NEW YORK – Philip Morris Cos. Inc. Wednesday said its fourth-quarter profits climbed 11 percent, despite the recession and the impact of Sept. 11 on the economy, and announced that its chief financial officer will soon become its next chief executive officer.
New York-based Philip Morris, whose long list of products includes Marlboro cigarettes and Miller beer, said that CFO Louis Camilleri will become president and CEO in April, following the company's next shareholder meeting.
Philip Morris, which owns the majority of Kraft Foods Inc. , also gave earnings growth projections for the year.
Chairman Geoffrey Bible, lauded for carrying the company through tough litigation, will remain chairman until August, when he reaches Philip Morris' mandatory retirement age of 65.
Camilleri, 47, had been seen by many industry analysts as a strong candidate for the post.
"I think that's a very good move," Prudential Securities analyst Rob Campagnino said of the appointment. "People certainly have a level of comfort with him."
Investors are already very familiar with Camilleri, who has spoken during the company's financial conference calls. He is also scheduled to speak during a Wednesday afternoon call.
The company said it earned $2.166 billion for the quarter, or 99 cents per share on an underlying basis, up from $1.95 billion, or 87 cents a share, a year earlier.
Analysts had expected the company's earnings to come within a tight range of 99 cents to $1.00 per share, with an average estimate of 99 cents, according to tracking firm Thomson Financial/First Call.
Revenues jumped to $21.97 billion from $19.38 billion a year earlier.
Campagnino called the quarter a "strong finish to a very good year."
Shares of Philip Morris were up 19 cents at $49.98 in early-afternoon trading on the New York Stock Exchange, after climbing as high as $50.23 earlier Wednesday. The stock has climbed about 9 percent since the start of the year, in sharp contrast to the broad Standard & Poor's 500 index, which has fallen about 5 percent over the same period.
"Philip Morris continued to deliver solid results in a difficult global environment in 2001," Chairman and CEO Geoffrey Bible said in a statement.
Bible, who was named CEO in 1994 and became chairman in 1995, said the company expects 2002 underlying earnings per share to climb 9 percent to 11 percent, based on earnings of $4.42 per share for 2001. The estimate includes the elimination of amortization of goodwill and intangible assets, and is adjusted for the initial public offering of Kraft last June.
But Bible cautioned that the strong U.S. dollar and economic weakness in some international markets, among other factors, are risks to that forecast.
Credit Suisse First Boston analyst Bonnie Herzog said she was "very encouraged" by the 2002 earnings guidance.
Analysts expect Philip Morris to earn $4.80 to $4.91 per share in 2002, with a consensus view of $4.86, according to First Call.
Underlying results include the operating results of Kraft's Nabisco unit in 2001 but not in 2000, and adjust for certain items. Kraft, the largest North American food maker, is now traded as a separate stock.
DOMESTIC TOBACCO VOLUME DOWN FOR COMPANY AND INDUSTRY
The company's domestic tobacco business, PM USA, posted a 4 percent drop in shipment volume to 49.3 billion units. Industry volume fell 5.2 percent to 97.5 billion units, the company said, citing consumer goods data compiled by Management Science Associates.
Shipment volume was dragged down by wholesalers cutting inventory ahead of a Jan. 1 federal excise tax increase that applied to inventory on hand at the end of 2001, the company said.
PM USA's retail share inched up 0.3 points to 50.6 percent, the company said, citing industry data. Marlboro, the world's top cigarette brand, increased its retail share by 1.1 points to 38.1 percent, the company said.
Internationally, Philip Morris said it had strong volume performance in countries including Belgium, Indonesia, Israel, Italy, Japan, Korea, Mexico, and Russia. But it saw lower shipments in Argentina, Egypt, the Philippines, Turkey and for duty-free goods worldwide.
Philip Morris cautioned that it expects "continued erosion of the economic climate in Argentina to negatively affect income in 2002."
North American food leader Kraft on Tuesday said its fourth-quarter earnings climbed 34 percent, helped by cost savings from its buyout of cookie maker Nabisco in late 2000, lower interest expense and strong volume gains. Kraft also forecast 2002 earnings ahead of Wall Street's expectations.
Meanwhile, operating income at Miller Brewing Co., which has struggled for the past several quarters, climbed 30.5 percent to $77 million, boosted in part by volume gains and higher pricing.