Philip Morris, Reynolds Beat Profit Estimates on Higher Prices

Source from:  Bloomberg 10/23/2009

Philip Morris International Inc., the world's largest publicly traded tobacco company, and Reynolds American Inc. reported third-quarter profit that beat analysts' estimates as higher prices offset shipment declines. Philip Morris, based in New York, said earnings dropped to 93 cents a share, topping the 91-cent average of 13 analysts' estimates compiled by Bloomberg. Reynolds, the second-largest U.S. tobacco company, reported earnings, excluding some items, of $1.24 a share, compared with $1.17 expected by 11 analysts. Both companies increased their 2009 earnings forecasts. Philip Morris, which gets all of its revenue outside the U.S., used pricing to counter a 2.9 percent drop in cigarette shipments and revenue declines tied to foreign exchange rates. Reynolds, the Winston-Salem, North Carolina-based maker of Camel cigarettes, boosted prices earlier this year before the U.S. government increased taxes by 62 cents a pack April 1. "This year has been marked by unprecedented increases in excise taxes on tobacco products, an extremely weak economy and intense competitive activity," Susan Ivey, Reynolds' chairman and chief executive officer, said in a statement today. She said Reynolds' results reflect "continued improvement." Reynolds and Philip Morris were little changed in early New York trading. Philip Morris, which has climbed 17 percent this year, fell 73 cents to $50.82 yesterday in New York Stock Exchange composite trading. Reynolds fell 83 cents to $49.04 yesterday and has gained 22 percent this year. Forecasts Net income for Philip Morris, maker of the Marlboro, Parliament and Virginia Slims cigarette brands, dropped 14 percent to $1.8 billion, or 93 cents a share, from $2.08 billion, or $1.01, a year earlier, the company said today in a statement. Revenue declined 4.6 percent to $16.6 billion. Philip Morris said earnings will be $3.20 to $3.25 a share this year, up from an earlier projection of as much as $3.20. Reynolds, which also makes Pall Mall cigarettes, projects full-year earnings, excluding some items, of $4.60 to $4.70 a share, up from a previous forecast of as much as $4.60. Reynolds, whose R.J. Reynolds Tobacco Co. division raised prices in December and March, reported that third-quarter net income rose to $362 million, or $1.24 a share, from $211 million, or 72 cents, a year earlier. Trademark impairment and restructuring costs hurt year-ago results. Revenue fell 5.3 percent to $2.15 billion. Enditem