Philip Morris, Reynolds Top Analyst Profit Estimates

Philip Morris International Inc., the world’s largest publicly traded tobacco company, and Reynolds American Inc., the second-largest U.S. cigarette maker, reported second-quarter profit that topped analysts’ estimates and raised their 2009 earnings forecasts.

Higher prices helped Philip Morris, the maker of top- selling Marlboro cigarettes, earn 83 cents a share excluding some items, beating the average analyst estimate of 77 cents. Reynolds’ profit of $1.29 a share topped analysts’ expectations by 13 cents.

Philip Morris and Reynolds joined Altria Group Inc., the largest U.S. tobacco company, in saying price increases contributed to earnings and helped counter declining or little- changed shipments. Altria reported second-quarter earnings yesterday that also exceeded analysts’ projections.

“Everybody’s pricing has been impressive and shows the resilience of the tobacco space,’‘ Brian Barish, who manages Philip Morris and Altria shares at Cambiar Investors, said today in an e-mail. The Denver-based firm oversees $4.7 billion.

Philip Morris advanced $2.14, or 4.9 percent, to $46.02 at 4 p.m. in New York Stock Exchange composite trading. The shares have risen 5.8 percent this year. Reynolds gained $1.04, or 2.5 percent, to $42.22.

Net income at New York-based Philip Morris, which generates all of its revenue outside of the U.S., fell 8.6 percent to $1.55 billion, or 79 cents a share, in the second quarter from $1.69 billion, or 80 cents, a year earlier. Revenue declined 8.9 percent to $15.2 billion.

Philip Morris Forecast

Higher prices in Argentina, Germany, Russia and other major markets added to Philip Morris’ earnings while shipments of 223.2 billion cigarettes were little changed.

The company said currency fluctuations will hurt earnings less than it anticipated this year. It expects to earn $3.10 to $3.20 this year, higher than its February forecast of $2.85 to $3 a share.

Some analysts such as Christopher Growe of Stifel Nicolaus & Co. in St. Louis already raised their full-year expectations because of currency changes, pushing the average estimate to $3.11 a share.

The higher forecast “should bolster investor confidence that Philip Morris can sustain its solid underlying business momentum,’‘ Judy Hong, a Goldman Sachs Group Inc. analyst in New York, wrote today in a note to clients. She recommends buying the stock.

Through yesterday, the U.S. currency had fallen over the past month against all 16 most-traded currencies tracked by Bloomberg. The dollar’s decline helps revenue by increasing the value of overseas sales when converted to the U.S. currency.

Reynolds Earnings

Reynolds, based in Winston-Salem, North Carolina, said higher prices countered a 6 percent drop in shipments in the second quarter to 22.4 billion cigarettes.

Camel’s share of U.S. cigarette sales remained unchanged at 7.5 percent, while Pall Mall‘s share rose 2.6 percentage points to 5.2 percent. Reynolds’ total market share increased to 28.7 percent.

Reynolds “gained market share at the retail level, the first time in many years that the company was able to accomplish this,’‘ Thilo Wrede, a Credit Suisse analyst in New York, wrote today in a note to clients. He rates the stock as “neutral’‘ and said promotions contributed to the market share gain.

The company’s smokeless tobacco unit increased its market share to 29.4 percent from 27.5 percent, led by Grizzly snuff.

Reynolds projected 2009 profit of $4.40 to $4.60, an increase from a forecast of $4.15 to $4.45 in April.

Altria, based in Richmond, Virginia, reported yesterday adjusted earnings of 50 cents, helped by price increases and manufacturing cost cuts. The profit beat the average analysts’ estimate by 3 cents. Altria also raised its full-year profit forecast.

Tobacco tax will save lives, cut medical costs

As a practicing physician for over 20 years in Kern County, I have seen many patients who have been affected by smoking -- including those who have never smoked -- and I want to do everything in my power to make sure that early detection of lung disease, cancer research and smoking prevention programs are growing in California.

SB 600, a bill authored by state Sen. Alex Padilla and co-sponsored by the American Cancer Society, the American Heart Association, the American Lung Association and other health organizations, does just that.

