Khyber Tobacco Company Limited (KTC) has reported a strong financial performance for the first quarter ended September 30, 2026, with net sales increasing by 91% and profit after tax rising by nearly five times compared with the corresponding period last year. Higher tobacco exports and improved operational performance played a major role in driving the company’s growth.
According to the company’s unaudited first-quarter financial statements for FY2026-27, net sales reached Rs. 3.03 billion, compared with Rs. 1.58 billion in the same quarter of the previous financial year. Gross turnover also increased by 65%, reaching Rs. 4.97 billion against Rs. 3 billion a year earlier.
The company’s financial performance showed significant improvement across major indicators. Gross profit surged by 233% to Rs. 876.88 million, compared with Rs. 263.46 million in the corresponding quarter of the previous year. Meanwhile, profit before taxation climbed to Rs. 479.25 million from Rs. 39.12 million, representing an increase of approximately 1,125%.
After accounting for taxation of Rs. 298.36 million, Khyber Tobacco recorded a profit after tax of Rs. 180.89 million, compared with Rs. 36.97 million in the same period last year. Earnings per share also improved considerably, reaching Rs. 26.13 against Rs. 5.34 previously.
Export Growth Drives Revenue Expansion
Higher leaf tobacco exports remained the primary contributor to the company’s improved financial performance. Export sales doubled to Rs. 2.41 billion during the quarter, compared with Rs. 1.21 billion in the corresponding period last year.
The company exported approximately 2.98 million kilograms of leaf tobacco, significantly higher than the 0.82 million kilograms recorded in the first quarter of FY2025-26.
Domestic business also demonstrated positive growth. Net local sales increased by 64% to Rs. 615.51 million, supported by a 41% increase in local cigarette sales volume. The company said management is working to strengthen its domestic market presence by attracting new customers and developing relationships with existing clients.
Improved Margins Support Profitability
Khyber Tobacco’s gross profit margin improved to 29% from 16.7% in the same quarter last year. According to the directors’ review, higher sales volumes helped improve the absorption of fixed production costs, while raw material consumption declined as a proportion of net sales.
During the quarter, the company purchased 5.85 million kilograms of green leaf tobacco at an average price of Rs. 722 per kilogram. Local cigarette production also increased to 32,117 cartons, compared with 13,075 cartons in the corresponding quarter last year.
However, the company continued to face higher operating and financing expenses. Finance costs increased to Rs. 146.82 million from Rs. 59.32 million, mainly due to markup on loans from sponsors. Selling and distribution expenses also rose to Rs. 92.87 million, reflecting increased export-related business activity.
Economic Challenges Remain a Concern
The company highlighted several economic challenges that could affect its business during the remaining quarters of the financial year. Rising energy and food prices contributed to inflationary pressure in Pakistan, while higher interest rates are expected to keep financing costs elevated.
The State Bank of Pakistan maintained its policy rate at 11.5% during the reported quarter before increasing it to 12% on October 26, 2026. These developments may create additional pressure on production costs, working capital requirements and borrowing expenses.
Management Remains Optimistic About Future Growth
Despite the challenging economic environment, Khyber Tobacco’s management remains cautiously optimistic about the company’s future prospects. Its key priorities include maintaining export volumes, improving operational efficiency, controlling costs and exploring new domestic and international markets.
The company also plans to invest strategically in technology and infrastructure to enhance productivity and strengthen relationships with customers and suppliers.
Overall, Khyber Tobacco Company has delivered an impressive start to FY2026-27, supported by strong export growth, improved gross margins and higher domestic sales. However, maintaining this performance will depend on its ability to manage rising financing costs, sustain export demand and maintain operational efficiency throughout the remaining financial year.
