By Dow Jones Business News, October 17, 2013, 02:06:00 PM EDT
-Total cigarette volume fell 5.7%
-Guidance cut on cautious outlook in certain markets
-Shares up about 1% midday
By Nathalie Tadena and Ben Fox Rubin
Philip Morris International Inc. ( PM ) again lowered its earnings guidance for the year Thursday, challenged by some
of its most important Asian markets.
With sales volumes shrinking in developed countries, the maker of Marlboro and L&M brand cigarettes has relied on
emerging markets to boost results. Yet a handful of macroeconomic trends in some of those markets, including inflation
woes in Indonesia and tax increases in the Philippines, have pressured sales.
The company's new guidance "now reflects those realities," said Michael Lavery, an analyst at CLSA Americas, who
called the new range "achievable."
The cigarette maker expects to post earnings of $5.35 to $5.40 a share, down from July's lowered view of $5.43 to $
5.53 a share.
In the latest period, Philip Morris maintained its share of industry sales and raised prices, driving a 5.1% rise in
quarterly profit. Chief Executive Andre Calantzopoulos said the company's share momentum, particularly in the European
Union, partially offset weaker industry volumes.
Total cigarette volume fell 5.7% to 223.1 billion units. Volumes slipped across regions, with the largest decline
recorded in Asia, where volumes were hurt by an excise tax increase in the Philippines.
Overall, Philip Morris reported a profit of $2.34 billion, or $1.44 a share, up from $2.23 billion, or $1.32 a share,
a year earlier. Net revenue, excluding excise taxes, edged up 0.1% to $7.93 billion. Revenue increased 1.6% excluding
currency fluctuations, driven by favorable pricing across all regions.
Analysts polled by Thomson Reuters most recently forecast earnings of $1.43 a share on revenue of $7.94 billion.
Mr. Lavery said there was concern ahead of the report that Philip Morris could face challenges in Indonesia after fuel
subsidies were trimmed at the end of the second quarter, pressuring customers' budgets. While the industry overall
suffered from the subsidy change, Philip Morris was able to hold on to market share and performed better than expected
in the country, he said.
"That market's been a big growth driver for them, so it's positive to see that kind of news," Mr. Lavery said.
Shares were up 1% at $86.94 in recent trading. The stock is up 4% so far this year.
Write to Nathalie Tadena at firstname.lastname@example.org and Ben Rubin at email@example.com
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