AMERICAN global cigarette and tobacco company Philip Morris International Inc. (PMI) has lauded the Philippine government’s campaign against the illicit trade of cigarettes in the country and expressed hope for a sustained enforcement of excise tax compliance in the industry.
In its 2017 first-quarter results conference call, the company said it was encouraged by the government’s renewed focus on addressing illicit trade, including excise tax stamp compliance.
“We are hopeful for sustained enforcement to address the issue long term, which we believe should ensure that prices at the bottom of the market reflect full excise tax payment,” it said.
The Bureau of Customs has conducted a series of raids around the country as part of its campaign against the proliferation of fake cigarettes and the use of counterfeit Bureau of Internal Revenue (BIR) tax stamps.
Last month, the BIR filed a P9.5-billion criminal complaint against a local cigarette maker found to be storing some 60,000 master cases of cigarettes with fake tax stamps.
The bureau said the local cigarette manufacturer is facing a string of additional criminal complaints involving tax liabilities of over P27 billion.
Meanwhile, PMI said its earnings in the first quarter of 2017 advanced to $1.59 billion, up from $1.5 billion in the same quarter last year.
“Our results were in line with our previously communicated expectation of a relatively weak first quarter due to lower cigarette volume and certain timing factors,” said André Calantzopoulos, PMI chief executive officer.
In the Philippines, PMI said higher pricing and a favorable portfolio mix, reflecting the strong performance of Marlboro in the Philippines, drove profitability growth in the quarter, despite a cigarette industry volume decline of 15.6 percent.
“Our total cigarette share decline in the quarter was due mainly to the timing of competitors’ price increases, as well as continued competitor discounting at the bottom of the market, which led to widened price gaps, notably compared to Fortune and Jackpot,” it said.
It said Marlboro’s cigarette share increased by 5.0 points to 32.5 percent in the Philippines, driven by in-switching from lower-priced brands.