Philip Morris Tops Profit Estimates, Helped by Higher Pricesby
Philip Morris International Inc., the world’s largest publicly traded tobacco company, topped quarterly profit estimates and raised the low end of its forecast, helped by higher prices and a recovering economy.
Earnings amounted to $1.24 a share, excluding some items, the New York-based company said in a statement Thursday. Analysts had estimated $1.12 on average, according to data compiled by Bloomberg. Philip Morris now expects annual earnings of $4.35 to $4.40 a share, compared with an earlier forecast of $4.32 to $4.42.
Chief Executive Officer André Calantzopoulos cited pricing and market-share trends for lifting results, as well as an improved macroeconomic environment. Still, the company faces shrinking volumes around the world as governments tax cigarettes more heavily and encourage people to quit the habit. Philip Morris’s total cigarette shipment volume was down 1.5 percent last quarter, excluding the effect of acquisitions.
Philip Morris shares rose 1.4 percent to $85.68 as of 10:19 a.m. in New York. The stock was up 3.7 percent this year through Wednesday’s close.
Third-quarter revenue, excluding excise taxes, amounted to $6.9 billion. That exceeded the $6.79 billion projected by analysts.
To adapt to shifting demand, the company is investing in new products such as its iQOS noncombustible cigarette, which can be smoked inside without hurting indoor air quality. Philip Morris, the seller of Marlboro, also has an edge over some peers because it offers a more premium product.
Until 2008, Philip Morris was a subsidiary of Altria Group Inc., which owns the U.S. rights to Marlboro. The idea was to let Altria focus on the domestic market, while Philip Morris went after overseas smokers. Still, the companies continue to work together. Altria and Philip Morris entered into a joint venture in July to develop next-generation devices such as "heat-not-burn" products and nicotine inhalers.
The strong dollar, which has dogged U.S. companies over the past year, remains a concern, Calantzopoulos said on Thursday. But conditions are improving in the European Union and its EEMA region, which spans Eastern Europe, the Middle East and Africa.
The tobacco industry also was singled out by the Trans-Pacific Partnership deal, which was announced Oct. 5. It would prohibit cigarette companies from using the agreement to sue countries for revenue lost due to tobacco-related regulations. Tobacco is the only industry that would be excluded from remedies under TPP arbitration.