Philip Morris CR 2012 Net Falls on Currency Swings, Higher Costs

Philip Morris CR, the Czech unit of the world’s largest publicly traded tobacco company, said full-year profit fell on currency swings, higher costs and a move by consumers to cheaper brands.

Net income for the 12 months ended Dec. 31 fell to to 2.4 billion koruna ($119 million) from 2.5 billion koruna a year earlier, the Kutna Hora, Czech Republic-based company said in an annual report today on its website. Total revenue excluding excise tax and VAT rose 6.6 percent to 12.96 billion koruna.

Philip Morris’s board proposed a full-year gross dividend of 900 koruna a share from 2012 profit and retained earnings from previous years, compared with a 920 koruna per share payout on 2011 income, the company said in a separate statement.

“Overall we see financial result slightly positive mainly due to higher than estimated dividend at 900 koruna per share,” Erste Group Research analyst Josef Novotny wrote in a note to investors. Erste forecast a dividend of 836 koruna.

Despite of an improvement in revenue due to exports to other Philip Morris units, the local market remains “under pressure” as consumers in both countries move to cheaper brands or flake tobacco with lower taxation, Chief Executive Officer Andras Tovisi said in a statement.

Profit from operations fell 3.4 percent from a year earlier to 3 billion koruna, primarily reflecting an “unfavorable” volume and mix in the Czech Republic and Slovakia, higher costs and expenses linked to currency swings worth 30 million koruna, according to the statement. The decline was partially offset by “favorable” pricing in both markets and higher exports to affiliates, it said.

Philip Morris’s market share fell 1.2 percentage points to 50.7 percent in 2012 in the Czech Republic. In Slovakia, the measure rose 0.9 percentage point to 50.9 percent in 2012, it said.

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