Corporate results: PTC announces Rs4.8b profit for 2014

Cost control major factor behind 55% YoY growth.

KARACHI: Pakistan Tobacco Company (PTC) has announced a net profit of Rs4.8 billion for 2014, which is 55.2% higher than the company’s earnings recorded in the preceding 12 months.

According to a stock exchange filing on Monday, the company also declared a final dividend of Rs12 per share, which is in addition to an interim dividend of Rs3 per share.

The substantial year-on-year increase in earnings seems to be the direct result of controlled cost of sales along with reduced selling and distribution expenses.

While Pakistan Tobacco’s gross turnover for the year increased 19.2%, the annual rise in its gross profit stood at 30.5%, showing effective cost controls during 2014.

The company reduced its selling and distribution expenses by 3.6%. Its profit before tax increased by 54% while the amount of income tax it paid last year shot up by 51.5% on an annual basis.

Heavy taxation is a huge problem for the tobacco industry in Pakistan. In addition to income tax, the company paid excise duties and sales tax to the tune of Rs54.4 billion and Rs16.1 billion respectively last year.



Despite a significantly better performance by Pakistan Tobacco, the cigarette industry has grown nominally in recent years mainly because of illicit trade. Its main competitor, Philip Morris, closed down one of its five factories recently. Its net loss for the first nine months of 2014 was Rs603.3 million.

Published in The Express Tribune, February 24^th, 2015.

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