April 18 (Bloomberg) -- Philip Morris International Inc., the world’s largest publicly traded tobacco company, posted first-quarter earnings that fell more than analysts estimated (PM:US) as tax increases and economic weakness hurt shipments.
Net income (PM:US) fell 1.7 percent to $2.13 billion, or $1.28 a share, from $2.16 billion, or $1.25, a year earlier, the New York-based maker of Marlboro cigarettes said today in a statement. Excluding some items, profit was $1.29 a share. Analysts projected $1.34, the average of 15 estimates compiled by Bloomberg.
Chief Executive Officer Louis Camilleri, who is retiring next month, has introduced new varieties of top-selling Marlboro to win smokers abroad. Global shipments slid 6.5 percent, including a 10 percent drop in the economically struggling European Union and a 43 percent decline in the Philippines, where excise taxes were increased in January.
“Volumes were much weaker than we expected,” Christopher Growe, an analyst at Stifel Financial Corp. in St. Louis, wrote today in a note. He recommends buying Philip Morris shares and had expected shipments to decline 3.5 percent.
Philip Morris lowered its forecast for per-share profit this year to $5.55 to $5.65 because of unfavorable currency effects. Analysts estimated $5.72, on average. The currency effect is about 19 cents a share, an increase from a projection of 6 cents Feb. 20, the company said.
Philip Morris fell 2.5 percent to $91.69 at the close in New York. The shares (PM:US) have climbed 9.6 percent this year while the Standard & Poor’s 500 Index has gained 8.1 percent.
The Dollar Index, a gauge of the greenback against counterparts at six major U.S. trading partners, has gained 3.6 percent this year. The stronger dollar reduces the value of sales from abroad when translated back into the U.S. currency.
Philip Morris gets all of its sales outside the U.S. and last year got about 35 percent of its revenue from the European Union. The euro has slid 1 percent against the dollar this year.
Revenue rose 2.8 percent to $18.5 billion. Price increases in markets including Russia, France, Indonesia and Argentina boosted sales $531 million.
Shipments of the top-selling Marlboro brand sank 4.8 percent to 68.7 billion cigarettes. Global volume declined to 204.9 billion.
The shipments decline in the first quarter “was not unexpected” because Philip Morris had implemented or announced about 75 percent of the price increases it plans for 2013, Chief Financial Officer Jacek Olczak told analysts today on a conference call.
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