Philip Morris, RJR Nabisco Profits Rise on Foreign Sales

Philip Morris Cos. and RJR Nabisco Holdings Corp. on Tuesday said second-quarter profits surged on strong international sales as the industry nears a $368.5-billion tobacco settlement that is expected to weaken U.S. sales.

Philip Morris, the world’s largest cigarette maker, said net income rose 13% to $1.84 billion, or 76 cents a share. RJR’s profit from operations rose 11% to $242 million, or 71 cents. The results matched analyst estimates.

European profit rose more than 10%, the result of decades spent urging foreign consumers to light up Marlboro and Camel cigarettes.

Philip Morris said second-quarter revenue rose 5.9% to $18.41 billion, from $17.38 billion. Worldwide sales of Marlboro, the globe’s best-selling cigarette, rose 5.4%, the company said.

Operating profit from international cigarette sales rose 15% to $1.13 billion. Operating profit from U.S. tobacco rose 12% to $1.19 billion.

Profit from international operations is expected to exceed U.S. profit for the first time this year, analysts said. Sales were strongest in Western Europe, Latin America and Asia.

RJR Nabisco, which manufactures Winston and Camel cigarettes, said international sales rose 13%, largely from sales in Central Europe and the former Soviet Union.

The company said if the dollar hadn’t strengthened against currencies in its biggest markets, international operating profit would have risen 23% to $199 million. With the currency impact, operating profit rose 11% to $179 million.

Philip Morris shares rose $2.38 to $42.88. RJR’s shares rose $1.13 to $30.94. Both trade on the New York Stock Exchange.