Philip Morris International Inc., (PM) the world’s largest publicly traded tobacco company, reported second-quarter earnings that trailed analysts’ estimates after the stronger dollar reduced overseas sales.
Net income sank 8.3 percent to $2.12 billion, or $1.30 a share, from $2.32 billion, or $1.36, a year earlier, the New York-based maker of Marlboro cigarettes said today in a statement. Analysts projected earnings of $1.41, the average of 13 estimates compiled by Bloomberg.
Philip Morris generates all of its revenue outside of the U.S., reducing the value of earnings after the yen and other currencies weakened in the second quarter. Unfavorable currency shifts reduced second-quarter profit by 7 cents a share while lower cigarette shipments also hurt earnings.
“The weak start to the year leaves a lot to do in the second half of the year to hit full year guidance,” Charlie Mills, an analyst at Credit Suisse Group AG in London, wrote today in a note. He rates Philip Morris shares neutral, equivalent to a hold recommendation.
Profit trailed analysts’ average estimate by 7.5 percent, the biggest miss since Altria Group Inc. (MO) spun off Philip Morris in March 2008, according to data compiled by Bloomberg.
Philip Morris projected currencies will lower profit by 31 cents in 2013, more than its earlier projection for a 19-cent reduction. The company now expects to earn $5.43 to $5.53 a share, down from a projection of $5.55 to $5.65 in April.
Sales increased 2.2 percent to $20.5 billion. Excluding excise taxes, revenue slipped 2.5 percent to $7.9 billion. It would have risen 0.5 percent if not for unfavorable currency, the company said.
Twelve of 16 major currencies fell against the dollar in the second quarter, led by the Australian dollar’s decline of 12 percent. The yen slipped 5 percent, while the euro advanced 1.5 percent.
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