Philip Morris Price Boosts Help Profit Top Estimates

Source from:  Bloomberg 04/27/2009

Philip Morris International Inc., the world's largest publicly traded tobacco company, reported a smaller drop in first-quarter profit than analysts expected because of cigarette price increases. Net income declined to $1.48 billion, or 74 cents a share, from $1.67 billion, or 79 cents, a year earlier, the New York- based maker of Marlboro cigarettes said today in a statement. Analysts expected profit of 70 cents, the average of estimates compiled by Bloomberg. Price boosts in Greece, Russia, Indonesia and other markets contributed $358 million, helping limit a $697 million reduction in sales because of the stronger U.S. dollar. Revenue at Philip Morris, which generates all of its sales outside of the U.S., sank 7.4 percent and Marlboro shipments slipped 2.4 percent. The company beat earnings estimates with "strong prices offsetting weak volumes," Thilo Wrede, a Credit Suisse analyst in New York, wrote today in a note to clients. He rates Philip Morris as "neutral." Philip Morris rose 75 cents to $37 at 4 p.m. in New York Stock Exchange composite trading. The shares have slumped 28 percent since the spinoff of Philip Morris by Altria Group Inc. on March 28, 2008. Chief Financial Officer Hermann Waldemer addressed concerns among some investors that the global recession may be weighing on demand for Philip Morris cigarettes and slowing expansion of top-selling Marlboro in emerging markets. Prices Increases "We have retained our ability to increase prices in order to boost our profitability," Waldemer said on a conference call. The company plans price increases in markets including Germany and has seen no "global consumer downtrading" among smokers switching to rivals' less expensive cigarettes, he said. Revenue fell to $13.3 billion and Marlboro shipments slipped to 71.1 billion cigarettes. Philip Morris affirmed its February forecast to earn $2.85 a share to $3 a share in 2009. Profit may reach the high end of the range if currencies remain steady, Waldemer said. Analysts projected profit of $2.98. Chief Executive Officer Louis Camilleri boosted sales in Canada and Latin America by 11 percent with last year's acquisition of Rothmans Inc. Philip Morris bought the 60 percent of Canada's second-largest tobacco producer it didn't already own. Sales advanced 5.8 percent in Asia. They dropped in the European Union and in the region that encompasses Eastern Europe, the Middle East and Africa, largely because of the stronger dollar. The ICE's Dollar Index, which tracks the dollar versus the euro, the yen, the pound, the Canadian dollar, the Swedish krona and the Swiss franc, increased 5.1 percent in the first quarter as investors sought refuge in the world's reserve currency. Enditem