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PMI’s second-quarter cigarette volume increased by 2.4 per cent in EU

| July 18, 2014

Philip Morris International’s cigarette shipment volume during the second quarter to the end of June, at 222,801 million, was down by 2.7 per cent on that of the second quarter of 2013, 228,899 million.

Volume was increased in the EU by 2.4 per cent to 49,913 million, but down in the rest of the company’s regions: by 1.0 per cent to 23,065 million in Latin America & Canada (LAC); by 2.8 per cent to 74,170 million in Eastern Europe, Middle East & Africa (EEMEA); and by 6.1 per cent to 75,653 million in Asia.

PMI’s solid performance in the EU was said to have been driven by sales in Germany, Italy and the UK, partly offset by those in France, Greece and Hungary.

Total cigarette shipments of Marlboro were up by 1.0 per cent to 73.2 billion, while those of L&M fell by 3.5 per cent to 24.2 billion. Cigarette shipments of Bond Street decreased by 4.0 per cent to 11.1 billion; those of Philip Morris decreased by 11.1 per cent to 7.8 billion; those of Parliament increased by 7.6 per cent to 12.4 billion; those of Chesterfield increased by 33.2 per cent to 11.8 billion; and those of Lark decreased by 13.1 per cent to 6.9 billion.

PMI’s shipment volume of Other Tobacco Products (OTP), in cigarette equivalent units, increased by 4.2 per cent, while shipment volume for cigarettes and OTP in cigarette equivalents decreased by 2.4 per cent.

Reported diluted earnings per share during the second quarter, at $1.17, were down by 10.0 per cent on those of the second quarter of 2013, while adjusted diluted earnings per share, at $1.41, were up by 8.5 per cent.

Reported net revenues, excluding excise taxes, were down by 1.5 per cent to $7.8 billion and reported operating income was down by 13.9 per cent to $2.9 billion.

“As we expected, we achieved strong fundamental results in the second quarter, driven by a lower volume decline, strong pricing and robust market share,” said CEO André Calantzopoulos.

“For the second half of this year, we anticipate more challenging quarterly comparisons, particularly in the fourth quarter – which, in 2013, saw currency-neutral adjusted diluted earnings per share grow by 19.4 per cent – due to known business challenges, particularly in Asia, the timing of investments behind the commercialization of our Reduced-Risk Products and the roll-out of Marlboro Red 2.0, as well as costs related to our manufacturing footprint optimization initiatives.

“We are today reaffirming our 2014 full-year reported diluted EPS guidance. As previously communicated, down-trading and heavy price discounting at the low end of the market in Australia, in combination with the impact of plain packaging, could place us at the lower end of our guidance for currency-neutral adjusted diluted EPS growth of six per cent-eight per cent for the full year.”

Meanwhile, PMI’s cigarette volume shipments during the six months to the end of June, at 418,762 million, were down by 3.5 per cent on those of the first six months of 2013, 433,846 million.

Shipments were down in all of the company’s regions: by 0.1 per cent to 91,618 million in the EU; by 2.8 per cent to 44,514 million in LAC; by 4.4 per cent to 146,454 million in Asia; and by 4.9 per cent to 136,176 million in the EEMEA.

Turkey to crack down harder on smokers

| July 18, 2014

Turkey, which already bans tobacco smoking in enclosed public places, plans to impose further restrictions on where its citizens may smoke, according to a Daily Sabah story.

Existing legislation bans smoking in restaurants and cafés but, up to now, people have been allowed to smoke in outdoor areas of such premises.

Now, under new measures to be brought in under the Ministry of Health’s 2014-18 tobacco control program, restaurant and café owners will have to set up separate outdoor areas for smokers and non-smokers.

The ministry will ban smoking also within a stipulated distance of the entrance to premises where smoking is prohibited.

And it will ban smoking from some outdoor areas open to the public, including playgrounds and the courtyards of schools and mosques.

Under the new control program, smoking, which is already banned on public transportation, will be prohibited in private vehicles carrying pregnant women or children.

The ministry has promised to make more frequent the inspections of tobacco outlets, so as to crack down on  sales to people under the age of 18, and it will introduce a ban on cigarette sales in shops in ‘close proximity’ to schools.

The Minister of Health Mehmet Müezzinoğlu was quoted as saying the regulations would be adopted ‘as soon as possible’.

“Cigarette is the first step to bad habits for most consumers of alcoholic beverages and drug users,” he said. “So, we aim to curb smoking rates first.”

SM’s sales up in second quarter

| July 18, 2014

Swedish Match’s sales during the second quarter to the end of June, at SEK3,339 million, were up by four per cent on those of the second quarter of 2013, SEK3,220 million.

