Clear The Air News Tobacco Blog Rotating Header Image

July 23rd, 2015:

Corporate results: Tobacco giant makes Rs1 million per hour in profit

Pakist­an Tobacc­o Compan­y record­s net profit of Rs4.7b for the first half of 2015
By Farooq Baloch

KARACHI: In what has become its highest ever earnings, Pakistan Tobacco Company (PTC) made more than Rs1 million per hour in net profit during six months ended June 30, 2015, the company’s financial results showed on Wednesday.

The Pakistani subsidiary of British American Tobacco Company reported an after-tax profit of Rs4.7 billion or Rs18.5 per share for the first half of 2015, increasing its bottom line by two-thirds compared to Rs2.8 billion or Rs11 per share in the corresponding period of 2014.

This is the highest income PTC has ever reported since it launched operations in the country.

The multinational tobacco giant, which pays more in taxes to the government than what is paid by the entire salaried class combined, contributed Rs49 billion – also its highest ever – to the national exchequer in the form of duties and taxes for the period under review. This is a 17% increase over the same period of previous year.

Pakistan’s largest tobacco manufacturer, which accounts for more than half the market, saw its net sales increase by 23% to Rs24.6 billion during the period under review compared to Rs20 billion in the first six months of 2014.

“This result was well above market consensus estimates,” Topline Securities said in its report, adding the company’s net profit was driven by record high gross margins of 41%, a year-on-year (YoY) increase of 543 basis points.

Decline in international oil prices helped improve macroeconomic conditions, which led to higher consumer spending during the six-month period, the report said. As a result, PTC’s sales increased by 23% YoY.

On a quarter-on-quarter basis, net sales grew by 17% to Rs13.2 billion while after-tax profit registered a growth of 27%. On a YoY basis, sales and net earnings for the quarter ended June 30, 2015 were up 23% and 65% respectively, it said.

The company has posted five-year (2010-14) sales and profit compound annual growth rate of 13% and 10% respectively.

Pakistan is one of the biggest markets in Asia in terms of cigarette consumption with an estimated annual consumption of 81 billion sticks – that is 422 cigarettes per person per year.

“With a 2% rise in Pakistan’s population in 2015, the company’s volumes are expected to reach an estimated 45 billion sticks,” according to Topline’s report.

The government has increased federal excise duty (FED) on tobacco to 63% in the new budget. However, Topline said cigarette manufacturers have already increased prices by 5% to 10% on average to pass its impact on to the consumer.

Published in The Express Tribune, July 23rd, 2015.

Tobacco smugglers try to outwit cops

By Karishma Dipa

Johannesburg – A truck carrying a 15-ton load of tobacco worth an estimated street value of about R3 million ended up at an Ekurhuleni police station under false pretences.

In the early hours of Tuesday, the driver showed up at Brackendowns police station in Alberton in a panic, claiming he was being followed by a gang in a Mercedes-Benz C180 who were trying to hijack his cargo.

But when the alleged “hijackers” arrived at the same police station moments later claiming to be police informants on the hunt for the contraband, the driver’s version of events was questioned.

He insisted that the tobacco he was transporting from the Beit Bridge border post in Limpopo to Germiston was legal.

This prompted officers to visit the location in the Ekurhuleni suburb, but when they arrived there, no one was able to corroborate the driver’s version of what happened.

When members of the Joburg metro police department’s crime prevention unit as well as the SAPS crime intelligence unit arrived at the station later to verify if the occupants of the Mercedes-Benz were in fact informers, officers became increasingly suspicious.

This led to an investigation which showed that the entire shipment was contraband tobacco that was illegally destined for Singapore.

Police spokeswoman Sergeant Lindy Moloi told The Star that the driver, the owner of the truck as well as a crew member had since been arrested and charged with possession of illegal tobacco.

The SA Revenue Service will also charge the men with the diversion of exhibit goods, false entry into the country and tax evasion when they appear in the Palm Ridge Magistrate’s Court on Friday.

The articulated truck and the 145 boxes, weighing about 110kg each, have been seized.

By late on Wednesday, police also found tobacco and a replica AK47 while sifting through the cargo.

“We will go through all the boxes and investigate further,” Maloi said.

Police spokeswoman Lieutenant-Colonel Katlego Mogale said the men travelling in the Mercedes following the truck were actually the suspects, and when they realised that the driver was heading for a police station, they disappeared.

It seems the driver nearly managed to con the police.

