Philip Morris International (NYSE:PM)

Philip Morris International is an independent and standalone tobacco company that spun off from its former parent company Altria (MO) on March 28, 2008. It is the world's largest producer of tobacco products, with a market share of 15.71TB3T outside the United States. The operational headquarters have been located in Lausanne, Switzerland, since 2002. Since the spin-off by Altria, the headquarters have been located in New York. Under the separation agreements, PMI does not operate in the United States (which remains the territory of Philip Morris USA, a company with which it shares the brand names but which is completely separate from it).

One reason for the split of PMI from Altria Group is the difference in demand for international tobacco sales compared to the domestic market. While international sales continue to grow, Altria's domestic revenue is declining due to high government taxes on tobacco and the negative image of the tobacco industry in the United States.

The top 25 brands of Philip Morris International are Marlboro, L&M, Bond Street, Philip Morris, Chesterfield, Fortune, Parliament, Lark, Morven Gold, 234 cigarettes, U Mild, Next, Optima, Red & White, Muratti, Diana, Merit, Champion, Virginia Slims, Apollo-Soyuz, Hope, Delicados, Longbeach, Minak Djinggo, Marathon.

PM offers a generous current efficiency of 3.9%. This is certainly less than the average long-term yield (4.56%), but it is still not bad in the current climate. In addition, the average annual dividend growth is sustained, with 12.55%. The distribution ratio remains correct, with 66.83%, which leaves enough margin to continue to ensure the payment of the dividend, or even to continue to increase it, even in the event of a drop in profits.

PM's weakness is clearly its volatility., with 29.72%, which can easily discourage more than one investor. On the other hand, this volatility is not too linked to market fluctuations, which is attested by a beta of 0.87.

Philip Morris International employs approximately 75,300 people worldwide. Its products are manufactured in more than 50 factories worldwide: the main factories are located in the Netherlands (Bergen op Zoom), Russia (Saint Petersburg), Germany (Berlin), Turkey (Izmir), Poland (Krakow), Ukraine (Kharkiv) and Portugal (Albarraque). Neuchâtel in Switzerland is home to the Philip Morris Products SA factory (formerly Fabriques de tabac réunies), as well as the group's Research and Development center.

In 2010, PMI sold 899 billion cigarettes in more than 160 markets (European Union 223 billion; Eastern Europe, Middle East and Africa 289 billion; Asia 282 billion; Latin America and Canada 105 billion), or 16 % of the international market outside the United States1. At the global level, it is the second largest producer of cigarettes, the first being the Chinese tobacco monopoly China National Tobacco Corporation (CNTC).

Production and sales outside the United States make PM resistant to fluctuations in the greenback, even though it is its reference currency. Thus the title displays a $risk of -0.4, which means that the value of PM in CHF even tends to increase when the dollar falls. This is always good to take when you decide to invest in a currency that is known to be structurally weak.

In the end, PM receives a rating of 3 stars, which represents a good return/risk ratio. The yield is attractive in these times, dividends are showing sustained growth and despite this the company is not squandering all its profits to reward shareholders. In addition, as a wild card, PM is protecting itself against the weakness of its own currency. It is a shame, however, that the stock is so volatile, because this increases the risk of buying at the wrong time, or of being guided by one's emotions during too big increases, or decreases...

Sources: Wikipedia, Wikinvest, Swissquote, Yahoo Finance, dividends.ch