Hmm, Cigarettes or rice?
Philip Morris International Inc. has done well since its spinoff from Altria Group Inc. last month.
Philip Morris International Inc. has done well since its spinoff from Altria Group Inc. last month. In the first quarter, the cigarette maker reported that net income jumped 29 per cent and sales rose 18 per cent – all of which taps into the argument that international tobacco is a thriving market because growing affluence in many parts of the world is encouraging people to smoke premium Western brands. Investors are coming around: They drove Philip Morris' the stock up 3.9 per cent on Wednesday, after the results were released. Since its spinoff, the stock has risen about 5 per cent in total, outperforming the rump Altria Group, which holds the domestic operations. But Stefane Marion, an economist at National Bank, points out that while the tobacco market might be a good safe haven in developed economies – since people tend to smoke in good times and bad – premium Cigarettes are considered a luxury good in many of the markets where Philip Morris is pinning its growth prospects. “Although we remain positive on the long-term outlook emerging economies, the short-term has become More challenging because of the surging price of food which is depressing disposable income in many countries,” he said in a note to clients. “Since food is a necessity, households will obviously pare down spending on other categories of goods."