The Strategist

Phillip Morris earnings fell more than expected

07/19/2016 - 16:57

On the background of unstable exchange rates, the global manufacturer of cigarettes raised its forecast for net profit in 2016 from $ 4.45 to $ 4.55 per share. Excluding currency fluctuations, the company expects adjusted earnings per share to increase to 12% compared to 2015; most of the growth is believed to come in the IV quarter of 2016.

For the period ended June 30, the volume of cigarettes fell by 4.8% to 209.3 billion units, while shipments were down in all regions where Phillip Morris operates. The volume of shipments fell by 5.9% in Latin America and Canada, 7.9% in Asia and 4% in Eastern Europe, Middle East and Africa. Volume decreased by 0.8% in the European Union, where the company earns about one-third of their income.

The total profit of Phillip Morris was at $ 1.79 billion, or $ 1.15 per share, compared with $ 1.89 billion, or $ 1.21 per share, a year earlier. Analysts expected earnings of $ 1.20 per share. Revenue, excluding excise taxes decreased by 3.1% to $ 6.65 billion, while analysts had forecast revenue below $ 6.77 billion.

Shares of Phillip Morris before the opening of trading lost in price 0.8%, falling to $ 102.13 per share. During the current year, the company’s quotes increased by 17% at the close of trading on July 18, 2016.

Earlier in May 2016, the EU's highest court rejected demand of Phillip Morris and several other tobacco companies against tough anti-smoking restrictions. Even in 2014, the prohibition included menthol cigarettes; amount of nicotine in electronic cigarettes was also strictly limited. The ban on the colorful packaging of cigarette packs, operating in the UK, was unchallenged as well.


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