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PMI’s shipment volume down in second quarter

| July 17, 2015

Philip Morris International’s cigarette shipment volume during the second quarter to the end of June, at 219,833 million, was down by 1.3 per cent on that of the second quarter of 2014, 222,801 million. Excluding the effect of acquisitions, shipment volume was down by 1.4 percent.

Volume was down in each of its four regions: in the EEMA (Eastern Europe, the Middle East and Africa) by 0.5 percent to 73,829 million; in Asia by 0.5 percent to 75,256 million; ; in Latin America & Canada (LAC) by 2.1 percent to 22,589 million; and in the EU by 3.5 percent to 48,159 million.

Total cigarette shipments of Marlboro were down by 1.1 percent to 72,322 million, while those of L&M increased by 1.4 percent to 24,546 million. Cigarette shipments of Parliament fell by 7.1 percent to 11,514 million; those of Bond Street rose by 5.8 percent to 11,777 million; those of Chesterfield fell by 10.1 percent to 10,611 million; those of Philip Morris increased by 13.5 percent to 8,831 million; and those of Lark increased by 20.2 percent to 8,270 million.

PMI reported that its shipment volume of Other Tobacco Products (OTP), in cigarette equivalent units, increased by 3.3 percent, while shipment volume for cigarettes and OTP in cigarette equivalents decreased by 1.2 percent, excluding the effect of acquisitions.

Reported diluted earnings per share during the second quarter, at $1.21, were up by 3.4 percent on those of the second quarter of 2014, while adjusted diluted earnings per share, at $1.21, were down by 14.2 percent.

Reported net revenues, excluding excise taxes, were down by 12.0 percent to $6.9 billion while reported operating companies’ income was up by 0.6 percent to $3.0 billion.

“Our second-quarter results were very solid, further reinforcing our great start to the year,” said CEO André Calantzopoulos in announcing the results.

“Our organic volume trends, market share growth and robust pricing, exemplified by our flagship brand Marlboro, are driving excellent operational performance within an improving macroeconomic environment for our business.

“Based on this strong business momentum, we now anticipate we will be towards the upper end of our projected full-year, constant currency adjusted diluted EPS growth rate range of 9 percent to 11 percent.

“While currency headwinds remain stubbornly high, we are ever focused on the prudent management of cash flow. We are committed to returning around 100 percent of our free cash flow to shareholders.”

Meanwhile, PMI’s cigarette volume shipments during the six months to the end of June, at 418,590 million, were almost unchanged from those of the first six months of 2014, 418,762 million.

Shipments were increased 1.7 percent to 138,550 million in the company’s EEMA region, but they were down in its other regions: by 0.7 percent to 145,381 million in Asia; by 0.8 percent to 90,880 million in the EU; and by 1.7 percent to 43,779 million in LAC.

PMI and Altria extending e-vapor co-operation

| July 17, 2015

Philip Morris International announced yesterday the extension of its December 13 strategic framework with the Altria Group to include a joint research, development and technology sharing agreement.

‘The additional Agreement provides the framework under which PMI and Altria will collaborate to develop the next generation of e-vapor products for commercialization in the United States by Altria and in markets outside the United States by
PMI,’ PMI said in a note included in its second-quarter results announcement.

‘The collaboration between PMI and Altria in this endeavor is enabled by exclusive technology cross licenses and technical information sharing. The Joint Research, Development and Technology Sharing Agreement also provides for co-operation between PMI and Altria on scientific assessment, regulatory engagement and approval related to e-vapor products.

‘Under the existing strategic framework Agreements, Altria is making available its e-vapor products exclusively to PMI for commercialization outside the United States and PMI will make available two of its candidate reduced-risk tobacco products exclusively to Altria for commercialization in the United States.

‘It is envisaged that PMI’s candidate products would be regulated in the United States as Modified Risk Tobacco Products (MRPT) and any commercialization would be subject to U.S. Food and Drug Administration … authorization.

