RICHMOND, Virginia (AP) — Cigarette maker Philip Morris International Inc.’s second-quarter profit grew more than 21 percent because it commanded higher prices for its brands.
The seller of Marlboro and other brands overseas also increased its full-year earnings forecast on Thursday.
Philip Morris International said its net income rose to $2.41 billion, or $1.35 per share, for the period ended June 30, up from $1.98 billion, or $1.07 per share, in the same period last year.
Adjusted for tax items, the company said it earned $1.34 per share. Analysts polled by FactSet expected earnings of $1.21 per share. They typically exclude one-items from their estimates.
Cigarette shipments increased slightly to 241.2 billion cigarettes, but raising prices helped its revenue excluding excise taxes grow about 17 percent to $8.3 billion in the quarter. Analysts expected revenue of $7.82 billion.
Smokers face tax hikes, bans, health concerns and social stigma worldwide, but the effect 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.
“Our outlook is promising with strong market share and business momentum. Pricing remains a very strong driver of profitability,” CFO Hermann Waldemer said in a conference call with investors. Waldemer said in the last three months, the company implemented or announced price increases in numerous markets including Australia, Canada, Germany, Italy and Russia.
Shares of Philip Morris International rose $2.71, or about 4 percent, to $70.90 in morning trading.
The company, which has offices in in New York and Lausanne, Switzerland, increased its full-year earnings forecast to between $4.70 and $4.80 per share, above analysts’ previous estimate of $4.64.
Especially important in the second quarter were large gains in cigarette shipments of 7.5 percent in Asia, including Indonesia, Japan and Korea and Thailand, and the favorable impact of acquiring Fortune Tobacco Co. in the Philippines. Revenues in the Asia region increased more than 38 percent.
The March earthquake and tsunami in Japan also offered Philip Morris International a sales opportunity because supply disruptions led Japan Tobacco Inc., the world’s No. 3 tobacco maker, to stop shipping cigarettes within Japan.
Philip Morris International was able to minimize supply disruptions because all of its cigarettes for sale in Japan are produced outside the country and shipments at ports were being unloaded normally. That allowed it to sell brands like Marlboro to customers in Japan who normally bought other brands.
Shipments fell 4.8 percent in Latin America and Canada, 3.3 percent in Eastern Europe, the Middle East and Africa, and 3.1 percent in the European Union.
Total Marlboro shipments rose slightly in the quarter to 78.1 billion cigarettes, mainly due to growth in Asia, as well as Eastern Europe, the Middle East and Africa.
Philip Morris International said its market share increased or remained stable in many key areas.
The company’s earnings also were helped slightly by foreign exchange rates for the U.S. dollar. When the dollar is falling, companies that sell goods internationally get more dollars when they convert revenue from foreign currencies.
That effect is particularly strong for Philip Morris International, because it does all its business overseas.
The company also said it spent $1.5 billion to buy back 22.7 million shares of stock in the quarter. It plans share repurchases of about $5 billion in 2011 as part of its three-year, $12 billion buyback program that began in May 2010.
Philip Morris International is the world’s second-biggest cigarette company after the state-controlled China National Tobacco Corp.
Altria Group Inc. in Richmond, Virginia, owner of Philip Morris USA, spun off Philip Morris International in 2008. Altria is the largest U.S. cigarette seller.