
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, April 22, 1994                   TAG: 9404220185
SECTION: BUSINESS                    PAGE: A9   EDITION: METRO 
SOURCE: Associated Press
DATELINE: RICHMOND                                 LENGTH: Medium

PHILIP-MORRIS LEADERS REPORT GAINS MADE DURING TRYING YEAR

With metal detectors and burly guards outside, senior Philip Morris executives Thursday pointed to the world's largest tobacco firm's successes in a year of mounting social and government pressure on the cigarette industry.

At the company's annual meeting, Philip Morris Companies Inc. Chairman Michael A. Miles pointed to increased tobacco sales at home and abroad.

Overseas tobacco marketing grew 15 percent to a record $15.7 billion last year.

Miles brushed aside a question about a possible divorce for the manufacturing giant's tobacco and food businesses. In addition to Marlboro cigarettes and other tobacco products, Philip Morris makes cereal, cheese, chocolate and hundreds of other items.

In 1993, Philip Morris surprised analysts with a drastic price cut on premium brand cigarettes.

As a result, income from domestic cigarette sales dropped 45.8 percent in 1993.

``But the evidence clearly indicates that our strategy is working,'' Miles said.

Philip Morris ended the year with a record 45.5 percent share of the retail market, ``having recaptured essentially all the share lost to competitors' discount brands,'' Miles said.

Earnings dropped 37 percent in 1993 from the year earlier, mostly because of the price change and continued corporate restructuring, the company's annual report said.

Philip Morris announced a major restructuring plan last fall that includes elimination of 14,000 jobs over three years.

At the meeting, Philip Morris turned back an anti-smoking measure and three other ballot initiatives brought by shareholders.

Speakers on the smoking issue drew chuckles and grumbles from the crowd of about 730 who attended the meeting at the company's Richmond cigarette manufacturing plant.

A few wisps of smoke floated above the auditorium, where each seat is within easy reach of an ashtray. Ushers, parking lot attendants and executives all smoked casually.

``The men in this room in ties who do not smoke make money off the poor and disadvantaged,'' said Gregory Connelly, a dentist who said Philip Morris should drop its opposition to smoking restrictions.

Philip Morris sued the Environmental Protection Agency over the agency's restrictions on secondhand smoke, saying there is no proof such smoke causes cancer. Philip Morris also sued ABC over a report alleging tobacco firms deliberately manipulate the level of nicotine in cigarettes.

``Our cigarettes are not `spiked' with nicotine,'' Miles said. He made passing reference to Clinton administration suggestions that tobacco be regulated as a drug.

by CNB