Bloomberg News

Philip Morris Profit Tops Estimates on Cigarette Prices

October 20, 2011

(Updates with closing stock price in sixth paragraph.)

Oct. 20 (Bloomberg) -- Philip Morris International Inc., the world’s largest publicly traded tobacco company, reported third-quarter profit that topped analysts’ estimates, helped by higher shipments and increased cigarette prices in Asia.

Net income rose 30 percent to $2.38 billion, or $1.35 a share, from $1.82 billion, or 99 cents, a year earlier, the New York-based maker of Marlboro cigarettes said in a statement. Excluding some items, profit was $1.37 a share, beating the $1.24 average of 14 analysts’ estimates compiled by Bloomberg.

Chief Executive Officer Louis Camilleri raised prices in Japan, Australia and Indonesia, where demand pushed total shipments higher by 4.4 percent. Excluding excise taxes, total sales at Philip Morris, which generates all of its revenue outside the U.S., advanced 26 percent to $8.36 billion.

“Aided by Asia and the emerging markets, shipments were good, and they’re not having any problem getting price increases,” Jack Russo, an analyst at Edward Jones & Co. in St. Louis, said today in an interview. He rates the shares as “buy.” “They blew by the consensus pretty easily.”

The company raised the low end of its 2011 profit forecast by 5 cents to $4.75 a share, and left unchanged the high end of $4.80. Analysts projected $4.74, the average of 16 estimates.

Philip Morris rose 3.3 percent to $68.19 at 4 p.m. in New York. The shares have climbed 17 percent this year.

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Lorillard Inc., the third-largest U.S. cigarette maker, is scheduled to release its results on Oct. 24, followed by Reynolds American Inc., the second-biggest, on Oct. 25 and Altria Group Inc., the largest, on Oct. 27.

Philip Morris is the second most profitable company in the Standard & Poor’s 500 Index, after Linear Technology Corp., according to earnings rankings compiled by Bloomberg through Oct. 18. The analysis gave equal weight to five variables, including profit margin and return on invested capital. Lorillard, based in Greensboro, North Carolina, ranked 10th.

--Editors: James Callan, Robin Ajello

To contact the reporter on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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