Phillip Morris Reported Lower 2Q Revenue

July 30th, 2013 00:00

Philip Morris International's 2Q revenue dropped around 8% as it sold fewer cigarettes, dropping company shares by 2.5% in premarket trading these days. The Marlboro manufacturer also decreased its yearly guidance because of an unfavorable foreign exchange rates.

Marlboro tobacco

PMI sells Marlboro, Parliament, Virginia Slims and many other cigarette brands outside of the U.S., so its final results reveal smoking tendencies out of the country. It's the world's second largest cigarette maker after the China National Tobacco Corporation. Over half of the countries in the European Union are currently facing an economic downturn and recently, China published its 2Q of sluggish economic increase.

The cigarette manufacturer revealed revenue of about $2.12 billion, or $1.30 per share, in the quarter, lower from $2.32 billion, or $1.36 per share, registered a year ago. Not including excise taxes, profits dropped 2.5% to $7.9 billion regardless of higher prices. Costs to make and sell tobacco products increased more than 1% to $2.7 billion. Industry experts have predicted $1.41 per share on earnings of $8.17 billion. Cigarette shipments dropped around 4% to 228.9 billion cigarettes as it observed volume holds back in all of its areas. Entire Marlboro volumes dropped almost 6% to 72.4 billion cigarettes.

PMI explained that raised excise taxes forced shipments straight down almost 6% in the course of this quarter. Shipments dropped 3.6% in the company's area that involves Eastern Europe, the Middle East and Africa. Shipments also dropped 2.4% in Latin America and Canada. As to Asia, one of its biggest and profitable areas, the company explained that cigarette volume dropped 3.5%, injured by the latest tax boost in the Philippines, which faced a 16% drop in shipments.

The company took advantage from raises in Japan right after the March 2011 earthquake. The given activities supplied the company with sale prospect since supply interruptions led Japan Tobacco, the world’s third cigarette maker, to quit shipping cigarettes inside Japan. It also purchased Philippines Company Fortune Tobacco in February 2010, supporting its Asian business. Smokers deal with tax boosts, bans and health concerns throughout the world; however the impact of those on cigarette demand is less evident outside the United States. Marlboro maker has compensated for volume decreases by increasing prices and chopping costs.

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