August 2025: H1 2025 Results1
China Tobacco International (CTI) reported both revenue growth and improved profitability in H1 2025 despite margin pressure in certain segments. Revenue for the period rose 18.5% year-on-year to HK$10.32 billion, compared to HK$8.70 billion in the same period last year. Cost of sales increased faster, at 21.1%, to HK$9.37 billion, which led to a slight decline in gross profit to HK$946 million from HK$964 million. Operating profit stood at HK$939 million, just below last year’s HK$958 million, while profit before tax edged up 1.6% to HK$856 million. After income tax of HK$134 million, net profit reached HK$723 million, up 6.3% from last year’s HK$680 million. Profit attributable to shareholders increased nearly 10% to HK$706 million, while earnings per share rose from HK$0.93 to HK$1.02. CTI declared an interim dividend of HK$0.19 per share, up 26.7% from HK$0.15 last year.
Segment breakdown shows mixed results. The core tobacco leaf import business into Mainland China grew volumes by 2.5% and revenue by 23.5% to HK$8.40 billion, but gross profit declined 7.7% due to rising costs. Tobacco leaf exports to Southeast Asia, Hong Kong, Macau, and Taiwan performed strongly, with volumes up 12.7%, revenue up 25.9% to HK$1.16 billion, and gross profit surging 124% to HK$63 million on stronger pricing and higher sales. The cigarette export business saw volumes decline by 7.9%, but revenue grew slightly to HK$552 million and gross profit rose 16.8% to HK$142 million, driven by better performance in self-operated channels. In contrast, new tobacco products exports were significantly impacted by regulatory and geopolitical challenges, with volumes dropping 65% to 81 million sticks, revenue down 66.5% to HK$15 million, and gross profit falling 62% to less than HK$1 million. Operations in Brazil also suffered from adverse weather and product mix changes, with volumes down nearly 35%, revenue halved to HK$195 million, and gross profit down 21% to HK$54 million.
On the balance sheet, CTI maintained a strong financial position. Total assets rose to HK$10.00 billion from HK$9.82 billion at year-end 2024, while total liabilities fell to HK$6.30 billion from HK$6.63 billion. Shareholders’ equity increased to HK$3.70 billion, supported by higher retained earnings. Cash and short-term bank deposits grew to HK$3.98 billion from HK$2.86 billion, highlighting improved liquidity. Net current assets stood at HK$3.24 billion, and both the capital-to-debt ratio (0.69 versus 0.94 previously) and current ratio (1.52 versus 1.43) reflected stronger leverage and liquidity metrics.
Looking ahead, CTI stated it will continue to expand internationally by leveraging its capital platform, strengthening supply chain resilience, and optimizing pricing and services to maintain profitability in its tobacco operations. It plans to expand cigarette exports in duty-free and overseas markets by deepening strategic partnerships, optimizing product structures, and enhancing brand influence. While the new tobacco segment faces challenges, management aims to improve its competitiveness through innovation, intellectual property protection, and streamlined access to overseas markets. In Brazil, the focus will be on strategic sourcing, expanding the sales network, and diversifying product offerings. CTI also emphasized its commitment to ESG, digital transformation, enhanced risk management, and talent development as part of its long-term strategy.
Summary: China Tobacco International delivered solid top-line growth, increased net profit, and raised dividends in the first half of 2025. Despite cost pressures and setbacks in new tobacco and Brazil operations, CTI strengthened its financial position and maintained ample liquidity. Its outlook for the second half of the year is anchored on supply chain resilience, international expansion, market diversification, and ESG-driven development to sustain growth and shareholder returns.
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