The smokes business overseas is growing choppy due to currency exchange rates.

Philip Morris International ( PM) is one of the victims. The seller of Marlboro cigarettes and other brands overseas said the stronger dollar helped shrink its profit by 9% in the quarter, but it still managed to beat Wall Street's expectations.

During the period the company earned $1.55 billion, or 79 cents a share, compared with $1.69 billion, or 80 cents, in the year-ago quarter.

Excluding one-time charges, Philip Morris International posted adjusted earnings of 83 cents a share, surpassing analysts' forecasts of 77 cents.

The stronger dollar weighed down profit by 19 cents on an EPS basis.

Revenue dropped 9% to $15.21 billion from $16.7 billion, hurt by sales in Europe. Declines were particularly severe in Italy, Poland and Spain.

But despite this difficulty, the company raised its full-year guidance to a range of $3.10 to $3.20 a share. That's up from its prior forecast of $2.85 to $3 a share.

Like its competitors, Philip Morris International is seeking to make smokeless products. Earlier this month the company said it would purchase Swedish Match South Africa to help in this endeavor.

On Wednesday Altria ( MO) posted a 9% jump in its second quarter earnings, helped by cost cuts, the acquisition of a smokeless tobacco maker, and improved sales of both cigarettes and cigars.

Philip Morris International was spun off from Altria, which still owns Philip Morris USA, in 2008. The move was seen as a way for Philip Morris International to pursue growth in emerging markets.
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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