Phillip Morris Post Better than Expected Earnings

It has often been said, that the best companies to purchase during recessions and times of economic challenges are: those that sell products which are in high demand, no matter what is occurring in the economy.  One such example of this; the can be seen with the cigarette manufacturers, who have been reporting strong profits despite the fact that consumer spending has been in a severe contraction. Recent evidences of this; can be found in the earnings report from Phillip Morris, who reported earnings of $.80 cent per share in comparison to the $.71 cents that was reported last year.  What happened was; the company benefited from price increases in both Russia and the various Asian countries. The overall demand was so strong, that the company raised forecasts for the full year to $3.85 per share from the original forecast of $3.82.

What all of this shows; is that despite the global recession demand for cigarettes is continuing to remain strong. This is because during times of economic challenges, many alcohol and cigarette manufacturers will post stronger than expected earnings, as people are more tempted to drink or smoke. In the case of Phillip Morris, the overall effects of the economic slowdown have been far more severe, in the developing countries. As a result, this has increased demand dramatically, as the prices of their products continue to rise despite the recession. This means; that for the foreseeable future Phillip Morris will continue to provide investors with earnings stability, as people are smoking more in Russia and Asia.