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Philip Morris Earnings: Here is What You Need to Know

Philip Morris Earnings ReportPhilip Morris International (NYSE: PM) reported its quarterly earnings Thursday before the markets opened, and the report is seen as generally positive on the Street. The company reported quarterly EPS of $1.36, which beat estimates by 1 cent, thought revenue of $8.1 billion was down nearly 2 percent from the second quarter of 2011. In Thursday morning trading, PM stock was up more than 1 percent to $90.50 per share.

The EPS figure was listed up 0.7 percent from 2011, but excluding currency rates, was actually more than 8 percent higher. However, worldwide cigarette volume was down 1.2 percent. Operating income was reported at $3.7 billion, down nearly 3 percent from the same period in 2011.  The company spent $1.5 billion in the quarter repurchasing nearly 18 million shares of common stock. Europe was the biggest hit to sales volume for the company, as that region reported a decline of more than 9 percent. The company reported that currency affected its numbers negatively by more than 7 percentage points.

The company did, however, reaffirm its full-year, currency-neutral EPS forecast of $5.10 to $5.20, which is up from $4.85 in 2011.

“Despite the anticipated Japan hurdle and currency headwinds, we had a solid second quarter which underscored our sustained business momentum,” said CEO Louis C. Camilleri. “Excluding the Japan hurdle, our year-to-date organic cigarette volume grew by an exceptional 3.3%. On the same basis, our currency neutral, reported and adjusted diluted earnings per share were up by a very robust 17.2% and 18.2%, respectively. Our broad geographic footprint, world-class brand portfolio and a strong pricing environment remain the cornerstone of our continuing ability to capitalize on growth opportunities around the world, whilst enabling us to weather uncertainty in those markets where economic conditions are still currently weak.”

The news seems to affect PM stock positively, which is good news for hedge funds like Tom Russo’s Gardner, Russo & Gardner and Phill Gross and Robert Atchinson’s Adage Capital Management. GR&G was invested $712 million deep in PM at the end of March, while Adage was in for $258 million. However, of the five hedge funds with the largest stakes in PM stock by value, four of them had increased their share holds during the first quarter of 2012 (Adage increasing its stake by 21 percent). GR&G, meanwhile, sold off 2 percent of its stake during the quarter. Billionaire Jim Simons has also been a long term stock holder of PM (see Jim Simons’ top stock picks).

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