PMI''s 2013 Volume Shipments Holed by Tax Regime Changes in the Philippines

Source from:  Tobacco Reporter  02/08/2014

Philip Morris International's shipment volumes during the 12 months to the end of December, at 880,169 million, were down by 5.1 per cent on those of the 12 months to the end of December 2012.

Volumes were down in each of PMI's region: by 7.7 per cent in Asia; by 6.5 per cent in the EU; by 2.4 per cent in Eastern Europe, Middle East and Africa (EEMA); and by 1.4 per cent in Latin America and Canada.

Overall, the decline in volumes was said to have been caused principally by a significant erosion of total industry tax-paid volume.

In Asia, PMI's volumes were hit by the unfavorable impact of a January 2013 excise tax increase and a surge in the prevalence of domestic non-duty paid products in the Philippines, and lower shares in Japan and Pakistan, partly offset by the company's performance in Indonesia.

Excluding the Philippines, overall, PMI's cigarette shipment volume decreased by 2.7 per cent.

In the EU, volumes fell because of the unfavorable impact of excise tax-driven price increases, the weak economic and employment environment, the share growth of the other tobacco products (OTP) category, and the prevalence of non-duty paid products.

Volume declines in the EEMA were due to the impact of price increases in Russia and Ukraine, an increase in illicit trade in Russia, Turkey and Ukraine, and a weak economy in Russia.

Total shipments of Marlboro cigarettes of 291.1 billion were down by 3.5 per cent, due primarily to declines in the EU, notably in France, Poland and Spain, partly offset by Italy; in the EEMA, mainly in Romania, Russia, Turkey and Ukraine, largely offset by countries of North Africa; in Asia, predominantly in Japan and the Philippines, partly offset by Indonesia; and in Latin America and Canada, mainly in Argentina and Brazil, partly offset by Colombia and Mexico.

Excluding the Philippines, Marlboro cigarette shipments were down by 1.3 per cent overall.

Total L&M shipments of 95.0 billion were up by 1.4 per cent, total Bond Street shipments of 44.9 billion were down by 4.2 per cent, total Parliament shipments were up by 2.9 per cent to 44.7 billion, total Philip Morris shipments decreased by 7.9 per cent to 35.0 billion, total Chesterfield shipments of 34.4 billion were down by 3.2 per cent, and total Lark shipments of 28.8 billion were decreased by 10.2 per cent.

Total shipments of OTP, in cigarette equivalent units, grew by 4.9 per cent, notably in the EU, mainly in Belgium, France, Hungary and Italy.

Total shipments of cigarettes and OTP in cigarette equivalents were down by 4.7 per cent.

Meanwhile, during the fourth quarter of last year, PMI's cigarette shipments, at 223,199 million, were down by 4.3 per cent on those of the three months to the end of December 2012.

Asia region shipments were down by 9.4 per cent to 74,821 million, EU shipments were down by 4.9 per cent to 44,437 million, and EEMA shipments were down by 1.2 per cent to 76,428 million.

Latin America and Canada shipments were up by 4.0 per cent to 27,513 million.

In announcing the results, CEO André Calantzopoulos, said PMI had confronted an extremely harsh operating environment in 2013.

"Within this context, we withstood the pressures well and delivered a solid financial performance," he said.

"As foreseen, our fourth-quarter results were particularly strong, contributing to our full-year adjusted diluted earnings per share growth of 10 per cent, excluding the impact of unfavorable currency.

"This performance reflects our continued robust pricing and excellent share momentum."

"The challenges of last year, including significant currency headwinds, are likely to persist into 2014 and are reflected in our full-year forecast for reported diluted EPS, along with significant expenditures behind the development of reduced-risk products.

"Our overarching objective remains our steadfast commitment to generously reward our long-term shareholders."

For the full year 2013, PMI reported diluted earnings per share up by 1.7 per cent to $5.26 and adjusted diluted earnings per share up by 3.4 per cent to $5.40.

Reported net revenues, excluding excise taxes, were down by 0.5 per cent to $31.2 billion.

Reported operating companies' income was down by 2.7 per cent to $13.8 billion, and adjusted operating companies' income was down by 1.1 per cent to $14.1 billion.

Reported operating income was down by 2.5 per cent to $13.5 billion. Enditem