Earnings Preview 2Q: Philip Morris International Inc.

Source from:  AP 07/22/2009

Cigarette maker Philip Morris International Inc. is scheduled to report second-quarter results Thursday. The following is a summary of key developments and analyst opinion related to the period. OVERVIEW: Philip Morris International - which sells Marlboros, L&M, Parliament and Virginia Slims outside the U.S. and has offices in Lausanne, Switzerland, and New York - said in April that the strong dollar battered its first-quarter profit, which fell 12 percent. The stronger dollar has hurt many companies that have large overseas businesses. Most U.S. companies that sell goods internationally convert those sales from foreign currencies into dollars when they report their financial results. If the dollar strengthens relative to those currencies, revenue in those currencies translates into fewer dollars. Philip Morris International is the world's second-biggest cigarette maker after the state-controlled China National Tobacco Corp. It was spun off in 2008 from Richmond, Va.-based Altria Group Inc., owner of Philip Morris USA. BY THE NUMBERS: Analysts surveyed by Thomson Financial on average expect Philip Morris International to post a profit of 77 cents per share for the second quarter on revenue of $6.2 billion. That compares with earnings per share of 86 cents for last year's second quarter on revenue - excluding excise taxes - of $6.71 billion. The company expects to earn $2.85 to $3 per share for fiscal 2009 but has not issued a forecast for its second-quarter earnings. ANALYST TAKE: Stifel Nicolaus & Co. analyst Christopher Growe wrote in a note to investors June 5 that the global tobacco market remains strong, with consumption growing 1 percent around the world this year. It fell in 2008, when global consumption hit 5.8 trillion "sticks," Growe wrote. Wall Street will be watching the impact of recent acquisitions and exchange rates. WHAT'S AHEAD: Philip Morris International announced earlier this month that it has agreed to buy Swedish Match's South African snuff and pipe tobacco operations for 1.75 billion South African rand, or roughly $222 million. Swedish Match South Africa Ltd.'s pipe tobacco and snuff products account for about 31 percent of total tobacco consumption in South Africa. The brands involved in the deal include Boxer, Best Blend and Taxi. Philip Morris International and Swedish Match are already partners in a joint venture to sell Swedish Snus and other smokeless tobacco products in markets outside the U.S. and Scandinavia. Tobacco makers have been seeking more smokeless products as demand for cigarettes has been threatened by smoking bans, higher taxes, health concerns and social stigma. The company also said it would pay $452 million to buy privately owned Protabaco, a Colombian maker of Mustang, Premier and President cigarettes. STOCK PERFORMANCE: During the quarter ended June 30, shares of Philip Morris International rose about 20.4 percent to end the period at $43.62. Over the last 52 weeks, the stock has traded between $32.04 and $56.26. Enditem