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Philip Morris International Inc. (PMI) Reports 2012 Results; Provides 2013 Earnings Per Share Forecast

Stocks in this article: PMPMI

EU Key Market Commentaries

In the Czech Republic, the total cigarette market was down by 2.8% to 20.5 billion units in 2012, mainly reflecting the impact of excise tax-driven price increases in the first and second quarters of 2012 and a more than 20% growth of the fine cut category over the full year. In the fourth quarter of 2012, the total cigarette market was down by 0.7% to 5.3 billion units. PMI’s shipments were down by 7.4% in 2012 and by 5.7% in the fourth quarter. Market share was down by 2.1 points to 42.2% in 2012, principally reflecting continued share declines for lower-margin local brands, such as Petra and Sparta, down by a combined 1.2 points to 6.1%, and Red & White, down by 1.2 points to 11.7%. This decline was partly offset by a higher share for Marlboro, Chesterfield and Philip Morris, up by 0.2, 0.5 and 0.6 points to 7.4%, 0.8% and 2.9%, respectively. Market share of L&M was essentially flat at 7.1%. PMI’s 2012 fourth-quarter market share was down by 2.1 points to 40.0%.

In France, the total cigarette market was down by 4.9% to 51.5 billion units in 2012, mainly reflecting the impact of price increases in the fourth quarters of 2011 and 2012. In the fourth quarter of 2012, the total cigarette market was down by 7.2% to 11.6 billion units, reflecting the unfavorable impact of the aforementioned price increase which raised premium price products to €6.60 per pack, an increase in illicit trade and growth of the OTP category. PMI’s shipments were down by 7.7% in 2012 and by 11.9% in the fourth quarter. PMI’s market share was down by 0.9 points to 39.6% in 2012, mainly due to Marlboro, down by 0.9 points to 24.8%, and to L&M, down by 0.3 points to 2.7%. Market share of premium Philip Morris was up by 0.1 point to 8.3% and share of Chesterfield was up by 0.2 points to 3.3%. PMI’s 2012 fourth-quarter market share was essentially flat at 40.1%. PMI’s market share of the fine cut category was up by 0.9 points to 25.2% in 2012 and up by 1.1 points to 26.1% in the fourth quarter.

In Germany, the total cigarette market was down by 1.2% to 83.4 billion units in 2012, flattered by trade inventory movements of competitors’ products in December ahead of the January 2013 excise tax increase. In the fourth quarter of 2012, the total cigarette market was down by 0.2% to 20.5 billion units, reflecting the favorable impact of the aforementioned inventory movements. PMI’s shipments were down by 1.5% in 2012 and by 2.4% in the fourth quarter. PMI’s market share was essentially unchanged at 35.8% in 2012, with Marlboro essentially flat at 21.3%, L&M up by 0.1 point to 10.5% and Chesterfield flat at 2.3%. While PMI’s 2012 fourth quarter market share was down by 0.8 points to 35.6%, reflecting the impact of the aforementioned inventory movements, share of Marlboro was up by 0.1 point to 21.6%. PMI’s market share of the fine cut category was up by 0.7 points to 14.7% in 2012 and up by 0.3 points to 14.6% in the fourth quarter.

In Italy, the total cigarette market was down by 7.9% to 78.7 billion units in 2012, reflecting the impact of price increases in 2011 and March 2012, an unfavorable economic environment, strong growth in the fine cut category, and an increase in illicit trade. In the fourth quarter of 2012, the total cigarette market was down by 4.0% to 19.0 billion units. PMI’s shipments were down by 7.3% in 2012 and by 4.8% in the fourth quarter. PMI’s market share was essentially flat at 53.0% in 2012, with Marlboro, up by 0.6 points to 23.1%, fueled by the March 2012 and June 2012 launches of Marlboro Silver and Marlboro Pocket Pack, and Philip Morris, up by 0.4 points to 3.7%, benefiting from the first-quarter 2012 launch of Philip Morris Selection in the low-price segment, offset by low-price Diana, down by 0.8 points to 12.4%. PMI’s 2012 fourth quarter market share was up by 0.9 points to 53.2%, driven by Marlboro, up by 1.3 points to 23.5%. PMI’s market share of the fine cut category was up by 16.0 points to 27.9% in 2012 and up by 6.6 points to 27.8% in the fourth quarter.

In Poland, the total cigarette market was down by 6.1% to 52.1 billion units in 2012, mainly reflecting the impact of price increases in the first quarter of 2012 and growth in the availability of non-duty paid OTP products. In the fourth quarter of 2012, the total cigarette market was down by 10.0% to 11.5 billion units, reflecting the unfavorable impact of the aforementioned factors. PMI’s shipments were down by 3.1% in 2012, and by 4.3% in the fourth quarter. Market share was up by 1.1 points to 36.4% in 2012, benefiting from the launch of two new Marlboro super slims variants in the second quarter. Market shares of Marlboro, Chesterfield and L&M were up by 0.9, 0.4 and 0.7 points to 11.3%, 1.8% and 16.6%, respectively. PMI’s 2012 fourth-quarter market share was up by 2.3 points to 39.2%. PMI’s market share of the fine cut category was up by 0.5 points to 17.8% in 2012 and down by 1.5 points to 15.5% in the fourth quarter.

In Spain, the total cigarette market was down by 11.7% to 53.5 billion units in 2012, mainly reflecting the impact of price increases in the second half of 2011 and second quarter of 2012, the unfavorable economic environment, the growth of the OTP category and illicit trade. In the fourth quarter of 2012, the total cigarette market was down by 14.0% to 12.1 billion units, reflecting the aforementioned factors and the unfavorable impact of trade inventory movements. PMI’s shipments were down by 11.4% in 2012 and by 5.7% in the fourth quarter. Market share was down by 0.3 points to 30.6% in 2012, with higher share of Chesterfield, revamped in the first quarter of 2012, up by 0.6 points to 9.0%, offset by Marlboro, down by 0.4 points to 14.3% and Philip Morris, down by 0.3 points to 0.7%. Market share of L&M was down by 0.2 points to 6.3%. PMI’s 2012 fourth quarter market share was up by 0.7 points to 31.3%. PMI’s market share of the fine cut category was up by 1.1 points to 11.7% in 2012 and up by 3.0 points to 13.1% in the fourth quarter.

EASTERN EUROPE, MIDDLE EAST & AFRICA REGION (EEMA)

2012 Full-Year

In EEMA, net revenues increased by 5.7% to $8.3 billion, including unfavorable currency of $467 million. Excluding the impact of currency and acquisitions, net revenues increased by 11.3%, primarily due to both favorable pricing and volume/mix of $466 million and $425 million, respectively.

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