Philip Morris International Inc.(PM) reported adjusted fourth quarter 2011 earnings per share, excluding special items, of $1.10, surpassing the year-ago earnings by 13.4% and the Zacks Consensus Estimate by 1.85%.
For fiscal 2011, Philip Morris posted adjusted earnings of $4.88 per share,which was 26.1% higher than $3.87 per share earnings posted a year ago. The fiscal 2011 earnings also beat theZacks Estimate by 3 cents.
Revenue, Volumes & Margins
During the quarter, Philip Morris’ net revenue grew 9.0% year over year to $7.7 billion, including favorable currency impact of $1.2 billion. Excluding currency translation, net revenue increased 9.7%, mainly driven by favorable pricing of $1.9 billion, primarily in Asia, and favorable volume of $472 million.
Cigarette shipment volume in the quarter increased slightly by 0.7% year over year to 226.6 million units, primarily driven by a 10.5% increase in shipment volume in Asia, which was a result of double-digit growth in Indonesia, Japan and Korea. While volume in EEMA (Eastern Europe, Middle East & Africa) went up 0.2%, European Union (EU) and Latin America and Canada suffered a declineof 7.1% and7.4%,respectively.
In EU, cigarette shipment volume dropped on a year-over-year basis predominantly due to lower total market share, mainly in Italy, Portugal and Spain, and a lower total market in Greece. In EEMA, cigarette shipment volume grew by 0.2%, primarily driven by the Middle East and North Africa, notably due to a higher total market and share in Algeria, partially offset by a lower total market in Turkey. In Latin America,shipment was impacted by decline in Mexico, reflecting a lower total market.
During the quarter, shipments of Marlboro rose 2.3% as a result of growth in the EEMA market. Shipments of L&M were also up 1.9% during the quarter, driven by the growth in EU. Parliament and Lark brands recorded increased volumes of 18.7% and 25.8%, respectively, while Chesterfield and Bond Street witnessed declines of 1.4% and 1.5%, respectively, in the quarter.
Philip Morris’ quarterly gross profit expanded 9.8% year over year to $5.0 billion, while operating income increased 7.0% to $2.9 billion in the fourth quarter of 2011.
Financial Analysis
As of December 31, 2011, Philip Morris had cash and cash equivalents of $2.6 billion and long-term debt (including current portion) of $14.8 billion.
Share Buyback and Dividend
During the year the company hiked its dividend by 20.3% to $0.77,representing an annualized rate of $3.08 per common share.
During the fourth quarter, Philip Morris spent $1.0 billion to repurchase 14.5 million shares. In fiscal 2011, PMI spent $5.4 billion to repurchase 80.5 million shares of its common stock. During the fourth quarter, the company spent $1.0 billion to repurchase 14.5 million shares.
Guidance
Concurrent with the earnings release, the company expects 2012 full-year reported diluted earnings per share to be in a range of $5.25 to $5.35. However, adjusted diluted earnings per share are projected to increase by approximately 10% to 12% versus $4.88 in 2011.
The company plans share repurchases of approximately $6.0 billion in fiscal 2012.
The company’s major competitors are Altria Group Inc. (MO) and Reynolds American Inc. (RAI). Phillip Morris currently has a Zacks #3 Rank which implies short term Hold rating on the stock. On a long term basis we remain Neutral on the stock.
ALTRIA GROUP (MO): Free Stock Analysis Report
PHILIP MORRIS (PM): Free Stock Analysis Report
REYNOLDS AMER (RAI): Free Stock Analysis Report
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