Philip Morris Profit Rises 9% as Promotional Efforts Pay Off
Philip Morris Cos., the world’s largest tobacco company, said its profit rose 9% in the fourth quarter as the company’s biggest promotions ever kept U.S. cigarette sales from falling even as it boosted prices.
The maker of Marlboro cigarettes, Kraft foods and Miller beer said profit from operations rose to $1.77 billion, or 72 cents a share, matching estimates. Revenue rose 7% to $18.4 billion.
Separately, the company said a voluntary retirement program at its Kraft unit would result in the loss of 600 jobs. Philip Morris expects to take a first-quarter pretax charge of $150 million for the cuts, which should result in savings of $50 million a year. Kraft’s profit rose 3% in the quarter, as cost cuts helped offset the effect of high prices for raw milk.
Philip Morris offered 45-cents-per-pack discounts on some of its most popular cigarettes in November, offsetting a price increase to pay for the industry’s $206-billion pact with 46 states to settle health claims related to smoking.
The offer kept smokers from bolting to cheaper brands, and shipments dropped only 6.2%, less than forecasts of declines up to 10%.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Bell Atlantic Corp., the nation’s largest local phone company, said its fourth-quarter earnings rose 12% to $1.09 billion, or 69 cents a share, meeting forecasts, as it sold more high-profit services such as call waiting and cut costs related to its acquisition of Nynex Corp. Revenue rose 5% to $8.08 billion.
* DuPont Co., the largest U.S. chemical company, said its fourth-quarter operating profit fell a less-than-expected 9% to $682 million, or 60 cents a share, as declining costs and rising white pigment sales partly offset lower fiber and chemical prices. Including profit from its 70% interest in Conoco Inc., which DuPont plans to sell, per-share results of 61 cents beat the 58-cent average estimate of analysts surveyed by First Call Corp. Sales rose 3.3% to $6.1 billion. Revenue was $6.46 billion in the three months ended Dec. 31, compared with $6.07 billion in the year-ago period.
* General Dynamics Corp.’s fourth-quarter profit rose 16% to $96 million, or 75 cents a share, 2 cents higher than the average estimate, on strong sales at its unit that makes submarines and destroyer ships. The defense contractor’s sales grew 33% to $1.47 billion.
* Sony Corp. said its third-quarter profit from operations fell 26% as the rising yen cut the value of foreign earnings and sales of computers and appliances slumped. A one-time gain from the sale of securities pushed net income up 1.8% to about $970.78 million from a year ago, the company said. Sales fell 3% to $16.79 billion.
Operating profit from electronics dropped 49% amid weak prices, offsetting gains in Sony’s other divisions. Sony Pictures improved profit, despite a decline in revenue, because of gains from home-video titles, strong results from “The Mask of Zorro” and improvements in its TV production business. The music division’s profit was boosted by releases from Mariah Carey, Celine Dion and George Michael.
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