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PMI reports cigarette volume growth in first quarter

| April 17, 2015

Philip Morris International’s cigarette shipment volume during the first quarter of 2015, at 198,757 million, was increased by 1.4 percent on that of the first quarter of last year, 195,961 million.

Volume was increased by 4.4 percent to 64,721 million in the company’s Eastern Europe, Middle East and Asia (EEMA) region and by 2.4 percent to 42,721 million in the EU. But it was down by 1.0 percent to 70,125 million in Asia and by 1.2 percent to 21,190 million in its Latin America and Canada region.

Marlboro shipments of 67.2 billion were up by 2.1 percent, driven mainly by its performances in the EU, notably in France, Italy and Spain; and in the EEMA, notably in Algeria, Saudi Arabia and Turkey, partly offset by shipments in Egypt and Ukraine. Marlboro shipments declined in Asia, mainly due to the brand’s performance in Japan and Korea, partly offset by its results in the Philippines, and they declined slightly in Latin America and Canada mainly due to the brand’s performance in Argentina, partially offset by sales in Brazil and Mexico.

L&M shipments of 22.7 billion were up by 8.2 percent; Parliament shipments of 9.6 billion were down by 3.5 percent; Bond Street shipments of 9.2 billion were down by 1.1 percent; Chesterfield shipments of 9.5 billion were increased by 8.6 percent; Philip Morris shipments of 7.8 billion were down by 3.3 percent; and Lark shipments of 6.4 billion were down by 5.6 percent.

PMI’s shipment volume of other tobacco products (OTP), in cigarette equivalent units, was up by 2.1 percent, mainly due to growth in the fine-cut category, notably in the Czech Republic and Italy, partly offset by its performances in Germany and Portugal.

The total volume of cigarettes and OTP was up by 1.4 percent.

PMI’s market share was said to have increased in a number of key markets, including Algeria, Argentina, Australia, Austria, Belgium, the Czech Republic, Egypt, France, Germany, Hong Kong, Indonesia, Italy, Japan, South Korea, the Netherlands, Poland, Russia, Saudi Arabia, Spain and Switzerland.

PMI said that its reported diluted earnings per share, at $1.16, were down by $0.02 or 1.7 percent on those of the first quarter of 2014; or, excluding the effects of currency factors, were up by $0.29 or 24.6 percent.

Adjusted diluted earnings per share, at $1.16, were down by $0.03 or 2.5 percent from $1.19, though excluding currency factors, adjusted diluted earnings were up by $0.28, or 23.5 percent.

Reported net revenues, excluding excise taxes, were down by 4.4 percent to $6.6 billion; or, excluding currency factors and the impact of acquisitions, reported net revenues were up by 9.1 percent.

Reported operating companies’ income was down by 2.2 percent to $3.0 billion; or, excluding currency factors and the impact of acquisitions, reported operating companies’ income was up by 17.2 percent.

Adjusted operating companies’ income was down by 2.9 percent to $3.0 billion; or, excluding currency factors and the impact of acquisitions, adjusted operating income was up by 16.3 per cent.

Reported operating income was down by 2.7 percent to $2.9 billion.

“Our strong first-quarter results are an excellent start to the year,” said CEO André Calantzopoulos.

“Our organic volume and market share performance was better than we originally forecast, underpinned by the investments we made in 2014 and an improving operating environment this year.

“Our robust business momentum is such that we are raising our guidance for the year and now forecast, at prevailing exchange rates, constant-currency adjusted diluted EPS growth of 9 percent-11 percent.

“While currency volatility persists, we remain focused on managing our cash flow prudently and are steadfast in our aim to return around 100 percent of our free cash flow to our shareholders.”

Smoking gun in Jordan’s toy story

| April 17, 2015

Jordanian authorities closed three coffee shops during the first quarter of this year for violating the Public Health Law, which bans smoking in public places, according to a story in The Jordan Times quoting the Petra news agency.

Fatima Khalifah, head of the Health Ministry’s tobacco control department, said that, in addition, liaison officers had issued fines against the owners or operators of 21 premises during field visits to ensure the enforcement of the law.

The premises included restaurants, coffee shops, hotels, tobacco stores, car rental offices and toy shops.

More U.S. students using electronic cigarettes

| April 17, 2015

Current electronic cigarette use among US middle- and high-school students tripled between 2013 and 2014, according to data published by the Centers for Disease Control and Prevention (CDCP) and the Food and Drug Administration’s Center for Tobacco Products in the Morbidity and Mortality Weekly Report.

Findings from the 2014 National Youth Tobacco Survey show that current electronic cigarette use (use on at least one day in the past 30 days) among high school students increased from 4.5 percent in 2013 to 13.4 percent in 2014: from about 660,000 to about two million students, according to a CDCP press note issued through PRNewswire. Among middle school students, current electronic cigarette use more than tripled from 1.1 percent in 2013 to 3.9 percent in 2014: from about 120,000 to about 450,000 students.

This was said to be the first time since the survey started collecting data on electronic cigarettes in 2011 that current use of these products surpassed current use of every other tobacco product overall, including conventional cigarettes.

“We want parents to know that nicotine is dangerous for kids at any age, whether it’s an e-cigarette, hookah, cigarette or cigar,” said CDCP director Tom Frieden, MD, MPH. “Adolescence is a critical time for brain development. Nicotine exposure at a young age may cause lasting harm to brain development, promote addiction, and lead to sustained tobacco use.”

