Once again Pakistan Tobacco Company Limited (KSE: PAKT) has done a great job for the first half of this year. As per the notice to the KSE yesterday, the tobacco giant had received a massive boost to both its top line and bottom line during the six months ended June 30, 2015.
It seems that the PAKTs both factories in Jhelum and Nowshera have been very busy during the year. The firms net turnover grew by nearly 23percent to reach close to Rs25 billion in 1HCY15. Similar to last year the company saw a volumetric increase in its medium level brand, Gold Leaf and budget brands like Capstan and Gold Flake.
Even though the company saw a massive expansion in its sales, core costs remained in check. PAKT saw its cost of sales increased by nearly 12 percent but as a percentage of net sales, it declined by 936 bps to 58.38 percent. The improvement in company’s performance is visible in its gross margin, which has gone up by 42 percent compare to 36 percent in year-on-year comparison.
PAKT has kept a tight control on its selling and distribution expenses. Even, though, higher sale is attributed to higher expenses and company is fighting the war of illicit tobacco in the country, it was able to decrease its expenses by 6.91 percent of net turnover, a good 735 bps lower from 1HCY14.
Due to massive increase in the company’s top line and the cost control measures, PAKT improved its bottom line by 66.3 percent and closed the first half with a hefty net profit of Rs 4.7 billion which corresponds to a healthy EPS of Rs18.53.
In 2014 alone, illicit trade in cigarettes accounted for almost 23 percent of the total market in Pakistan, this translated into around 18.6 billion cigarettes. With all these issues, PAKT has performed significantly well thanks to strong supply chain and the strong feet on the ground.