Pakistan Tobacco Company Limited has posted a half-yearly profit of Rs. 11 billion for the period ended June 30, 2023, almost 30 percent higher than the profit in the same period of the previous year.
The company’s earnings per share during the period came in at Rs. 43.22, compared to earnings per share of Rs. 33.32 reported in the same period of last year.
The company’s gross turnover stood at Rs. 133.465 billion, up 17.6 percent compared to the gross turnover of Rs. 113.447 billion. However, the net turnover of 46.098 was just 2.42 percent higher than the same period of the previous year. This was mainly down to a 30 percent increase in excise duties over the same period of the previous year and a 22 percent increase in sales tax over the previous year.
The company’s cost of sales stood at Rs. 19.464 billion compared to the cost of sales of Rs. 23.825 billion reported in the same period of the previous year. Gross profit stood at Rs. 26.633 billion, up 26 percent from the previous year.
The operating profit during the period under review stood at Rs. 18.205 billion, compared to an operating profit of Rs. 15.085 billion in the same period of last year.
Quarterly performance
For the quarter ended June 30, the company’s profit stood at Rs. 4.2 billion, up 18.5 percent compared to a profit of Rs. 3.625 billion reported in the same quarter of the previous year. The company’s earnings per share during the quarter stood at Rs. 16.82 compared to earnings per share of Rs. 14.20 reported in the previous year.
Gross turnover during the period stood at Rs. 74.743 billion, up 23 percent compared to the gross turnover of Rs. 60.615 billion reported in the same quarter of the previous year. However net turnover declined by 7 percent to Rs. 23.514 billion. This was due to a 50.5 percent increase in excise duties over the same quarter of the previous year and a 30 percent increase in sales tax.
Surprise increase in profit and sales
It is pertinent to mention here that cigarette manufacturers had claimed that the surge in excise duty in February 2023 led to an increase in sales of smuggled and counterfeit cigarettes. The manufacturers had claimed that there has been a drastic decline in the sale of legal cigarettes as a result of the excise duty hike. However, the financial results of Pakistan Tobacco Company tell a different story.
I haven’t seen the P&L. What was the amount of windfall gains on finished goods inventory? That could account for some of the increase in profits.