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Philip Morris 1Q on target
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April 18, 2000: 12:01 p.m. ET
Earnings meet estimates; reflects rise in N. America, Europe cigarette sales
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NEW YORK (CNNfn) - Philip Morris Co. reported Tuesday first-quarter earnings that are in line with expectations, citing higher cigarette sales in Europe and North America as well as strong food and beverage sales.
The world's largest tobacco producer posted earnings from operations of $2.1 billion, or 89 cents a diluted share, up from $1.96 billion, or 80 cents a share, in the year-earlier period. The per-share figure matches the estimate of analysts polled by earnings tracker First Call Corp.
The producer of Marlboro cigarettes, Kraft cheese and Miller beer said its revenue increased a little more than 4 percent to $20.3 billion.
 Higher tobacco sales helped boost the bottom line as wholesalers built up depleted inventories, the company said. Domestic operating income from tobacco sales gained 6.5 percent to $1.1 billion while international operating income rose 4.5 percent to $1.5 billion -- reflecting two price increases the company implemented in the past year to boost its profits.
On the food side of its business, operating income rose 6.6 percent to $258 million on stronger sales of its coffee, cheeses and confectionery items, even as unfavorable currency exchange rates detracted from overall profits. Contract brewing of beer, which Philip Morris takes on for companies that farm out their production, jumped 12.5 percent during the quarter.
"Our first-quarter results clearly demonstrate that our business fundamentals are robust," Chairman Geoffrey Bible said. "Overall, we had a solid quarter and remain on track to meet our full-year growth targets." Analysts surveyed by First Call expect the company to earn $3.71 a share for the year.
 "It was actually even better than it looks," said Roy Burry, an analyst with Brown Brothers Harriman. "Their results were good all the way down the line." Burry had anticipated earnings of 90 cents a share in the latest quarter and expects the company to earn $3.75 for the full year. He currently rates the stock a "buy."
Higher corporate expenses weighed on the company's bottom line during the quarter, as did unfavorable exchange rates, which also impacted other areas of its business, the company said. Burry anticipates those higher costs peeled of an additional 5 to 6 cents a share of profit, meaning Philip Morris would have otherwise beat Wall Street's expectations.
On the flip side, the company's earnings got a per-share profit boost from a lower number of shares outstanding. The New York-based company paid $921 million for 45 million of its shares outstanding in the latest quarter.
Shares of Philip Morris (MO: Research, Estimates) slipped 3/16 to 21-1/16 in early trading on the New York Stock Exchange. 
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Philip Morris
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