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2013 Pakistan Tobacco profits 202 percent higher than 2012

| April 22, 2013

The Pakistan Tobacco Company has announced its results for the quarter ended March 31, 2013, recording stellar earnings of Rs1.09 billion as compared to only Rs359 million earned in the same period of the preceding year (translating into 202 percent growth). The company has also announced an interim dividend of Rs2 per share alongside the results, according to a story in the The International Herald Tribune.

The company’s net sales for the period improved nearly 28 percent over the same period of the previous year, and it recorded a 45 percent higher gross profit at Rs2.72 billion. Meanwhile, its selling and distribution expenses dropped 33 percent over the previous year to Rs597.49 million, while administrative expenses remained more or less flattish at Rs331.72 million. At the same time, its operating expenses grew 17 percent to Rs136.53 million, while operating income also registered a rise of 144 percent to Rs20.99 million. All these factors meant the company retained more of its gross profits than the previous year, as its net finance costs also registered a drop of an impressive 96 percent to Rs1.66 million.

The company paid a total of Rs15.26 billion in excise, sales and income taxes for the period.

Pakistan has $175.8 million reasons to tackle tobacco smuggling

| April 17, 2013

Pakistan is losing 17 billion Pakistani rupees ($175.8 million) per annum due to the illicit cigarette trade, which represents about 26.7 percent of total cigarettes consumed in terms of volume.

According to a research paper compiled by the Euromonitor International, and cited in a story published by the Asia News Network, Pakistan ranked third-highest in illicit trade in Asia-Pacific countries, behind Malaysia and Hong Kong last year.

When compared to its Asia-Pacific counterparts, over a five year period (2006-11), Pakistan’s illicit cigarette trade registered the second-highest growth of 62.77 percent after Vietnam (70.7 percent).

During the same period China, the largest cigarette consuming economy in Asia Pacific, registered an impressive contraction in illicit trade by 18 percent.

Total government revenue loss over the past five years due to illicit trade amounted to a staggering 80 billion rupees. This is approximately equivalent to 11 percent of the funds approved by the Public Sector Development Programme.

The document further revealed that Pakistan’s illicit cigarette trade comprises three main types, namely, local duty-not-paid (DNP), smuggled and counterfeit. Of these, local DNP cigarettes have the dominant share unlike the global norm where smuggled cigarettes are usually the real cause of concern.

The local DNP cigarettes made up to 84.5 percent of total illicit market, while 12 percent and 3.5 percent were smuggled and counterfeit cigarettes, respectively. This high share of local DNP suggests that situation is more of an internal problem, thus highlighting the need for improving local law enforcement.

Euromonitor estimates that an alarming 26.7 percent of all cigarettes consumed in Pakistan last year were illicit comprising local DNP, smuggled or counterfeit. This translates to a massive volume of 23.5 billion sticks. It further stated that during 2002-2011, global illicit cigarette trade contracted by 7.3 percent, whereas in the same period, the situation in Pakistan worsened with a growth in illicit trade of 113.6 percent. In fact, volume of illicit cigarettes more than doubled from 11 billion sticks in 2002 to 23.5 billion sticks in 2011.