Will Philip Morris International Inc. (NYSE:PM) Keep Leading The Tobacco Industry?
Philip Morris International Inc. (NYSE:PM) is scheduled to report its earnings later this week and in this article, I’ll elaborate on several factors that might appeal to investors in the company. Philip Morris is the sole distributor of the iconic Marlboro cigarette brand in international markets and continues to be a global leader in the tobacco industry.
Philip Morris is a global leader in the tobacco industry
PM is also rated as a global top employer
The company’s future growth is likely to be driven by its RRPs.
The company dominates the global tobacco industry with a market share of about 28% of the global market excluding China, which is a closed market. Given its dominant position, the company is a price leader and has the ability to increase the prices of its tobacco products in any of the countries it operates in without losing market share to competitors.
However, the company faces stiff competition from companies such as Altria Group Inc (NYSE:MO) and British American Tobacco PLC (ADR) (NYSE:BTI) in many of the markets in which it operates. Furthermore, Altria has the sole distributorship rights for the Marlboro brand in the USA, while Philip Morris has the sole international rights.
There is more to the company than just selling cigarettes as the company is guided by its overarching vision of having a smoke-free world. Currently, the company owns six of the world’s top 15 international brands, which it sells in over 180 countries globally.
Philip Morris was recently recognized as a global top employer by the Top Employers Institute as well as a top employer in Africa for the second consecutive year. This demonstrates that the company has a lot going for it, which is a bonus to the company’s strong financials.
The company reported strong growth over the first half of 2017 with overall revenues growing by 4.4%, while earnings per share increased by 5.2% over the same period. The growth in earnings reported by the company was largely driven by the higher prices of the company’s products.
The main risk facing the company is the declining volumes of cigarettes sold globally as more people quit smoking in an effort to live healthy lives. However, the company’s reduced risk products (RRPs) that lower the damaging impact of smoking are likely to take off even as cigarette volumes decline, which should secure the company’s future.
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