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Cigarette maker Philip Morris Int'l CEO to step down, replaced by chief operating officer

By: Michael Felberbaum, The Associated Press

Wednesday, Mar. 13, 2013 at 10:06 AM | Comments: 0

RICHMOND, Va. - Philip Morris International Inc. said Wednesday that CEO Louis C. Camilleri will step down and be replaced by the man who led it before it became an independent company.

The seller of Marlboro and other cigarette brands overseas said its current chief operating officer, Andre Calantzopoulos, will become CEO immediately after the company's annual shareholder meeting May 8. He also was nominated for election to the board. Camilleri will remain in his current job of chairman, the company said.

Philip Morris International, which has offices in Lausanne, Switzerland, and New York, is second in size only to state-controlled China National Tobacco Corp. It was spun off in 2008 from Richmond, Va.-based Altria Group Inc., owner of Philip Morris USA, which still sells Marlboro and other Philip Morris brands in the U.S.

In 2012, Philip Morris International's net income grew 2.4 per cent to $8.8 billion. Revenue excluding excise taxes increased about 1 per cent to $31.4 billion. Its shipments were up more than 1 per cent to 927 billion cigarettes and its market share, excluding China and the U.S., grew to a record 28.8 per cent.

Calantzopoulos, 55, has served as chief operating officer since the company spinoff from Altria. He joined the company in 1985 and served as its CEO of the international unit from 2002 until the spinoff.

The 58-year-old Camilleri was CEO of Altria in 2002, when it first embarked on a restructuring that led to the spin-off of Kraft Foods Inc., then the separation of the two cigarette makers.

The often-unapologetic Camilleri gained international media attention in 2011 when he told a cancer nurse that while cigarettes are harmful and addictive, it is not that hard to quit.

The statement was in response to comments at its annual shareholder meeting, in which executives usually spend much of the time sparring with members of anti-tobacco and other corporate accountability groups.

The nurse, later identified as Elisabeth Gundersen from the University of California-San Francisco, cited statistics that tobacco use kills more than 400,000 Americans and 5 million people worldwide each year. She is a member of The Nightingales Nurses, an activist group that works to focus public attention on the tobacco industry.

Gundersen also said a patient had recently told her that of all the addictions he's beaten — crack, cocaine, meth — cigarettes have been the most difficult.

In response, Camilleri said: "We take our responsibility very seriously, and I don't think we get enough recognition for the efforts we make to ensure that there is effective worldwide regulation of a product that is harmful and that is addictive. Nevertheless, whilst it is addictive, it is not that hard to quit. ... There are more previous smokers in America today than current smokers."

Camilleri, a longtime smoker, was quoted in an April 2009 BusinessWeek article as saying he had quit only once, for three months when he had a cold.

In recent years, tax hikes, smoking bans, health concerns and social stigma worldwide have made the cigarette business tougher. The fact that the impact on cigarette demand generally has been less stark outside the U.S. has benefited Philip Morris International. Still the company faces challenges that are as wide-ranging as its reach.

The company has said regulations, including bans on product displays, ingredients and colorful packaging, have impeded competition and add costs for retailers.

Varying degrees of tax hikes and economic challenges also have encouraged adult smokers to make choices purely on price and have fostered black markets.

Philip Morris International has compensated for volume declines — particularly in developed markets like the European Union, Latin America and Canada — by raising prices, cutting costs and focusing on emerging markets in Asia, as well as the Eastern Europe, the Middle East and Africa.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .

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