SB 600 would increase the cigarette and tobacco tax in California by $1.50 per pack, a portion of which would go the tobacco control and lung cancer research, and would most importantly reduce the number of teen smokers. Smoking is the largest preventable cause of death in California, and by reducing consumption through an increased tax, we can save hundreds of thousands of lives and millions of dollars in health care costs. It's about time that California increase the cigarette and tobacco tax.

SB 600 will not only save lives, but will keep nearly 361,000 kids from becoming addicted. In my years as a doctor in the San Joaquin Valley, where air pollution is higher and asthma more prevalent than other parts of the state, I understand the need to detect and treat emphysema, asthma, bronchitis and other lung diseases immediately, especially in children.

One in five children in the San Joaquin Valley have asthma, in Kern County alone there are over 20,000 cases of pediatric asthma and nearly double the amount of adult asthma cases. SB 600 will help to reduce the growth of those numbers by expanding the tobacco control program, deterring teens from starting to smoke and reducing the number of smokers.

California hasn't increased the tax on cigarettes and tobacco in 10 years, but the incidence of heart and lung disease and smoking related cancers continues to rise, claiming nearly 40,000 lives annually. SB 600 is projected to reduce youth smoking by 21 percent, cause nearly 190,000 current smokers to quit, prevent more than 165,000 premature deaths and save California $8.1 billion in health care costs.

SB 600 will also help California get back on track by contributing $1.2 billion to the state's general fund in the first year alone. The budget deficit in California has forced already existing health and education programs to be cut and in some cases, eliminated, but SB 600 would help close that gap by contributing to the general fund.

The funds not used for tobacco prevention can help save some of the vital health and education programs threatened by California's budget deliberations.

Big tobacco companies have paid hundreds of millions of dollars to avoid a tax increase in California- and they've gotten away with it for over a decade. Nine states (with both Democratic and Republican governors), Arkansas, Delaware, Florida, Hawaii, Kentucky, Mississippi, New Hampshire, Rhode Island and Wisconsin, have enacted tobacco increases in 2009. There is no better time than right now to increase the tax; it will save lives, prevent tobacco addiction by our teens, reduce future health care costs and help balance the state budget. It's about time.

Ravi Patel, MD, is a board certified oncologist and founder of the Comprehensive Blood and Cancer Center. He lives in Bakersfield.

Stearns could get up to $917,000 to counteract obesity, tobacco

Area public health agencies are anticipating several million in state grant dollars over the next two years to combat obesity and tobacco use, underlying factors in the leading causes of death in Central Minnesota.

The money is part of the Statewide Health Improvement Program passed by the Legislature in 2008 as part of state health care reform. Lawmakers allocated $47 million for the program.

All three St. Cloud-area counties have applied for the program. Sherburne County has been told it will receive $601,000 over the next two years, said Vonna Henry, public health director.

Stearns County could get as much as $917,000, public health director Renee Frauendienst said.

Benton County's amount is still uncertain.

SHIP is modeled on an initiative called Steps to a HealthierUS, which was tested in Minneapolis, St. Paul, Willmar and Rochester.

The goal was to reduce the state's health care costs by getting "upstream" of health problems, said Cara McNulty, program director with the Minnesota Department of Health.

SHIP aims to encourage policy and environmental changes that make it easier for people to make more healthful choices, she said.

The program focuses on obesity and tobacco use because they are both common in Minnesota and the leading causes of chronic diseases such as heart diseases, diabetes and cancer. Many of the deadly diseases driving up health care costs are preventable, McNulty said.

An estimated 38 percent of Minnesota adults are classified as overweight and one quarter are obese as measured by body mass index. Only 51 percent get 30 minutes or more of moderate physical activity five days a week. Eighteen percent of adults smoke.

SHIP is different from past prevention programs because it doesn't just tackle one risk factor in a single setting such as schools, McNulty said. Rather, it involves communities, schools, workplaces and health care systems using strategies proven to work, she said.

Some examples: working with schools to make sure they are providing healthful, affordable breakfasts so students aren't hungry during the day; helping to make communities safer and easier to walk or bike; and promoting farmers markets to make sure the community has access to locally grown fruits and vegetables.

