Philip Morris Cos. Inc. announced that 2001 third-quarter underlying diluted earnings per share rose 8.1% to $1.07, and underlying net earnings increased 5.3% to $2.4 billion. Always a major supplier to vending, the company strengthened its position with the acquisition of Nabisco last year.
"Philip Morris' third quarter 2001 results were solid. Our growth momentum continued despite an unfavorable pre-tax currency impact on income of $146 million," said Geoffrey C. Bible, chairman of the board and chief executive officer. "Domestic tobacco delivered solid income gains and our international tobacco business achieved volume growth and strong share gains in many key markets. As reported, Kraft Foods delivered solid income gains, as it continues to drive growth with successful new products and by realizing cost savings from productivity improvements and synergies."
Bible added: "Despite the challenges in the global economy, we remain confident that we will meet our previously disclosed 2001 full year underlying diluted earnings per share growth of approximately 9%," but he added that currency movements and other factors continue to be risks to this projection.
During the quarter, Philip Morris Cos. repurchased 21.7 million shares of its common stock at a cost of $1.0 billion as part of its current three-year $10 billion share repurchase program. In August, the company also announced a 9.4% increase in its dividend to an annualized rate of $2.32 per share.
On an underlying basis, for the third quarter of 2001, operating revenues increased 12.1% to $22.4 billion; operating companies income increased 12.5% to $4.7 billion; net earnings rose 5.3% to $2.4 billion; and diluted earnings per share rose 8.1% to $1.07.
Underlying results include the operating results of Nabisco in 2001, but not in 2000 and adjust for certain items, including results from operations divested since the beginning of 2000.
Kraft Foods Inc. reported that worldwide underlying volume increased 35.6%, with a 34% volume increase in North America and a 39.8% volume increase in international markets. Underlying operating companies income increased 37.2% to $1.5 billion.
On a pro forma basis, assuming Kraft owned Nabisco for all of 2000, Kraft worldwide volume increased 3.0%, reflecting the success of new products and higher volume in developing markets. Operating companies income increased 9.8% to $1.5 billion, driven by increased volume and savings from continued productivity improvements and synergies.
On a pro forma basis, volume for Kraft Foods North America increased 2.5%, due to successful new products and strong shipments in the two KFNA segments of Beverages, Desserts and Cereals as well as Oscar Mayer and Pizza. Operating companies income improved by 10.2%, driven by higher volume, continued productivity and synergy savings, partially offset by higher dairy commodity costs.
On a pro forma basis, volume for Kraft Foods International increased 4.4%, driven by continued momentum in the developing markets of Central and Eastern Europe, Latin America and Asia Pacific. Operating revenues decreased 4.1% to $2 billion, as the favorable impact of higher volume was more than offset by the negative impact of currency and lower coffee prices.
Operating companies income increased 8.2%, driven by volume growth, continued productivity savings and Nabisco cost synergies. Excluding an unfavorable currency impact of $11 million, operating companies income would have increased 12.5%.
Underlying operating companies income for Philip Morris Inc., the company's domestic tobacco business, increased 8.1% to $1.6 billion in the third quarter, driven by higher pricing and improved product mix.
Underlying operating companies income for Miller Brewing Co. declined 7.7% to $131 million due to lower volume and higher marketing spending for its core brands.
Philip Morris recorded 2000 underlying operating revenues of $80.3 billion (or $88.0 billion assuming Kraft owned Nabisco for all of 2000) and the company owns 83.9% of the outstanding common shares of Kraft.