For the second time this year tobacco company Philip Morris International Inc. cut its full-year estimated profit to show the consolidation US dollar, while notifying about declined tobacco sales in the European Union.
The drop by 10-cent to between $5.10 and $5.20 per share followed a 5-cent decline in April. Now Philip Morris waits for exchange rates to deduct nearly 25 cents per share from profits for 2012 in comparison with 19-cent earnings last year.
Louis Camilleri, Philip Morris Chairman and Chief Executive, said at an investor day event in Switzerland that the seller of cigarette brands such as Marlboro and L&M outside the US now sees a weak second-quarter performance in the European Union, showing essential quarterly destruction in sales across the industry in southern Europe, especially in Spain and Italy.
Last year European sales promoted 23% to whole shipments of Philip Morris.
Mr. Camilleri said he believes that this year the tobacco company can hold to its aim of 1 per cent growth in volume striking off acquisitions and divestments. Camilleri said that Philip Morris anticipates volume growth will continue to be strong in Asia and in Eastern Europe, Middle East and Africa. Tobacco sales in Asia, the firm’s biggest market, have helped to support profits in recent quarters.
The tobacco company confronts tough comparisons in Asia in the current quarter, as the year-ago period contained an extra 10-cent earning from Japan. In 2011, Philip Morris had a 24% increase in sales in Japan as competitor Japan Tobacco Inc. experienced production decline after the Japanese tsunami in March 2011.
As sales decrease in developed countries, Mr. Camilleri said pricing will be essential to supporting earnings. Philip Morris performed cigarettes price rises in several markets it serves to help increase profitability. Stable excise tax levels have also helped the company.
Mr. Camilleri said that this year they have not seen any rise that they would consider to be excessive, but he told about potential tax hikes in the Philippines and a few other markets.
Last week, the cigarette manufacturer revealed a new three-year share repurchase plan summing $18 billion, the latest step to return more money to shareholders. Dividend yields, share repurchases and strong cash flows have driven investors to tobacco stocks of late.
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