Philip Morris (Pakistan) Limited announces financial results for nine months ended September, 2021

Philip Morris (Pakistan) Limited (PMPKL) posted a Profit After Tax of PKR 2,071 million for the nine months ended September 30, 2021, compared to a Profit After Tax of PKR 1,828 million for the same period last year. The Company’s net turnover, on the other hand, stood at PKR 12,789 million during the stated period reflecting an increase of 7.5% versus the same period last year. During these nine months, the Company’s contribution to the National Exchequer, in the form of excise duty, sales tax and other government levies, stood at PKR 20,449 million that is higher by 17.4% compared to the same period last year, reflecting 60.9% of nine months Gross Turnover.

The unchanged excise rate on cigarettes as laid out in the Federal Budget 2021/22 proved to be fruitful that helped add to FBR’s record revenue collection. PMPKL’s contribution to the National Exchequer during the first Quarter ended September 30, 2021 of the ongoing fiscal year 2021/22 stood at PKR 6,014 million – higher by 22.1% versus the prior period.  No change in excise rates also led to consumer price stability of the tax paying cigarette brands, however, the persistent price gap of over 200% between compliant tax paid and non-tax paid brands continue to have a negative impact on the national treasury which are continue selling lower than the minimum price for the purposes of levy and collection of federal excise duty i.e. PKR 63/pack, hence, invalidating the purpose of imposing levies for tobacco control. As a result, non-tax paid brands continue to have an annual loss of PKR 77 billion (estimated) to the national exchequer.

We would also like to emphasize that although Pakistan’s economy which started to gain momentum in the first half of the calendar year is now facing serious challenges. The continuing rise of commodity and fuel prices internationally accompanied by devaluation of PKR v/s US$ has pushed up the inflation rate and these factors are making the operating environment highly challenging and likely to raise the cost of doing business. Given the economic challenges, greater focus is needed by the Government as rising inflation has already eroded the purchasing power of the common man. This, in general, may have consequences on the profitability of the Corporates across the country in terms of higher cost of doing business and  the current volatile domestic and international economic environment might have serious consequences for the Company’s operations in future specially, as it may divert the cigarette consumer to cheaper illicit brands to offset the decline in their income

Expressing his views on the Company’s announcement of its financial results, Mr. Roman Yazbeck, Managing Director at Philip Morris (Pakistan) Limited said, “Despite of all the challenges, the Company is making strides in improving its overall performance. On behalf of the Board of Directors, I would like to express our gratitude to all our employees, shareholders, business partners, and everyone whose efforts have enabled us to progress and deliver on our goals.”

On the subject of transparent collection of duties and taxes, he added, “FBR’s decision to roll-out the Track and Trace System for the tobacco industry is a welcome step and we look forward to seeing its uniform implementation across the board to ensure a level playing field which addresses the challenges faced by the legitimate tax paid sector from the non-tax paid sector.

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