Philip Morris International 4Q profit rises, helped by better pricing; plans $12B buyback

Philip Morris Int’l 4Q profit rises, plans buyback

RICHMOND, Va. — Cigarette maker Philip Morris International Inc. said Thursday that raising its prices and selling more cigarettes in emerging markets combined with the benefits of a weaker dollar to boost its fourth-quarter profit by 5 percent.

The seller of Marlboro, Parliament, Virginia Slims and other brands of cigarettes overseas also announced a new three-year, $12 billion share buyback program to begin in May.

Its shares rose $1.86, or 4 percent to close at $48.67 Thursday.

Philip Morris International — the world’s second-largest cigarette seller after China’s state-owned company — said its quarterly profit rose to $1.5 billion, or 80 cents per share. That compares with $1.45 billion, or 71 cents per share, a year earlier. And the profit tops the 78 cents per share analysts forecast.

The company’s revenue spiked 10 percent to $6.72 billion. Analysts expected revenue of $6.49 billion.

The results capped a difficult year, when the company’s profit fell 8 percent to $6.34 billion, or $3.24 per share. In 2008, it earned $6.89 billion, or $3.31 per share. Its revenue fell 3 percent to $25 billion, from $25.71 billion in 2008.

CEO Louis C. Camilleri said in a statement that the company compensated for consumers buying cheaper cigarettes worldwide — and for the weak economy — by raising its prices, increasing its market share and cutting costs during the fourth quarter.

In a conference call with investors, Camilleri said the company performed well “despite challenges we faced in numerous markets that bore the brunt of the global economic downturn,” which is a “testament to the vigor and breadth of our brand portfolio.”

While tax hikes, smoking bans, health concerns and social stigma have cut cigarette demand worldwide, the decline is less stark in its newer markets outside the United States. Growing demand in Africa, Asia and the Middle East also has helped to offset declines in the European Union, Latin America and Canada.

The World Health Organization estimates about 30 percent of adults worldwide smoke. The U.S. Centers for Disease Control and Prevention estimates that about 20 percent of American adults do.

Philip Morris International’s cigarette shipments edged up less than 1 percent to about 218.2 billion cigarettes during the quarter. Sales in Eastern Europe, the Middle East, Africa and Asia rose 4 percent to $1.87 billion. In Asia, sales rose nearly 17 percent to $1.71 billion.

But the company’s revenue also rose 11 percent in the European Union to $2.37 billion — a 4 percent increase, excluding the benefit of the weaker dollar.

Companies that sell goods internationally convert revenue from foreign currencies into dollars when they report their financial results. If the dollar weakens relative to those currencies, revenue in those currencies translates into more dollars.

The company, which has offices in Lausanne, Switzerland, and New York, expects to earn $3.75 to $3.85 per share for 2010. Analysts expect a 2010 profit of $3.82 per share.

Philip Morris International was spun off in 2008 from Richmond, Va.-based Altria Group Inc., owner of Philip Morris USA.

The stock has traded between $32.04 and $52.35 during the past 52 weeks.

AP Business Writer Mae Anderson in New York contributed to this report.