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Philip Morris International Inc. (PMI) Reports 2012 Second-Quarter Results; Reaffirms 2012 Full-Year Reported Diluted EPS

Stocks in this article: PMPMI

EU Key Market Commentaries

In the Czech Republic, the total cigarette market was down by 4.2% to 5.3 billion units, mainly reflecting the impact of excise tax-driven price increases in the first and second quarters of 2012. PMI’s shipments were down by 9.8%. Market share was down by 2.7 points to 42.8%, principally reflecting continued share declines for lower-margin local brands, such as Petra and Sparta, down by a combined 1.3 points, and Red & White, down by 1.1 points to 12.0%. This decline was partly offset by a higher share for Marlboro, up by 0.1 point to 7.6% and a higher share for Philip Morris, revamped during the first quarter of 2012, up by 0.7 points to 3.1%.

In France, the total cigarette market was down by 5.9% to 13.6 billion units, mainly reflecting the impact of price increases in the fourth quarter of 2011. PMI’s shipments in the second quarter of 2012 were down by 10.1%. PMI’s market share was down by 0.9 points to 40.0%, mainly due to Marlboro, down by 0.8 points to 25.2%, reflecting its crossing of the €6.00 per pack price threshold ahead of competitive brands. Market share of premium Philip Morris was flat at 8.3% and share of Chesterfield was up by 0.2 points to 3.3%. PMI’s market share increased by 0.4 points compared to the first quarter of 2012, driven by Marlboro, up by 0.5 points. PMI’s market share of the fine cut category was up by 0.7 points to 25.7%.

In Germany, the total cigarette market was down by 5.1% to 21.2 billion units, mainly reflecting the unfavorable impact of price increases in June 2011 and March 2012. June year-to-date, the total cigarette market was down by 1.3%. PMI’s shipments were down by 4.5% in the quarter. PMI’s market share grew by 0.3 points to 36.4%, driven by a higher share for Marlboro, up by 0.3 points to 21.4%, the brand’s highest share since the fourth quarter of 2010, a higher share for L&M, up by 0.1 point to 10.5%, and a slightly higher share for Chesterfield, up by 0.1 point to 0.8%. PMI’s market share of the fine cut category was up by 1.2 points to 16.0%.

In Italy, the total cigarette market was down by 10.5% to 20.2 billion units, reflecting the impact of price increases in July and September 2011, and March 2012, an unfavorable economic environment, strong growth in the fine cut market, and an increase in illicit trade. PMI’s shipments were down by 13.4%. While PMI’s market share declined by 0.5 points to 52.9%, driven largely by low-price Diana, down by 0.8 points to 12.4%, share of Marlboro grew by 0.3 points to 23.0%, fueled by the March 2012 and June 2012 launches of Marlboro Silver and Marlboro Pocket Pack, respectively. The decline in total market share, particularly in the low-price segment due to the growth of international low-price brands, was partially offset by the first-quarter 2012 launch of Philip Morris Selection in the low-price segment, as a result of which the Philip Morris brand family grew by 0.3 points to 3.6% in the second quarter. PMI’s market share of the fine cut category was up by 24.5 points to 31.0% and up by 2.7 points compared to the first quarter of 2012.

In Poland, the total cigarette market was down by 7.7% to 13.8 billion units, mainly reflecting the impact of price increases in the first quarter of 2012. June year-to-date, the total cigarette market was down by 3.7%. Whilst PMI’s shipments were down by 2.6%, market share was up by 2.0 points to 36.9%, mainly reflecting a favorable comparison with the second quarter of 2011 impacted by the delayed implementation of price increases by competition. Shares of Marlboro, L&M, Chesterfield and Red & White were up by 0.9, 0.4, 0.9 and 0.4 points to 11.2%, 16.3%, 2.1% and 5.5%, respectively. PMI’s market share of the fine cut category was up by 0.1 point to 18.7%.

In Spain, the total cigarette market was down by 18.0% to 13.7 billion units, mainly reflecting the impact of price increases in the second half of 2011 and second quarter of 2012, the unfavorable economic environment and the growth of the OTP category. June year-to-date, the total cigarette market was down by 10.0%. PMI’s shipments were down by 16.8%. Market share was down by 1.4 points to 29.6%, with higher share of Chesterfield, revamped in the first quarter of 2012, up by 0.5 points to 8.9%, offset by Marlboro, down by 0.7 points to 13.9%, L&M, down by 0.5 points to 6.1% and Philip Morris, down by 0.4 points to 0.7%. PMI’s market share of the fine cut category was up by 1.2 points to 11.9%.

EASTERN EUROPE, MIDDLE EAST & AFRICA REGION (EEMA)

In EEMA, net revenues increased by 6.9% to $2.2 billion, despite unfavorable currency of $127 million. Excluding the impact of currency and acquisitions, net revenues increased by 12.7%, primarily due to favorable pricing of $114 million and favorable volume/mix of $141 million, the fourth consecutive quarter of favorable volume/mix. June year-to-date, net revenues, excluding currency and acquisitions, were up by 12.6%, driven by higher pricing and favorable volume/mix of $216 million and $251 million, respectively.

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