Philip Morris Beats on Q1 Earnings, Lags Revs - Analyst Blog
April 17 2014 - 1:00PM
Zacks
Philip Morris International
Inc.’s (PM) adjusted first-quarter 2014 earnings per share
of $1.19 beat the Zacks Consensus Estimate of $1.17 by 1.7%.
However, earnings lagged the prior-year quarter results by 7.8% due
to unfavorable currency translations, industrial headwinds in Asia
and inventory distortions.
Excluding an unfavorable currency
impact of 16 cents, earnings exceeded the prior-year quarter
figures by 4.7%.
Revenues and
Margin
Net revenue went down 8.8%
(down1.6% excluding currency) to $6.9 billion and lagged the Zacks
Consensus Estimate of $7.1 billion by 2.8%. Earnings declined from
the prior-year level mainly due to volume decline in the tobacco
category. Cigarette shipment volume decreased 4.4% to 196.0 billion
units mainly due to a decline in total market share .
Segment
Details
During the quarter, net revenue in
the European Union region climbed 2.2% (down 0.4% excluding
currency) from the prior-year quarter to $2.0 billion predominantly
reflecting lower total market share, notably in France and
Poland.
Net revenue in the Eastern Europe,
the Middle East & Africa (EMEA) region declined 1.7% (up 4.5%
excluding currency) from the prior-year quarter to $2.0 billion.
Revenues improved in organic terms backed by favorable pricing of
$234 million, principally in Russia. The new business structure in
Egypt also contributed to the growth in the region.
Asia recorded net revenue of $2.2
billion, down 21.8% (down 8.7% excluding currency) from the
prior-year quarter due to unfavorable volume/mix primarily in Japan
and Indonesia.
In Latin America and Canada,
revenues slipped 8.7% (up 4.2% excluding currency) to $713 million.
Earnings improved in organic terms mainly due to favorable pricing
in Argentina, Canada and Mexico.
Philip Morris' quarterly gross
profit declined 10.8% from the prior-year quarter to $4.5 billion,
mainly due to higher excise tax faced by the company during the
quarter. Operating income slipped 12.3% year over year to $3.0
billion in the reported quarter due to higher marketing,
administration and research costs.
Financial
Update
During the quarter, Philip Morris
spent $1.25 billion to repurchase 15.4 million shares.
Guidance
Management revised increased its
outlook for fiscal 2014. It now expects GAAP earnings in the range
of $5.09 to $5.19, higher than $5.02 to $5.12 expected
previously. For fiscal 2014, the company expects currency
impact of 61 cents per share, lower than 71 cents expected
previously. Excluding the currency impact and one time
restructuring charges, the company expects its earnings to increase
approximately 6% to 8% from adjusted earnings of $5.40 in 2013.
Philip Morris carries a Zacks Rank
#3 (Hold). Other consumer staples sector that are performing well
at the current level include Supervalu Inc. (SVU),
Diamond Foods Inc. (DMND) and Mondelez
International Inc. (MDLZ). All the stocks sport a Zacks
Rank #2 (Buy).
DIAMOND FOODS (DMND): Free Stock Analysis Report
MONDELEZ INTL (MDLZ): Free Stock Analysis Report
PHILIP MORRIS (PM): Free Stock Analysis Report
SUPERVALU INC (SVU): Free Stock Analysis Report
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