Cigarette volumes down but reduced risk products offer PMI new opportunities
Philip Morris International’s cigarette shipment volume during the third quarter (July-September), at 222,300 million, was down by 0.4 percent on that of the third quarter of 2013, 223,124.
Shipments were increased in the EU by 0.5 percent to 49,209 million and in the company’s Eastern Europe, Middle East and Africa (EEMA) region, also by 0.5 percent, to 77,252 million.
But they were down by 1.3 percent to 72,352 in Asia and by 2.0 percent to 23,487 in its Latin America and Canada region.
In reporting its third quarter results, PMI said the fall in cigarette shipment volume in Asia had been due mainly to developments on the Japanese market, partially offset by those in Indonesia and Pakistan. The fall in Latin America & Canada was due largely to developments on the markets of Canada and Mexico.
These regional falls, it added, had been partially offset by a solid performance in the EU, driven notably by developments on the Italian market; and by an increase in the EEMA, driven mainly by developments on the markets of countries in the Middle East and North Africa, partly offset by developments on the markets of Kazakhstan, Serbia and Ukraine.
By brand, overall shipments declined in the case of Marlboro (down by 3.5 percent to 72.6 billion); L&M (down by 0.6 percent to 24.0 billion); and Philip Morris (down by 9.4 percent to 8.0 billion), which, in Japan, ‘morphed’ into Lark.
Overall shipments increased in the case of Bond Street (up by 0.3 percent to 12.0 billion); Parliament (up by 9.3 percent to 12.9 billion); Chesterfield (up by 25.2 percent to 11.6 billion); and Lark (up by 25.2 percent to 9.0 billion).
The shipment volume of OTP, in cigarette equivalents, increased by 7.6 percent between the third quarters of 2013 and 2014, which meant that the total shipment volume for cigarettes and OTP in cigarette equivalent units decreased by 0.1 percent.
PMI reported that its market share had increased in a number of key markets, including those of Algeria, Argentina, Austria, Brazil, Colombia, the Czech Republic, Egypt, France, Germany, Italy, Kazakhstan, the Netherlands, the Philippines, Poland, Russia, Saudi Arabia, Spain and Switzerland.
Meanwhile, PMI’s reported diluted earnings per share (EPS) during the third quarter of 2014, at $1.38, was down by $0.06 or 4.2 percent on that of the third quarter of 2013. And adjusted diluted EPS, at $1.39, was down by $0.05 or 3.5 per cent.
Reported net revenues, excluding excise taxes, at $7.9 billion, were down by 0.9 percent.
Reported operating companies’ income, at $3.5 billion, was down by 5.5 percent, while adjusted operating companies’ income, at $3.4 billion, was down by 5.8 percent.
Reported operating income, at $3.3 billion, was down by 7.1 percent.
“Our results in the third quarter were slightly better than we expected, underpinned by a modest decline in volume, continued robust pricing and solid market share gains in each of our four regions,” said André Calantzopoulos, CEO.
“While currency headwinds have stiffened, our underlying business momentum is such that we remain confident we are on course to achieve currency-neutral adjusted diluted EPS growth for the full year 2014 of approximately 6.5 percent to 7.5 percent. This confidence was further reflected in the announced increase of our regular quarterly dividend of 6.4 percent.
“We are particularly excited by the commercialization, next month, of iQOS, our first product within our innovative portfolio of potentially Reduced-Risk Products that, we believe, represent one of our greatest growth opportunities. I am immensely proud of our talented employees whose exceptional work has opened this significant new chapter in our history.”