New book by Larry Connors Click here Improve your trading - See how
Philip Morris manufactures and sells cigarettes and other tobacco products outside of the U.S. The company, whose international brands include Marlboro, Merit, Parliament and Virginia Slims, held an estimated 15.6% share of the international cigarette market outside of the U.S in 2008. Until its spin-off in March 2008, Philip Morris was an operating company of Altria Group. The company is now looking to expand its business beyond cigarettes into smokeless tobacco products as industry volumes have fallen at an annual rate of 1%-2% for the past several years.
In a statement, chairman and chief executive officer, Louis Camilleri said, "The third quarter underscored our proven ability to deliver excellent results and improve our operating margins, with net revenues, adjusted operating companies income and earnings per share up, on a constant currency basis, by a strong 6.9%, 13.7% and 18.3%, respectively."
Third Quarter Results
The New York-based Marlboro brand maker posted net earnings of $1.80 billion or $0.93 per share for the third quarter, lower than $2.08 billion or $1.01 per share in the prior-year quarter. Excluding currency impact, reported earnings per share was up 8.9% at $1.10 per share. The year-ago quarter results included a $0.08 per share of tax benefit.
Excluding special items, adjusted earnings per share for the quarter was flat with the year-ago quarter at $0.93. Excluding currency impact, adjusted earnings per share grew 18.3% to $1.01. On average, ten analysts polled by Thomson Reuters expected earnings of $0.91 per share for the third quarter.
Quarterly net revenues totaled $16.57 billion, down from $17.37 billion the year-ago quarter. Net revenues, excluding excise taxes, for the quarter declined 5.3% to $6.59 billion from $6.95 billion in the same quarter last year, and missed six Wall Street analysts' consensus estimate of $6.71 billion.
Excluding the impact of currency, net revenues increased 6.9%, while excluding acquisitions also, it increased only 4.1%.
Segmental Details
Philip Morris' total cigarette shipment volume for the third quarter was down 2.9% to 219.28 billion units from last year's 225.91 billion units, hurt by a 4% decline in the European Union or EU, and a decline of 4.5% in Eastern Europe, Middle East & Africa or EEMA, and a 2.6% fall in Asia, partially offset by a 6.0% growth in Latin America & Canada. On an organic basis, excluding acquisitions, Philip Morris' cigarette shipment volume was down 2.1%.
EU region net revenues, excluding excise taxes, decreased 9.8% to $2.41 billion, due to unfavorable currency impact of $304 million. Excluding the impact of currency and acquisitions, net revenues increased 1.1%.
Net revenues for the EEMA region, excluding excise taxes, declined 13.2% to $1.83 billion, including unfavorable currency impact of $425 million. Excluding currency and acquisitions impact, net revenues grew 6.7%, reflecting favorable pricing primarily in Russia, Turkey and Ukraine, partially offset by unfavorable volume/mix. In Asia region, net revenues, excluding excise taxes, grew 2.5% to reach $1.65 billion, including unfavorable currency impact of $7 million. Excluding currency impact, net revenues grew 3.0%, driven by favorable pricing, partially offset by unfavorable volume/mix.
Latin America & Canada region net revenues, excluding excise taxes, rose 24.0% to $698 million, despite unfavorable currency impact of $110 million, largely due to the 2008 Rothmans Inc., Canada acquisition and higher pricing. Excluding currency and acquisition impact, net revenues increased only 11.5%.
Other Metrics
Operating companies income for the quarter decreased 1.1% to $2.91 billion, due to unfavorable currency impact of $449 million. Excluding currency and acquisitions impact, adjusted operating companies income was up 11.1%.
Operating income for the third quarter declined 1.4% to $2.85 billion from $2.89 billion in the prior-year quarter. Gross profit for the quarter was $4.27 billion, down 4.6% from $4.47 billion in the year-ago quarter.
Last month, based on the strong operating cash flow of $6.4 billion, Philip Morris declared a 7.4% increase in regular quarterly dividend to $0.58 per share, representing an annualized rate of $2.32 per share.
During the third quarter, Philip Morris also repurchased 31.5 million common shares for an aggregate of $1.5 billion, which is a part of its two year $13 billion share repurchase program that began in May 2008. The company has spent a total of $9.6 billion to repurchase 209.6 million shares since then.
Philip Morris also completed the purchase of the South African operations of Swedish Match AB (SWMA, SWMAF.PK) for about $262 million, which was announced in early July. The South African operations of Swedish Match manufactures pipe tobacco and snuff category products, which represent an estimated 31% of total tobacco consumption in that country. The acquisition, which extended Philip Morris' push into the smokeless tobacco products. The company expects the acquisition to be immediately marginally accretive to its earnings per share.
Nine Month Highlights
For the nine month period, Philip Morris posted net earnings of $4.82 billion or $2.44 per share, lower than $5.45 billion or $2.60 per share in the prior-year period. Excluding currency impact, reported earnings per share was up 13.8% at $2.96 per share.
Excluding special items, adjusted earnings per share for the period declined 4.6% to $2.48 from the year-ago period's $2.60. Excluding currency impact, adjusted earnings per share grew 15.4% to $3.00.
Net revenues for the year-to-date period were $45.07 billion, down 6.9% from $48.42 billion in the same period last year. Net revenues, excluding excise taxes, for the period declined 6.5% to $18.32 billion from $19.58 billion in the year-ago period. Excluding the impact of currency, net revenues increased 7.4%, while excluding acquisitions also, it increased only 4.7%.
Outlook
For fiscal 2009, Philip Morris lifted its earnings forecast to a range of $3.20 to $3.25 per share from the prior guidance of $3.10 to $3.20 per share. Analysts expect the company to report earnings of $3.24 per share for fiscal 2009, with estimates in the range of $3.15 to $3.31 per share.
This forecast includes, at current exchange rates, an unfavorable currency impact of $0.52 per share, compared to the prior estimate of $0.55 per share. Excluding currency, earnings per share is estimated to increase about 12% to 14%. It also includes a after-tax charge of $93 million or $0.04 per share relating to the Colombian Investment and Cooperation Agreement.
Stock Quote
In Thursday's regular trading session, PM is currently trading at $49.50, down $1.32 or 2.60% on a volume of 3.84 million shares. In the past 52-week period, the stock has been trading in a range of $32.04 to $52.35.
For comments and feedback: contact editorial@rttnews.com Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.
