Philip Morris reports impressive results, proves its resilience

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Philip Morris reports impressive results

Globel tobacco giant Philip Morris International, despite being a US company and thus adversely affected by strength of the dollar which curbs its foreign revenue has managed to stun investors when it publicized its first quarter financial report for 2015. Managing to effectively handle the long-term trend toward falling cigarette demand, Philip Morris saw its shares go up by 7.8% in the aftermath of the announcement of its economic report which revealed its strong business fundamentals, resilience and hopeful future prospects.

Although according to the results announced revenue fell more than 4% to $6.62 billion, and adjusted earnings came in at $1.16 per share, down 2.5% from last year’s first-quarter results, these are largely attributed to the impact of the dollar strength, and Philip Morris managed to achieve considerable currency-neutral growth of about 9% in sales and 24% in earnings per share.

The strongest results came from the company’s Asian and Western Hemisphere segments. More specifically, when seen on a currency-neutral basis, operating income in Asia jumped 10.7%, while Latin America and Canada were even stronger, boasting 1.8% dollar-sales growth and a nearly 14% rise in operating income. Moreover, falling sales and profits in the European Union and in the Eastern Europe, Middle East, and Africa segments were due entirely to currency impacts, with all segments posting reasonably strong results in currency-neutral terms.

What was more surprising and unexpected though, were the results concerning cigarette shipment volumes, which were much healthier than anticipated. Worldwide volume rose 1.4% to 198.8 billion units, with small declines in the Asian and Western Hemisphere segments being offset by growth in the two European segments. Specifically, the Marlboro brand saw a 2.1% gain, with increased sales in France, Italy, and Spain driving a substantial portion of the rise. Market share in the European Union climbed to 39.6%, while Philip Morris also continued to play a dominant role in the cigarettes market of several countries across the globe. For example, in Argentina, Mexico, the Philippines, and Italy more than half of all tobacco sales are controlled by Philip Morris brands.

The good results achieved by Philip Morris International surprised even the company itself, since according to its CEO Andre Calantzopoulos “our organic volume and market-share performance was better than we originally forecast” and thus “our robust business momentum is such that we are raising our guidance for the year.”

Provided that Philip Morris will continue succeeding in keeping demand for tobacco strong worldwide despite expectations and forecasts for the contrary, then this would be a remarkable success and an accomplishment that many had thought was impossible.

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