‘As previously announced, PMI expects to apply to the FDA during the course of 2016 for one of these two candidate reduced-risk products, its heat-not-burn iQOS product, to be approved as an MRTP.’

Altria, on its website, also announced the extension of the e-vapor agreement.

SM and PMI to dissolve smokeless joint venture

| July 17, 2015

Swedish Match and Philip Morris International have mutually agreed to dissolve their joint venture agreement relating to the sale of smokeless tobacco products outside Scandinavia and the US.

The joint venture, SMPM International, which was owned on a 50/50 basis by Swedish Match and PMI, was established in 2009.

In a press note, Swedish Match said there was a small but growing demand for snus in current joint venture markets but that the development of these markets had taken longer than the parties to the agreement had initially anticipated.

‘As a consequence the parties have mutually agreed to dissolve the joint venture,’ the press note said.

‘Swedish Match and PMI will now focus on independent strategies for the commercialization of snus in the former joint venture territory. Trademark licenses will revert to the original owners, and separate transitional agreements have been signed whereby Swedish Match will supply snus products to PMI for certain markets and PMI will perform distribution services on behalf of Swedish Match in Canada and in Russia.’

Lars Dahlgren, president and CEO of Swedish Match was quoted as saying that the hard work and efforts of all involved in the SMPM International joint venture were appreciated.

“We have attained valuable insights, and are pleased to see that snus has been viewed by many outside of our core markets as a viable alternative,” he said. “We look forward to continuing to build our knowledge and work toward further developing our snus business globally.”

Swedish Match’s second quarter sales increased

| July 17, 2015

Swedish Match’s sales during the second quarter to the end of June, at SEK3,644 million, were up by nine percent on those of the second quarter of 2014, SEK3,339 million.

Operating profit, excluding SM’s share of net profit from the Scandinavian Tobacco Group (STG) and larger one-off items, increased by nine percent to SEK937 million, while operating profit including SM’s share of STG profits and larger one-off items, increased from SEK941 million to SEK1,021 million.

Basic earnings per share (EPS) were up from SEK3.27 to SEK3.62, while adjusted EPS was up from SEK3.27 toSEK3.79.

BAT welcomes BSI vaping-product guidelines

| July 17, 2015

British American Tobacco has welcomed vaping-product guidelines issued yesterday by the British Standards Institution (BSI).

The guidelines set quality and safety standards for vaping products, including electronic cigarettes and e-liquids.

“We are supportive of the BSI specifications for e-cigarettes and believe that they have the potential to grow this important category by giving the appropriate assurances to consumers on product quality and safety,” said Donato Del Vecchio, head of BAT’s Legal and External Affairs for Next Generation Products.

“Although these specifications are voluntary, we believe that all manufacturers have an obligation to their consumers to deliver the best in product quality and safety.

“As such, we support the principles of the BSI guidelines and we are currently auditing our supply chain to work towards ensuring full compliance to these voluntary standards.

“We’ve always said that we want to see a regulatory framework for e-cigarettes that ensures consumer safety and product quality whilst allowing for the appropriate levels of innovation, marketing and distribution freedoms that we believe are required to enable this important category to grow.

“We are confident in the robust practices and procedures that we have in place around product safety and quality standards for our e-cigarette Vype. We see delivering quality products as vital in ensuring the growth of this important category.”

Smokers have reduced risk of Parkinson’s disease

| July 16, 2015

When compared with non-smokers, smokers have a 36-50 percent reduced risk of contracting Parkinson’s disease, according to a Helsingin Sanomat story citing research carried out in Finland.

The story, relayed by the TMA, said also that consuming coffee reduced the risk of Parkinson’s disease by 33 percent.

The researchers, who were based at the University of Helsinki and the Helsinki University Central Hospital in Finland, said the exact cause of the risk reduction was currently unknown.

They said, however, that drinking coffee and smoking were associated with the growth of the bacterial population in the gastro-intestinal tract, which played a key role in the synthesis of certain vitamins.

The researchers have yet to examine whether there is a causal effect between these simultaneously occurring changes and Parkinson’s disease.

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