Pentagon OKs tobacco in combat

Everyone knows that we all would be better off if no one smoked. It would prevent a lot of premature deaths and save a lot of money on medical and insurance bills. And it's nice to enjoy a nice piece of salmon in a good restaurant without having to inhale someone's second-hand smoke.

But telling someone to quit who is at risk of getting his or her tail shot off or walking by an exploding car might be too much. So, the Pentagon told its troops Wednesday that it won't ban tobacco products in war zones.

Eventually, the military might become nonsmoking but that is a long way down the road, maybe 20 years or more. The Pentagon has had plans before to reduce or ban smoking in the military with little success. A 1999 plan to reduce smoking rates by 5 percent a year and reduce chewing tobacco use to 15 percent by 2001 fell flat.

The press secretary for the Defense Department said that Defense Secretary Robert Gates "knows that the situation they (soldiers) are confronting is stressful enough as it is. I don't think he is interested in adding to the stress levels by taking away one of the few outlets they may have to relieve stress."

Of course, smoking in combat zones will make it more difficult to quit smoking when the soldiers return. That has been a problem in every war.

Maybe getting the recruits to quit during basic training and at the service academies would be a good place to start the nonsmoking policy.

CC tobacco stats reveal younger smokers

While less Oregonians are lighting up than years past, Coos County continues to exceed the state average. Now, some specialists fear that this trend could breed younger smokers.

According to the Oregon Tobacco Prevention and Education Program, Coos County ranks the fourth highest in tobacco consumption in the state, with roughly 27% of the adult population using tobacco products.

But the addiction starts young, with as much as 14% of 8th graders and 34% of 11th grade students using tobacco in the county.

According to Tobacco Program Coordinator, Stephen Brown, over 90%of all nicotine products are sold to people who started before age 21.

"Most long term smokers begin smoking when they're 12,13 or 14 years old and if you start at that age, you're much more likely to become addicted and become a long term smoker," says Brown.

Brown adds that one of the big misconceptions among the youth is that they think smoking and chewing is far more common then it really is. In fact, nearly three-quarters of Coos County's population doesn't use tobacco.

But despite all the education surrounding the dangers of this product, Brown says the only way to change the status quo is by limiting its public consumption.

"A community as a whole indicates to kids that smoking is not a good behavior and the best way for a community to do that is to not smoke," says Brown. "Especially to not some around children and to not smoke in public places."

Philip Morris to Acquire Protabaco for $425 Million

Philip Morris International Inc. agreed to buy Productora Tabacalera de Colombia, Protabaco Ltda. for $452 million, its second acquisition this month as tobacco demand rises in emerging markets.

The purchase of Colombia’s second-largest tobacco company needs regulatory approval and is expected to be completed within six months, New York-based Philip Morris said today in a statement. The maker of Marlboro cigarettes bought Colombia’s biggest tobacco company, Compania Colombiana de Tabaco SA, in 2005.

Philip Morris, the world’s largest publicly traded tobacco company, agreed to buy Swedish Match AB’s South African unit for $224 million last week. Spun off last year from Altria Group Inc., Philip Morris generates all its sales outside the U.S. Revenue from Latin America and Canada rose 11 percent in the first quarter while falling 12 percent in Europe, the company said in April. Shipments in Colombia declined during the period, Philip Morris said.

Closely held Protabaco sells the Mustang, Premier and President brands. It had about 32 percent of Colombia’s cigarette sales last year, with revenue of $107.6 million and shipments of 6.1 billion cigarettes, Philip Morris said.

Philip Morris rose 1 cent to $42.35 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 2.7 percent this year.

Occasional Smoker, 47, Signs Tobacco Bill

President Obama does not discuss the fact that he still occasionally smokes, a habit he very publicly tried to kick during his race for the White House.

But there he was on Monday, talking about cigarettes. As he signed legislation bringing tobacco products under federal control for the first time, the president conceded that the new law, aimed at keeping children from starting to smoke, could have helped him three decades ago.

Mr. Obama noted that 90 percent of smokers began on or before their 18th birthday.

