Philip Morris Q1 profit declines on costs, cuts full-year EPS view

Tobacco giant Philip Morris International Inc. Thursday reported a decline in first-quarter profit, reflecting higher costs. Meanwhile, earnings per share improved from last year. The company also lowered its full-year 2013 earnings outlook for prevailing exchange rates only, according to a story on RTTNews.com.

However, the firm reiterated its annual constant-currency adjusted diluted earnings per share growth rate target of 10 to 12 percent, reflecting its pricing actions and market share momentum.

Louis Camilleri, chairman and CEO of the company said, “Our first quarter was relatively difficult, with our headline results marred by a number of known factors, including inventory movements, the 2012 leap year effect, currency and a slowly improving – but nevertheless substantial erosion in our – volume in the Philippines.”

Philip Morris, the owner of Marlboro, Parliament and Virginia Slims cigarette brands, said its Cigarette shipment volume declined 6.5 percent from last year. Excluding Philippines, shipment volume was down 2.1 percent. Philippines had unfavorable impact of the disruptive January 2013 excise tax increase.

In the first quarter, net earnings attributable to the company declined to $2.13 billion from $2.16 billion in the previous year. However, on a per share basis, earnings rose to $1.28 from $1.25 in the prior-year quarter, reflecting lower share count. Reported earnings, excluding currency was $1.35 per share in the first quarter of 2013.

Adjusted earnings for the recent quarter were $1.29 per share and adjusted earnings, excluding unfavorable currency of $0.07, totaled $1.36 per share.

On average, 12 analysts polled by Thomson Reuters expected the company to earn $1.34 per share for the quarter. Analysts’ estimates typically exclude special items.

Net revenues for the quarter grew 2.8 percent to $18.53 billion. Net revenues, excluding excise taxes, rose 1.8 percent to $7.58 billion. Nine analysts had consensus revenue estimate of $7.52 billion for the quarter. Excluding currency, the revenue increase was 3.2 percent.

In European Union, revenues declined 4 percent, while Eastern Europe, Middle East & Africa posted a revenue growth of 11.3 percent. Asia showed a marginal improvement of 0.5 percent, while revenues from Latin America & Canada decreased 0.3 percent.

Marketing, administration and research costs advanced to $1.62 billion from $1.51 billion in the preceding year.

For full-year 2013, for prevailing exchange rates only, the company now expects reported earnings per share to be in a range of $5.55 to $5.65, down from the prior outlook of $5.68 to $5.78 per share.

Excluding an unfavorable currency impact, at prevailing exchange rates, of about $0.19, reported earnings per share are still projected to increase by about 10 to 12 percent, compared to adjusted earnings per share of $5.22 in 2012.