PTC’s profit intake rises to Rs6b

Earnings up 55% during Jan-Sep of current year

KARACHI: Pakistan Tobacco Company boosted its net earnings by more than half to Rs6 billion during the nine-month period that ended on September 30, 2015, the company revealed on Monday.

The Pakistani subsidiary of British American Tobacco Company reported an after-tax profit of Rs6.3 billion or Rs24.8 per share for the first nine months of 2015, increasing its bottom line by 55% compared to Rs4 billion or Rs16 per share it earned in the corresponding period of 2014.

The result announcement was accompanied with a cash dividend of Rs6 per share.

However, the stock, which traded at Rs998.5 per share the previous day, declined by 2.5% or Rs25.3 per share to settle at Rs973.2 per share at the close of market on Monday with only 750 shares changing hands - PTC is not a liquid stock and not covered by most market analysts.

“This result was below our estimates,” Topline Securities said in a report referring to the company’s performance in the latest quarter.

Rise in revenue

The government had increased Federal Excise Duty (FED) on tobacco by 5 percentage points to 63% in the latest budget, the report said, adding tobacco manufacturers raised prices of their products by Rs10 to 15 per pack of 20 cigarettes to pass on this impact, which affected volumetric sales.

“Revenues fell short of our expectations mainly on the back of lower volumetric sales,” the report said.

Pakistan’s largest tobacco manufacturer, which accounts for more than half the market, saw its net sales increase by 19.5% to Rs33 billion during the period under review compared to Rs27.7 billion it grossed during the corresponding period of 2014. However, revenues in the latest quarter increased by 9.5% to Rs8.5 billion compared to Rs7.7 billion of the same quarter of 2014.

Revenues of the company increased in January-September period primarily due to the increase in prices, the report said. As per industry sources, retailers in the later part of the second quarter, which ended on June 30, 2015, started piling up stock of cigarettes in anticipation of budget season, which resulted in higher sales.

On the margin front, the report said, improving macros owing to decline in international oil prices resulted in lower raw material and packaging costs for the company. As a result, gross margin went considerably up by 566 basis points YoY to 46.7% in the latest quarter of 2015.

Published in The Express Tribune, October 20^th, 2015.

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