Merger of Philip Morris, Fortune results in stronger biz for both

MANILA, Philippines - The merger of US-based tobacco giant Philip Morris and Lucio-Tan owned Fortune Tobacco Corp. has resulted in a stronger business for both firms, the head of the merged entity said in a recent interview.

The new company, formed in February last year is aptly called PMFTC, which combines the initials of Philip Morris Philippines Manufacturing Inc. (PMPI) and Fortune Tobacco Corp. (FTC).

PMTFC president Chris Nelson said that while he cannot disclose sales figures and volume projections, he said the merger has been positive overall.

“The combination is going very well,” Nelson said.

However, he said that 2010 seemed to have been a better environment for the tobacco industry compared to this year.

“2011 is okay but not as much as 2010. Income is probably slightly down to flat,” Nelson noted.

He partly blames the lower-than-expected government spending in the first half of the year which dampened economic growth and overall consumer spending.

According to the latest government data, the Philippine economy grew by just 3.4 percent in the second quarter of the year from a strong 8.9 percent in the comparative period in 2010.

Nevertheless, Nelson said that there has been improvement in the business with the two entities both having strong brands.

Philip Morris owns the Marlboro and Philip Morris brands while Fortune carries Hope, Fortune, Champion and Boss cigarettes.

According to the company, PMPI employs around 1,000 workers while Fortune Tobacco has around 4,000 employees.

Nelson said PMFTC has just concluded a collective bargaining agreement with its employees.

The merger came as a surprise to industry players given the strong rivalry between the two cigarette firms. Philip Morris International said it had a 15.4-percent share of the total international cigarette market outside of the United States in 2009.

Philip Morris maintains a regional manufacturing facility in a 25-hectare complex in Tanauan City, Batangas while Fortune has a facility in Marikina.