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Marlboro Maker Raises Prices to Compensate a Decrease in Smoking

Published on December 16th, 2014 00:00

Philip Morris International (PMI) the world’s major cigarette manufacturer, surpassed revenue estimations after price boosts and market-share profits made it easier to make up for a tiny decrease in cigarette volumes.

3Q net revenue dropped 7.9 % to $2.16 billion, or about $1.38 per share, from $2.34 billion, or $1.44, a year earlier, the New York-based producer of Marlboro cigarettes explained these days in a report. Eliminating certain products, revenue constituted $1.39 a share in the period. The average of 11 analysts’ estimations gathered by Bloomberg was $1.33.

Philip Morris, which receives all its income outside the U.S., has been increasing prices in order to compensate a decrease in smoking. That aided net profit rise 3.4 % to $21.3 billion, although cigarette shipment volume dropped by 0.4 %, not including acquisitions. “Our final results in the3Q were a bit better than we anticipated, underpinned by a moderate decrease in volume, ongoing strong pricing and sturdy market share profits in each of our four regions,” Chief Executive Officer Andre Calantzopoulos explained in the statement.

Profits not including excise taxes constituted about $7.86 billion, going above analysts’ $7.61 billion average estimation. In spite of this, Philip Morris reduce its revenue outlook, citing currency headwinds. Revenue this year will constitute approximately $4.76 to $4.81 per share, Philip Morris stated. That compares with a July prediction of about $4.87 to $4.97.

The stock increased 2 % to $85.26 at the close in New York. PMI shares have decreased 2.1 % this year, in contrast to a 0.8 % achieve for the Standard & Poor’s 500 Index. This revenue comes as U.S. antitrust representatives examine a blockbuster tobacco offer. Reynolds American concluded in July to acquire U.S. competitor Lorillard for around $25 billion. If the transaction is approved, the transaction will leave 90 % of the 400-year-old American tobacco industry with only two rivals: Reynolds and Altria Group.

Altria, the U.S. cigarette leader, spun off Philip Morris International in 2008 so it could concentrate on the local market.