Latest Stories

Philip Morris Int’l Q2 profit falls 8%; hurt by PH tax increase in Asia

In this July 17, 2012, photo, Marlboro cigarettes are displayed in Montpelier, Vermont. Philip Morris International’s second-quarter profit fell about 8 percent as it shipped fewer cigarettes, sending company shares down in premarket trading Thursday, July 18, 2013. AP PHOTO/TOBY TALBOT

RICHMOND, Virginia—Philip Morris International’s second-quarter profit fell about 8 percent as it shipped fewer cigarettes, sending company shares down in premarket trading Thursday.

The company, which fell short of Wall Street expectations, also lowered its full-year guidance due to unfavorable foreign exchange rates, which also weighed on quarterly results.

Philip Morris International sells Marlboro and other cigarette brands outside of the US, so its results reflect smoking trends abroad. It’s the world’s second-biggest cigarette seller behind state-controlled China National Tobacco Corp.

The cigarette maker reported earnings of $2.12 billion, or $1.30 per share, in the quarter ended June 30, down from $2.32 billion, or $1.36 per share, a year ago.

Excluding excise taxes, revenue fell 2.5 percent to $7.9 billion despite higher prices. Costs to make and sell cigarettes rose more than one percent to $2.7 billion.

Analysts polled by FactSet had expected $1.41 per share on revenue of $8.17 billion. Its shares fell $2.30, or 2.5 percent, to $87.50 in premarket trading.

Cigarette shipments fell about 4 percent to 228.9 billion cigarettes as it saw volume declines in all of its regions. Total Marlboro volumes fell nearly 6 percent to 72.4 billion cigarettes.

Still, the company gained share in key markets including France, Germany, Indonesia, Spain and the United Kingdom.

Philip Morris International said economic woes in the European Union and increased excise taxes drove shipments down nearly 6 percent during the quarter as more than half of the countries in the European Union are now in recession.

Shipments fell 3.6 percent in the company’s region that encompasses Eastern Europe, the Middle East and Africa. Shipments also fell 2.4 percent in Latin America and Canada.

Hurt by Philippine tax increase

In Asia, one of its largest growth areas, the company said that cigarette volume fell 3.5 percent, hurt by a recent tax increase in the Philippines, which saw a 16.5 percent decline in shipments.

The company benefited from increases in Japan following the March 2011 earthquake and tsunami. The events offered the company a sales opportunity because supply disruptions led Japan Tobacco Inc., the world’s No. 3 tobacco maker, to stop shipping cigarettes within Japan. It also bought Philippines company Fortune Tobacco Co. in February 2010, bolstering its Asian business.

During the quarter, Philip Morris International saw volumes rise in Indonesia by about 3.5 percent and fall 2 percent in Japan, primarily due to the timing of inventory movements.

The company also noted a growing prevalence of counterfeit and contraband cigarettes.

Smokers face tax increases, bans, health concerns and social stigma worldwide, but the effect of those on cigarette demand generally is less stark outside the United States. Philip Morris International has compensated for volume declines by raising prices and cutting costs.

Because it does all its business overseas, the company also has to navigate changes in currency values. A stronger dollar cuts into revenue generated overseas when it’s translated back into dollars.

Philip Morris International Inc., based in New York and Switzerland, cut its profit guidance for the year because of recent changes in foreign exchange rates. It now expects $5.43 to $5.53 per share, versus $5.17 per share in 2012. The forecast includes a one-year $300 million cost-saving target and planned share buybacks of $6 billion for 2013. It spent $1.5 billion to buy back 16.7 million shares in the quarter.

Altria Group Inc. in Richmond, Virginia, the owner of Philip Morris USA, spun off Philip Morris International as a separate company in 2008. Altria is the largest U.S. cigarette seller.—Michael Felberbaum

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: cigarettes , Earnings , Philip Morris , US

  • ting0508

    All Philippine made cigarettes by Philip Morris should be exported to China and Taiwan! I won’t mind!

    • Karabkatab

      The sad truth is, Chinese smokers still prefer their own brand. And their retail price of their own brand is much higher than foreign brand.

  • ting0508

    No problem. This Company is bound to die a natural death anyway. Why? It has caused millions of people die from smoking related illnesses like lung cancer, throat cancer and other pulmonary diseases. To hell with this Company!

  • Noelnoel Munro

    They knew its coming since 25 years ago. That was the reason why they bought Food Companies like Nabisco, Kraft Foods Int. Maxwell, Cadbury and many more. They are Mega mega mega mega rich.

  • Carum Al Dumal

    This means that the Philippine Government Can raise the Cigarette tax even higher. So those of us who are “can afford” can show off even more. Good for the public kasi they pay more taxes! Win-win to pre!

  • ReneV

    best to export all phillip morris cigarettes to china. we don’t mind.

  • divictes

    Maniwala kayo diyan! People around me are still puffing like ancient locomotives___in fact,with a vengeance, alam nyo naman ang Pinoy, gustong ipakita na ‘can afford’.

    • Chrisnadal19

      cnu mas paniniwalaan ikaw or PM executives? ur basing on observation only, not facts.

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • UN heads say Syria aid needs ‘largely unanswered’
  • Captain who left doomed ferry had 40 years at sea
  • UK woman held for murder after children’s bodies found
  • Washington calls S. Sudan violence an ‘abomination’
  • Abducted soldier freed in Compostela Valley
  • Sports

  • UP nips St. Benilde; Adamson blasts RTU in Filoil women’s caging
  • Kevin Garnett responds to Raptors’ GM F word
  • Albert Pujols hits 500th HR of major league career
  • UST posts twin kill in Filoil pre-season cup opening day
  • Wizards beat Bulls in OT to take 2-0 series lead
  • Lifestyle

  • Entering the monkhood a rite of passage
  • Haneda International Airport: A destination on its own
  • Wanted: Beauty queen with a heart that beats for the environment
  • Kim Atienza: At home with art and design
  • Life lessons I want to teach my son
  • Entertainment

  • Ex-Fox exec denies allegations in sex abuse suit
  • Kris Aquino backtracks, says Herbert Bautista and her are ‘best friends’
  • Summer preview: Chris Pratt enters a new ‘Galaxy’
  • Bon Jovi helps open low-income housing in US
  • Summer movie preview: Bay reboots ‘Transformers’
  • Business

  • Toyota sells 2.58 million vehicles, outselling GM
  • McDonald’s 1Q profit slips as US sales decline
  • SEC approves SM’s P15B retail bond offer
  • $103M Vista Land bonds tendered for redemption
  • Oil slips to $102 as US crude supplies seen rising
  • Technology

  • Engineers create a world of difference
  • Bam Aquino becomes Master Splinter’s son after Wiki hack
  • Mark Caguioa lambasts Ginebra teammates on Twitter
  • Brazil passes trailblazing Internet privacy law
  • New York police Twitter campaign backfires badly
  • Opinion

  • One-dimensional diplomacy: A cost-benefit analysis of Manila’s security deal with Washington
  • No ordinary illness
  • Reforest mountains with fire trees and their kind
  • Day of the Earth
  • When will Chinese firm deliver new coaches?
  • Global Nation

  • Palace thanks Estrada for successful HK mission
  • Hong Kong accepts PH apology; sanctions also lifted
  • China won’t budge, wants PH gov’t to apologize to HK
  • Cha cha train to follow Obama visit?
  • No word yet on inking of US-PH defense pact during Obama visit
  • Marketplace