Philip Morris Changes Earning Outlook as Currency Fluctuates
The world’s largest tobacconist, Philip Morris International snubbed its earnings forecast for the full year 2012 last week, for the second time in the last four months, to adjust to prevailing currency fluctuations. Excluding the impact of currency shifts, the tobacco company’s growth outlook was not changed.
Excluding currency impacts, the tobacco giant’s growth forecast remains unchanged.
For 2012, the maker of Marlboro, L&M and Parliament brands of cigarettes, now estimates earnings to equal $5.10 to $5.20 per share basing on prevailing currency exchange rate, versus its previous forecast, announced in April, of $5.20 to $5.30 earnings per share.
The tobacco giant currently believes unfavorable currency to draggle its revenues by $0.25 per share, compared with the $0.15 per share outlook disclosed previously.
After adjusting to currency movements, PMI still expects earnings to rise by nearly 10 to 12 percent up from previous year’s adjusted earnings per share, which totaled $4.88.
Overall, 19 analysts surveyed by Thomson Reuters believe the tobacco giant would earn an average of $5.23 per share. Analysts’ outlook usually excludes special items.
Two months ago, Nomura brokerage cut Philip Morris full-year forecast, considering that solid performance in Indonesia could be compensated by downturn in other major markets, including Spain, Mexico, Japan, Greece, South Korea and Philippines during the year.
“The growing importance of Asian market (especially Indonesia) presents a certain risk which could result in a slowing down or annual volatility. Though Asian is major source of growth for PMI, with the risk of stricter regulation, besides to possible volatility, which is frequently observed in Asian markets, we believe these threats have not been included in the outlook,” Nomura mentioned.
Philip Morris International senior management discussed the business forecast and long-term growth plans during a two-day investor conference which was held last week in Switzerland. At the conference, the company’s CEO Louis Camilleri announced the long-term growth perspectives for the company, and confirmed they are in the process of developing three innovative heated-tobacco products, which have the potential to become groundbreaking for the industry.
In addition, Philip Morris admitted it would invest 15 million Euros to INTERPOL program on combating trans-border criminal activity related to the trafficking of illicit and counterfeit goods, among which are tobacco products.
The group’s shares closed Thursday’s trading session at $88.51, going down $0.01.
In Pre-market session, shares are at $0.61 or 0.69 percentage points and currently selling at $87.90.