Tobacco: PAKISTAN TOBACCO COMPANY LIMITED - Analysis of Financial Statements Financial Year 2003 - Financial Year 2007.

Pakistan Tobacco Company Limited is part of British American Tobacco, the world's most famous tobacco group, its brands sold in 180 markets around the world. The company produces high quality tobacco products to meet the diverse preferences of millions of consumers, and it works in all the business areas - from seed to smoke. Pakistan Tobacco's operations in Pakistan began in 1947, making it one of Pakistan's first foreign investments. Pakistan Tobacco provides a number of reputed brands of cigarettes to consumers in Pakistan, including Benson and Hedges, Embassy, Gold Flake, Capstan and Gold Leaf.

Over the years, Pakistan Tobacco has shown a rising trend as evident from the impressive growth in gross, net and operating profits. Its operating profits grown by 28% and net profit by 44% in 2006 compared to the previous year. The strong financial performance is attributable to significantly higher sales volume, improved margins in all brands and continued control over the cost with a focus on operational efficiencies and other initiatives. The company maintained double digit volume growth in 2006 with a record sales volume of 34.5 billion sticks - 13% higher than the same period last year (SPLY). This is a remarkable performance keeping in view the overall industry growth, which is estimated at 3%. Gold Flake remained the volume leader in the portfolio and grew at a phenomenal rate of 27% vs. the SPLY, whereas Gold Leaf maintained its volume base.

JAN-SEPT 2008 (Q3FY08)

In spite of the deteriorating economic conditions of the economy, Pakistan Tobacco Company saw a moderate growth in the first three quarters of the current financial year. Although it has been hit by inflation, acute power shortages, rupee devaluation and higher costs in 2008, but it has managed to earn profits, although with smaller margins than the ones present before. Its main brand, Gold Flake, held its position of being the main volume contributor to the company's sales, while Gold Leaf also performed very well since December 2007, adding two brands to its portfolio: Gold Leaf Menthol and Gold Leaf Light. Furthermore, the demand for tobacco has seen a sharp decline from 79 million kilogrammes in 2007 to 71 million kilogrammes at present. Keeping these factors in mind, the performance of PTC has been good.

Net sales from January to September 2008 was Rs. 30.63 billion, a jump of 17% from Rs. 26.21 billion seen in the same period of last year. Out of this increase, 9.3% was attributed to increased sales volume while the rest was a result of rising prices prevalent in the country. The gross profit for the period reached Rs. 5.45 billion, which is 11% higher than the last year's figure of Rs. 4.92 billion. But the …