Philip Morris International Inc., the world’s largest publicly traded tobacco company, gave a full-year profit forecast that missed analysts’ estimates, hurt by the strengthening dollar.
Profit this year will fall to $2.85 to $3 a share from $3.32 in 2008, Philip Morris said in a statement today. Analysts anticipated $3.41, the average of 12 estimates compiled by Bloomberg. Excluding the projected 80-cent impact of foreign- currency exchange rates, profit would rise as much as 14 percent, the company said.
“Currency will certainly be a drag this year,” Giri Cherukuri, who helps manage $1 billion at Oakbrook Investments, said today in a telephone interview. The Lisle, Illinois-based firm owned 172,706 Philip Morris shares through December.
Philip Morris generates all of its sales outside of the U.S. Last year’s acquisition of Canada’s Rothmans Inc., engineered by Chief Executive Officer Louis Camilleri, as well as higher cigarette prices helped lift fourth-quarter revenue 2.2 percent to $15.2 billion.
Philip Morris’s estimate of currency impact was More than what the market was expecting, Judy Hong, a Goldman Sachs Group Inc. analyst in New York, said today in a note to clients. She had projected it would decrease earnings by 45 cents a share. She recommends buying the stock.
‘Steep Hurdle’
The ICE’s Dollar Index, which tracks the dollar versus the euro, the yen, the pound, the Canadian dollar, the Swedish krona and the Swiss franc, increased 2.3 percent in the fourth quarter as investors sought refuge in the world’s reserve currency.
Philip Morris fell $1.54, or 4 percent, to $36.78 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have dropped 15 percent this year.
The global economic downturn creates “uncertainty, particularly on the currency front,” Camilleri, 54, said in the statement. “At current exchange rates we face a steep hurdle.”
Net income fell to $1.45 billion, or 71 cents a share, in the fourth quarter, from $1.57 billion, or 74 cents, a year earlier, New York-based Philip Morris said. Twelve analysts estimated 62 cents on average in a Bloomberg survey.
Philip Morris’s shipments rose 2 percent to 217.2 billion Cigarettes, bolstered by demand in most markets except the European Union, the company said. Mexico and Indonesia are among countries where some smokers are trading up to Marlboro from local brands.
Philip Morris said yesterday it will jointly sell snuff with Swedish Match AB, Europe’s largest maker of smokeless tobacco. The companies will license their trademarks to a joint venture, which will sell Swedish snuff, known as snus, and other smokeless tobacco products worldwide outside of Scandinavia and the U.S.
Philip Morris, which owned 40 percent of Toronto-based Rothmans, bought the rest of Canada’s second-biggest tobacco producer last year for $2 billion.