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International Marlboro Cigarette Market

best marlboro cigarettesWhile Marlboro cigarette sales continue to drag in the U.S. and parts of Europe, tobacco volumes in many other corners of the world remain robust. Philip Morris International Inc.’s (PM) first-quarter profit rose 13% on growth in Asian markets that offset trouble in Ukraine, which recently raised taxes, and cash-strapped Spain.

While Philip Morris continues to see volume growth in pockets of the international market, companies that sell their tobacco wares in the U.S. are relying more on pricing power to keep up bottom-line gains and offset weak sales. On Wednesday Altria, the nation’s largest cigarette maker, said profit rose 15% as price hikes and cost cuts offset a 6.4% cigarette volume decline.

Reynolds American Inc. (RAI) is seeing a similar sales slide. First-quarter earnings more than quadrupled from a year-ago period weighed by a settlement with the Canadian government, while cigarette volumes fell 5.2%.

The Altria Group Inc. (MO) spinoff, which sells cigarette brands such as Marlboro and L&M outside the U.S., boosted its full-year earnings forecast by 20 cents because of improving business conditions and favorable currency exchange. The company now expects per-share earnings of $4.55 to $4.65.

Philip Morris said it plans higher brand-support spending and more conservative pricing as consumers in countries like Greece, Spain and Ukraine face continued economic pressure. Still, pricing will remain “the key driver” of profitability growth, company executives said on a conference call.

Philip Morris is taking advantage of upheaval in Japan’s tobacco market in the wake of last month’s earthquake and tsunami. While the company won’t be able to gauge the full impact of changes to its shipment patterns until the second quarter, it does expect some upside from the decision to boost deliveries as Japan Tobacco Inc. (2914.TO) struggles to fix its hobbled manufacturing capabilities.

Philip Morris reported a first-quarter profit of $1.92 billion, or $1.06 a share, up from $1.7 billion, or 90 cents a share, a year earlier.

Revenue rose 6% to $16.5 billion, due in part to higher pricing. Excluding excise taxes, sales increased 4.5% to $6.8 billion, or 2.7% excluding currency fluctuations.

Analysts polled by Thomson Reuters most recently forecast per-share earnings of $1.05 on $6.95 billion in revenue.

Shipments of Marlboro, the company’s flagship brand, slid 2.9% on weakness in Greece and Spain and an excise tax increase in Mexico.

Philip Morris’s overall volume rose 1.6%, as a 14% spike in Asia more than offset a 7.3% decline in the European Union region and a 5.5% drop in Latin America and Canada. Volume slid 0.8% in Eastern Europe, the Middle East and Africa, due to the political turmoil in North Africa and continued weakness in Ukraine.

Reynolds, whose brands include Camel cigarettes and Grizzly moist snuff, has diversified into smokeless tobacco, cut production costs and put its energy into a few key brands as tobacco demand shifts. Reynolds said it will continue to “refine” its cigarette portfolio this year.

The company reported a profit of $353 million, or 60 cents a share, up from $82 million, or 14 cents a share, in the same period a year earlier. Excluding items such as plant closing costs and settlements with the Canadian government, per-share earnings rose to 59 cents from 56 cents.

Revenue edged up 0.3% to $1.99 billion.

Analysts polled by Thomson Reuters most recently forecast per-share earnings of 58 cents on revenue of $2.04 billion.

One bright spot for Reynolds American is smokeless tobacco. Earnings edged up $1 million to $85 million at the American Snuff unit, which makes Grizzly- and Kodiak-branded moist snuff. Total moist snuff volume rose 13.2% and the company gained 1.3 share points to grab 31.1% of the market.

Shares of Philip Morris gained 2.2% to $67.94 in recent trading, while Reynolds American rose 1% to $36.66


About The Author

Jessica Miller is a professional author of many tobacco articles, trained seminars from New York to London contributing to the success of this area in the U.S. At present writes about everything that is interesting especially about cheap cigarettes online store, tobacco related subjects and cigarette effects.


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