Tobacco Asia

44 tobaccoasia MANUFACTURING NEWS 制造新闻 Pakistan's Cigarette Production Grows by 10% Recent data from the Pakistan Bureau of Statistics (PBS) revealed that the country's cigarette production grew by 10% year-on-year to 29.15 billion sticks during January-June 2022. These recent figures continue a growing trend from 2021, when annual output hit 57 billion sticks, reflecting a 16% growth year-on-year from 2020. The average monthly cigarette production for H1 2022 was 4.86 billion sticks, up from H1 2021's 4.86 billion sticks, coming closer to 2018's highest average monthly cigarette production of 5.1 billion sticks. The highest monthly produc- tion on record was 6.27 million sticks in April 2018. Business Recorder reported that H1 2022's 10% cigarette production growth was reflected in the financial reports of the country's top two tobacco companies, Philip Morris (Pakistan) Limited (PMPK) and Pakistan Tobacco Company Limited (PAKT). PMPK's net turnover grew to PKR10.16 billion (US$46 million), a 10% increase year-on-year, while PAKT's net turnover grew by 21% year-on-year. While both compa- nies' operating profitability increased by double digits during the analysis period thanks to their topline growth, their bottom lines/net profits still shrank by double digits. Both PAKT and PMPK had a 10% and 11% year-over-year decline in net income, respectively, to PKR8.51 billion and PKR1.53 billion. This may be in large part due to a 10% "super tax" levied on a number of industries in June this year, including tobacco. A new PKR36 billion tax on cigarettes and tobacco announced this August may present another key challenge for the industry moving forward. Miftah Ismail, minister of finance and revenue, said the tax was imposed to fill the gap created by a PKR15 billion reduction in retail tax. The ministry had proposed an PKR18 billion tax on tobacco, but the federal government decided to double it. The total tax levied on 50 pack-stack (1,000 cigarettes) for tier-1 cigarettes was hiked from PKR5,900 to PKR6,500, while tier-2 cigarettes saw a tax increase from PKR1,850 to PKR2,050. The tax on tobacco was raised by 3,800% from PKR10 per kg to PKR380 per kg. PMI Makes the Philippines' Largest Investment in Heated Tobacco Philip Morris International (PMI) announced it will invest another PHP8.8 billion (US$150 million) in Philip Morris Fortune Tobacco Corp. (PMFTC), its Philippines affiliate, to add manufacturing lines to produce heated tobacco sticks for its smoke-free products. This first significant investment made by a multinational tobacco company will be used to expand PMFTC's cigarette factory in Tanauan City, Batangas over a period of two years with actual production slated to start in Q4 2023. PMI projects the new production lines will generate as much as 220 special- ized jobs and help the local tobacco farming sector as PMFTC will use locally-grown tobacco that is approved for producing heated tobacco sticks. "This marks the largest investment to date in the cigarette alternative category in the country and brings PMFTC a step closer to achieve its vision of a smoke-free Philippines," PMI said in a statement. "We can say that we are proud to invest in the country's journey to finally rid society of cigarettes, by providing better alternatives to those who would otherwise continue to smoke, while helping generate revenues for the government and livelihood opportunities for the people," said Denis Gorkun, PMFTC president. PMFTC is the leading cigarette manufacturer in the Philippines, controlling over 90% of the local market. UTC Ends Eastern Tobacco's Manufacturing Monopoly United Tobacco Company (UTC), a division of Philip Morris International (PMI) broke state-owned Eastern Tobacco Com- pany's decades-long monopoly on the manufacturing of cigarettes. Earlier in 2022, the company obtained a license from the government to build a cigarette manufacturing factory, following Egypt-based Philip Morris Misr LLC, which was established in 2013 as the licensee for PMI products in Egypt. Since the 1980s, Marlboro cigarettes, the top-selling cigarette brand worldwide for PMI, were produced in Egypt by Eastern Company. Hany Aman, Eastern Company's c.e.o. and managing director, told Ahram Online that his company has acquired 24% of UTC in a deal worth EGP100 billion and that the two companies are "working together in an integrated manner." "We have not been affected negatively by the work of UTC in the market. Our acquisition transaction in the UTC compensates for the absence of PMI proper in the Egyptian market," Aman added. "PMI products are available in the local market under the label Made by UTC." In FY2021/2022, Eastern Company's revenues increased by 6% to EGP 67.9 billion from EGP 63.8 billion in FY2020/2021. Following the completion of the acquisition agreement, Eastern Company filed a disclosure with the Egyptian Ex- change (EGX) outlining the rules that had been reached for UTC's manufacturing operations. Pakistan's cigarette production continues on an upward trend. Photo credit Marco Verch under Creative Commons 2.0.

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