* Philip Morris Q3 EPS 93 cts tops Wall St view for 91 cts
* Raises '09 EPS view to $3.20-$3.25 from $3.10-$3.20
* Reynolds Q3 EPS $1.24 tops Street view of $1.17
* Raises '09 EPS view to $4.60-$4.70 from $4.40-$4.60
* Shares of both companies unchanged in premarket trade
(Adds executive comments, share activity, sales details)
By Martinne Geller
NEW YORK, Oct 22 Philip Morris International
Inc (PM.N) and Reynolds American Inc (RAI.N) posted
higher-than-expected quarterly profits and raised their
full-year forecasts on Thursday, as tax increases and the
recession did not hurt the cigarette makers as much as feared.
Large tobacco companies have been battling a tough economy
that has led some consumers to turn to cigarettes from
lower-priced rivals. In addition, tax increases, like the
62-cent-a-pack increase in the United States earlier this year,
have also pressured volume.
"This year has been marked by unprecedented increases in
excise taxes on tobacco products, an extremely weak economy and
intense competitive activity," said Reynolds Chief Executive
Ivey attributed Reynolds' third-quarter performance to
improved operating margins, market share gains in some of its
cigarette brands, improved volume and market share for its
moist snuff tobacco, and growth at its Santa Fe Natural Tobacco
At the company's R.J. Reynolds division, higher prices,
lower promotional expenses and productivity gains largely
offset the impact of higher pension expenses and an 11 percent
decline in cigarette volume.
Reynolds said its Camel and Pall Mall brands increased
their market share by 2.1 percentage points in the quarter,
bringing their combined market share to 12.7 percent.
PHILIP MORRIS SHIPMENT VOLUME DECLINES
Philip Morris, the world's largest non-state-owned tobacco
company, said sales volume was hurt by price increases and
economic weakness, particularly in Spain and Ukraine.
Excluding the impact of acquisitions, Philip Morris'
cigarette shipment volume fell 4 percent in the quarter.
However, the year-to-date decline is 2.1 percent, which
Chief Executive Louis Camilleri said was more in line with the
company's expectations for the full year.
Philip Morris reported third-quarter profit of $1.80
billion, or 93 cents a share, down from $2.08 billion, or $1.01
a share, a year earlier. Analysts on average were expecting 91
cents a share, according to Thomson Reuters I/B/E/S.
Net revenue excluding excise taxes was $6.59 billion,
roughly in line with analysts' average estimate.
Reynolds, which makes Camel cigarettes and Grizzly
smokeless tobacco, said profit was $362 million, or $1.24 per
share, in the quarter, compared with $377 million, or $1.29 per
share, a year earlier.
Analysts on average forecast $1.17 per share, according to
Thomson Reuters I/B/E/S.
Net sales fell about 5 percent to $2.15 billion.
For the year, Reynolds forecast earnings of $4.60 to $4.70
per share. In July, its forecast was $4.40 to $4.60 per share.
Analysts on average were expecting $4.59 per share.
Philip Morris also raised its outlook, saying it expected
to earn $3.20 to $3.25 per share in 2009, up from an earlier
forecast of $3.10 to $3.20.
Philip Morris' forecast includes a 4 cent-per-share special
charge and a 52 cent-per-share hit from foreign exchange. The
company only sells outside the United States, and the stronger
dollar has reduced the value of international sales.
Analysts on average were expecting $3.24 per share for the
year, according to Thomson Reuters I/B/E/S.
Shares of both companies were flat in premarket trade.
(Reporting by Martinne Geller; Editing by Dave Zimmerman and