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Tobacco giants sue Britain over plain-packaging

| June 4, 2015

Philip Morris International (PMI) and British American Tobacco (BAT) have sued the British government over plain-packaging legislation passed in March. The law, which would take effect from May 2016, requires cigarettes to be sold in packages of uniform shape and size that feature only the brand name and contain prominent graphic health warnings. England is the third and most populous country to introduce plain-packaging laws, following Australia and Ireland.

PMI argues that England’s plain-packaging regulations “unlawfully deprive PMI of its trademarks” and should therefore be overturned, according to an article in The New York Times. London-based BAT stated that the British government had left the company “with no other choice” and released a statement saying that “any business that has property taken away from it by the state would inevitably want to challenge and seek compensation.” Japan Tobacco International has also indicated it would challenge England’s legislation. The tobacco companies are seeking unspecified damages, which could total billions of dollars if granted.

A statement released by the English Department of Health said it would “not allow public health policy to be held to ransom by the tobacco industry” and that it “would not have gone ahead with standardized packaging unless we had considered it to be defensible in the courts.”

PMI buys remaining shares of PM Mexico

| May 21, 2013

Philip Morris International will buy Grupo Carso’s 20 percent share in Philip Morris Mexico (PMM)) for approximately $700 million. The purchasing price is subject to a potential adjustment based on PMM’s performance over three years ending two fiscal years after the closing of the purchase.

The transaction, which will give PMI a 100 percent share in PMM, is expected to be completed by Sept. 30, 2013, subject to the approval of the Mexican antitrust authority.

PMI’s relationship with Grupo Carso, and its founder Carlos Slim Helú, spans more than 30 years. “We would like to express our profound gratitude to Carlos Slim Helú and Grupo Carso, with whom we have built a successful partnership that has positioned PMM as the leading tobacco company in Mexico,” said André Calantzopoulos, CEO of PMI.

“We have benefited greatly from our partnership with Grupo Carso and we remain confident in our ability to excel in this important market in the years ahead,” added James Mortensen, PMI’s president, Latin America and Canada Region.

“After more than 30 years of a very successful partnership of great harmony and cooperation that led PMM to continuous market share growth in the Mexican tobacco market, it is now time to leave PMM in the hands of one of the best management teams and organizations in the world, led by Louis C. Camilleri and André Calantzopoulos,” said Slim Helú, who is also a member of PMI’s board of directors.

In 2012, PPM held a 73.5 percent share of Mexico’s 33.6 billion-stick cigarette market. PMI’s flagship brand, Marlboro, is the leading brand in Mexico with a 2012 market share of 53.6 percent.

PMI, Spanish tobacco renew relationship

| April 9, 2013

Philip Morris International is strengthening its long-term commitment to the future of tobacco growing in Spain by renewing its Framework Collaboration Agreement with the Spanish Ministry for Agriculture, Food and the Environment for the next three years, the company said last week.

“As part of the new Agreement signed today in Madrid and subject to the agreed terms, PMI will buy 33 percent more of the Spanish tobacco crop in 2013 compared to 2012,” the company said in a note posted on its website yesterday. “In 2014 and 2015 PMI will increase its tobacco purchases by an annual rate of approximately 5 percent.”

The new agreement was signed by Spain’s Minister for Agriculture, Food and the Environment Miguel Arias Cañete, and Spaniard Drago Azinovic Gamo, president of PMI’s EU region.

“We are pleased with this agreement, which reaffirms the support of the Spanish government, the regional government of Extremadura and PMI for the continued, sustainable growth of quality tobacco leaf in Spain,” said Drago Azinovic.

“Despite the increasingly competitive and continually changing business environment, PMI remains committed to the future of this sector and the jobs it creates in Spain.

“It is for this reason that, along with the entire tobacco sector, we are especially concerned about the impact the extreme proposals in the proposed European Tobacco Products Directive currently being debated in Brussels.

“This directive could very negatively affect the entire sector that in our country generates 56,000 jobs and approximately 6 percent of the Spanish government’s total tax revenue.”

The agreement is said to reaffirm the commitment that PMI, the government of Extremadura and the Spanish Ministry for Agriculture and Environment have made to focus on efforts to improve the quality of Spanish tobacco and make it more competitive, “particularly against the backdrop of an increasingly challenging economic and regulatory environment.”

“It also includes provisions that will enhance the environmental sustainability of tobacco growing areas by encouraging good agricultural practices,” the note said. “To assist in putting these practices into place, PMI will offer tobacco growers’ associations and others involved in the growing and processing of tobacco, training sessions on good agricultural practices over the next three years.”

PMI volumes down

| October 18, 2012

Philip Morris International reported net revenues, excluding excise taxes, of $7.9 billion in the third quarter of 2012, down 5.3 percent from the comparable 2011 quarter. Its cigarette shipment volume was down by 1.3 percent. Operating companies’ income was down 1.5 percent, to $3.7 billion.

Excluding the impact of currency exchange rates and acquisitions, reported net revenues, excluding excise taxes, were up by 3.4 percent, and reported operating companies’ income was up by 4.8 percent.

“Despite the difficult comparisons in the third-quarter, we remain confident that the fundamentals of our business are solid as a whole, which is testament to our progress, especially in our Asia and EEMA regions,” said Louis C. Camilleri, chairman of the board and chief executive officer.

“We expect to achieve our annual organic volume growth target of 1 percent in 2012 and our adjusted diluted EPS growth to be in line with our mid-to-long term constant currency annual growth target.”