Philip Morris Int'l 3Q profit falls 8 pct on lower cigarette sales, unfavorable exchange rates

Markets Associated Press

Philip Morris International's third-quarter profit dropped 8 percent as cigarette sales fell in the overseas markets that it serves and it was hurt by foreign exchange rates for the U.S. dollar.

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The seller of Marlboro and other cigarette brands outside the United States earned $2.15 billion, or $1.38 per share, in the quarter, down from $2.34 billion, or $1.44 per share, a year ago.

On an adjusted basis, it earned $1.39 per share, beating Wall Street estimates by 6 cents, according to Zacks Investment Research.

Excluding excise taxes, revenue fell about 1 percent to $7.86 billion. Analysts expected revenue of $7.74 billion.

Cigarette shipments fell less than 1 percent to 222.3 billion cigarettes. Total Marlboro volumes fell 3.5 percent to 72.6 billion cigarettes. Shipments fell 2 percent in Latin America and Canada and 1.3 percent in Asia. Shipments were up less than 1 percent in the company's region that encompasses Eastern Europe, the Middle East and Africa, as well as in the European Union.

Still, the company said its retail market share increased in a number of key regions, including Argentina, France, Germany, Italy, Russia, Spain and Switzerland.

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Smokers face tax increases, bans, health concerns and social stigma worldwide, but the effect of those on cigarette demand generally is less stark outside the United States. Philip Morris International has compensated for volume declines by raising prices and cutting costs.

Because it does all its business overseas, the company also has to navigate changes in currency values. A stronger dollar cuts into revenue generated overseas when it's translated back into dollars.

The company on Thursday cut its full-year earnings forecast to a range of $4.76 and $4.81 per share.

Philip Morris International Inc., based in New York and Switzerland, is the world's second-biggest cigarette seller behind state-controlled China National Tobacco Corp.

Richmond, Va.-based Altria Group Inc., the owner of Philip Morris USA, spun off Philip Morris International as a separate company in 2008. Altria is the largest U.S. cigarette seller.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .