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Pakistan Tobacco Company (PSX:PAKT) has once again done its job quite well. The largest cigarette company in Pakistan saw a significant boost to both its top line and bottom line during the six-month period ended June 30, 2016.

John Player Gold Leaf (JPGL), the flagship brand in the premium segment, and the value for money segment, Capstan by Pall Mall Original along with Gold Flake have given a significant boost to the firm's net turnover. During the period, the sales grew by 17.3 percent year-on-year to reach a height of Rs28.8 billion. Despite a growth at the top, core cost for the period has declined, thanks to the better price of tobacco in the global commodity markets. The boost in top line and core cost control has reflected in the strengthening of the gross margin, which has touched a new high at 51 percent for the period under discussion.

With that said, however, the company has seen higher administrative expenses and the decline in its other income. At the same time, the finance income has increased, which has caused a net increase, but the financial cost of the company has declined. PAKT eventually closed the first half with a hefty net profit of Rs7.071 billion and an impressive EPS of Rs27.68, showing vast improvement over the same period of last year.

graph 48

It is estimated that 24 percent of the total cigarettes trade in Pakistani markets are illicit (smuggled, counterfeited, duty-evasive) and under these conditions, the strong financial performance of PAKT is quite admirable. Nevertheless, this is the return that PAKT has received after investing considerably into its businesses from supply-chain to branding to distribution network.

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