Acquisitions Provide PMI with First Quarter Volume Increase

Source from:  tr.itsmyiq.com Apr 24, 2008 04/25/2008

Cigarette shipments by Philip Morris International during the first quarter of 2008, at 217.9 billion pieces, were up 2.2 per cent on those of the previous first quarter, but shipments were down 0.8 per cent if the effect of acquisitions is excluded. PMI, which last month was spun off by the Altria Group, reported that the rise in volumes was driven by shipments in its EEMA, Asia and Latin America regions. But it said that shipments in the EU, which declined by 5.9 per cent (against a total market decline of 5.5 per cent), had been 'adversely distorted by unfavorable inventory movements in the Czech Republic and Germany'. 'Total cigarette shipments of Marlboro of 77.3 billion units were down 1.2 per cent, with growth in EEMA, Asia and Latin America offset by a decline in the EU,' the company reported. 'Total cigarette shipments of L&M of 23.8 billion units were down 8.0 per cent, with a decline in EEMA partially offset by growth in the EU. 'Driven by a strong increase in shipments in EEMA, total cigarette shipments of Chesterfield grew 18.3 per cent versus the prior-year quarter. Total cigarette shipments of Parliament recorded similar strong growth, up 18.8 per cent, with gains in EEMA and Asia. Virginia Slims, led by shipments in Asia, grew 13.7 per cent.' There was a strong surge in shipments of other tobacco products, which, in cigarette equivalent units, increased by more than 33 per cent, fueled by strong growth in Germany and Poland. PMI reported that its first-quarter 2008 market share performance improved on that of the previous first quarter in a number of markets, including Argentina, Belgium, Egypt, Italy, Korea, Mexico, the Netherlands, Portugal, Russia, Spain and Ukraine. But PMI's market share in the EU was down 0.6 percentage points to 38.8 per cent as market share gains in many key Western European markets, including Belgium, Italy, the Netherlands, Portugal and Spain, were more than offset by share declines in France, Poland and Switzerland. Within the EEMA region, shipments in Russia were up by 7.8 per cent, in part because sales during the first quarter of 2007 were depressed following tax/price increases, the introduction of maximum recommended retail prices and temporary adjustments due to a change in distribution systems. PMI's market share of 26.7 per cent was up by 0.1 percentage point, with the higher-priced brands Marlboro, Parliament, Virginia Slims, Muratti and Chesterfield all registering share gains. In Turkey, volume was essentially unchanged, but the company's product mix was improved. It enjoyed double-digit growth of its premium brand portfolio, Parliament, Marlboro and the recently-launched Virginia Slims, while sales of lower-margin brands were down. PMI's market share of 39.6 per cent was down by 1.4 percentage points in the quarter, but is said to have stabilized. In Ukraine, PMI's market share rose by 1.5 percentage points to 34.7 per cent, driven by what the company described as 'continued consumer up-trading to Marlboro, Parliament and Chesterfield'. In Asia, PMI shipments increased by 10.0 per cent, due to acquisition volume in Pakistan and solid gains in Indonesia and Korea, partly offset by a decline in Japan. Excluding acquisition volume from Lakson Tobacco, volume was up by 0.4 per cent. In Latin America, cigarette shipments, at 23.2 billion units, were up by 5.6 per cent, reflecting higher shipments in Argentina and Mexico, driven partly by the inclusion of acquired local trademarks in Mexico. Excluding acquisition volume, shipments decreased by 0.6 per cent due to lower shipments in Colombia. Overall, PMI's sales increased by 18 per cent to $15.6 billion while net income was up by 29 per cent to $1.87 billion, or 89¢ per share. Enditem