Philip Morris International is to restructure its business in Egypt as part of an initiative aimed at enhancing its profitability and growth in markets across North Africa and the Middle East.
‘The new business model entails a new contract manufacturing agreement with our long-standing, strategic business partner, Eastern Company S.A.E., the creation of a new PMI affiliate in Egypt and a new distribution agreement with Trans Business for Trading and Distribution LLC,’ PMI said in a press note posted on its website yesterday.
To accomplish this restructuring and to ensure a smooth transition to the new model, PMI will record, in the fourth quarter of 2013, a charge of about $0.10 to its 2013 full-year reported diluted earnings per share.
“Today’s announcement marks the next stage in the highly successful evolution of our business in Egypt, which could not have been achieved without the significant contribution of our long-established partner, Al Mansour International Distribution Company S.A.E.,” said Miroslaw Zielinski, PMI’s president, Eastern Europe, Middle East & Africa Region and PMI Duty Free.
“PMI’s new operational model will ensure business continuity in this dynamic market, where PMI achieved currency-neutral, double-digit earnings growth and strong share gains in 2013. Furthermore, going forward, the new model will assure the continued expansion of our market presence and an increase in our share of the profit pool.”
PMI said that it was the leading international tobacco company in Egypt, where its products are contract manufactured by Eastern Co.
Its market share last year, at 22.9 per cent, was up by 4.7 percentage points on that of its 2012 market share, with the share of its premium brand, Marlboro, up by 1.1 percentage points to an estimated 7.3 per cent, and the share of its mid-priced L&M up by 3.3 percentage points to an estimated 13.1 per cent.
Overall, about 80 billion cigarettes were sold on the Egyptian market last year, about 2.8 per cent more than were sold during 2012.
Last year, the retail pack price of Marlboro, which enjoys close to a 75 per cent share of the premium segment, was E£15.50 (about $2.25).