Philip Morris International
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Altria Group owns 100 percent of Philip Morris International (PMI), a tobacco company. Its headquarters are located in Lausanne, Switzerland since 2002. They were previously located in Rye Brook, New York, USA.
The company currently holds a 14.5% share of the international cigarette market and employs over 60,000 people worldwide. Philip Morris International’s brands are made in more than 50 factories around the world and are sold in more than 160 markets.
In 2005, PMI cigarette volume rose by 43 billion units, or 5.7%, to 804.5 billion units driven primarily by the acquisitions of Sampoerna in Indonesia and Coltabaco in Colombia, volume growth across Eastern Europe and in Turkey, and a one time inventory sale in Italy.
PMI operating companies’ income, or OCI, increased by 19.2% in 2005 to 7.8 billion dollars. The growth was due to pricing, a contribution of 341 million from acquisitions, positive currency of 331 million, higher income from the Marlboro take-back in Japan, the impact of the one-time inventory sale in Italy and a favorable comparison with 2004 when PMI recorded a 250 million dollar charge for the EC Agreement. These positive factors were partially offset by unfavorable volume and mix, higher R&D, manufacturing, distribution, trade and selling expenses and higher asset impairment and exit costs.
The EU Region still accounts for around half of PMI’s profitability. Within the Region, about two thirds of the profitability is generated by the four key markets of France, Germany, Italy and Spain.
Eastern Asia accounts for 18% of PMI profitability and the most important market is Japan. While not expected to provide any material financial benefits in the short-term, China should provide strong potential for OCI expansion in Eastern Asia in the future.
In May 2005, Philip Morris International purchased PT HM Sampoerna Tbk for a total value of USD 5.2 billion. Sampoerna is Indonesia’s third largest tobacco company, with estimated domestic tobacco volume of 41 billion units in 2004, generating net revenues of approximately Rp. 9.0 trillion (USD 1.0 billion).
On December 21, 2005 the China National Tobacco Corporation (CNTC) and Philip Morris International have reached agreement on the licensed production in China of PMI’s Marlboro brand and the establishment of an international equity joint venture between China National Tobacco Import and Export Group Corporation (CNTIEGC), a wholly owned subsidiary of CNTC, and PMI.