Pakistan Tobacco earnings soar 134% in Jan-Sept period

Profit growth of the tobacco giant slows down in third quarter.

KARACHI:

Pakistan Tobacco Company (PTC), despite a slow third quarter growth, more than doubled its profit and increased revenues by nearly a fifth for the nine-month period that ended on September 30, 2013, according to the company’s financial results released on Wednesday.

A subsidiary of British American Tobacco and the largest tobacco manufacturer in the country, PTC earned more than Rs10 million a day in profit during the first nine months of 2013.

The company’s profit for the period increased 134% to Rs2.7 billion or Rs10.57 per share compared to Rs1.1 billion or Rs4.51 per share in the corresponding period of 2012.



The manufacturer of Benson & Hedges and John Player Gold Leaf – the company’s high-end market brands – reported Rs22.7 billion in revenues for the nine-month period, an increase of 19% compared with Rs19 billion earned in the same period last year.

The tobacco giant has paid Rs1.4 billion income tax for the nine months, a 115% increase from Rs653 million it paid to the national exchequer in the corresponding period of 2012. This is in addition to the Rs34 billion it paid as excise duty during the period.

As opposed to the nine-month results, which were impressive, the company’s quarterly performance showed that it didn’t have a good third quarter this year.

PTC earned Rs610 million or Rs2.39 per share during the quarter ended September 30, 2013, a decline of 12% compared with Rs691 million or Rs2.71 per share in the corresponding period of 2012. Revenues for the quarter increased 11% to Rs6.5 billion compared with Rs5.8 billion in the same quarter last year.

The tax levied on retail price of each packet of cigarettes ranges from 68.5% to 81%, indicating that the tobacco industry is taxed at the highest rate.

There were hardly any analysts available to comment on the company’s results. PTC is not a liquid stock, thus it doesn’t create interest among majority of analysts covering the Karachi bourse.

Earlier, PTC had an impressive first half, posting a 353% increase in profit and 23% increase in revenues. The abnormal gains were a result of the rise in core profitability and other income, Khurram Shehzad, Head of Research at Arif Habib Corporation then told The Express Tribune.

By contrast, PTC’s core profitability for the quarter ended September 2013 was 9.3%, down from 11.6% in the same quarter last year. Other income for the quarter also dropped to Rs13 million compared with Rs24 million of the same quarter last year.

On the other hand, core profitability increased from 6% during the first nine months of 2012 to 12% for the same period this year. Similarly, other income for the nine-month period of 2013 increased to Rs118 million, up from Rs51 million in the corresponding period of 2012.

Published in The Express Tribune, October 24^th, 2013.

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