Philip Morris International Inc.
) reported adjusted first-quarter 2013 earnings per share of
$1.29, missing the Zacks Consensus Estimate by 4.4% but
surpassing the comparable prior-year quarter earnings by
Earnings missed due to currency headwind, shipment volume loss
in the Philippines and a difficult comparison due to the 2012
leap-year effect. Excluding an unfavorable currency impact of 7
cents, adjusted earnings of $1.36 exceeded the prior-year quarter
earnings by 8.8%.
Revenues and Margin
Excluding the impact of an unfavorable currency translation of
$103.0 million, net revenue increased roughly 3.2% from the
prior-year quarter, mainly driven by favorable pricing. During
the quarter, Philip Morris' net revenue inched up 1.8% from the
prior-year quarter to $7.6 billion. Revenues also exceeded the
Zacks Consensus Estimate of $7.4 billion.
During the quarter, net revenue in the European Union (EU)
slipped 4.0% from the prior-year quarter to $1.97 billion due to
lower market share in Germany, Italy and Spain.
Net revenue in the Eastern Europe, the Middle East &
Africa (EMEA) region stood at $2.0 billion, up 11.3% from the
prior-year quarter fuelled by positive pricing in Russia, Turkey
Asia recorded net revenue of $2.8 billion, up 0.5% from the
prior-year quarter driven by favorable pricing in Australia,
Indonesia and the Philippines. In the Latin America and Canada
region, revenue slipped 0.3% to $781 million in the quarter.
Philip Morris' quarterly gross profit increased 1.8% from the
prior-year quarter to $5.1 billion, while operating companies
income (operating income before general corporate expenses and
the amortization of intangibles) slipped 0.6% year over year to
$3.5 billion during the quarter.
Volumes in Detail
Cigarette shipment volume excluding the unfavorable excise tax
increase in the Philippines went down by 2.1% due to an
unfavorable reversal of trade inventories built up in the fourth
quarter of 2012, weak economic and employment environment and
growth of the Other Tobacco Product Category.
In the European region, cigarette shipments declined 10.1%,
driven by a lower market share, particularly in southern
In Latin America and Canada, cigarette shipment volumes
declined 7.5% due to lower total market share in Argentina,
Brazil and Mexico.
Cigarette shipment volume in Asia declined 10.4% from the
prior-year quarter, mainly due to excise tax hike in the
Shipment volume in EMEA grew 1.4% on the back of improved
market conditions in North Africa, the Middle East, Russia and
During the quarter, shipments of the Marlboro brand of
cigarettes slipped by 4.8% due to decline in EU particularly in
France and Spain. Shipment volume of the L&M brand went up
4.3% during the quarter, mainly due to shipment rise in Egypt,
Russia and Saudi Arabia. Parliament recorded volume growth of
Chesterfield, Philip Morris, Lark and Bond Street witnessed a
decline of shipment volume of 6.0%, 11.4%, 8.3% and 0.7%,
Philip Morris exited the first quarter 2013 with cash and cash
equivalents of $3.9 billion compared with $3.0 billion in the
preceding quarter. Long-term debt stood at $20.8 billion in the
first quarter of 2013 compared with $17.6 billion in the previous
Share Buyback and Dividend Update
During the quarter, Philip Morris spent $1.5 billion to
repurchase 16.7 million shares. After completing a three-year
share buyback program worth $12 billion in Jul 2012, the company
announced a new share buyback program of $18.0 billion in Aug
The company expects currency impact of 19 cents per share for
2013, higher than 6 cents per share forecasted previously.
Excluding the currency impact, the company reiterates its
earnings guidance to increase by approximately 10%-12% compared
with adjusted earnings of $5.22 in 2012.
Philip Morris carries a Zacks Rank #4 (Sell). However, we
would recommend some other stocks, such as
Flowers Foods Inc.
Green Mountain Coffee Roasters Inc.
) - Zacks Rank #1 (Strong Buy), and
) - Zacks Rank #2 (Buy) that are currently doing well and are
worth considering in the consumer staples industry.
FLOWERS FOODS (FLO): Free Stock Analysis
GREEN MTN COFFE (GMCR): Free Stock Analysis
KELLOGG CO (K): Free Stock Analysis Report
PHILIP MORRIS (PM): Free Stock Analysis
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