Philip Morris International (
), the world's leading international tobacco company outside of the
U.S. and China, recently announced its Q2 results. Higher pricing
power and favorable currency exchange rates continued to support
operating margins that increased despite overall flat cigarette
shipment volume in the second quarter. PMI's product portfolio
boasts eight of the world's top 15 brands including Marlboro,
the number one cigarette brand worldwide. Until a spin-off in
2008, Philip Morris International was an operating company of the
). Philip Morris International competes with British American
), Japan Tobacco (PNK:JAPAF.PK) and Imperial Tobacco Group plc (
) in its various geographical segments.
We have a
$69.50 price estimate for Philip Morris
, which is just slightly below the market price.
Asian Markets Show Growth
The Asian markets of Indonesia, Japan and Korea continue to
drive PMI's cigarette sales volume and all posted double digit
revenue growth. Indonesia and South Korea offered PMI organic sales
growth while Philippines continued to show growth after the 2010
merger with Fortune Tobacco Corporation (
). The Japanese market benefited from an increase in market share
in the wake of supply disruptions for Japan Tobacco post-march
earthquake and tsunami.
While the sales volume increased 8% in Asia, it declined by 3%
in Europe, Africa and Middle East and by 5% in Latin America. This
decline was led by declining market size in Russia, Ukraine, Spain,
Poland and Greece and Mexico dealt with a disruptive January excise
tax hike. Yet there was modest growth in Germany, Argentina,
Algeria and Turkey.
Leading Brands Perform Well Giving Pricing
PMI is known for its premium brands and global market share in
the premium category. These premium products give the company
pricing flexibility which helps its profitability. The flagship
premium brand, Marlboro continues to see solid sales posting 6%
growth in Asia led by Indonesia, Japan, Korea and Vietnam. These
gains were offset by a 3% decline in Europe and Latin America.
Among its other premium brands, L&M sales volume grew 3%,
Parliament's sales grew 10% driven by Europe and Russia. Lark's
sales increased 10% mainly driven by Japan. However, Chesterfield
saw decline in sales.
See our complete analysis of Philip Morris