The dynamism and profitability of the tobacco industry is outstanding, leading to high and sustainable dividend payments to shareholders. One of the best companies within the industry is Philip Morris International (PM), the owner of seven of the top 15 cigarette brands in the world, including the top cigarette brand Marlboro. Philip Morris is the second-largest tobacco company in the world, after government-controlled China National Tobacco. Philip Morris has a market capitalization of $136 billion and is traded on the New York Stock Exchange.
Company Profile
Philip Morris International is an American global cigarette and tobacco company, with products sold in over 180 countries and more than 87,000 employees. Its market share of the cigarette market outside of the U.S. is above 16%. Philip Morris was part of Altria (MO) until 2008 when it performed a spin-off of Altria Group. Altria was a conglomerate which had several divisions. Altria sold off its beer unit, spun off the Kraft (KRFT) division as a standalone company, and split the cigarette business into Philip Morris USA, which retained the name Altria, and Philip Morris International. Altria controls the U.S. market, while Philip Morris does all of its business abroad.Philip Morris International producer of LM cigarettes.
Because tobacco, the main constituent of cigarettes, is the single greatest cause of preventable death globally and is addictive, the industry is highly controversial and is increasingly the subject of litigation and restrictive legislation from governments concerned about the health impacts of its products. Therefore, Philip Morris' geographical exposure is a major positive factor especially compared to Altria, as the U.S. tobacco industry has been penalized by litigation for years. On the other hand, the rest of the world does not have the same issues for tobacco companies and Philip Morris simply doesn't have the same litigation costs eating its profits that Altria does, nor does it have the uncertainty of future litigation issues. In 2012, the company held an estimated 16.3% share of the total international cigarette market outside of the U.S. The company has very good geographical diversification, generating about 35.7% of its sales in Asia, 27.2% in European Union, 26,5% in Eastern Europe, Middle East and Africa, and 10.6% in Latin America and Canada