Global consumer goods conglomerate Philip Morris Companies, which controls the Kraft Foods business as well as the Marlboro tobacco brand, has reported underlying diluted earnings per share up 8.6% to US$1.14 for the Q1 of 2002, versus the Q1 of 2001.
“Philip Morris had a solid quarter in a very challenging global environment,” said Geoffrey C. Bible, chairman and CEO: “Our domestic tobacco business delivered higher income and continued to grow retail share for its premium brands. Our international tobacco business achieved higher volume and income, despite unfavourable currency and continued economic weakness in certain markets. Our beer business continued to show signs of improvement.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“In addition, Kraft Foods delivered strong income gains generated by volume growth and continued productivity and synergy gains.”
During the Q1, the company repurchased 21.5 million shares of its common stock at a cost of US$1.1bn.
Underlying results
On an underlying basis, net revenues for Q1 2002 increased 3% to US$20.5bn, operating companies’ income increased 3.9% to US$4.5bn and net earnings rose 5.9% to US$2.5bn. On a constant currency basis, operating companies’ income increased 8.2% and net earnings rose 11%. Diluted earnings per share rose 13.3%.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataReported results
On a reported basis, net revenues for Q1 2002 increased 2.9% to US$20.5bn, operating companies income increased 13.4% to US$4.3bn, net earnings rose 32.9% to US$2.4bn and diluted earnings per share rose 36.3% to US$1.09.
Food
Kraft Foods reported 2002 Q1 results with worldwide underlying volume increasing 2.5%. Underlying operating companies income increased 7.4% to US$1.5bn.
On an underlying basis, volume for Kraft Foods North America increased 2.5% due primarily to strong results in Beverages, Desserts and Cereals and contributions from new products. Operating companies income improved by 7.2% to US$1.3bn, driven by volume growth and productivity and synergy savings, partially offset by higher dairy commodity costs.
International food
On an underlying basis, volume for Kraft Foods International (KFI) increased 2.5%, driven by gains in Europe, Middle East and Africa, and Latin America and Asia Pacific. Operating companies income increased 8.4% to US$259m, due to productivity and synergy savings. Excluding an unfavourable currency impact of US$6m, operating companies income would have increased 10.9%.
Domestic tobacco
Underlying operating companies income for Philip Morris Inc, the company’s domestic tobacco business, increased 4.0% to US$1.3bn, driven primarily by higher pricing and volume, partially offset by the timing of trade pricing credits.
PM USA’s shipment volume increased 1.3% to 52.3 billion units. Industry volume as reported by Management Science Associates increased 2.9%. The company’s shipment share was 51.6%, down 0.8 points.
According to data from Information Resources Inc./Capstone, the combined retail share for its four focus brands, Marlboro, Parliament, Virginia Slims and Basic, was up 0.7 points to 47.6%, although PM USA’s retail share was essentially unchanged at 50.7%.
The company’s retail share of the premium segment grew 0.8 points to 62.2%, while the industry’s premium segment decreased 0.7 points to 72.9% at retail. Importantly, PM USA’s premium brands collectively increased their retail share by 0.2 share points in the quarter.
International tobacco
Underlying operating companies income for Philip Morris Int rose 0.4% to US$1.6bn and shipment volume increased 2.4% to 184.0 billion units. The company gained share in most of its top 25 income markets.
In Western Europe, shipment volume was down slightly, and in Central Europe, the Middle East and Africa, volume declined 3.6%. In Eastern Europe there was double-digit volume, in Asia volume was up 7.2% and in Latin America, volumes rose slightly.
Beer
Underlying operating companies income for Miller Brewing Company increased 4.8% to US$130m, due to higher domestic shipments, partially offset by increased marketing expenses.
Domestic shipment volume was up 1.6% to 9.5 million barrels, driven by higher shipments for its core brands and the successful introduction of Skyy Blue(TM). Shipment volume was up 1.6% for Miller’s core brands, with Miller Lite, Miller High Life and Foster’s all recording growth, while Skyy Blue(TM) volume essentially offset the declines in Miller’s lower-priced non-core brands.
Early in 2002, Miller entered into agreements with Skyy Spirits LLC, Allied Domecq PLC and Brown-Forman Beverages Worldwide to launch a range of new ready-to-drink flavoured malt beverages. The flavoured-alcohol malt beverage category is the fastest growing segment in the wine, beer and spirits industry. During the Q1, the partnership with Skyy Spirits introduced Skyy Blue(TM), a flavored malt beverage with a citrus flavour.
Financial services
Underlying operating companies income for Philip Morris Capital Corporation (PMCC) rose 10.9% to US$71m. The increase was driven by growth in leasing activities and by continued gains derived from PMCC’s finance asset portfolio.
Bible added: “Looking forward, we continue to project full year 2002 underlying diluted earnings per share growth in the range of 9% to 11%. Currency, economic weakness in certain international markets [among other things] represent continuing risks to this projection.”
