According to PMI's recent press release on Q2 earnings (http://www.pmi.com/eng/media_center/press_releases/pages/201307180700.aspx):
Despite a decline in volumes in the first half of 2013, PMI's net profits (for Q1+Q2) of $7.9 billion were down by only 2.5%. The company's CEO also predicts that PMI will meet its growth rate target of 10-12% this year: “For the second half of the year, we expect volume/mix to improve, pricing to remain strong and our total cost variance, excluding currency, to be flat. While industry volume remains a challenge, our underlying business performance is such that we continue to expect to meet our mid to long-term currency neutral adjusted diluted EPS growth rate target of 10-12% in 2013.”
"In the Philippines, PMI’s shipment volume of 19.1 billion units decreased by 16.5%, primarily reflecting the unfavorable impact of the disruptive excise tax increase in January 2013, which resulted in a recommended retail selling price increase for premium Marlboro and low-price Fortune of approximately 60% and 70%, respectively. Industry cigarette volume of 23.1 billion units was estimated to have decreased by 7.0%, reflecting a partial, but insufficient, improvement in declared tax-paid volume by local manufacturers and government tax enforcement. PMI’s market share in the quarter decreased by 9.5 points to 82.9%, primarily due to down-trading to competitive brands. Marlboro’s market share decreased by 5.9 points to 14.7%. Share of low-price Fortune decreased by 18.0 points to 32.8%, partly offset by gains from PMI’s other local low-price brands. PMI’s cigarette shipments are estimated to decline by 20-25% for the full-year 2013, as the availability of non-tax paid domestic volume remains a critical issue."
Apparently, PMI is continuing to blame the January excise increase and illicit trade/smuggling ("non-tax paid domestic volume") for its declining market volumes, and denying the fact that smokers are smoking less and/or quitting (in addition to smokers down-trading to cheaper brands).
The PH Department of Health should try to get new prevalence data as soon as possible to clearly illustrate the positive (dampening) effect of the sin tax increase on consumption.
Given that PMI made huge profits last year (2012) and is expecting further growth this year (2013), let's look at how much money PMI made in 2012 and relate this to how many deaths its products caused in the same year.
In 2012:
- PMI's share of the global market = 16.3%
- Global number of deaths from tobacco in 2012 = 6 million
- PMI's 2012 death toll = 978,000
- PMI's 2012 earnings = $14.2 billion
- PMI's earnings per death = $14,519.00
If at least 87,600 Filipinos are killed by tobacco every year, and PMFTC holds 94% of the market (as of 2012), then PMFTC is accountable for at least 82,344 Filipino deaths.
If we multiply this number by PMI's reported global earnings per death, this means that PMFTC earned $1,195,552,536 or PHP 50.2 billion (USD=PHP42) from tobacco-caused deaths in the PH in 2012.
Now compare this to what the entire tobacco industry in the PH (including PMFTC) paid to the government as excise in 2012: PHP 28.16 billion.
The tobacco industry has no shame.
