RICHMOND, Va. (AP) -- Cigarette maker Philip Morris International Inc., which sells Marlboro and other brands abroad, is expected to report higher profit and revenue when it releases its second-quarter results before the market opens on Thursday.
WHAT TO WATCH FOR: Whether cutting costs and raising prices continued to help Philip Morris International compensate for smokers buying fewer, or cheaper, cigarettes.
Smokers face new tax increases, bans and other tobacco-control efforts, as well as health concerns and social stigma worldwide, but the impacts are starker in the U.S. than in many other countries.
Cigarette shipments fell 6.5 percent to 205 billion cigarettes the first quarter that ended in March, hurt by economic woes in the European Union and a recent tax increase in the Philippines.
Shipments grew 1.4 percent in the company's region that encompasses Eastern Europe, the Middle East and Africa, but fell about 10 percent in both Asia and the European Union. Shipments also fell 7.5 percent in Latin America and Canada.
Shipments had grown 5 percent the year before.
In Asia, one of its largest growth areas, the company said cigarette volume grew nearly 3 percent if it didn't count the Philippines. There were gains in Japan and Indonesia.
The company benefited from increases in Japan following the March 2011 earthquake and tsunami. The events offered the company a sales opportunity because supply disruptions led Japan Tobacco Inc., the world's No. 3 tobacco maker, to stop shipping cigarettes within Japan. It also bought Philippines company Fortune Tobacco Co. in February 2010, bolstering its Asian business.
Marlboro shipments fell nearly 5 percent in the quarter, to 68.7 billion cigarettes. L&M and Parliament brands posted gains.
Philip Morris International said its market share grew in a number of key markets in the first quarter, including Canada, France, Germany, Indonesia, Italy and the United Kingdom.
Earlier this year the company cut its 2013 profit guidance to between $5.55 and $5.65 per share, excluding one-time items, because of recent changes in foreign exchange rates. The forecast includes a one-year gross productivity and cost savings target for 2013 of about $300 million.
When the U.S. dollar is rising against the world's other currencies, companies that sell goods internationally take a hit when converting revenue in foreign currencies back into the dollar. That effect is particularly strong for Philip Morris International, because it does all its business overseas.
Analysts also will be interested in any updates on the company's next-generation products. Philip Morris International has said it expects to launch the first of these products between 2016 and 2017, which could include one that heats tobacco in a cigarette with a controlled heating mechanism or an aerosol nicotine-delivery system.
It also will be the first earnings call as CEO for Andre Calantzopoulos, who replaced Louis C. Camilleri following the company's annual meeting in May. Calantzopoulos had led Philip Morris International before it became an independent company.
WHY IT MATTERS: Philip Morris International, with offices in New York and in Lausanne, Switzerland, is the world's second-biggest cigarette company after state-controlled China National Tobacco Corp.
Richmond, Va.,-based Altria Group Inc., the owner of Philip Morris USA, spun off Philip Morris International in 2008. Altria is the largest U.S. cigarette seller.
WHAT'S EXPECTED: Analysts on average expect Philip Morris International to report earnings of $1.41 per share on revenue of $8.17 billion, according to FactSet. Analysts typically exclude one-time items.
LAST YEAR'S QUARTER: Philip Morris International reported net income of $1.36 per share on revenue of $8.12 billion, excluding excise taxes.
Michael Felberbaum can be reached at https://www.twitter.com/MLFelberbaum .