Pakistan Tobacco adds Rs10m a day to profits

Earnings for the quarter clocks in at Rs1b, announces Rs2 per share dividend .

KARACHI:

Pakistan Tobacco Company (PTC) managed to boost its profits by more than eight times and revenues by nearly a fifth for the quarter ended June 30, 2013 – the abnormal gains, say analysts, comes on the back of increase in core profit and other income as well as reduction in the income tax rate.

A subsidiary of British American Tobacco, PTC earned more than Rs10 million a day in profits during the second quarter of 2013. The company’s profits for the quarter increased by a staggering 886% to Rs1 billion or Rs3.93 per share – it had earned Rs101 million in the same quarter last year. The profit for the six months ending June, 2013 increased by 353% to Rs2 billion or Rs8.18 per share.

The manufacturer of Benson & Hedges and John Player Gold Leaf – the company’s high-end market brands – reported Rs8.4 billion in revenues for the second quarter of 2013. This is an increase of 18.3% when compared with Rs7.1 billion, it earned in revenues in the same quarter last year. The half-yearly revenues increased by 22.7% to Rs16 billion.

The company also announced a cash dividend of Rs2 per share for the financial year ending December, 2013 – this brings the total payout for the year to Rs4 per share.

The tobacco giant has paid Rs435 million in income taxes for the April-June quarter and Rs1 billion for the first six months of 2013.

Besides the increase in the company’s core profitability, there were other factors that contributed to the abnormal gains, Khurram Shahzad, head of research at Arif Habib Corporation told The Express Tribune. The reduced tax rate was another factor that contributed to the company’s profits.

PTC paid taxes on its income at 30% –  5% lower than the pre-budget rate of 35%.

Published in The Express Tribune, August 16^th, 2013.

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