Philip Morris Earnings Up 2 Percent
Philip Morris Cos. Inc.'s profit edged up 2 percent in the third quarter before onetime charges, matching Wall Street expectations as increases in food and beer earnings offset a decline in tobacco profits.
The maker of Marlboro cigarettes, Maxwell House coffee and Miller Lite beer reported Tuesday its earnings excluding one-time items rose to $2.1 billion, or 87 cents a share, from $2.05 billion, or 84 cents a share, a year earlier.
Revenue rose 6.9 percent to $19.9 billion from $18.6 billion a year ago.
The results matched the 87 cents per share that analysts surveyed by First Call/Thomson Financial had expected. In trading on the New York Stock Exchange, Philip Morris shares rose 25 cents a share to $30.75.
The latest results exclude $136 million in pretax charges for a factory closing and reduction of cigarette capacity in Brazil and $8 million related to job cuts in the domestic tobacco business. the 1998 results exclude the impact of $121 million in pretax charges mainly for settling tobacco suits.
With those charges included, net income was up 1.1 percent to $2 billion, or 84 cents a share, from $1.98 billion, or 81 cents a share, a year ago.
Domestic tobacco profits were off 1.8 percent for the quarter, as Philip Morris shipped 10.6 percent fewer cigarettes. But its revenue from cigarette sales in the U.S. climbed 24.5 percent because it raised prices.
Philip Morris and the other major U.S. tobacco makers raised prices sharply last year to help defray the costs of their $246 billion, 25-year settlement with the states over the costs of treating sick smokers.
Shipments by the nation's biggest cigarette company fell faster than the 9.3 percent industrywide decline, and it estimated its share of the industry shipments fell 0.7 percentage point to 49.3 percent.
But it said shipments a year ago were inflated because of promotional activities and said its share would have arisen if the figures were adjusted to factor out the impact of those activities.
Shipments of Marlboros, the industry's biggest brand, fell 10.8 percent.
Roy Burry, tobacco analyst for Brown Bros. Harriman, said the company's profit per cigarette was rising in both the domestic and international tobacco businesses and that it should leave Philip Morris with ``massively more cash on the balance sheet than they need to make their settlement payments next year.''
But he said the above-average decline in tobacco shipments shows there ``seems to be some sputtering'' in its market share growth. ``Its ability to gain market share is ebbing,'' he said.
International tobacco profits were about the same as last year as it shipped 5.8 percent fewer cigarettes.
Profits were up 7.1 percent on its Kraft Food North America business led by gains in its Capri Sun and Maxwell House beverages, Kraft cheese, Post cereals and Oscar Mayer meats. International food profits rose 1.5 percent.
At Miller Brewing, profits rose 18.6 percent due to higher pricing and the impact of its enlarged contract brewing business. Shipments rose for Miller Lite and Miller High Life but fell for Miller Genuine Draft and Molson, the Canadian brand that Miller distributes in the United States.
For the first nine months, Philip Morris earned $5.82 billion, or $2.41 a share, after charges compoared with $5.1 billion, or $2.09 a share, a year ago. Revenue rose to $59.2 billion from $55.9 billion in 1998.