Philip Morris earnings spurt 15% $1.57 billion quarter made possible by brisk cigarette sales


NEW YORK -- Philip Morris Cos. said yesterday that its first-quarter earnings surged 15 percent on continued strong demand for its top-selling cigarettes.

The New York-based maker of Marlboro cigarettes, Kraft cheese and Miller beer had net income of $1.57 billion, or $1.89 a share, exceeding by a penny the average estimate of 10 analysts surveyed by Zacks Investment Research. A year earlier, it had profit from operations of $1.36 billion, or $1.60 a share.

The increase was led by its tobacco business, the world's largest. In the United States, operating profit rose 11 percent as the retail market share held by its premium Marlboro brand climbed 1.8 points to a record 32.4 percent. And international tobacco's operating profit jumped 17 percent as shipments gained 13 percent.

"The fundamentals are very strong in global tobacco and North American food," said Goldman Sachs & Co. analyst Marc Cohen. "They're doing extraordinary things in terms of returning capital to shareholders."

Revenue from continuing operations rose 13 percent to $17.49 billion from $15.54 billion. Since the beginning of last year, Philip Morris sold its food-service distribution, specialty oils, marshmallows and caramels, baked goods, table spreads and Rondele specialty cheeses operations.

In the year-ago quarter, a charge of $28 million, or 3 cents a share, for accounting changes resulted in net income of $1.34 billion, or $1.57.

Per-share profit increased by a larger percentage than net income because the company repurchased 7.2 million shares for $685 million, part of its $6 billion buyback program.

The domestic tobacco business earned $971 million in the quarter as sales rose 9.9 percent to $2.8 billion. Shipments climbed 6.7 percent to 53.9 billion cigarettes, as Marlboro's volume rose 11 percent to 36.2 billion cigarettes.

The company's share of U.S. shipments increased to a record 47.8 percent, up 1.8 percentage points. Marlboro captured 32.1 percent, up 2.4 points, of the industry's shipments.

Philip Morris' other U.S. full-price brands, which include Merit, Benson & Hedges, Parliament and Virginia Slims, held 9.1 percent of the retail market, up slightly.

International tobacco operating profit increased to $1.1 billion as sales jumped 18 percent to $6.3 billion. Shipments climbed 13 percent to 176 billion cigarettes.

Shares in Philip Morris rose $1.625 to $91 on trading of 2.3 million shares.

Pub Date: 4/17/96

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