Philip Morris International Inc.
(
PM
) reported adjusted first quarter 2012 earnings per share,
excluding special items, of $1.27, surpassing the year-ago earnings
by 19.8% excluding currency and the Zacks Consensus Estimate of
$1.19.
Revenue, Volumes & Margins
During the quarter, Philip Morris' net revenue grew 9.7% year
over year to $7.4 billion, including favorable currency impact of
$92 million. It surpassed the Zacks Consensus Estimate of $7.2
billion. Excluding currency translation, net revenue increased
roughly 11.0%, mainly driven by $369 million of favorable pricing
and $370 million of favorable volume/mix.
During the quarter, net revenue in the European Union (
EU
) went up 2.6% y/y to $2.05 billion. Net revenue in the Eastern
Europe, Middle East & Africa (
EEMA
) region stood at $1.8 billion, up 8.8% from the previous year
comparable quarter. Asia led the race among the regions as it
recorded net revenue of $2.7 billion, up 19.5% from the same period
a year ago. Latin American and Canada region reported a marginal
0.4% y/y growth to $0.78 billion.
Cigarette shipment volume in the quarter increased slightly by
5.4% year over year to 219.1 million units, primarily driven by a
12.4% increase in shipment volume in Asia, which was a result of
double-digit growth in Indonesia, Japan, Korea the Philippines and
Thailand. While volume in EEMA (Eastern Europe, Middle East &
Africa) went up 3.6%, Latin America and Canada reported a growth of
2.9%. However, EU suffered a decline of 1.5%.
In EU, cigarette shipment volume dropped on a year-over-year
basis, predominantly due to lower total market share, higher tax
imposed by the European governments, macro-economic headwinds,
particularly in southern Europe, decreased consumer and the
prevalence of illicit trade, mainly in Greece and Spain.
During the quarter, shipments of Marlboro rose 5.2% as a result
of growth in the EEMA market. Shipments of L&M were also up
4.4% during the quarter, driven by the growth in EU, Asia, Latin
America and Canada. Parliament and Lark brands recorded increased
volumes of 10.6% and 15.1%, respectively, while Chesterfield and
Bond Street witnessed increases of 2.3% and 4.9%, respectively, in
the quarter.
Philip Morris' quarterly gross profit expanded 11.3% year over
year to $5.0 billion, while operating companies income increased
13.4% to $3.5 billion in the first quarter of 2012. Operating
income went up 13.2% y/y to $3.4 billion during the quarter.
Financial Analysis
As of March 31, 2012, Philip Morris had cash and cash
equivalents of $3.6 billion compared to $2.5 billion as on December
31, 2011 and long-term debt of $15.34 billion compared to $14.82
billion in the previous quarter.
Share Buyback
During the first quarter, Philip Morris spent $1.5 billion to
repurchase 18.1 million shares. The company has a target of buying
back shares worth $6.0 billion during 2012.
Guidance
Concurrent with the earnings release, the company expects 2012
full-year reported diluted earnings per share to be in a range of
$5.20 to $5.30 compared with $4.85 in 2011. However, adjusted
diluted earnings per share are projected to increase by
approximately 10% to 12% over $4.88 in 2011.
The company's major competitors are
Altria Group Inc.
(
MO
) and
Reynolds American Inc.
(
RAI
). Phillip Morris currently has a Zacks #4 Rank, which implies
short-term Sell rating on the stock. On a long-term basis we remain
Neutral on the stock.
ALTRIA GROUP (
MO
): Free Stock Analysis Report
PHILIP MORRIS (
PM
): Free Stock Analysis Report
REYNOLDS AMER (
RAI
): Free Stock Analysis Report
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