Lower Volume Hurts Philip Morris Results

Before you go, we thought you'd like these...
Before you go close icon

philip morris cigarette manufacturingPhilip Morris International Inc. (NYSE: PM) reported first-quarter results before markets opened this morning. The tobacco products firm posted adjusted diluted earnings per share (EPS) of $1.29 on revenue of $7.6 billion. In the same period a year ago the company reported EPS of $1.25 on $7.45 billion in revenues. Thomson Reuters had consensus estimates for EPS of $1.34 and revenue of $7.52 billion.

On a GAAP basis, EPS totaled $1.28. The company also said that currency exchange rates cut earnings by $0.07 a share.

Cigarette shipment volume fell 6.5% year-over-year globally and by 42.5% in the Philippines, where a new excise tax cut shipments by 10 billion units. European volume fell 10.1% and Asian shipments fell 10.4%. Only the Eastern Europe, Middle East and Africa posted a gain, and that a small one of 1.4%. The company was able to make up some of the decrease by raising prices.

The company lowered its full fiscal year EPS guidance to a range of $5.55 to $5.65, compared with full-year 2012 EPS of $5.22. The forecast includes a $0.19 per share reduction due to currency exchange rates. The consensus estimate had called for full-year EPS of $5.73 on revenues of $32.37 billion.

The company's CEO noted:

Our first quarter was relatively difficult, with our headline results marred by a number of known factors, including inventory movements, the 2012 leap year effect, currency and a slowly improving - but nevertheless substantial erosion in our - volume in the Philippines. Despite this apparent weakness, our pricing actions and market share momentum provide us with the confidence to reiterate our annual constant-currency adjusted diluted EPS growth rate target of 10-12%.

What makes tobacco companies so attractive to investors is their dividend, and Philip Morris pays a quarterly dividend of $0.85. The company repurchased 16.7 million shares of its own stock in the first quarter at a cost of $1.5 billion. Philip Morris plans to spend $18 billion on share repurchases in a three-year program that began in the third quarter of last year. So far the company has spent $4.35 billion on share buybacks.

The company's shares closed down about 1% last night, at $94.04 and are inactive so far this morning. The stock's 52-week range is $81.10-$96.60. Thomson Reuters had a consensus analyst price target of around $97.60 before today's report.


Filed under: 24/7 Wall St. Wire, Earnings, International Markets, Tobacco Tagged: PM
Read Full Story

Markets

S&P 500 2,204.71 12.76 0.58%
DJIA 19,216.24 45.82 0.24%
NASDAQ 5,308.89 53.24 1.01%
DAX 10,684.83 171.48 1.63%
HANG SENG 22,668.92 163.37 0.73%
NIKKEI 225 18,370.83 95.84 0.52%
USD (per EUR) 1.08 0.00 0.09%
USD (per CHF) 1.01 0.00 -0.04%
JPY (per USD) 113.59 -0.27 -0.24%
GBP (per USD) 1.27 0.00 0.17%

From Our Partners