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Islamabad, Amidst the prevailing economic challenges and industry dynamics, Philip Morris (Pakistan) Limited has revealed a decline in its financial results for the third quarter of 2023. The figures exhibit a notable downturn in both total net turnover and domestic net turnover as compared to the prior year. This downturn is largely attributed to the exorbitant excise increment implemented earlier in February 2023.
According to a news release by Philip Morris (Pakistan) Limited, for the nine months concluding on September 30, 2023, the company recorded a total net turnover of PKR 13,641 million. This figure represents an 8.9% dip as compared to the corresponding period of the previous year. On the domestic front, the net turnover stood at PKR 10,575 million, marking a considerable drop of 24.1% in comparison to the previous year. This decline is in tandem with a 44% slump in volumes, a direct aftermath of the sharp excise hike in February 2023. Post-tax profits for the same period were recorded at PKR 659 million, marking another significant drop. However, the company’s contribution to the National Exchequer increased by 22.5% as compared to the previous period, totaling PKR 26,189 million.
In an effort to enhance tax revenues, combat counterfeiting, and deter the smuggling of illicit goods, the Track and Trace System was inaugurated for the tobacco sector on July 1, 2022. Though Philip Morris (Pakistan) Limited, along with two other entities, has integrated the System in its entirety, several tobacco manufacturers have merely formalized the Tri-Partite Agreement without its complete execution. The efficacy of the System predominantly rests on its uniform implementation and rigorous surveillance of both production volumes and goods’ tracing at retail junctures.
The fiscal year 2022/2023 observed a compounded excise surge of more than 200%, with a striking 150% escalation in February 2023 alone. This increment culminated in a pronounced 55% decline in tax-paid volumes between March and June 2023, in contrast with the same period of the preceding year. In terms of the first nine months of 2023, there was a 37.9% drop in tax-paid volumes, predominantly influenced by multiple excise-induced price escalations. The prescribed minimum price stands at PKR 127.4 per pack for FED and Sales Tax collection, yet non-tax-paid cigarettes reportedly trade at an average of PKR 100 per pack. This discrepancy creates a price chasm of nearly 200% when juxtaposed with the majority of tax-paid brands. Absent rigorous oversight, the anticipated annual fiscal deficit due to the non-tax-paid domain could surpass PKR 240 billion.
Mr. Roman Yazbeck, the Managing Director of Philip Morris Pakistan, commented on the financial landscape, emphasizing the company’s unwavering resolve to adapt and steer through these challenging times while maintaining a vigilant watch over market fluctuations.
The post Philip Morris Pakistan Reports Decline in Q3 Financials Amid Economic Challenges appeared first on Pakistan Business News.