* Q1 shr $0.74 beats Wall Street by 5 cents
* Cigarette volume remains unchanged
* Price increases help
* Backs 2009 profit forecast
* Shares up 2.2 pct (Adds conf call comments, analyst comments, byline)
By Dhanya Skariachan
BANGALORE, April 23 (Reuters) - A better-than-expected profit at Marlboro-seller Philip Morris International Inc (PM.N) showed most smokers are still lighting up their favorite brands despite the global slowdown.
The world’s largest publicly traded tobacco company, which markets Philip Morris’ brands outside the United States and was spun off from Altria Group Inc (MO.N) last year to give shareholders a pure foreign cigarette market play, reported a strong quarterly profit on price increases and weaker-than-expected currency headwinds.
First-quarter earnings at Philip Morris were $1.52 billion, or 74 cents a share, compared with $1.72 billion, or 79 cents a share, a year earlier.
Analysts on average had expected earnings of 69 cents a share, before special items, according to Reuters Estimates.
Net revenue fell about 6 percent to $5.6 billion.
“We do not expect the tobacco industry to be immune from the impact of the global economic crisis but to remain resilient,” Philip Morris CFO Hermann Waldemer said on a conference call.
Cigarettes are viewed as relatively recession-resistant because of the addictive nature of the product and the strong brand loyalty of its customers.
The cigarette maker also allayed concerns regarding consumers opting for lower-priced options amid economic woes.
“We are not witnessing a global consumer down-trading trend and the situation is quite different market by market,” Waldemer said.
Philip Morris, which plans to raise prices across its portfolio in Germany in June, said price hikes across a broad range of its markets were aimed at mitigating the impact of unfavorable currency and any future potential volume softness.
Morningstar analyst Phil Gorham, however, disapproved of the move to raise prices in Germany, saying it could lead to some consumers seeking lower-priced brands.
Philip Morris, which backed its 2009 earnings forecast, said the stronger dollar hurt its first-quarter earnings by 15 cents a share.
However, the company added it has seen a slightly more favorable currency environment in recent weeks.
“Should current spot rates prevail for the rest of the year, we would anticipate that our earnings per share would climb to the high-end of our February guidance,” Waldemer said.
For 2009, the company expects earnings of $2.85 a share to $3.00 a share. In February, Philip Morris said that the stronger dollar would cut earnings by 80 cents a share in the period.
Since Philip Morris International’s sales come from outside the United States, it is more vulnerable to fluctuations in the dollar than other U.S. companies.
The New York-based company, whose other brands include Bond Street, Parliament, Rothmans, Number 7, Philip Morris, and Virginia Slims, said its cigarette shipment volume of 203.4 billion units was unchanged in the first quarter.
Volume rose in Asia -- driven by Indonesia and South Korea -- and in Latin America and Canada.
“In these (Asian and Latin American) markets, restrictions on smoking are much more lax ... They (Philip Morris) are still able to capture new smokers,” Morningstar’s Gorham said.
Additionally, the brands are strong and “well-positioned to capture that kind of growth,” he added.
Philip Morris shares rose to an intraday high of $37.35, before paring some gains to trade up 80 cents or 2.2 percent at $37.05 Thursday afternoon on the New York Stock Exchange. (Editing by Gerald E. Mccormick and Dave Zimmerman)