MANILA, Philippines–Tobacco control advocates on Thursday called the merger of leading cigarette companies Fortune Tobacco Corp and Philip Morris Philippines Manufacturing Inc (PMPMI) a “kiss of death blown to many Filipinos.”

Health Justice, a non-government organization that aims to bridge the gaps between health science and law, said it expects the 2 cigarette manufacturers to also combine their resources in lobbying to weaken tobacco control measures.

“The government can expect more tobacco-industry backed leaders or policy makers, more organized lobbying techniques, more corruption, more smuggling, less tax collection, and less compliance with tobacco control laws,” said lawyer Deborah Sy, executive director of Health Justice.

She specifically reacted to news reports that, “When asked which group (Philip Morris or Fortune) initiated the [merger] talks, PMPMI Chris Nelson said: ‘We kissed at the same time.’”

Early Thursday, reports said that PMPMI and Fortune “concluded an agreement to form a new company, Philip Morris Fortune Tobacco Corporation.”

“Each contributed selected assets and liabilities into the new company, with each party holding an equal economic interest,” reports quoted PMPMI’s Nelson.

Fortune Tobacco, owned by business tycoon Lucio Tan, will control the finances and the distribution, while multi-national PMPMI and maker of top-selling brand Marlboro, will focus on manufacturing, operations and management of the cigarettes.

Fortune, which produces leading local cigarette brands Fortune and Hope, corners 60% of the industry share in the country. PMPMI, which operates a large cigarette manufacturing plant in Batangas, has a 30% share.

With the union of the two companies, 90% of the cigarette market will be in the hands of a single group.

This is not the first time that PMPMI had bought into a local cigarette company in a country where it’s operating. In 2005, Switzerland-based Philip Morris International (PMI) acquired majority of Indonesia’s largest tobacco company, PT HM Sampoerna Tbk. Sy said that PMI’s move had resulted to a more “aggressive tobacco industry.”

With PMI’s using a local name, it has the chance to effectively market its own brands. At the same time, PMI is able to lobby systematically against anti-tobacco laws in Indonesia.

Newsbreak earlier reported that tobacco companies, through its group Philippine Tobacco Institute, allegedly distribute lobby money to congressmen, and sometimes contribute to their campaign kitties, to block tobacco control proposals, like putting graphic health warning on tobacco products and increasing its taxes.

The bills, which were not approved before the 14th Congress went on recess, sought to discourage the public from smoking. The World Health Organization recorded some 90,000 smoking-related deaths every year worldwide that can be attributed to high cigarette consumption.

by Lilita Balane, Abs-cbnnews

Cigarette maker Philip Morris International Inc. said Thursday that raising its prices and selling more cigarettes in emerging markets combined with the benefits of a weaker dollar to boost its fourth-quarter profit by 5 percent.

The seller of Marlboro, Parliament, Virginia Slims and other brands of cigarettes overseas also announced a new three-year, $12 billion share buyback program to begin in May.

Its shares rose $1.86, or 4 percent to close at $48.67 Thursday.

Philip Morris International _ the world’s second-largest cigarette seller after China’s state-owned company _ said its quarterly profit rose to $1.5 billion, or 80 cents per share. That compares with $1.45 billion, or 71 cents per share, a year earlier. And the profit tops the 78 cents per share analysts forecast.

The company’s revenue spiked 10 percent to $6.72 billion. Analysts expected revenue of $6.49 billion.

The results capped a difficult year, when the company’s profit fell 8 percent to $6.34 billion, or $3.24 per share. In 2008, it earned $6.89 billion, or $3.31 per share. Its revenue fell 3 percent to $25 billion, from $25.71 billion in 2008.

CEO Louis C. Camilleri said in a statement that the company compensated for consumers buying cheaper cigarettes worldwide _ and for the weak economy _ by raising its prices, increasing its market share and cutting costs during the fourth quarter.

In a conference call with investors, Camilleri said the company performed well “despite challenges we faced in numerous markets that bore the brunt of the global economic downturn,” which is a “testament to the vigor and breadth of our brand portfolio.”

While tax hikes, smoking bans, health concerns and social stigma have cut cigarette demand worldwide, the decline is less stark in its newer markets outside the United States. Growing demand in Africa, Asia and the Middle East also has helped to offset declines in the European Union, Latin America and Canada.

The World Health Organization estimates about 30 percent of adults worldwide smoke. The U.S. Centers for Disease Control and Prevention estimates that about 20 percent of American adults do.

Philip Morris International’s cigarette shipments edged up less than 1 percent to about 218.2 billion cigarettes during the quarter. Sales in Eastern Europe, the Middle East, Africa and Asia rose 4 percent to $1.87 billion. In Asia, sales rose nearly 17 percent to $1.71 billion.

But the company’s revenue also rose 11 percent in the European Union to $2.37 billion _ a 4 percent increase, excluding the benefit of the weaker dollar.

Companies that sell goods internationally convert revenue from foreign currencies into dollars when they report their financial results. If the dollar weakens relative to those currencies, revenue in those currencies translates into more dollars.

The company, which has offices in Lausanne, Switzerland, and New York, expects to earn $3.75 to $3.85 per share for 2010. Analysts expect a 2010 profit of $3.82 per share.

Philip Morris International was spun off in 2008 from Richmond, Va.-based Altria Group Inc., owner of Philip Morris USA.

The stock has traded between $32.04 and $52.35 during the past 52 weeks.

The Associated Press

Kevin Duffey writes: As the market seems to be in correction mode in recent weeks, I’m starting to become more focused on some positions that I want to accumulate. One of these has been Philip Morris Int’l (PM).
For a potential play, you can now sell a January 2011 put with a $40 strike price for $3.20 premium (as of this writing). Note that you can collect $320 on essentially $4000 in cash (for every put contract) which is an 8% return. It’s actually slightly higher since the time to hold the option is less than a year.

Compare the $3.20 you can collect versus holding shares of the stock. The annual dividend payout on PM is $2.32. So by selling the put versus holding the stock, you can earn an additional $.88 per share between now and January of next year. Even more, you’re essentially obligated to PM shares at $40 per share versus today’s price of around $46 per share, so if you end up owning the shares, your cost basis is based on $40 per share versus today’s price.

I think it’s a great way to collect an 8% return with very low risk. Your only risk is if PM goes well below $40 and you’re required to purchase the shares at $40; obviously, this is still better than buying shares at $46. PM is a great long term holding, consider selling puts to pick up shares at lower prices and earn a higher return in the near term.

Remember, if you do this strategy, be sure you have the cash in your account to purchase the shares if the strike price hits.

If you want to be more aggressive, and you wait for the market to move even lower, you will potentially be able to sell the Jan 2011 $40 Puts for even more income, or target a strike price even lower than $40. Then again, you might not get that opportunity.

Disclosure: I hold shares of Philip Morris Int’l (PM) and am looking to buy more as the market move lower.

By Kevin Duffey, Marketoracle