PMI cigarette volumes fall in third quarter

| October 16, 2015

Philip Morris International’s cigarette shipment volume during the third quarter (July-September), at 218,911 million was down by 1.5 percent on that of the third quarter of 2014, 222,300 million.

Shipments were increased by 2.6 percent to 79,265 million in the company’s Eastern Europe, Middle East and Africa (EEMA) region, but they were down by 0.8 percent to 48,824 million in the EU, by 1.9 percent to 23,036 million in Latin America and Canada, and by 6.3 percent to 67,786 million in Asia.

In reporting its third quarter results, PMI said the 1.5 percent fall in cigarette shipment volume, which excluded the effects of acquisitions, had been due mainly to developments in Asia, largely in Indonesia, Japan and Pakistan.

‘Estimated net inventory movements in the quarter were slightly unfavorable, reflecting unfavorable distributor inventory movements in Japan,’ the company said. ‘Excluding these inventory movements, PMI’s total cigarette shipment volume decreased by 1.1 percent, or by 1.2 percent excluding acquisitions.

Overall shipments of Marlboro increased by 2.1 percent to 74,185 million reflecting growth in: the EU, notably Spain, partly offset by Italy and the UK; the EEMA, notably Saudi Arabia and Turkey, partly offset by Algeria, Egypt and Ukraine; and Asia, notably Japan, the Philippines and Vietnam, partly offset by Indonesia. Marlboro cigarette shipmentsdecreased in Latin America & Canada, mainly due to Argentina and Brazil, partly offset by Mexico.

Meanwhile, shipments of Philip Morris were up by 17.9 percent to 9,390 million; shipments of L&M were up by 9.3 percent to 26,179 million; shipments of Bond Street were up by 0.8 percent to 12,045 million; shipments of Parliament were down by 4.4 percent to 12,289 million; shipments of Chesterfield were down by 6.1 percent to 10,864 million; shipments of Lark were down by 18.3 percent to 7,320 million; and shipments of other brands were down by 8.0 percent to 66,639 million.

PMI’s total shipment volume of other tobacco products (OTP), in cigarette equivalent units, increased by 2.9 percent; so total shipment volume for cigarettes and OTP, in cigarette equivalent units, decreased by 1.4 percent excluding acquisitions.

PMI’s cigarette market share was said to have increased in a number of key markets, including Argentina, Austria, Belgium, Brazil, Canada, Colombia, Egypt, France, Hungary, Korea, the Netherlands, Russia, Saudi Arabia, Spain, Switzerland, Turkey and the UK.

PMI’s reported diluted earnings per share (EPS) during the third quarter of 2015, at $1.25, were down by $0.13 or 9.4 percent from those of the third quarter of 2014. And adjusted diluted EPS, at $1.24, were down by $0.15 or 10.8 percent.

Reported net revenues, excluding excise taxes, at $6.9 billion, were down by 11.8 percent.

Reported operating companies’ income, at $3.0 billion, was down by 12.3 percent, while adjusted operating companies’ income, at $3.0 billion, was down by 12.1 percent.

Reported operating income, at $3.0 billion, was down by 11.5 percent.

“Our strong performance in the first half of the year continued in the third quarter,” said CEO André Calantzopoulos.

“Organic volume, market share and pricing trends remain very robust against the backdrop of an improved macroeconomic environment, particularly in our EU and EEMA Regions.”

“We continue to progress with the commercialization and clinical assessment of our Reduced-Risk Product, iQOS, and, as previously announced, are accelerating our spending to support additional city launches and national expansions this year and next.”

“Although currency headwinds have again stiffened slightly, our business momentum is such that we are today [October 15] revising and narrowing our full-year guidance, and increasing the projection of our constant-currency adjusted diluted EPS growth rate range to 11 percent to 12 percent.”


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