Smoking Profits (PM, MO)

Philip Morris International Inc. (NYSE: PM) is showing that smoking is still cool, at least as far as earnings are concerned.  The international tobacco giant reported adjusted earnings of $1.00 EPS for 7% earnings growth, and revenues were $6.61 billion.  Thomson Reuters had estimates of $1.01 EPS and $6.92 billion.  This comes on the heels of Altria Group Inc. (NYSE: MO) earnings.  Today’s news seems mixed, but the guidance and the buyback data may carry the show.

The company noted an unfavorable currency adjustment of $138 million in revenues due predominantly to the Euro; and excluding the currency net revenues increased by 2.5%. There were also a few drags on its operations.  Among those were various timing issues affecting several markets, Japan in particular.  Also noted was a significant excise tax increase implemented in Greece and Turkey.

The company’s increased market share is allowing it to raise and narrow guidance ahead.  For 2010, the company sees $3.90 to $3.95 EPS versus $3.24 in 2009 and versus Thomson Reuters estimates of $3.77 EPS.

‘International Tobacco’ repurchased 20.7 million shares of its common stock for $1.1 billion.  The company had already juiced its dividend up, but the company is adding to share buybacks via an acceleration of buybacks of an additional $1.0 billion in 2010 under an existing buyback plan.

Revenues rose by 0.4% excluding excise taxes, but that was 2.5% growth excluding currency.  Free cash flow rose by 33.6% to $2.3 billion, but this figure was listed as being up 47.4% excluding currency.

It is still too early to see live price indications but shares closed Wednesday at $57.48 and the 52-week trading range is $42.94 to $58.78.

Altria Group Inc. (NYSE: MO) saw its shares rise yesterday to $24.92 from $24.75 after its earnings after beating earnings with $0.54 EPS versus $0.52 EPS expected, and the 52-week range there is $17.80 to $25.00.  The boost to Altria was on smokeless tobacco and on Marlboro pricing.

JON C. OGG