AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Islamabad: In a corporate briefing held today, Pakistan Tobacco Company (PAKT) revealed a significant challenge hampering the industry: the illicit cigarette market, which commands a staggering 57% share, continues to overshadow legitimate sales despite PAKT’s robust financial performance.
The company’s management emphasized the pressing issue of affordability and illicit market dominance that plagues formal players. This situation persists even though the government refrained from increasing excise rates in the latest budget. Illicit cigarettes remain considerably cheaper, thus obstructing the growth of legitimate brands.
Nonetheless, PAKT reported impressive financial results for the first half of 2025. Net turnover increased by 19% year-on-year, reaching Rs69.4 billion, while profit after tax surged by 30% to Rs14.3 billion. This growth was bolstered by a remarkable 350% rise in export turnover, mainly to markets in Greece and Europe, totaling Rs10 billion.
The gross profit margin saw a significant improvement, rising to 47.3% from last year’s 40.6%, driven by cost optimization, refined pricing strategies, and enhanced export margins. The management credited better export performance and positive feedback on product quality for this upturn in the second quarter of 2025.
PAKT also announced a dividend of Rs100 per share, maintaining its focus on delivering value to consumers and shareholders alike. The company’s smokeless product category, Velo, which now contributes 4–5% of the total turnover, has reached a break-even point and is expected to yield better margins next year. PAKT has been actively exporting Velo to seven countries, with the first shipment to Bahrain anticipated in the coming months.
In terms of agricultural impact, the recent rains and flooding did not significantly affect tobacco crops, as most had already been harvested and stored. This proactive measure preserved the majority of the crop in Khyber Pakhtunkhwa, with ongoing assessments in Punjab.
Management highlighted that cigarette consumption has remained stable at around 80 billion over the past 2–3 years. To combat the burgeoning illicit market, a reduction in excise duty is deemed necessary. However, the effective tax rate has increased due to government disallowance of certain expenses.
As PAKT continues to navigate these challenges, the company’s commitment to enhancing shareholder value and product quality remains steadfast, despite the hurdles posed by the thriving illicit market.