Marlboro Maker's 3Q Revenue Decreased by 8%

December 15, 2014
Philip Morris International

Philip Morris International's 3Q revenue decreased 8 % as cigarette sales dropped in the abroad markets that it serves and it was affected by foreign exchange rates for the U.S. dollar.

The maker of best-selling Marlboro and popular cigarette brands outside the United States explained on Thursday that it gained $2.15 billion, or $1.38 per share, in the quarter, lower from $2.34 billion a year ago. Its shares increased by 48 cents to $84.06 in the morning trading Thursday.

Cigarette shipments dropped less than 1% to 222.3 billion cigarettes. Entire Marlboro volumes declined 3.5 % to 72.6 billion cigarettes. Shipments decreased by 2 % in Latin America and Canada and 1.3 % in Asia. Shipments were up less than 1 % in the company's region that involves Eastern Europe, the Middle East and Africa, which include European Union. Nevertheless, the company explained its retail market share boosted in a number of major regions, including Argentina, France, Germany, Italy, Russia, Spain and Switzerland.

Smokers face tax boosts, bans and health concerns; however, the impact of those on cigarette demand usually is less stark outside the United States. Philip Morris International has compensated for volume decreases by increasing prices and cutting costs. Since it performs all its business abroad, the company also has to get around alterations in currency values. A more robust dollar cuts into profits generated abroad when it is translated back into dollars.

Philip Morris International explained several days ago that it's preparing to release Marlboro HeatStick and a device called iQOS in Nagoya, Japan. The product also is estimated to be launched in Milan, Italy, later on this year. The short, cigarette-like sticks are heated up to about 660 degrees Fahrenheit (about 350 degrees Celsius) in a pen-like device to generate a tobacco-flavored nicotine vapor. As opposed to popular e-cigarettes that use liquid nicotine, the HeatStick includes genuine tobacco, a point the company is convinced will make them more appealing to cigarette users. It's one of a number of so-called "reduced-risk" goods PMI intends to check as the industry diversifies above conventional cigarettes amid declining demand.

Philip Morris International based in New York and Switzerland, is the world's second largest cigarette seller.