ISLAMABAD PR - Philip Morris (Pakistan) Limited has dismissed claims being made in past few days by certain organisations about its financial performance. Announced recently, during the nine months ended September 30, 2020, PMPKL net turnover for the nine months ended September 30, 2020 with the same period in 2019, had a marginal increase in line with inflation whereas the company witnessed a volume decline of 26% (versus same period in 2019), shared Muhammad Zeeshan, PMPKL Chief Financial Officer in an exclusive conversation.
“We have previously also highlighted how rapid increase of illicit trade and its accelerating market share continues to threaten the tax-compliant sector. PMPKL closed its manufacturing facility in 2019. This measure, albeit tough, was taken to ensure cost optimisation due to declining volumes. The one-off impairment and employee separation cost expenses related to factory closure, which featured heavily in our 2019 accounts are no longer appearing in our 2020 accounts. The significant decrease in other expenses by PKR 2,463 million is the key driver behind the overall increase in the Operating Profit before tax from last year.”
He said, “We understand that some civil society organisations are taking our financials out of context to drive their own vested interests and agendas.”
Stressing upon the need for a longer term view versus isolated data, Zeeshan added, “Trends projections are more accurate when you take a longer term view instead of being selective, particularly when there are many externalities at play. This is especially true in a year like 2020 where the whole world has seen disruptions of an unprecedented nature.”
“If we take a longer term projection, our volume has more than halved in the past 10 years. Our internal data as well as independent research indicates that most of this volume was gained by non-tax paying cigarette manufacturers and traders.”
“We have undertaken various measures and initiatives to manage our performance and remain operational. We closed one of our factories last year to ensure sustainability and viability of the business - it was a very tough decision for us but we did it. We are functioning yes and meeting our financial obligations, but to say that we are “enormously” or “massively” profitable is grossly misleading as would any policy decision made on back of such claims. The legitimate business is at peril due to the accelerated growth of illicit in the industry,” he concluded.