Analysts eye market share, cigarettes sold as Philip Morris Int'l reports 1Q results Thursday

Cigarette maker Philip Morris International Inc., which sells Marlboro gold and other U.S. brands abroad, reports its first-quarter results before the market opens Thursday.

WHAT TO WATCH FOR: Whether fewer cigarettes sold in the wake of tax hikes and growing tobacco control efforts. Smokers face new tax hikes, bans, health concerns and social stigma worldwide, but the impacts are starker in the U.S. than in many other countries.

With offices in New York and in Lausanne, Switzerland, Philip Morris has compensated for consumers buying cheaper cigarettes — and for the weak economy — by cutting costs and raising prices. Its market share has increased.

Last quarter, Philip Morris International's cigarette shipments increased 3.1 percent to 224.9 billion cigarettes, with gains in Asia, including Indonesia, Korea and Pakistan. The company also benefited from its acquisition of Fortune Tobacco Co. in the Philippines.

Tax increases hurt the number of cigarettes sold in various regions in the fourth quarter. Shipments fell 5.4 percent in the European Union. Volumes fell about 6 percent in Eastern Europe, the Middle East and Africa and grew 2.4 percent in Latin America and Canada.

Weakness in places like Spain, Ukraine, Japan and Mexico could drive volumes down in the first quarter, Goldman Sachs analyst Judy Hong said in a recent research note. Impacts from the recent earthquake and tsunami in Japan won't likely be seen until next quarter.

Analysts also expect the company's earnings to be affected by foreign exchange rates compared with the U.S. dollar. When the dollar is rising, companies that sell goods internationally and must convert revenue from foreign currencies usually take a hit in the dollar value of that revenue, and vice versa. That effect is particularly strong for Philip Morris International, because it does all its business overseas.

WHY IT MATTERS: Philip Morris International is the world's second-biggest cigarette company after the state-controlled China National Tobacco Corp.

Altria Group Inc. in Richmond, Va., owner of Philip Morris USA, spun off Philip Morris International in 2008. Altria is the largest U.S. cigarette seller.

WHAT'S EXPECTED: Analysts on average expect Philip Morris International to report earnings of $1.04 per share on revenue of $6.95 billion, according to FactSet. Analysts typically exclude one-time items.

LAST YEAR'S QUARTER: Philip Morris International reported net income of 90 cents per share on revenue of $6.5 billion.