2010 Earnings Preview: Philip Morris Int'l Inc.

Source from:  AP 02/10/2011

Cigarette maker Philip Morris International Inc., which sells Marlboro and other U.S. brands abroad, reports its fourth-quarter and full-year results Thursday. WHAT TO WATCH FOR: Whether fewer cigarettes sold in the wake of tax hikes and growing tobacco control efforts. Smokers face new tax hikes, bans, health concerns and social stigma worldwide, but the impacts are starkest in the United States. With offices in New York and in Lausanne, Switzerland, Philip Morris has compensated for consumers buying cheaper cigarettes - and for the weak economy - by cutting costs and raising its prices. Its market share has increased. Last quarter, Philip Morris International's cigarette shipments grew 4.5 percent to 229.2 billion sticks. Especially key were large gains in Asia, including Indonesia, Korea and Pakistan, and the favorable impact of acquiring Fortune Tobacco Co. in the Philippines. Shipments fell 4.6 percent in the European Union, where tax hikes hurt as well. Volumes fell about 3 percent in Eastern Europe, the Middle East and Africa and about 2 percent in Latin America and Canada. Analysts also expect the company's earnings to be affected by foreign exchange rates compared with the U.S. dollar. When the dollar is rising, companies that sell goods internationally and must convert revenue from foreign currencies usually take a hit in the dollar value of that revenue. That effect is particularly strong for Philip Morris International, because it does all its business overseas. WHY IT MATTERS: Philip Morris International is the world's second-biggest cigarette company after the state-controlled China National Tobacco Corp. Altria Group Inc. in Richmond, Va., owner of Philip Morris USA, spun off Philip Morris International in 2008. Altria is the largest U.S. cigarette seller. WHAT'S EXPECTED: Analysts on average expect Philip Morris International to report earning 97 cents per share on revenue of $7.297 billion, according to FactSet. Analysts typically exclude one-time items. LAST YEAR'S QUARTER: Philip Morris International reported net income of 80 cents per share on revenue of $6.72 billion. Enditem