February 26, 2026 (MLN): Pakistan Tobacco Company Limited (PSX:PAKT) reported a net profit of Rs29.85bn for the year ended December 31, 2025, a solid 7% increase from the Rs27.78bn profit recorded in the prior year.

The company's earnings per share rose to Rs116.85 from Rs108.74 in the corresponding period of the previous year.

The company's gross turnover saw a 5% increase to Rs374.69bn from Rs355.51bn.

However, thanks to a slight 1% dip in excise duties (Rs177.96bn) and a moderate 5% rise in sales tax (Rs57.71bn), the company's net turnover expanded at a much faster pace, increasing 15% year-on-year to Rs139.02bn from Rs121.08bn.

Cost of sales increased 17% to Rs71.58bn from Rs61.26bn.

Because the cost of sales grew slightly faster than net revenue, gross profit grew by a comparatively slower 13% to Rs67.44bn from Rs59.81bn in the prior period.

The gross profit margin contracted slightly to 48.5% from 49.4% in 2024, reflecting the impact of inflationary pressures on production costs.

Similarly, the net profit margin dipped slightly to 21.5% compared to 22.9% last year, though bottom-line profitability remained robust in absolute terms.

On the operating side, selling and distribution expenses surged 32% to Rs9.52bn from Rs7.19bn.

Administrative expenses rose 18% to Rs5.87bn from Rs4.99bn, while other operating expenses increased 15% to Rs3.91bn from Rs3.41bn.

Providing a major boost to operations, other income jumped an impressive 5.12x to Rs1.14bn from Rs221.61m. This massive jump helped offset the rising overheads, allowing operating profit to grow 11% to Rs49.29bn from Rs44.45bn.

Below the operating line, the company faced a significant drag from its financing activities.

Finance income plummeted 58% to Rs2.65bn from Rs6.33bn. While finance costs also decreased 36% to Rs821.66m from Rs1.27bn, the steep drop in income meant that net finance income fell 64% to Rs1.83bn from Rs5.05bn.

The company recorded an income tax expense of Rs21.26bn, a 2% decrease from Rs21.72bn in the corresponding period last year.

Ultimately, strong core sales growth and a 5.12x surge in other income successfully absorbed the impact of rising operating costs and a sharp decline in net finance income, driving the 7% bottom-line expansion for the year.