Philip Morris International’s Q2 Profit Falls

Philip Morris International's Q2 Profit Falls
Philip Morris International Inc. (NYSE:PM) reported its second-quarter results, and its outlook for the full year today. Here are the highlights.

Quarterly Earnings

Reported earnings per share were $1.36 up 0.7 percent over 2011. However, this would have been up 16.8 percen, had it not been for the currency effect and the Japanese hurdle.

Operating income was down by 2.9 percent to $3.6 billion. Net earnings were $2.3 billion.

Quarterly Shipments and Revenues

Cigarette shipment volume fell by 1.2%, excluding acquisitions.  However, cigarette shipment volume was up by 1.4% excluding acquisitions, and the 6.3 billion units associated with the 2011 Japan hurdle. Volumes in Europe were down 9.4 percent, while they grew 5.1 percent in the EEMA. Latin America and Canada volumes were lower by 3 percent, while Asia saw a growth of 0.7 percent.

Reported net revenues, excluding excise taxes, were down by 1.8% to $8.1 billion, or up by 2.9%, excluding currency and acquisitions.

“Despite the anticipated Japan hurdle and currency headwinds, we had a solid second quarter, which underscored our sustained business momentum,” said Louis C. Camilleri, Chairman of the Board and Chief Executive Officer. “Our broad geographic footprint, world-class brand portfolio, and a strong pricing environment remain the cornerstone of our continuing ability to capitalize on growth opportunities around the world, whilst enabling us to weather uncertainty in those markets where economic conditions are still currently weak.”

Outlook for 2012

Reported full year earnings expected for 2012, at the current exchange rates, are in the range $5.10 to $5.20 compared to $4.85 in 2011.

Share repurchase

The company spent $1.5 billion on the buyback of 17.8 million shares during the quarter. It has announced a new three-year buyback program, likely to commence in August, worth $18 billion.

It might be useful here to look at  Altria Group, Inc. (NYSE:MO), from which PMI separated in 2008. While Altria sells in the U.S., PMI concentrates on the international segment. Altria has had an exceptional run-up in its price, and has brushed off concerns regarding smoking bans, lawsuits and fines.  According to an article in The Motley Fool, contrary to expectations, the number of smokers in the U.S. is not declining, and that it will continue to perform well so long as the number of smokers does not fall. Altria reports its Q2 results on July 24.



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