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Pakistan Tobacco Company Limited (PTC) has launched its flagship product – VELO – in the Japanese market, aiming to diversify its offerings and boost interest income amid rising inflation and economic uncertainty, reports WealthPK.

VELO is a modern oral nicotine product, catering to the growing demand for less harmful tobacco alternatives. PTC's export strategy is set to expand further with plans to enter France and Peru. The company reported impressive export sales worth $24.7 million in the first nine months of 2024, highlighting the effectiveness of its export-driven strategy. PTC was established in 1947 under the Companies Act, 1913. As a subsidiary of British American Tobacco (Investments) Limited, it manufactures and sells cigarettes/tobacco. Despite the complex financial environment, PTC demonstrated resilience, reporting a net gross turnover of Rs263.4 billion in 9MCY24.

Its cost of sales also increased by 52% due to record leaf prices. The company's net turnover stood at Rs88.1 billion and gross profit at Rs42.06 billion in 9MCY24. Thus, the company posted a profit-before-tax of Rs35.6 billion for the nine-month period ended September 30, 2024. This figure represents a slight decline of 4% compared to the same period of the previous year, but indicates a relatively stable profit margin amidst adversity. PTC interest income also saw a significant increase, serving as a critical buffer against inflation and rising operational costs, allowing the company to sustain its financial health during the period under review.

PTC's financial management and operational efficiency have been key factors in navigating economic challenges during the period. The company maintained liquidity, limiting the reduction in operating profit to just 6% to Rs30.2 billion, demonstrating its commitment to profitability. The company focuses on operational efficiency, process optimisation and waste reduction, ensuring competitive pricing and market penetration. PTC is aware of domestic challenges, such as combating illicit trade and enhancing industry compliance. The illicit tobacco segment poses a threat to legitimate sales, undermining the company's efforts.

Therefore, PTC continuously makes efforts to protect its market share and ensure its consumers' access to regulated products. Looking forward, PTC will align with global trends and be well-positioned for future growth. The modern oral category is experiencing robust growth in Pakistan, making it an increasingly important market for VELO. As consumer preferences shift towards safer alternatives, PTC is well-positioned to capture this trend and expand its market share. The introduction of VELO not only enhances PTC's product lineup but also reflects its commitment to innovation within the tobacco industry.

As more consumers seek out reduced-risk products, PTC's proactive approach could lead to increased sales and brand loyalty among health-conscious consumers globally.  Therefore, the company's ability to navigate economic challenges while expanding its portfolio will be critical in maintaining its competitive edge. By implementing strategic initiatives, PTC is not only enhancing its market presence but also setting a precedent for innovation within the tobacco industry.

Credit: INP-WealthPk