Philip Morris International earnings, revenue down … big time


Great story!

Philip Morris International’s earnings and revenue are dropping, dropping faster than forecast by the company.

Philip Morris is a spin-off from Altria, which handles Philip Morris’ domestic production of cigarettes.

According to several stories I came across, Philip Morris’  revenues dropped 11 percent at the end of 2015, dropping faster than projected. Cigarette shipping volume also dropped 2.4 percent, excluding acquisitions.

What this tells me, surprisingly, is that even internationally, the tobacco industry is hurting. Now, by “hurting,” I mean, they aren’t raking in the kinds of billions there were raking in 20 and 30 years ago.  The biggest declines were in Eastern Europe,  the Middle East and Africa, where revenues were down 19 percent — that is interesting.

Here is an interesting paragraph from the the MySA Website:

International tobacco company Philip Morris International has been an attractive stock ever since it split off from domestic peer and former parent Altria Group , combining growth prospects from foreign markets with solid dividend income. But 2015 has been a tough year for Philip Morris, and between foreign currency weakness and new regulatory threats that, in some cases, are even worse than what Altria has had to face in the U.S., the global tobacco giant has seen its financials under pressure. Coming into Philip Morris International’s fourth-quarter financial report Thursday, investors were prepared for declining fundamentals, but worse-than-expected results and gloomy guidance went beyond those initial expectations.

There’s the important sentence: “new regulatory threats that, in some cases, are even worse than what Altria has had to face in the U.S.” What this is referring to are small countries around the world attempting to pass restrictions on marketing and packaging of tobacco. Philip Morris International has been in a massive legal battle for years with Australia over that country’s plain packaging laws, and they’re battling a bunch of other countries like Uruguay and New Zealand over marketing and plain packaging laws.

John Oliver’s “Jeff the Diseased Lung” was a giant “screw you” to Philip Morris International for its tactics bullying small countries around the world.

And here we go … I’ve talked about this extensively, that the tobacco industry absolutely is looking to take over the e-cig industry. From this Investor’s Business Daily article:

Chief Executive Andre Calantzopoulos said efforts to develop electronic cigarettes and other cigarette alternatives picked up steam.

“We continued to make exciting progress on the development, assessment and commercialization of our Reduced-Risk Products,” he said. “We significantly expanded the roll-out of iQOS (smokeless cigarette) in Japan and introduced it into several new markets.”

Yup, they’re absolutely going to be looking for e-cigs to help save their skins.

Anyway, I thought this was great news. Big Tobacco is slowly shrinking, not fast enough for my taste, but make no mistake, an 11 percent drop in revenue is a real hurt. I look for Big Tobacco to respond by diversifying more into e-cigs and possibly one day, marijuana.