NEW YORK -- Cigarette makers still found people willing to spend even as other industries struggled with a pullback in the third quarter while consumers watched banks collapse and markets teeter. Executives of Philip Morris International Inc. and Reynolds American Inc. said Wednesday that their results demonstrate how they can defy a downturn, according to an Associated Press report.
PMI's profit rose 20% in the third quarter as sales climbed, and it benefited from favorable foreign exchange rates. It sells Marlboros, L&M, Chesterfield and Bond Street brands outside the United States.[image-nocss]
"No business in the world is actually recession-proof, but I am convinced that our business is very recession-resilient," chief financial officer Hermann Waldemer said.
Meanwhile, Reynolds American raised its full-year forecast even though profit fell 41% on hefty restructuring and trademark charges. The results still topped expectations as the tobacco company used higher prices to offset consumption declines.
Reynolds chief executive Susan Ivey said the company's performance "speaks to the resilience of the tobacco business, even in tough economic times."
PMI, which was spun off in March from Altria Group Inc., reported net income of $2.1 billion, or $1.01 per share, in the quarter that ended Sept. 30. It earned $1.73 billion, or 82 cents per share, in the same period a year ago.
Revenue climbed 22% to $17.37 billion. The company also affirmed its full-year profit forecast for 2008 and increased its quarterly dividend.
Reynolds American's net income slid to $211 million, or 72 cents per share, in the three months ended Sept. 30. It earned $358 million, or $1.21 per share, a year ago.
The maker of Camel, Pall Mall and Kool brands said revenue dipped 1% to $2.27 billion, coming in just above Wall Street's $2.25 billion forecast.
Reynolds said cigarette sales volume declined 7.5% in the third quarter, compared to a 3.5% decline industrywide in recent quarters. The loss in volume was partially offset by higher prices and cost savings.
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