When Philip Morris International
This time, though, volume is actually down by 2.9% instead of break-even, as it was for the previous period. And that number includes acquisitions; otherwise, volume would have been down by 4%. Sales of flagship brand Marlboro fell by 4.3%, driven by price pressures thanks to increasing excise taxes in many European markets, which isn't great news for the premium tobacco product.
But Philip Morris International did increase its full-year earnings forecast, so it's not like the company isn't making money, just not as much as it did in 2008. Revenue declined by 5.3% on the quarter -- PMI projects that revenue would have increased by 6.9% without currency fluctuations -- and operating income dropped by 1.4%. But the company deployed massive cash ($1.5 billion) in buying back 31.5 million shares in the third quarter.
Hey, it's tough all around for the tobacco companies, with Altria
Cigarettes are sometimes considered an inelastic product, which means that people will buy them regardless of the cost and economic conditions. But with increasing global excise taxes and an unpredictable economy, it sure looks like demand can and will be hit by external factors. Whether this less-than-auspicious trend is merely temporary remains to be seen.
Philip Morris International can cut costs to save face, but I've got to wonder how it and other tobacco companies, such as Altria, Lorillard