Hookah smoking use roughly doubled for middle- and high-school students, while cigarette use declined among high school students and remained unchanged for middle school students. Among high school students, current hookah use rose from 5.2 percent in 2013 (about 770,000 students) to 9.4 percent in 2014 (about 1.3 million students). Among middle school students, current hookah use rose from 1.1 percent in 2013 (120,000 students) to 2.5 percent in 2014 (280,000 students).

‘The increases in e-cigarette and hookah use offset declines in use of more traditional products such as cigarettes and cigars,’ the press note said. ‘There was no decline in overall tobacco use between 2011 and 2014. Overall rates of any tobacco product use were 24.6 percent for high school students and 7.7 percent for middle school students in 2014. In 2014, the products most commonly used by high school students were e-cigarettes (13.4 percent), hookah (9.4 percent), cigarettes (9.2 percent), cigars (8.2 percent), smokeless tobacco (5.5 percent), snus (1.9 percent) and pipes (1.5 percent).

‘Use of multiple tobacco products was common; nearly half of all middle and high school students who were current tobacco users used two or more types of tobacco products.

‘The products most commonly used by middle school students were e-cigarettes (3.9 percent), hookah (2.5 percent), cigarettes (2.5 percent), cigars (1.9 percent), smokeless tobacco (1.6 percent), and pipes (0.6 percent).’

Cigarettes, cigarette tobacco, roll-your-own tobacco and smokeless tobacco are currently subject to the FDA’s tobacco control authority and the agency is said to be finalizing rules that will bring additional tobacco products such as electronic cigarettes, hookahs and some or all cigars under that same authority.

“In today’s rapidly evolving tobacco marketplace, the surge in youth use of novel products like e-cigarettes forces us to confront the reality that the progress we have made in reducing youth cigarette smoking rates is being threatened,” said Mitch Zeller, JD, director of the FDA’s Center for Tobacco Products. “These staggering increases in such a short time underscore why FDA intends to regulate these additional products to protect public health.”

The report says that further reducing youth tobacco use and initiation is achievable through regulation of the manufacturing, distribution, and marketing of tobacco products coupled with ‘proven strategies’, including the funding of tobacco control programs at CDCP-recommended levels, increasing prices of tobacco products, implementing and enforcing comprehensive smoke-free laws, and sustaining hard-hitting media campaigns.

The report says also that because the use of electronic cigarettes and hookahs is on the rise among high- and middle-school students, it is critical that comprehensive tobacco control and prevention strategies for youth focus on all tobacco products, and not just on traditional cigarettes.

The National Youth Tobacco Survey is a school-based, self-administered questionnaire given annually to middle- and high-school students in both public and private schools. It surveyed 22,000 students in 2014 and is said to be nationally representative.

PM USA makes $3.5 billion MSA payment

| April 16, 2015

Philip Morris USA yesterday made its annual Master Settlement Agreement (MSA) payment, which this year amounts to about $3.5 billion, after adjusting for various items related to the Non-Participating Manufacturer adjustment disputes.

‘Since signing the tobacco settlement agreements in 1997 and 1998, PM USA has paid the states more than $70 billion,’ the company said in a statement posted on the website of its parent company, Altria.

‘MSA payments provide states valuable resources to fund tobacco cessation and underage tobacco prevention programs.

‘PM USA believes states should use MSA payments to fund these programs at levels recommended by the Centers for Disease Control.’

PM USA said it had deposited a portion of yesterday’s payment into the Disputed Payments Account, in accordance with the terms of the MSA and calculations made by the independent auditor.

No ‘disgusting’ pictures with single cigarettes

| April 16, 2015

More than 200,000 young Thais buy single cigarettes because they cannot afford to buy packs, according to a story in The Nation quoting a public-health researcher from Mahidol University.

Saranya Benjakul cited a 2011 survey that found also that more than 400,000 Thais aged 15-18 were smokers.

The poll results are being given another airing as the government gets ready to pass a new tobacco-control bill that, in part, will ban the sale of single cigarettes.

The bill has come under fire, partly from tobacco growers who believe that some of the bill’s measures will negatively affect their livelihoods.

Nanthawan Wichitwathakarn, a public-health lecturer at Thammasat University, has urged tobacco business operators, for the sake of children, to stop objecting to the ban on the sale of individual cigarettes.

Nanthawan said the sale of individual cigarettes was encouraging young people to smoke because they could not see the warning messages and disgusting pictures on cigarette packs.

The sale of individual cigarettes had already been prohibited in 97 countries, including Laos, Singapore and Brunei, she added.

Biofuel production triggered by tobacco enzymes

| April 16, 2015

A ‘Bioboost’ research project under way in Norway is using genetically engineered tobacco plants as a ‘factory’ to produce enzymes that can break down biomass from forest-based raw materials, potentially leading to the economic and sustainable production of biofuels, according to a Science Daily story relayed by the TMA.

The project is being led by Dr. Jihong Liu Clarke of the Norwegian Institute for Agricultural and Environmental Research (Bioforsk).

The first step in the production of forest-based biofuels requires that the biomass is broken down to sugar with the use of a cocktail of enzymes.

But the current high cost of producing the enzymes – in a fermentation-based system – is a major impediment for cost-effective biorefinery.

Now, researchers are using genetically engineered tobacco plants as a potential replacement for the energy-demanding fermentation-based systems.

Dr. Liu Clarke said producing the enzymes in plants was cheap because plants could use free carbon dioxide and energy.

And the tobacco plant was ideal for this purpose because it had many large leaves that provided “good” biomass; it grew quickly; and it could be harvested three or four times a year.

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