Philip Morris Unveils Three-Year, $18 Billion Buyback Plan

Source from:  Dow Jones Newswires 06/14/2012

Philip Morris International Inc. (PM) on Wednesday unveiled a new three-year share repurchase plan totaling $18 billion, as the internationally focused tobacco firm moves to return more cash to shareholders. Since Philip Morris went public in March 2008 after spinning off from Altria Group Inc. (MO), the company has spent $22.9 billion to repurchase 432 million shares. The maker of brands Marlboro and L&M, which already repurchased $1.5 billion in stock in the first quarter, expects to buy back $6 billion in total this year. The new repurchase program begins Aug. 1. An existing $12 billion buyback program, which was launched in May 2010, is expected to be completed "ahead of schedule," according to Philip Morris. Strong demand in Asia has driven sales for the cigarette maker, which has helped boost earnings in recent quarters. Philip Morris has sought to increase growth in emerging markets as volumes have slipped in more established European countries. All of the company's sales come from outside the U.S. Dividend yields, share repurchases and strong cash flows have driven investors to tobacco stocks of late. Three of the four publicly traded tobacco companies have outperformed the Dow Jones Industrial Average so far in 2012, including Philip Morris, which is up 10% this year. Since going public at $50, Philip Morris shares have climbed 73%, besting the gains of Altria, Reynolds American Inc. (RAI) and Lorillard Inc. (LO) over the same period. Philip Morris, which hit an all-time high of $91.05 in early May, was recently trading up 1.7% to $86.46. Morgan Stanley, in a broad research report on the tobacco industry, on Wednesday said the investment bank's $90 price target assumes Philip Morris maintains local-currency organic operating profit growth between 6% to 8% over the intermediate term. The firm adds the stock's current valuation remains attractive versus premium peers like Coca-Cola Co. (KO) and Colgate-Palmolive Co. (CL).Enditem