The newly spun off international unit of Phillip Morris (or Altria the new company name), announced its earnings this morning, a 29% increase in net profits from a year ago. Shareholders of Phillip Morris before the spin-off received one share of PM and one share of MO for each share of Phillip Morris that they owned prior to the spin-off. The primary reason for the spin off was to protect the international company from US regulations and litigation exposure releasing the true value of the international unit.
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The stock was recently up 3.4% to $51.75.
The international company was recently spun off from parent Altria Group Inc. and this is the first time the company is reporting as an independent company. Philip Morris International is officially based in New York and trades on the New York Stock Exchange, but gets all its sales from outside the U.S.
The company posted net income of $1.87 billion, or 89 cents a share, compared with $1.45 billion, or 69 cents a share, a year earlier. Revenue jumped 18% to $15.6 billion, while revenue excluding excise taxes rose 14% to $6.33 billion.
Analysts' latest mean estimates were earnings of 77 cents a share and revenue of $6.15 billion. Gross margin was flat at 25.8%. Shipment volume rose 2.2%, but the European Union posted a 5.9% drop.
Philip Morris, which was Altria's international arm, is growing faster than the U.S. cigarette business. Last month's breakup was designed to separate the lucrative international division from U.S. regulators and had been planned for years despite concerns that the tobacco litigants would try to stop the transaction.
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http://online.wsj.com/article/SB1208...?mod=wsjcrmain
MO, the domestic company will release earnings Thursday. They have already made their $4 billion annual master settlement payment on 4/15/2008.
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Altria Group Inc.'s (MO) Philip Morris USA made its annual Master Settlement Agreement payment of $4 billion, including about $156 million the company disputes it owes as a result of the 2005 nonparticipating manufacturer adjustment, which takes into account the effect of settlements on companies' market share loss.
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http://online.wsj.com/article/BT-CO-...?mod=wsjcrmain
In 2007 they paid about $36 billion in excise taxes (combined international and domestic) and about $4 billion in income taxes.
Some argue that the States are not adequately spending settlement money on public health.
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Since the November 1998 multi-state tobacco settlement, we have issued regular reports assessing whether the states are keeping their promise to use a significant portion of their settlement funds – expected to total $246 billion over the first 25 years—to attack the enormous public health problem posed by tobacco use in the United States.
This year, we find that the states have made important progress by increasing funding for tobacco prevention and cessation programs by 20 percent to a total of $717.2 million in fiscal year 2008, which is the highest level in six years. However, most states still fail to fund tobacco prevention programs at minimum levels recommended by the U.S. Centers for Disease Control and Prevention (CDC), and altogether, the states are providing less than half what the CDC has recommended.
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http://www.tobaccofreekids.org/reports/settlements/
No matter how you look at it, things are looking good for our largest tobacco company. I just find it ironic that some of us who are highly critical of big business, rich getting richer, Republicans being greedy, Haliburton, etc, etc. are perfectly willing to sellout their principles as long as a company like Phillip Morris is willing to fund government spending in exchange for protected status - even if the product as they would say, "kills".