“I know — I was one of those teenagers,” he said, standing beneath a punishing afternoon sun at a Rose Garden ceremony. “I know how difficult it can be to break this habit when it’s been with you for a long time.”

With that, Mr. Obama moved on. He did not mention whether he still smokes, a topic that has been a subject of considerable curiosity, and family drama, for years. Instead, he talked about the dangers of the addiction and its causes.

“Kids today don’t just start smoking for no reason,” he said. “They’re aggressively targeted as customers by the tobacco industry. They’re exposed to a constant and insidious barrage of advertising where they live, where they learn and where they play.”

The new law, the Family Smoking Prevention and Tobacco Control Act, allows the Food and Drug Administration not only to forbid advertising geared toward children but also to lower the amount of nicotine in tobacco products, ban sweetened cigarettes that appeal to young taste buds and prohibit labels like “light” and “low tar.”

When Mr. Obama entered the presidential race, he said his candidacy had been contingent on a deal with his wife, Michelle, that he quit smoking. The couple discussed his habit on “60 Minutes,” where Mrs. Obama declared, “I hate it.”

“That’s why he doesn’t do it anymore, I’m proud to say,” she continued. “I’m the one who outed him on the smoking. That was one of my prerequisites for, you know, entering this race, is that he couldn’t be a smoking president.”

Now there are few touchier questions inside the White House than whether Mr. Obama is still smoking. One senior administration official declined to answer, but pointed out that the president spoke Monday in the present tense, saying, “I know how difficult it can be to break this habit,” as opposed to “I know how difficult it was to break this habit.”

As Mr. Obama shook hands with some of the guests at the bill-signing ceremony, he wandered near a group of reporters. Dan Lothian, a correspondent for CNN, asked, “Mr. President, how difficult has your struggle been with smoking?”

The president, a mere few feet away, did not reply.

Several minutes later, the question came up at the daily White House press briefing. When asked directly if Mr. Obama was still smoking, Robert Gibbs, the president’s press secretary, replied: “He struggles with it every day. I don’t honestly see the need to get a whole lot more specific than the fact that it’s a continuing struggle.”

Governments losing $40 billion yearly due to cigarette smuggling

Governments worldwide are losing some $40.5 billion in revenues annually due to tobacco smuggling, a report by the International Union Against Tuberculosis and Lung Disease showed.

Based in Paris, the union’s effort has been recognized by the World Health Organization (WHO) as part of internationally-recommended Stop TB Strategy that has been used to treat 32 million people in 202 countries.

In its report, the union said some “11.6 percent of the global cigarette market is illicit and this is equivalent to $40.5 billion in lost revenues.”

“Higher income countries, where cigarettes are more expensive, have lower levels of cigarette smuggling than lower income countries, contrary to the tobacco industry claim that the overall level of smuggling is dependent on cigarette price,” the report stated.

Majority of the world’s smokers live in low and middle-income nations.

“If this illicit trade was eliminated, governments would gain, in principle immediately, at least $33 billion, and from 2030 onwards save over 160,000 lives a year, resulting from an overall increase in cigarette price of 3.9 percent and a consequent fall in consumption of two percent,” it showed.

This means that in just six years, more than a million lives from low and middle-income nations would be saved.

The report was released during the opening of the third inter-governmental negotiating body on the Protocol on the Illicit Trade in Tobacco Products in Geneva, Switzerland recently.

The protocol is the first agreement to be negotiated under the World Health Organization-led Framework Convention on Tobacco Control, the world’s first global health treaty.

Origin of imports and destination of exports

In the early 1990s, the United States of America took the largest share of Turkish exports (over 55 percent), followed by EU countries (about 25 percent). Over time, the share of the United States has declined to about 30 percent and the share of EU countries increased to nearly 40 percent.
The major importers of Turkey’s tobacco are now the United States, Canada, France, Switzerland, Zimbabwe, Malawi, South Africa and Germany. In 1990, Turkey imported almost all its tobacco from the United States.
Turkey is a net importer of tobacco from the United States, Switzerland, France, Canada, Zimbabwe, Malawi and South Africa, and net exporter to the remainder.