Philip Morris sales in Russia drop 2.3% in 2011
MOSCOW. Feb 13 (Interfax) - Tobacco concern Philip Morris International Inc. (PMI) reduced sales in Russia 2.3% year-on-year in 2011 due to a drop in sales in the premium- and mid- price segment.
Russia's cigarette market narrowed by around 2% in 2011 to 375 billion cigarettes, PMI said in a press release.
PMI premium segment sales fell 2.7% because of a 12.1% drop in Marlboro supplies. Sales of Parliament cigarettes increased 4.2%. Premium segment sales did increase in the fourth quarter with a 3.2% rise thanks to a 14.9% boost to Parliament supplies. It was the first increase since the fourth quarter of 2008, the release said.
In the mid-price segment, sales were down 3.3%, including a 0.7% drop for Chesterfield and 4.3% for L&M (there was a 2% and 12.1% rise, respectively, in the fourth quarter).
In the cut-price segment, Bond Street sales went up 3.3%.
PMI increased its share of the Russian market by 0.2 percentage points in 2011 to 25.8%, A.C. Nielsen reported.
The share of the Parliament brand in the premium segment rose by 0.1 percentage points, while Marlboro's share slid 0.2%. In the mid-price segment, L&M reduced its share by 0.4% while Chesterfield's went up 0.1%. Bond Street saw its share of the cut-price segment increase 0.4%.
PMI sales in Eastern Europe, the Middle East and Africa increased 0.3% thanks to higher sales in Saudi Arabia, Algeria and Turkey due to tobacco market growth and an increase in PMI's share of the market in these countries. PMI sales in Russia and Ukraine dropped amid a drop in the market and sales in Libya fell due to economic sanctions against the country.
Sales of premium brands in this region increased for the first time since 2008 (by 5.8%).
PMI revenue in Eastern Europe, the Middle East and Africa climbed 6.4% to $7.9 billion, including thanks to the positive impact of exchange rate differences ($49 million). Without the impact of exchange rate fluctuations and asset acquisition, PMI revenue grew 5.4% thanks to higher prices and more sales. PMI cigarette prices went up the most in Kazakhstan, Ukraine, Saudi Arabia and Russia.
Operating profit in this region grew 2.4% to $3.2 billion, or 5.9% without taking into account exchange rate fluctuation or acquisitions. The increase was partially offset by a rise in marketing and infrastructure investment costs in Russia.
In the Asian market, PMI revenue climbed 34.9% and sales went up 11%. Revenue in Europe went up 4.6%, while sales dropped 5.1%. In Latin America and Canada it was 8.1% and 4.8%, respectively.
Overall, PMI revenue jumped 14.3% to $3.1 billion, or 9.2%, without the impact of the exchange rate or acquisitions. Sales went up 1.7% (0.5% without acquisitions).
Philip Morris International is one of the world's largest tobacco manufacturers. The company produces cigarettes at over 50 factories and sells in 160 countries. Philip Morris estimates that it occupies 15.6% of the global tobacco market.
In Russia, Philip Morris has factories in Leningrad region and Krasnodar territory as well as Philip Morris Sales and Marketing, which distributes cigarettes through a network of branches in over 100 Russian cities. The two factories have the capacity to produce 100 billion cigarettes per year. Philip Morris affiliated companies have invested over $1 billion in Russia.
