Philip Morris Cos. Inc., the consumer products giant, said Thursday it is moving ahead with an ambitious overseas expansion program while recession continues to weigh on its businesses at home.
Speaking to Wall Street analysts at this north Florida resort, Philip Morris officials said the company stands ready to cut prices at home to keep its share of the recession-plagued U.S. market.
The company's Orange County-based land development arm, Mission Viejo Co., appears to be exempted from that price-cutting pledge, however.
"It is business as usual for us at the Mission Viejo Co.," said Wendy Wetzel, vice president of corporate affairs.
The company, with about 250 employees in Orange County, is developer of both the 10,300-acre Mission Viejo community and the 6,600-acre planned community of Aliso Viejo.
Mission Viejo Co. is also developing the 22,000-acre Highlands Ranch planned community just south of Denver.
While acknowledging that times are tough in the real estate development industry, Wetzel said home sales in Mission Viejo Co.'s two Orange County communities "are doing well in a dismal market."
Philip Morris officials said Thursday that the company is earmarking $3.5 billion for foreign operations for the next 5 years as part of a $9-billion overall capital spending budget for its consumer products operations.
Those operations include a Kraft Foods distribution facility in Santa Ana and an Oscar Mayer Co. sales office in Irvine. Chairman Michael Miles predicted a "record-breaking year" for the company in 1992, but warned that the U.S. market had not yet dug itself out of recession.
"While the outlook for our international business continues to be very positive . . . recession in the U.S. will pose challenges for our domestic companies for at least the first half of 1992," said Miles, who took over the company's helm from Hamish Maxwell last year.
"We are prepared to make further price cuts in key categories in 1992 if necessary to defend our businesses," he added.
Overseas expansion will include two previously announced cigarette manufacturing sites in Russia. The company expect to start making cigarettes there by July.
Geoffrey Bible, executive vice president for international business, told analysts the company will expand overseas operations until they are as big and profitable as its U.S. businesses. Philip Morris currently operates in 150 countries.
Meanwhile, the General Foods USA subsidiary will close a Kool-Aid plant in Evansville, Ind., and restructure another food plant in Dover, Del., with an overall loss of about 500 jobs, the company said in a separate statement from its New York headquarters.
Overall, the company expects to devote $9 billion to capital spending from 1992 to 1996, chief financial officer Hans Storr told the same meeting of analysts.
He said about 54% of that amount would be spent on its food business, 40% on tobacco, and 6% on beer.
Philip Morris stock rose 50 cents to $74.50 a share on the New York Stock Exchange after the announcement.
Times staff writer John O'Dell contributed to this report.