Cigarette maker Philip Morris International Inc. said Thursday that its third-quarter net income grew nearly 31 percent as it sold more cigarettes, particularly in Asia, and raised prices.
The seller of Marlboro and other cigarette brands overseas also lifted the lower end of its full-year earnings forecast by 5 cents. It now expects profit of $4.75 to $4.80. Analysts had expected earnings of $4.75 for 2011.
The company's July-September quarter topped analyst expectations, and shares rose $2.18, or 3.3 percent, to $68.21 in late morning trading.
Philip Morris International earned $2.38 billion, or $1.35 per share, up from $1.82 billion, or 99 cents per share, a year ago. Adjusted for one-time costs, the company earned $1.37 per share.
Excluding excise taxes, revenue grew about 26 percent to $8.4 billion.
Analysts polled by FactSet had expected earnings of $1.24 per share on revenue of $7.54 billion.
Philip Morris International said the number of cigarettes it shipped grew 4.5 percent to 239.5 billion cigarettes. Total Marlboro shipments rose 4 percent to 78.9 billion cigarettes.
Shipments to Asia rose nearly 13 percent, and revenue for the region jumped 53 percent. Chief Financial Officer Hermann Waldemer said in a conference call with investors that the Asian market is the "growth engine" of Philip Morris International. Growth in Asia is helping offset declining smokers in Western Europe and in Latin America and Canada.
The company bought Philippines company Fortune Tobacco Co. in February 2010, bolstering its Asian business.
Japan's earthquake and tsunami this March has also buffeted Philip Morris International's Asian sales. Supply disruptions stemming from the disaster at Japan Tobacco Inc., the world's No. 3 tobacco maker, has helped Philip Morris International increase market share in Japan. Shipments soared 47 percent in the third quarter.
The company also increased prices in Japan.
CFO Waldemer said that the company was able to keep its Japanese retail market share at 30 percent in September and early October, even after competitors' products were back on the market. Before the earthquake, Philip Morris International's share in Japan was about 26 percent.
"Japan has been an example of us seizing a business opportunity that presented itself in an optimal manner," Waldemer said.
Shipments also grew about 5 percent in Eastern Europe, the Middle East and Africa, but fell 3.5 percent in the European Union and dropped about 1 percent in the Latin America and Canada region because of declines in Mexico.
Philip Morris International said its market share increased or remained stable in several key regions.
Smokers face tax hikes, bans, health concerns and social stigma worldwide, but the effect on cigarette demand generally is less stark outside the United States. Philip Morris International has compensated for volume declines in Western Europe and other important markets by raising prices and cutting costs. The company said it plans to exceed its targeted $250 million in cost cuts in 2011.
The weaker U.S. dollar also helped earnings. Philip Morris International sells all its goods overseas. Converting revenue in stronger foreign currencies back into the dollar gives a boost.
The company also said it spent $1.4 billion to buy back 21.2 million shares of stock in the quarter. That can lift earnings per share.
Philip Morris International, with offices in New York and in Lausanne, Switzerland, is the world's second-biggest cigarette company after the state-controlled China National Tobacco Corp.
Altria Group Inc. in Richmond, Va., the owner of Philip Morris USA, spun off Philip Morris International in 2008. Altria is the largest U.S. cigarette seller.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.