New York-based cigarette manufacturer Philip Morris International (PM), the second-largest cigarette company in the world, reported on Thursday that a stronger dollar as well as economic turmoil in the European Union has led to a 6.5 percent lag in the company’s global shipments, and a decline in profits.
On $18.5 billion in revenue in the first quarter, the company earned $2.13 billion, or $1.28 per share, down from the prior year period during which the company earned $2.16 billion or $1.25 per share. The earnings figures for Q1 also came in short of analyst estimates of $1.34 per share.
The company’s shipments to the European Union were down by 10 percent as a result of the sovereign debt crisis which continues to leave much of the continent in some stage of a deep recession. Over one third of the company’s revenue comes from the EU.
Additionally, while shipments to the Middle East and Africa were up about 1.4 percent, they fell in Latin America and Canada by 7.5 percent. With the exception of the Philippines, where shipments tanked because of an increase in excise taxes, Asia saw an increase of about 3 percent.
Furthermore, while an average of analyst estimates had projected per-share profits for 2013 of $5.72, the company scaled back its own forecast down to $5.55 to $5.65. The company blames this on an unfavorable exchange rate from foreign currencies against a strengthening dollar.
The company’s shares were down as low as $90.70, before rebounding slightly to $91.67, a loss of 2.52 percent.
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