RICHMOND, Va. (AP) — Cigarette maker Philip Morris International Inc. said Thursday its second-quarter net income fell 4 percent, despite higher prices, as the company sold fewer cigarettes.
The seller of Marlboro and other cigarette brands overseas said changes in currency values hurt profit in the April-June quarter, and cut its earnings guidance for the year because of the stronger dollar.
Net income was $2.32 billion, or $1.36 per share, in the second quarter, down from $2.41 billion, or $1.35 per share, a year ago. The latest quarter's profit beat Wall Street estimates by a penny, according to FactSet.
When the U.S. dollar is rising against the world's other currencies, companies that sell goods internationally take a hit when converting revenue in foreign currencies back into the dollar. That effect is particularly strong for Philip Morris International because it does all its business overseas.
Excluding excise taxes, revenue fell about 2 percent to $8.1 billion, despite higher prices. Analysts expected revenue of $8 billion.
Philip Morris International said the number of cigarettes it shipped fell about 1 percent to 238.3 billion. The company is the world's second-biggest cigarette seller, trailing state-controlled China National Tobacco Corp.
Its shares rose 14 cents to close at $89.55 Thursday.
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 by raising prices and cutting costs.
Shipments grew about 5 percent in the company's region that encompasses Eastern Europe, the Middle East and Africa, but fell 9.4 percent in the European Union and 3 percent in Latin America and Canada.
Shipments in Asia, one of its largest growth areas, fell nearly 1 percent during the quarter on a tough comparison with the year-ago period, when shipments shot up in Japan following the March 2011 earthquake and tsunami.
The events offered the company a sales opportunity because supply disruptions led Japan Tobacco Inc., the world's No. 3 tobacco maker, to stop shipping cigarettes within Japan.
The company also bought Philippines company Fortune Tobacco Co. in February 2010, bolstering its Asian business.
Philip Morris International said total Marlboro shipments fell 1.5 percent in the quarter to 76.9 billion cigarettes. The company said its market share increased or remained stable in many key areas.
"We have the best geographic footprint in the industry and leadership in both emerging and developed markets," Chief Financial Officer Hermann Waldemer said in a conference call with investors.
During the quarter, the company spent $1.5 billion to buy back 17.8 million shares of stock as part of its three-year, $12 billion buyback program that began in May 2010. A new, previously announced three-year share repurchase program of $18 billion is expected to begin Aug. 1.
The company also kept its full-year earnings forecast of between $5.10 and $5.20 per share.
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.