SEKAP: How the Japanese of JTI have turned it into a profitable outward-looking company

A few years have passed since the former Cooperative Greek Tobacco Industry, also known as SEKAP, was “sinking” under the weight of huge accumulated debts, following the fate of its main shareholder, ATE Bank, while the revelation of the smuggling case had preceded it, when the discovery of a ship in Edipsos with cigarettes of the company served as the end of the thread. The liquidation-bankruptcy process in 2011-2013 would prove painful and in 2013 the company would be given a new chance through its acquisition by businessman Ivan Savvidis through Russian Donskoy Tabak. The Savvidis era will last just five years, as Japan Tobacco International will buy the Russian group from the businessman, with the result that SEKAP will now also pass under the umbrella of the multinational giant, starting a new chapter in its history. In this the company seems to follow not only a virtuous cycle of growth but also to be a regional “key” in the strategy of the JTI Group in Europe as the Xanthi factory today, having changed its business model of operation, produces products of the Japanese Group for ten European markets, including Greece.

To achieve this, investments that have exceeded 40 million euros in both building facilities and mechanical equipment have been made, transforming the Xanthi factory into a modern production base that follows technological developments.

Thus, in 2023, as shown in the financial statements published by SEKAP, which are consolidated directly into the parent company JT INTERNATIONAL HOLDING B.V, the production of tobacco products increased through 2023, continuing the production of cigarettes Camel and Winston, BF, GR brands as well as other international brands such as Mayfair, Benson & Hedges. It should be noted that at the time of the acquisition of SEKAP in 2018, the production capacity of the factory was 0.7 billion cigarettes, to reach today with the new investment of 5 billion cigarettes.

“JTI’s objective is to maintain the Company’s plant in Xanthi, increasingly integrating it into the Group, its standards and business guidelines, through strategic investments, providing jobs and improving the production unit, driven by quality and consumer needs,” says the SEKAP management under President Cleber Da Rodda, who took over the plant last April.

According to the financial statements released, in 2023 SEKAP’s turnover increased to 57.68 million euros, up from 55.22 million euros in 2022. Of this, EUR 40.5 million relates to sales in Greece and EUR 17.18 million in other countries.

Nevertheless, the company’s profits appear to be lower than last year. Specifically, profit before tax, financial, and investment results was EUR 1.89 million from EUR 4.71 million in 2022 and profit after tax was approximately EUR 682 thousand from EUR 3.73 million.

The company also has short-term debt liabilities of EUR 25 million and short-term trade payables of EUR 7.31 million at the end of the 2023 financial year

Cash and cash equivalents were EUR 6.94 million and inventories amounted to EUR 12.98 million. The company’s total equity increased to EUR 21.17 million compared to EUR 20.48 million

The number of SEKAP employees in 2023 was 159, up from 162 in 2022

The new model
It should be noted that since the end of 2019, SEKAP has changed its business model and operates under a product manufacturing contract with the JTI group as opposed to the previous model of a fully autonomous distributor of tobacco products. In fact, under the new operating model, the company, is no longer liable to pay tobacco product taxes throughout FY 2023. Instead, JTI Hellas, which is the trading company that distributes the products to retailers, will be liable.

The latter, according to the financial statements published last month, had a net turnover of €93.47 million for 2023 (at €814.83 million including VAT and VAT) from €87.11 million in 2022, recording a 7.3% increase.
Profit before tax was EUR 1.87 million from EUR 1.74 million in 2022 and is within management’s revised guidance for the financial year. Net profit for 2023 was EUR 1.38 million, up from EUR 1.14 million in 2022.

It should be noted that JTI in the domestic tobacco products market is the leader in the cigarette category with its Winston, Camel, and Old Holborn brands, and is the only multinational company producing “traditional” tobacco products in the country after its acquisition, currently holding the 1st position in the category and the 2nd position in the tobacco products market.

The Japanese tobacco giant plans to open stores in Greece soon, promoting its technologically advanced heated tobacco product. It should be noted that our country is among the first 10 countries where Ploom was launched.

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