The Star

Commentary: E-cigarettes dangerous, addictive

By: Dr. Jessica Neely

The introduction of the e-cigarette has precipitated the resurgence of the tobacco industry and threatens to undo 50 years of progress made by tobacco prevention campaigns.

These products, first introduced in 2007 from China, are rapidly gaining popularity in the United States, particularly among teens. E-cig use in middle school and high school students rose by 61 percent between 2012 and 2013 and tripled between 2013 and 2014 now surpassing traditional cigarette use in teens.

Products are marketed as “alternative” methods of smoking and are appealing to teens as they come in a variety of fruity or candy flavors.

Due to advertising campaigns, the general public is under the false impression that these products are safer than cigarettes. In fact, preliminary studies have shown that there are significant levels of formaldehyde, a carcinogen, inhaled when using e-cigarettes in addition to many heavy metals and aerosols. Furthermore, there is no evidence the use of e-cigarettes as a smoking cessation is effective.

What is most alarming is the rapid rise in accidental exposures, either through oral ingestion or skin contact, to liquid nicotine in young children.

Liquid nicotine is sold in high volumes, up to one gallon, in stores and online, at varying concentrations as high as 100 mg/ml. The toxicity of this substance is such that an average 2-year-old child would only need to ingest approximately 0.5 ml to experience lethal effects.

In 2014, there were 3,783 exposures reported to the national Poison Control Center, an eight-fold increase from 2012. Over half of these exposures were in children less than 6 years of age.

Oral ingestion most often results in stomach upset, including nausea or vomiting, but can also cause respiratory depression, cardiac arrhythmias and death. Tragically, on December 9, 2014, the first reported pediatric death due to ingestion of liquid nicotine occurred in an 18-month-old child in upstate New York, secondary to a fatal cardiac arrhythmia.

There is currently no federal legislation in place to help regulate e-cigarettes and while the FDA has attempted to take over regulation, efforts have been significantly stalled by the strong tobacco muscle behind Congress.

As political efforts move along at snail’s pace, we must begin to act locally. To protect our adolescents, who are the targets of e-cig marketing campaigns, and our vulnerable young children, who are being harmed through accidental ingestion of these toxic products, we must expose e-cigarettes for what they are: another dangerous and addicting method of smoking.

We must counsel our friends and loved that these products are dangerous to use and to have present in households where young children live. And we must advocate at the legislative level for laws that will define e-cigarettes as tobacco products and require them to be sold in childproof packages.

It is critical to intervene now before history is repeated and another generation suffers from the ill effects of tobacco products.

Jessica Neely, a former Henderson resident, is now a pediatrician at the University of California-San Francisco

E-cigarettes are just as addictive as the real cigarettes.

The e-cigarette industry has successfully sold their products on the premise that it can help smokers quit their nicotine addiction and have healthier lungs. However, how effective are these products?

A recent study conducted by the University of California in San Francisco published in the UCSF website revealed that though the e-cigarettes have greatly reduced the amount of nicotine a smoker inhales; it is not that efficient in quitting.

A two-year medical research conducted had 135 smokers as participants, and the test group were asked to smoke five levels of cigarettes with a significantly lower content of nicotine. After a year, the e-cigarette with the lowest nicotine content has been smoked for over 7 months.

However, the participants of the said medical research were allowed to continue on patronizing their usual cigarettes for 12 months. Then, the test group was not allowed to use their usual cigarettes on the 13th month of the study. This would test on how efficient the e-cigarettes would be in helping a person quit smoking.

Meanwhile, on a separate report by the Business Standard, the American University of Beirut and the Center for the Study of Tobacco Products conducted a study on the e-cigarettes. Researchers of this study found out that e-cigarettes are just as addictive as the typical cigarettes.

This is because the e-cigarette liquids have the most addictive form of nicotine, and what the manufacturers of the e-cigarettes do is that they have wrongly labeled the products’ nicotine content. This can still cause major health problems to the users of the e-cigarettes.

Daily Mail UK has learned that the smokers really found it very difficult to quit using e-cigarettes, even after a year of using the product. The types of nicotine being used in the e-cigarettes are the strongest forms of nicotine that can be absorbed by the body. Dr. Neal Benowitz told the site that most of the e-cigarette users really have no idea how to quit their dependence on nicotine and that at present, health experts are still trying to find out what other health hazards e-cigarettes can bring to the smokers’ bodies.

There are presently over 400 brands of e-cigarettes out in the global market.

Senate panel balks at plain packaging

The Senate panel reviewing a bill that would introduce uniform packaging for cigarettes removed the plain-pack requirement, calling instead for large health warnings, France24 reported.

