Philip Morris International 2Q net income rises 28 percent with jump in shipments to Asia

Philip Morris Int’l 2Q net income rises 28 pct

RICHMOND, Va. — Higher retail prices and a jump in shipment volume in Asia helped net income grow 28 percent for cigarette maker Philip Morris International, which sells cigarettes overseas only, the company said Thursday.

Philip Morris International, which sells Marlboro and other top brands outside the U.S., says it earned $1.98 billion, or $1.07 per share. That compares with $1.55 billion, or 79 cents per share, a year earlier.

Excluding excise taxes, revenue rose 15 percent to $7.06 billion. Most tobacco companies around the world have been raising prices to keep profits up as the recession and declining demand cut into cigarette volumes.

Analysts surveyed by Thomson Reuters on average expected profit of 97 cents per share on revenue of $6.83 billion, excluding excise taxes.

After lowering its forecast last month for its full-year net income, the company went back Thursday to its original range of $3.75 to $3.85 per share. The company had cited the weaker euro in cutting its forecast for full-year net income.

Its shares rose $1, or 2 percent, to $50.89 in midday trading Thursday.

The company shipped 8 percent more cigarettes — 241 billion cigarettes total — in the second quarter this year than last, boosted by a 34 percent increase in Asia tied to distributors increasing their inventory ahead of a tax hike in Japan.

Cigarette demand is falling less dramatically outside the United States, where Philip Morris International does all its business.

During the quarter, shipments fell 6 percent in the European Union and edged up less than 2 percent in Eastern Europe, the Middle East and Africa. They rose nearly 1 percent in Latin America and Canada.

The company, with offices in New York and in Lausanne, Switzerland, has compensated for demand falling worldwide — and for the weak economy — by cutting costs, raising its prices and increasing its market share.

“Our broad geographic footprint continues to serve us well, enabling us to deal with weakness arising in markets where economic recovery remains subdued,” CEO Louis Camilleri said in a statement. “Though partially flattered by a timing favorability in Japan, we posted a strong quarter across all key metrics.”

The company’s earnings also have benefited from a weaker dollar. It had previously seen its revenues deflate as the stronger dollar shrank the profit it earned in other currencies.

When the dollar is strong, companies that sell goods internationally and must convert revenue from foreign currencies usually take a hit in the dollar value of that revenue unless they raise prices abroad. That effect is particularly strong for Philip Morris International because all its business is overseas.

The reinstated forecast includes 7 cents per share for a reversal on a tax provision related to completing U.S. tax audits. Analysts expect net income $3.77 per share. Analyst estimates typically exclude one-time items.

Philip Morris International is the world’s second-biggest cigarette company after the state-controlled China National Tobacco Corp.

Altria Group Inc. in Richmond, Va., owner of Philip Morris USA, spun off Philip Morris International in 2008. Altria is the largest U.S. cigarette seller.

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