Philip Morris profit up, sets $12 billion buyback

The company, which sells Marlboro cigarettes and other brands outside the United States, said selective price increases helped it offset tough economic conditions and high unemployment rates that prompted some smokers to trade down to lower-priced brands.

The fragility of the economic recovery, particularly with regard to employment levels and currency volatility, naturally warrants a cautious outlook for 2010, CEO Louis Camilleri said in a statement.

However, we enjoy solid momentum and remain confident that we will again post strong financial results this year.

Philip Morris, the world's largest non-state-owned tobacco company, said it intends to buy back $12 billion in stock over the next three years, starting in May. It expects to repurchase $4 billion worth of shares this year.

Profit for the quarter ended December 31 was $1.52 billion, or 80 cents a share, compared with $1.45 billion, or 71 cents a share, a year earlier.

Excluding some costs, it said earnings were 81 cents a share. Analysts, on average, forecast 79 cents a share, according to Thomson Reuters I/B/E/S.

Fourth-quarter revenue rose 9.7 percent to $6.7 billion, including a favorable currency impact. Excluding currency, it said revenue rose by 7.9 percent.

Cigarette shipment volume rose 0.5 percent to 218.2 billion units in the quarter, as market share gains in Algeria, Egypt and South Korea helped offset declines in the European Union.

Philip Morris has been able to take advantage of growing cigarette demand in emerging markets, even as the slumping economy and higher taxes have taken their toll on demand in parts of western Europe.

Camilleri said on a conference call that, while there was concern in the past year that consumers would abandon higher-priced premium cigarettes for cheaper ones, that phenomenon has been relatively restricted.

Premium cigarette sales will remain under pressure in 2010 due to high unemployment, but Camilleri said the pressure should not be pervasive or particularly disruptive.

For 2010, the tobacco company expects organic shipment volume, or volume excluding acquisitions, to parallel 2009.

It also forecast 2010 earnings of $3.75 a share to $3.85 a share. Analysts, on average, have been expecting $3.82 a share.

The company's shares were up $2.00, or 4.3 percent, to $48.81 in afternoon trading.

(Reporting by Nicole Maestri; editing by Gerald E. McCormick, Gunna Dickson and Andre Grenon)