The Senate social affairs committee recommended adoption of larger health warnings in line with European Union requirements that must be implemented by May, 2016. Hundreds of tobacconists protested before the Senate as the panel debated the measure, France 24 said.

However the National Assembly, which approved plain packs in April, has the final authority, according to France24. The lower house will take up the bill again in September, according to the news service.

The generation that is born today should be a generation without tobacco

By Manjari Peiris

Currently one person dies every six seconds due to tobacco, which is nearly six million people each year, the World Health Organization states.

Ministers from 10 countries, including Australia with the aim of ending high smoking rates among young people, assembled recently in Paris to start a common drive to introduce plain cigarette packaging.

They said plain packaging had been shown to reduce the attractiveness of cigarettes for consumers, especially among women and youth. The effectiveness of health warnings of cigarette packets too increases.

World’s first plain package tobacco laws which comes from Australia are having the desired effect with eight out of ten smokers saying they don’t like the appearance of their ugly cigarette packets. Half of all smokers say they support the new packaging.

The French Health Minister Marisol Touraine hosting the conference said the aim was “a world without tobacco” and the generation that is born today should be a generation without tobacco”.

The target with plain packaging is not long term smokers, but preventing young people from starting to smoke. Plain packaging has an impact on them.

According to her smoking kills 78,000 people each year in France and those eight million smokers worldwide would die each year by 2030, if action is not taken.

Saying that “significant scientific proof justified plain cigarette packaging” representatives from nations as far afield as New Zealand, South Africa and Uruguay issued a joint statement.

Several countries have recently passed legislation to introduce plain cigarette packaging laws. Fierce opposition from powerful tobacco lobby has been working against them.

Australia was the first country to have introduced plain packaging legislation in 2012. Australia made it mandatory for cigarettes to be sold in dull packaging with graphic health warnings covering 90 percent of the back of the pack and 75 percent of the front of the pack.

These rules were designed to reduce the appeal of tobacco products, increase the effectiveness of health warnings and reduce the ability of packaging to mislead about the harm that smoking causes.

Some studies in Australia have shown that the rate of young smokers has declined with the introduction of plain packaging. However the tobacco industry counters that the reason for the decline is high tobacco excise duty.

The Cancer Institute NSW Chief Professor David Currow, says that they are seeing some real changes in the perception of smokers and their quitting behavior. Since 2006 they have been interviewing around 50 people a week, inquiring their responses to health warnings on tobacco products.

Two to three months after the introduction of plain packaging, there was a significant increase in the total proportion of smokers having strong response to plain packs.

The prominence of the new health warnings had encouraged smokers from 13 to 20 percent, to quit the habit.

This research found eight in ten smokers no longer thinking that their cigarette pack was attractive. Earlier this figure was only from two in ten.

A comparable number no longer thought their pack was fashionable, influenced the brand they bought or matched their style.

Since the adoption of plain packs, from 13 to 27 percent smokers were more likely that health warning packs made them worry, that they shouldn’t be smoking.

Professor Currow says; “This first of its kind study demonstrates the clear and continued impact tobacco plain packaging has had on the prominence of non pack health warnings as well as negative perceptions about tobacco packs.”

If plain cigarette packs can deepen responses of smokers to warnings as shown in this study, undoubtedly we can expect flow on effects on consumption and quitting as a direct result of plain packaging” says Professor Currow.

Britain is to follow Australia’s lead and introduce plain packaging in mid 2016 with public health advocates suggesting the majority of Europe could ban tobacco branding within five years.

– Asian Tribune –

Economic slowdown snuffs out growth in Indonesia’s smoking industry

JAKARTA, July 23 | By Bernadette Christina and Randy Fabi

Indonesians are smoking less than before, and that poses a dilemma for a government that faces a budget shortfall as well as rising unemployment and counts on tobacco taxes for about 10 percent of state revenue.

President Joko Widodo’s government needs to decide whether to significantly raise tobacco taxes in 2016, something Indonesian authorities have done for years.

The industry association representing Indonesia’s huge cigarette industry – the world’s fifth largest – says a big hike will bring further declines in sales and heavy job losses. It says small factories already laid off 10,000 workers last year.

The issue has arisen amid Indonesia’s worst economic slowdown since 2009. That has hit consumption of everything from cars to noodles, and forced President Joko Widodo to backtrack on his get-tough tax campaign and instead embrace policies to promote consumer spending.

In recent weeks, the government has removed luxury taxes from most goods, raised the minimum taxable income threshold for individuals, and promised no new types of tax this year.

