Karachi, August 16, 2023 – Philip Morris Pakistan Limited, an international company known for making cigarettes, has experienced a significant drop of 76 percent in its profits for the first half of this year, which ended on June 30, 2023.
In a report submitted to the Pakistan Stock Exchange on Wednesday, it was revealed that the company’s profits after taxes went down to Rs 372 million for the January to June period of 2023. This is a stark contrast to the Rs 1.53 billion in profits during the same time frame last year.
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The decrease in profits for Philip Morris Pakistan comes as no surprise, as the company had already warned about a decline in revenue due to a substantial increase in the Federal Excise Duty (FED) on tobacco products. The government had aimed to collect Rs 200 billion in taxes from the tobacco industry through a mini-budget in August 2022. Additionally, a supplemental budget announced in February 2023 further raised the revenue target from the tobacco industry beyond the initial goal set in August 2022.
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During the current fiscal year, the FED on tobacco products has risen by more than 200%. This increase in taxes, along with an increase in the minimum price set by tax laws for these products, has affected the company’s financial performance negatively.
With such a significant decline in profits, the company’s earnings per share (EPS) for the first half of 2023 were Rs 6.03 as a basic measure and Rs 4.34 when diluted. This is a notable drop from the EPS of Rs 24.90 (basic) and Rs 19.03 (diluted) during the same period last year.
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Looking at the turnover, the company’s earnings from January to June 2023 were Rs 9.06 billion, down from Rs 10.16 billion during the same period in the previous year. The gross profit for the first half of 2023 stood at Rs 3.38 billion, a decrease from Rs 4.65 billion in the first half of 2022.
The company’s expenses also surged during the first half of 2023, reaching Rs 2.52 billion compared to Rs 1.83 billion during the same period last year.
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The recent increase in FED charges on the cigarette industry has led to significant losses for Philip Morris Pakistan. In the quarter ending on June 30, 2023, the company reported a loss of Rs 7.84 million, a sharp contrast to the profit of Rs 383.48 million in the same quarter of the previous year.
