Cigarette maker Philip Morris International Inc. said Thursday that its third-quarter net income grew 1.3 percent as higher prices helped offset unfavorable changes in currency exchange rates.
The seller of Marlboro and other brands overseas said it earned $1.82 billion, or 99 cents per share, for the period that ended Sept. 30. That's up from $1.79 billion, or 93 cents per share, in the same period last year.
Excluding one-time items, the company says it earned $1 per share. Analysts expected $1.01 per share.
Revenue excluding excise taxes edged up less than 1 percent to $6.6 billion. Analysts expected $6.98 billion.
Philip Morris International shares edged up 25 cents to $57.74 in morning trading Thursday.
The company also raised its full-year earnings guidance Thursday to a range of $3.90 to $3.95 per share, on favorable currency exchange rates, improved business performance and a lower tax rate.
When the dollar is rising, companies that sell goods internationally and must convert revenue from foreign currencies usually take a hit in the dollar value of that revenue. That effect is particularly strong for Philip Morris International, because it does all its business overseas. The effect is reversed when the dollar's value is declining, as it has recently.
"Our underlying businesses performed strongly in the third quarter ... with good share momentum across all regions," Chief Financial Officer Hermann Waldemer said in a conference call with investors, adding that Marlboro is performing well and "pricing power remains strong."
Philip Morris International, with offices in New York and in Lausanne, Switzerland, said cigarette shipments grew 4.5 percent from last year's third quarter to 229.2 billion sticks. Especially key were large gains in Asia, including Indonesia, Korea and Pakistan, and the favorable impact of acquiring Fortune Tobacco Co. in the Philippines.
Shipments fell 4.6 percent in the European Union, where tax hikes hurt as well. Volumes fell about 3 percent in Eastern Europe, the Middle East and Africa and about 2 percent in Latin America and Canada.
Total shipments of its premium Marlboro brand fell 1.2 percent to 75.9 billion cigarettes in the quarter, while market share increased or remained stable across the regions in which the company operates.
Smokers face tax hikes, bans, health concerns and social stigma worldwide, but the impacts on cigarette demand are less stark outside the United States. Philip Morris International has compensated for volume declines by raising its prices, increasing its market share and cutting costs.
Philip Morris International is the world's second-biggest cigarette company after the state-controlled China National Tobacco Corp. Altria Group Inc. in Richmond, Va., owner of Philip Morris USA, spun off Philip Morris International in 2008. Altria is the largest U.S. cigarette seller.