Philip Morris Discloses its Buyback Plan

June 20th, 2012 00:00

Philip Morris International (PMI) is the largest international cigarette enterprise, with smoking products sold in about 180 countries of the world. In terms of market share, PMI occupies first position among 13 markets and the second in other 10 of the 30 leading markets by tobacco industry size. Company’s main objective is to assure higher profits for shareholders, and create premium quality and innovative smoking products to our adult clients, and also decrease the hazard caused by smoking products. Recently the company announced a new three year share buyback program of about $18 billion, as the internationally targeted enterprise plans to return money cash to shareholders.

Since Philip Morris spin off from Altria Group, it has spent approximately $22.9 billion to buyback 435 million shares. The manufacturer of Marlboro, Parliament and L&M brands, which already repurchased about $1 billion in stock in the first quarter, estimates to buy back more than $5 billion in 2012. The new buy back program starts August, 1. Current $12 billion repurchase program, which started in may 2010, is planned to be finished earlier that is was previously declared by company’s representatives.

Great demand in Asia has increased sales for the tobacco producer, which has lifted profits in recent quarters. Philip Morris has decided to boost growth in developing markets as volumes have dropped in largest European countries. Practically all of the company’s sales come from outside the U.S. Dividend yields, share buy back and firm cash flows have prompted investors to cigarette stock of late. Three of the four world giant tobacco companies have surpassed the Dow Jones Industrial Average in 2012, including PMI, which has grown by 10% this year. Since launching its activity at $50, Philip Morris has increased 72%, outperforming such tobacco leaders as Altria, Reynolds American and Lorillard within the same period. PMI, which reached an all-time high of $90 in May, was currently trading up 1.5% to $85.30.

Morgan Stanley, in a recent study on the tobacco industry, stated that the investment bank’s $90 price target acknowledges that Philip Morris keeps local profit growth between 6% to 8% over the average term.

By Steve Shepherd, Staff Writer. Copyright © 2012 All rights reserved.

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