Philip Morris International Inc. (PM), the world’s largest publicly traded tobacco company, posted second-quarter profit that beat analysts’ estimates after European sales rebounded.
Net income fell 13 percent to $1.85 billion, or $1.17 a share, from $2.12 billion, or $1.30, a year earlier, the New York-based maker of Marlboro cigarettes said today in a statement. Excluding some items, profit was $1.41 a share in the period, which ended June 26. The average of 13 analysts’ estimates compiled by Bloomberg was $1.24.
Chief Executive Officer Andre Calantzopoulos is working to recover from a lingering slump in Asia, along with unfavorable currency shifts. Philip Morris, which gets all of its revenue outside the U.S., said sales in Europe increased 8.5 percent, while overall cigarette shipment volume fell 2.7 percent. The latest results were driven by shrinking volume declines, pricing and “robust” market share, he said.
“We achieved strong fundamental results in the second quarter,” Calantzopoulos said in the statement.
The shares fell 0.2 percent to $84.55 at the close in New York. Philip Morris’s stock has dropped 3 percent this year, compared with a 5.9 percent gain for the Standard & Poor’s 500 Index.
Second-quarter revenue, excluding excise taxes, fell 1.5 percent to $7.8 billion. That exceeded analysts’ $7.53 billion average estimate.
Philip Morris still faces a number of challenges, including the rollout of its Marlboro Red 2.0 line and reduced-risk products, Calantzopoulos said. The company also is contending with continuing difficulties in Asia and price discounts in Australia. That will make it hard for the second half of the year to compare favorably with its earnings growth in 2013, putting the company at the lower end of its forecast, he said.
In June, the company reduced its annual forecast to a range of $4.87 to $4.97, down from $5.26 the previous year. Analysts had estimated $5.16 on average.
The earnings follow a blockbuster tobacco deal earlier this week, when Reynolds American Inc. agreed to buy U.S. rival Lorillard Inc. for about $25 billion. If it’s cleared by antitrust regulators, the transaction will leave the 400-year-old American tobacco industry with just two competitors controlling 90 percent of the market: Reynolds and Altria Group Inc.
Altria, the U.S. tobacco leader, spun off Philip Morris International in 2008 so it could focus on the domestic market.
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