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Philip Morris hits target
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October 17, 2001: 10:51 a.m. ET
Firm meets overseas growth estimates but overall sales miss mark.
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NEW YORK (CNNmoney) - Philip Morris Cos. posted improved third-quarter profits Wednesday that met Wall Street expectations on the strength of improved overseas cigarette sales.
The tobacco, beer and snack food maker earned $2.3 billion, or $1.07 per share, excluding special items, up about 8 percent from the $2.2 billion, or 99 cents per share, it earned on the same basis a year earlier. That was in line with the forecast of analysts surveyed by earnings tracker First Call. Sales rose to $22.4 billion from $20.1 billion, but missed First Call's forecast of $22.8 billion.
Philip Morris (MO: down $0.50 to $50.19, Research, Estimates) said it remains confident that its operations will achieve a 9 percent gain in diluted earnings per share for the entire year, although it said that it faces risks from changes in currency exchange rates. First Call forecasts that the company should earn $4.05 per share this year, which is up 9 percent from the $3.71 per share it earned a year earlier.
The company's shares fell 63 cents to $50.06 in following the announcement Wednesday morning.
Philip Morris' earnings come a day after Kraft Foods (KFT: up $0.12 to $33.72, Research, Estimates), which the company spun off in June in the year's biggest initial public offering, beat third-quarter estimates by a penny.
Profits from its domestic tobacco business increased 8.1 percent in the quarter to $1.6 billion. However, shipment volume in the United States declined 2.8 percent to 52.5 billion cigarettes. The company blamed the drop on timing of promotions shipped in June and an overall decline in industry volume.
International tobacco profit was essentially flat from a year ago at $1.4 billion as volume and higher pricing helped offset negative currency transactions. Excluding the negative currency impact, international profits would have grown 9.1 percent, the company said.
The company's biggest overseas growth came in Eastern Europe, where volume increased 17.2 percent, primarily reflecting sales in Russia and Ukraine.
International shipment volume grew 4.0% to 183.5 billion units. The company also saw big volume growth in Western Europe, the Middle East and Africa, which increased 2.9 percent.
Miller Brewing Co., which is owned by Philip Morris, reported a 7.7 percent decline in income to $131 million due to lower volume and higher marketing spending for its core beer brands.
Domestic shipment volume declined 3 percent to 10.3 million barrels, partially reflecting lower inventories and overall industry softness, the company said.
Philip Morris Capital Corp., the company's financial services arm, reported a 13.6 percent profit increase to $75 million, reflecting growth in leasing and structured finance investments.
During the quarter, Philip Morris repurchased 21.7 million shares of its common stock for $1 billion as part of its three-year program. In August, the company announced a 9.4 percent increase in its dividend to $2.32 a year. 
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