Does Philip Morris Profits Demonstrate Great Results?

Published on May 12th, 2014 00:00
Philip Morris

Philip Morris International (PMI) launch its quarterly survey, and shareholders have been striving for continuing decreases in sales that are likely to deliver profits boost to a standstill in the foreseeable future. The major issue for Philip Morris investors is that the company is missing its benefits over U.S. cigarette makers as Altria Group and Lorillard, as more strict rules abroad starts to generate precisely the same headwinds that American cigarette producers have battled against for years.

When Philip Morris was initially spun off from Altria, numerous traders declared that the international tobacco giant would have significantly better prospective, as a result of an understanding that international markets would be much harmless to cigarette sales growing. However, present-day tendencies indicate otherwise, as a growing amount of foreign authorities view tobacco regulations the same way the U.S. has passed years ago. Can Philip Morris have just as much achievements coping with regulating challenges as its U.S. competitors have faced in the past?

In latest months, industry experts have had combined opinions on Philip Morris revenue. They have increased their 4Q estimations by a penny per share, but they have significantly decreased their full-year 2014 predictions by practically $0.50 per share. The stock has reacted negatively, slipping 13% since October.

The crucial point for development at Philip Morris is to enter emerging markets to a larger level. At this time, the company has a massive amount of coverage to Western Europe, where the corporate atmosphere is rapidly becoming identical to what U.S. cigarette makers are used to finding locally and where taxes are even larger than U.S. cigarette taxes. In comparison, numerous emerging markets poses low tax rates and less legislations on sales procedures. That discrepancy most likely won't last permanently, but it offers a window of chance for Philip Morris to make profit on it, at least as long as growing market economic climates remain solid.

On top of that, cigarette options could have a key role in Philip Morris' expansion. Electronic cigarettes have become highly famous, and Philip Morris' relationship with Altria to build e-cigarette technologies could assist it struggle possible opposition from Lorillard and Reynolds.

By Kevin Lawson, Staff Writer.
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