Philip Morris (Pakistan) Limited announced a 67% decrease in quarterly profit on Wednesday, according to financial results sent to Pakistan Stock Exchange (PSX).
The company’s financial results revealed an after-tax profit of Rs379 million for the quarter that ended on March 31, 2023. The gross profit for the quarter remained unchanged from the previous year at Rs2.32 billion, while the company’s turnover increased to Rs5.82 billion.
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The decline in profit was attributed to a sharp increase in federal excise duty on cigarettes through the Finance Supplementary Act, 2023. The increase in taxation on cigarettes led to higher prices and increased turnover but adversely affected the earnings of tobacco companies.
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The CFO of Philip Morris Pakistan, Muhammad Zeeshan, warned against illegal trade that is damaging the economy and discouraging the documented sector. The government should support tax-paying organized industries, he said.
The increase in federal excise duty on cigarettes has significantly impacted the legal cigarette industry. The sale of legal cigarettes has declined by 50% in the first quarter, while the market share of illegal cigarettes has risen to 45% in just one month.
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To reduce the budget deficit, tax rates have been increased in the supplementary budget, including a significant increase in federal excise duty on cigarettes. However, this has widened the gap as cigarettes are already highly taxed in Pakistan.
Philip Morris Pakistan remains committed to supporting the country by providing employment opportunities and contributing significantly to the national exchequer.