Tobacco taxes have been raised an average 11 percent annually since 2010. Widodo set ambitious tax collection targets for this year, including one of 139 trillion rupiah ($10.42 billion) for cigarette taxes, and if that’s not met, the government’s budget gap will widen.

At this stage, the government is undecided on what to do with the cigarette tax for 2016.

In Indonesia, where about 60 percent of men smoke, cigarette production increased at an annual 7 percent average between 2007 and 2013. Last year, it declined 0.5 percent and this year will see a 2 percent fall, according to the Association of Indonesian Cigarette Producers.

“If (production) is declining and we are not careful on imposing the tax, production will decline further,” Heru Pambudi, the Finance Ministry’s director-general of customs and excise, told Reuters.

The ministry earlier this year announced plans for an additional 10 percent value-added tax on cigarette sales, but has yet to impose it and may scrap that proposal.

The producers association maintains higher taxation in 2016 will make conditions much harder for factories. “The industry must be protected,” spokesman Hasan Aoni Aziz said. “Smoking is often the indicator of the economy.”

A statistics bureau survey of low-income households found the only item they spent more on than cigarettes was rice, the staple food.

Last year, Indonesia made 344 billion sticks, of which more than 90 percent were distinctive “kreteks” containing cloves to spice up the taste. The big listed makers are PT Hanjaya Mandala Sampoerna Tbk, PT Gudang Garam Tbk and PT Wismilak Inti Makmur Tbk

The number of cigarette factories has dropped to 600 from more than 3,000 five years earlier.

Pambudi of the Finance Ministry said declining consumption “may have been caused by a variety of factors like consumers’ awareness of the dangers of smoking, cigarette price hikes and declining purchasing power.” ($1 = 13,365 rupiah) (Additional reporting by Hidayat Setiaji and Gayatri Suroyo; Editing by Richard Borsuk)


Online consultation on Macau’s anti-smoking bill to start on Aug 1,english/

Standing Committee President Chan Chak Mo

Standing Committee President Chan Chak Mo

The Legislative Assembly’s (AL) 2nd Standing Committee President Chan Chak Mo said Wednesday his committee had decided to hold a two-month online consultation about the government-drafted anti-smoking bill, starting at the beginning of next month.

The committee met Wednesday to discuss the controversial Tobacco Control and Prevention Law amendment bill.

The bill proposes four main changes to the law, including increase in the public areas where a blanket smoking ban would be in place, such as on all casino premises, and within 10 metres from any bus stop, as well as forbidding the sale of e-cigarettes locally, prohibiting shops from displaying packets of cigarettes, and an increase in the penalties for violating the anti-tobacco law.

The outline of the amendment bill was passed early this month, with 26 legislators’ ayes. Lawmakers Zheng Anting and Kou Hoi In voted against it.

Speaking after the meeting, legislator-cum-restaurateur Chan said that while most lawmakers had no issue with the majority of the bill’s articles, many were concerned about its proposed blanket smoking ban in the city’s casinos, prison and even tobacco shops.

Chan said after the discussion among the committee members, they had agreed to hold a public consultation about the bill on the legislature’s website, which would start on August 1 and run until September 30. He said the committee welcomes everyone to voice their opinion during the period.

The legislature’s website is in Chinese and Portuguese, although there is a page outlining the legislature’s work in English.

Chan added that the committee would also arrange a meeting with the city’s six gaming operators and the management of Macau Prison, as well as a number of civic groups, including six gaming-industry-related unions, such as the Association of Gaming and Entertainment of Macau (AMJEM) and the Macau Gaming Industry Frontline Workers (FMG), as well as two tobacco industry-related unions.

Chan said the lawmakers were concerned that a blanket smoking ban would affect the prison’s operations. Currently, the prison provides a number of smoking rooms for its inmates.

Chan insisted that the committee did not need to consult medical experts at this stage, as “they would just repeat what has already been said.”

Chan also said that it was the committee’s duty to discuss possible changes to the bill, but it would ultimately be up to the government to make any changes.

As is customary, the bill will be discussed in detail by the committee before it is returned with a report by its members about the final version to another plenum for an article-by-article vote.

Chan said while he understood the urgency of the bill, he expected the discussion and possible revisions to last about a year.

The city’s gaming operators oppose the bill’s proposed blanket ban on smoking on all casino premises, arguing for the continuation of smoking lounges, namely in VIP gaming rooms.

Currently, smoking is banned in mass-market gaming halls which, however, are allowed to set up smoking lounges.(macaunews/macaupost)