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Philip Morris 2Q on target
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July 20, 1999: 11:43 a.m. ET
Despite decline in tobacco operations, company posts 2.9% profit gain
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NEW YORK (CNNfn) - Philip Morris Cos. Inc. posted a 2.9 percent increase in second-quarter profit Tuesday and met Wall Street's expectations, as its domestic food and beer businesses offset a drop in worldwide tobacco operations.
The New York-based food and cigarette conglomerate -- a component of the Dow Jones industrial average -- earned $2.1 billion, or 85 cents per diluted share, for the April-June quarter. That matched the consensus forecast of analysts surveyed by First Call.
Including a pre-tax charge of $45 million associated with employee layoffs and other costs in its domestic tobacco unit, the maker of Marlboro cigarettes, Kraft Foods and Miller beer earned $2.0 billion, or 84 cents per share.
In comparison, Philip Morris (MO) earned $2.0 million, or 82 cents per share, in the 1998 period, excluding special charges. Including charges associated with tobacco settlements and compensation for early retirement and other worker reductions, the company earned $1.7 billion, or 71 cents per share, in the year-earlier period.
Total operating revenue rose 4.4 percent to $19.8 billion in the latest quarter.
"Our business continued to make steady progress during the second quarter, performing in line with our expectations," CEO Geoffrey Bible said in a statement. He said the company is seeing some signs of recovery in Asia and "our businesses are poised for robust growth in the years ahead."
Income from the domestic tobacco business dropped 3.9 percent as volume slid 9.6 percent. Shipments of Marlboro, its signature brand, declined 9.5 percent, but market share improved. Internationally, total tobacco volume declined 6.1 percent, largely dragged down by markets in Eastern Europe.
Profits rose 7 percent to $946 million at the company's Kraft Foods North America unit, with gains cited for Capri Sun beverages, Tombstone frozen pizzas and Post Oreo O's breakfast cereal. But other cereals, as well as Maxwell House coffee, were flat in the quarter.
The Miller Brewing unit posted a 12.7 percent increase in income, to $178 million.
For the first half of the year, earnings rose to $4.0 billion, or $1.65 per diluted share, from $3.9 billion, or $1.61, a year earlier. The figures exclude special charges. Revenue grew 5.3 percent to $39.3 billion.
The profit report had little effect on the company's stock price. Shares slipped 1/16 to 37-3/8 late Tuesday morning.
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