Karachi: Despite the economic headwinds facing Pakistan, Pakistan Tobacco Company Limited (PTC) has delivered a resilient performance for the nine months ending September 30, 2024. The Directors of PTC have released the company's condensed interim financial statements, showcasing a stable financial landscape amid the economic recovery phases.
According to the financial details released, PTC achieved a gross turnover of 262.42 billion rupees, a significant increase from the 221.35 billion rupees reported in the same period last year. The net turnover stood at 88.12 billion rupees, improving from 74.28 billion rupees in the previous year. Despite a 52% surge in the cost of sales, driven by the increased leaf prices, the company managed a gross profit of 42.06 billion rupees.
According to information available from the Pakistan Stock Exchange (PSX), the operational prowess of PTC was evident as it maintained domestic cigarette volumes and achieved exports worth PKR24.7 million amidst stable Federal Excise Duty (FED) conditions and robust market execution. However, profit before tax decreased slightly by 4% to 35.61 billion rupees, and profit after tax also saw a decline of 5% to 19.91 billion rupees, primarily due to a higher effective tax rate applied to exports.
The company’s enduring commitment to cost control and efficiency is evident in its ability to limit the operating profit decline to 6%, amidst the financial pressures of the high cost of inputs and the challenging market conditions in Pakistan. Despite these challenges, PTC's Board of Directors has declared an interim dividend of PKR 95 per share.
The tobacco industry in Pakistan faces continuous challenges from a large duty-evaded illicit segment, which has grown in response to increases in FED on cigarettes. This has led to a widening price gap between duty-paid and non-compliant sectors, pushing consumers towards cheaper illicit tobacco. About 58% of the market now consists of illicit trade.
In response to these challenges, the government introduced measures in the Federal Budget 2024/25 to stabilize the FED for cigarettes and enhance enforcement against illicit trade. PTC continues to adapt by investing in its reduced-risk product portfolio and expanding its export markets, including new ventures in Japan, France, and Peru with its VELO brand.
As PTC navigates through these turbulent times, its strategies of robust cost management and innovative market approaches continue to underline its resilience and commitment to sustainable growth.