RICHMOND, Va. – Philip Morris International’s third-quarter profit dropped 8 per cent as cigarette sales fell in the overseas markets that it serves and it was hurt by foreign exchange rates for the U.S. dollar.
The seller of Marlboro and other cigarette brands outside the United States said Thursday that it earned $2.15 billion, or $1.38 per share, in the quarter, down from $2.34 billion, or $1.44 per share, a year ago.
On an adjusted basis, it earned $1.39 per share, beating Wall Street estimates by 6 cents, according to Zacks Investment Research.
Excluding excise taxes, revenue fell about 1 per cent to $7.86 billion. Analysts expected revenue of $7.74 billion.
Its shares rose 48 cents to $84.06 in morning trading Thursday.
Cigarette shipments fell less than 1 per cent to 222.3 billion cigarettes. Total Marlboro volumes fell 3.5 per cent to 72.6 billion cigarettes. Shipments fell 2 per cent in Latin America and Canada and 1.3 per cent in Asia. Shipments were up less than 1 per cent in the company’s region that encompasses Eastern Europe, the Middle East and Africa, as well as in the European Union.
Still, the company said its retail market share increased in a number of key regions, including Argentina, France, Germany, Italy, Russia, Spain and Switzerland.
Smokers face tax increases, bans, health concerns and social stigma worldwide, but the effect of those on cigarette demand generally is less stark outside the United States. Philip Morris International has compensated for volume declines by raising prices and cutting costs.
Because it does all its business overseas, the company also has to navigate changes in currency values. A stronger dollar cuts into revenue generated overseas when it’s translated back into dollars.
The company on Thursday cut its full-year earnings forecast to a range of $4.76 and $4.81 per share.
Philip Morris International said Thursday that it’s planning to launch Marlboro HeatStick and an accompanying device called iQOS (pronounced EYE-cohs) in Nagoya, Japan, early next month, including the opening of a flagship iQOS store. The product also is expected to be released in Milan, Italy, later this year.
The short, cigarette-like sticks are heated to maximum of 660 degrees Fahrenheit (about 350 degrees Celsius) in the hollow pen-like device to create a tobacco-flavoured nicotine vapour. Unlike popular e-cigarettes that use liquid nicotine, the HeatStick contains real tobacco, a point the company believes will make them more attractive to cigarette smokers.
It’s one of several so-called “reduced-risk” products Philip Morris International plans to test as the industry diversifies beyond traditional cigarettes amid declining demand.
Philip Morris International Inc., based in New York and Switzerland, is the world’s second-biggest cigarette seller behind state-controlled China National Tobacco Corp.
Richmond, Va.-based Altria Group Inc., the owner of Philip Morris USA, spun off Philip Morris International as a separate company in 2008. Altria is the largest U.S. cigarette seller.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .