ISLAMABAD: Philip Morris (Pakistan) Limited (the Company) has witnessed the volume decline of 26 percent during the first nine months of current year (ended September 30, 2020) as compared to same period of 2019, whereas the company's contribution to the national exchequer, in the form of excise duty, sales tax and other government levies, stood at Rs 17,420 million, decrease of 11% compared to the same period last year.
During the nine months period; ended September 30- 2020, the company's net turnover stood at Rs 11.9 billion, resulting in an increase of 8%. This was supported by the excise led price increase in Jun'19 coupled with price increase on value brands in Feb'20 both were essential to offset the impact of severe volume decline and ensuring shareholders return.
During the same period, Company's exports turnover stood at Rs 1,305 million (US$ 8.1 million) showing a significant increase as compared to same period last year. The export of approximately 3.5 million kilos of tobacco is part of the Company's commitment to support Pakistan both from increasing export perspective as well as foreign exchange reserves.
Despite the declining volume, the Company recorded Profit before Tax of PKR 2,457 million for the nine months period ended September 30th, 2020 compared to Loss before Tax of PKR 1,769 million for the same period of 2019.
The overall increase in Operating Profit before Tax from last year is mainly due to significant decrease in other expenses by Rs 2,463 million. This is largely due to impairment and employee separation cost charged on account of closure of our factory in Kotri last year, coupled with decrease in distribution and marketing expenses.
The legally compliant tax paying cigarette industry, during this period, continued to face challenges from the excessive illicit cigarette sector, This is mainly attributable to the excessive excise duty increases of 93% (Value Tier) during federal budgets of September 2018 and June 2019 that stretched the price gap between duty evaded and duty paid cigarettes that are selling at prices lower than the legally permissible minimum price of Rs 63/pack resulting in a growing down trading.
In the interest of all stakeholders, it is requested that the Government undertakes sustainable measures through strict enforcement against illicit tobacco sector including the implementation of tax stamps on cigarettes packs, company added.
Copyright Business Recorder, 2020