit growth in profitability.

The firm said yesterday that its gross profit jumped by 16.2 percent to Sh69.2 billion in 2022 from Sh59.6 billion in 2021.

As a result, the company’s board recommended a final gross dividend payment of Sh370 per share, which is Sh70 more than what was paid in 2021.

TCC board chair Paul Makanza said the increase in profitability prompted the decision.

“Given the strong cash position and in line with our dividend policy of 90 to 110 percent pay-out ratio, the board of directors recommended a final gross dividend payment of Sh370 per share. This final dividend will be paid out to shareholders on or around May 11, 2023, subject to shareholders’ approval at the Annual General Meeting of shareholders (AGM) scheduled for April 21, 2023,” Mr Makanza said.

The final gross dividend plus the interim one which was paid out in November 2022, will bring the total gross dividend for the year ended December 31, 2022, to Sh670 per share.

“We closed 2022 with strong domestic sales results with a record-breaking volume of 5.7 billion sticks which is 10 percent higher than what was recorded in 2021,” said TCC CEO Takashi Araki.

The company manufactured nine billion sticks in 2022 which was a seven percent growth compared to 8.6 billion manufactured in 2021.

“This was driven by an excellent export performance which grew by 18 percent with the Democratic Republic of Congo being the major contributor,” said Mr Araki.

With such performance, TCC contribution to the government revenues in 2022 rose significantly, with value-added tax (VAT) and excise tax contributions increasing by nine percent to Sh243 billion compared to Sh223 billion in 2021.

Mr Araki attributed the company’s performance to the firm’s strategy of route to consumer/market; the portfolio of its quality products and its strong partnership with stakeholders, including wholesalers among other factors.

Meanwhile, Mr Araki - who has worked in the tobacco industry for almost three decades - exuded TCC appreciation to the government for its continuous efforts in improving Tanzania’s business environment.

“We appreciate the government continuous efforts to ensure an improved investment environment in the country. We are pleased that peace and stability, which is an important element for economic growth, continue to be maintained thus assuring investors of a sustainable operating environment,” he said.

The government decision to stabilize excise tax on cigarettes in the past three years, has supported TCC business growth which also allowed the company to increase its contribution to government revenues through taxes, he added.

The existence of the 75 percent domestic tobacco content (DTC) incentive for cigarette manufacturers using at least 75 percent of locally sourced tobacco, has a significant contribution to the local manufacturer.