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Philip Morris Profit Rises 1.3% on Higher Prices

Philip Morris Profit Rises 1.3% on Higher Prices
Philip Morris International Inc. reported a 1.3 percent increase in third-quarter profit after raising cigarette prices. Photographer: Jim R. Bounds/Bloomberg

Oct. 21 (Bloomberg) -- Philip Morris International Inc., the world’s largest publicly traded tobacco company, reported a 1.3 percent increase in third-quarter profit, missing some analysts’ estimates, after raising cigarette prices.

Net income advanced to $1.82 billion, or 99 cents a share, from $1.8 billion, or 93 cents, a year earlier, the New York-based maker of Marlboro cigarettes said today in a statement. Excluding some items, profit was $1 a share. Analysts projected $1.01, the average of 11 estimates in a Bloomberg survey.

Philip Morris, led by Chief Executive Officer Louis Camilleri, raised prices in Europe and Australia, helping counter falling shipments in Japan that slowed sales growth. Revenue excluding excise taxes totaled $6.61 billion, trailing the average analysts’ estimate of $6.98 billion.

“Pricing around the world is good,” Thomas Russo, who oversees more than $3 billion at Gardner Russo & Gardner in Lancaster, Pennsylvania, said today by telephone. “It’s offset by the fact that some of Philip Morris’s markets are economically weak.” He managed 7.4 million Philip Morris shares as of June 30.

Separately, Reynolds American Inc., the second-largest U.S. tobacco company, posted third-quarter earnings that topped estimates by 1 cent on a per-share basis. Net income rose 5.2 percent, Reynolds American said today.

Philip Morris rose 8 cents to $57.56 at 4 p.m. in New York Stock Exchange composite trading. The shares have climbed 19 percent this year. Reynolds American gained 5 cents to $63.05.

Cigarette Shipments

At Philip Morris, cigarette shipments fell 2.9 percent excluding acquisitions, with Europe declining 4.6 percent. Spending cuts and higher taxes aimed at slashing budget deficits in countries such as Greece have sapped demand for tobacco. Lower shipments in Japan resulted from an increase in second-quarter orders ahead of an Oct. 1 price increase.

Philip Morris increased its full-year profit forecast because of favorable currencies, improving business and a lower tax rate. It expects to earn $3.90 a share to $3.95 a share, higher than its July projection of $3.75 to $3.85. Analysts predicted $3.82. Earnings were $3.24 on that basis in 2009.

The company, which generates all of its sales from outside the U.S., was spun off from Altria Group Inc. in 2008. Altria, the largest U.S. tobacco company, reported yesterday a 28 percent increase in third-quarter net income that beat analysts’ estimates, helped by higher prices for Marlboro cigarettes in the U.S. and snuff sales.

Reynolds American’s third-quarter profit rose to $381 million, or $1.30 a share, from $362 million, or $1.24, a year earlier. Excluding some items, earnings were $1.35 a share.

The Winston-Salem, North Carolina-based maker of Camel cigarettes raised the low end of its full-year profit forecast by 5 cents. It expects to earn $4.95 to $5.05, compared with an average analysts’ estimate of $5.

(Philip Morris will hold a conference call for analysts at 9 a.m. New York time. To listen, click {LIVE <GO>}.)

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net.

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net.

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