The tobacco industry is not only facing global economic headwinds, it's also suffering at the hands of health-conscious people who are gradually quitting smoking. In contrast with Lorillard Tobacco (NYSE: LO ) and Reynolds American (NYSE: RAI ) , which have overturned things to an extent, the comeback hopes of Philip Morris International (NYSE: PM ) are gradually fading away.
In the first quarter, Philip Morris posted a profit of $1.88 billion or $1.18 per share, down from $2.13 billion or $1.28 per share in the year-ago quarter. Net revenue dropped 8.8% to $6.9 billion. Excluding the impact of currency fluctuations, revenue dipped 1.6%. Revenue also missed the Zacks Consensus Estimate of $7.1 billion by 2.8%.
Total cigarette volume fell 4.4% to 196 billion units. Net revenue in the European Union region was up 2.2% backed by favorable currency fluctuations. Sales in Eastern Europe, Middle East, & Africa declined by 1.7% while Asia was down by 21.8%. As for Latin America and Canada, sales dipped by 8.7%.
As a result of higher excise taxes, the company's gross profit declined by 10.8%. Operating margin shrunk 12.3% to $3 billion due to higher marketing, administration, and research costs.