But operating profit, excluding SM’s share of net profit from the Scandinavian Tobacco Group (STG) and larger one-off items, fell by one per cent to SEK941 million, while operating profit including SM’s share from the STG and larger one-off items, fell by 2.8  per cent to SEK941 million.

Basic earnings per share were down by 2.0 per cent to SEK3.27.

Proposed Lorillard acquisition suggests FDA unlikely to ban use of menthol

| July 18, 2014

A leading US health expert has said that the proposed acquisition of Lorillard by Reynolds American is an indication that the latter is confident the Food and Drug Administration will not be pressured by politicians into banning menthol.

Writing on his Rest of the Story blog, Dr. Michael Siegel, who is a professor in the Department of Community Health Sciences, Boston University School of Public Health, said that for several months a group of Democratic senators had been blasting the e-cigarette industry for using flavors in its products.

This group of senators had called for a ban on flavorings in e-cigarettes, supposedly because of their sincere interest in curtailing “marketing tactics aimed at luring children and teenagers into … nicotine addiction”.
‘The Rest of the Story has called their bluff, pointing out that what these senators really mean is that they want to stop tactics (flavored e-cigarettes) aimed at luring children into fake cigarette addiction, but not tactics (flavored cigarettes) that are aimed at luring children into actual cigarette addiction,’ said Siegel.

‘These same senators either supported the menthol exemption to the flavored cigarette ban and/or have failed to introduce or sponsor legislation that would ban menthol flavoring from cigarettes.’

The full story is at: http://tobaccoanalysis.blogspot.co.uk/2014/07/acquisition-of-lorillard-demonstrates.html.

RAI declares quarterly dividend

| July 18, 2014

Reynolds American’s board of directors yesterday declared a quarterly cash dividend on the company’s common stock of $0.67 per share ($2.68 per share annualized).

The dividend is payable on October 1 to shareholders of record on September 10.

In making the dividend announcement, RAI said that it was the 41st consecutive quarterly cash dividend that the company had declared since it became a public company on July 30, 2004.

‘RAI’s policy is to return about 80 per cent of the company’s current-year net income to shareholders in the form of dividends,’ the company said.

Policies plainly not working in England

| July 17, 2014

Conservative candidates in marginal seats, including public health minister, Jane Ellison, risk electoral defeat because of the government’s nanny state policies, according to a new survey* of English voters commissioned by the Democracy Institute, which describes itself as a politically independent think tank.

Conducted before and after this week’s cabinet reshuffle, the poll was said to have found tepid Tory support in much of England, especially in regions containing the most marginal seats. Conservative candidates continued to be threatened by a relatively popular UKIP, a second choice for a growing number of voters.

“These results suggest UKIP’s outspoken opposition to many of the government’s public health proposals has the potential to shift, in small but critical ways, the electoral sands,” said Patrick Basham, who directed the survey.

“David Cameron’s tenuous hold on the keys to No 10 is threatened, in part, by voters who tell us they’re tired of government telling them what, how, and when they should eat, drink, and smoke,” added Basham, who has conducted campaign and policy polls in the UK, East Africa, Australia, North America, and the Middle East.

The poll found that a majority of voters – 54 per cent to 38 per cent – opposed the introduction of plain cigarette packaging. And it found that a plurality of voters (42 per cent) was less likely to vote for a party that supported plain packaging. More than two-thirds (68 per cent) feared that plain packaging would encourage smuggling, and one-third (34 per cent) of smokers admitted that plain packaging would make them more likely to buy their cigarettes on the illicit market.

Meanwhile, a majority (51 per cent) thought the tobacco industry made a negative contribution to the economy, while 53 per cent said the industry also played a negative societal role.

“Our poll surprisingly finds plain packaging’s as unpopular as the tobacco industry itself,” said Basham. “While Big Tobacco remains a political pariah, plain packaging could prove an electoral albatross, in tandem with other nanny state-style initiatives, weighing down the Conservative vote.”

*The fieldwork for the survey of a randomly selected national telephone (landline and mobile) sample of 1,050 English voters (including 500 voters in marginal seats) was conducted by the Democracy Institute’s polling unit from July 9 to 11 and July 14 to 15, 2014.

The national poll has a margin of error of +/- 3% (95% confidence interval). The sub-sample of marginal seats has a margin of error of +/- 4% (95% confidence interval). The sub-sample of smokers has a margin of error of = +/- 6.5% (95% confidence interval).

To ensure a representative sample, the results were weighted for key demographic variables including, but not limited to, gender, age, education, income, region, and mobile phone-only households.

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