US TOBACCO Giant Philip Morris Changed the Name of Its Parent Company to Altria Last Week but the Rebranding Failed to Hide the Weak State of Its Business
US TOBACCO giant Philip Morris changed the name of its parent company to Altria last week but the rebranding failed to hide the weak state of its business.
The company reported an 18% slump in fourth-quarter profits to $18.8bn (u11.5bn, e16.3bn) year-on-year and warned investors to expect earnings-per-share growth of just 1% to 2% this year.
The slump in sales came from its tobacco business, which will still keep the Philip Morris name. Revenues were hit by increased sales of illegal cigarettes, increased competition from rival RJ Reynolds and from discount cigarette makers.
The US market is becoming tougher for premium cigarettes. Philip Morris's main brand, Marlboro, is now perceived as being too macho and too expensive, especially when coupled with rising state excise taxes.
The group managed to drive sales in the short term through heavy discounting and buy-two-get-one-free offers but the strategy hit margins and proved to be unsustainable.
The group's financial services arm, Philip Morris Capital, provided no help, plunging into the red after recording a $290m provision for exposure to the airline industry.
Even the group's normally reliable foods business, Kraft, disappointed. …