Philip Morris International (PMI) is a leading international tobacco company, encompassing eight of the world’s top 15 international brands which includes Marlboro, the number one cigarette brand worldwide. PMI has become the world's leading international tobacco company and the third most profitable international consumer goods company. While US sales revenues have been in decline as Altria struggles to cope with higher state tobacco tariffs and the tobacco industry's negative image in the US, international sales continue to grow for PMI.
Philip Morris International’s subsidiaries and affiliates and their licensees are engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States of America. Its products are sold in approximately 180 countries. The Company divides its markets into four geographic segments: The European Union (EU) Region, The Eastern Europe, Middle East & Africa (EEMA) Region, The Asia Region and The Latin America & Canada Region. In June 2011, it completed the acquisition of a cigarette business in Jordan, consisting primarily of cigarette manufacturing assets and inventories. January 1, 2011, it established a business structure with Vietnam National Tobacco Corporation (Vinataba) in Vietnam, further developing its joint venture with Vinataba through the licensing of Marlboro and establishing a PMI-controlled branch for the building of its brands. More on Reuters here.
Philip Morris International is a buy for all dividend growth investors. The company increased dividends over a period of 5 consecutive years with a double-digit rate. Dividends grew faster than the earnings per share due to the fact that the company stock up its payout ratio to a current value of 63%. After the spinn-off from Altria, the company was nearly debt-free and raised its loans to banks and other creditors to a current value of $22.4 billion. In relation to the strong operating cash-flow, measured by an EBITDA of $14.58 billion, the leverage seems to be ok for a consumer goods company with a high degree of addictiveness. The valuations are not cheap especially if you look the disappointing Q3/figures, the slowing growth an Europe and the reinforcing legal restrictions.
On September 12, 2012 PMI increased its dividend by 10.4% to 0.85 quarter dividend or $3.40 full year dividend. Analyst's from Morningstar estimated the fair value of the company at $92.0 which include a current upside potential of 7.70%. Philip Morris International is also a bet on China. Nearly half of Philip Morris International's sales were generated in Asia, the strongest growth region in the world.
