By Timothy S. Donahue

Top Takeaways:

• Import drag: Lower leaf volumes pushed revenue down 26.9%.
• Exports gain: Leaf exports and Brazil delivered strong growth.
• Profit holds: Earnings fell 11.2% despite the revenue decline.

China Tobacco International sold less but weathered the blow.

China Tobacco International (HK) reported an 11.2% decline in first-half attributable profit, as lower tobacco-leaf imports and delayed cigarette shipments pushed revenue down nearly 27%. Stronger leaf exports and its Brazil operation helped cushion the decline.

The Hong Kong-listed international arm of China Tobacco reported profit attributable to equity shareholders of HK$627 million ($80.4 million) for the six months ended June 30, down from HK$706.4 million the previous year, the company reports.

Revenue fell 26.9% to HK$7.54 billion ($967 million), down from HK$10.32 billion. Earnings per share declined to HK$0.91, down from HK$1.02.

The results were in line with a June profit warning, in which China Tobacco International forecast a 25%-30% decline in revenue and a 10%-15% drop in attributable profit.

The company kept its interim dividend at HK$0.19 per share.

Lower volumes in the tobacco-leaf import business were the primary factor weighing on revenue. China Tobacco International had previously attributed the decline to reduced imports from the United States and other regions, amid changes in international trade conditions and shipment timing.

The import business is a critical part of the company’s operations. China Tobacco International serves as the designated platform for China Tobacco’s overseas leaf procurement, making its results sensitive to changes in Chinese tobacco demand, international leaf availability, and global trade flows.

Despite the sharp decline in overall revenue, the company’s tobacco-leaf export business moved in the opposite direction.

China Tobacco International said its leaf export operations recorded significant increases in revenue and gross profit in the first half. Its Brazil operation also posted strong growth, helping offset some of the weakness in imports.

The Brazilian improvement reverses the weakness seen a year earlier. During the first half of 2025, the company’s Brazil operation generated HK$195.3 million in revenue, despite a sharp decline in export volumes amid adverse weather conditions and a shift in the mix of tobacco available for sale.

Brazil has become an increasingly important part of China Tobacco International’s global leaf strategy. The company has been expanding its presence there to strengthen tobacco sourcing and to expand sales to customers outside China.

Cigarette exports were another source of pressure in the latest period.

The company said shipment delays in its cigarette export business contributed to the revenue decline. It had previously said that adjustments to business processes related to China’s domestic duty-free market delayed shipments and the recognition of associated revenue.

The difference between the company’s revenue and its profit decline was notable.

Gross profit fell 9.5% to HK$856.3 million, a much smaller decline than the 26.9% drop in revenue. Net profit decreased 9.4% to HK$655 million, while attributable profit fell 11.2%.

Other income increased by 33.9% to HK$96.4 million, primarily due to foreign-exchange gains. Finance costs declined by 3.3% to HK$80.1 million as borrowings and interest rates decreased.

The results leave China Tobacco International with a more mixed first-half picture than the headline revenue decline suggests. Its large tobacco-leaf import operation contracted, but stronger export and Brazilian businesses provided an offset, helping protect profitability.

China Tobacco International said it will continue to strengthen supply-chain resilience, expand its international business, and optimize its product portfolio. The company also plans to deepen cooperation with suppliers and customers and to continue its digital transformation and sustainability initiatives.

Weather remains a risk in Brazil, where leaf production can materially affect both sourcing volumes and the company’s international sales.