The difficult economic environment, constant tax increases and smoking restrictions are affecting cigrette demand in the world – but particularly hard the situation is in the United States, where hefty taxes, bans and social attitude towards smokers have provoked a 10 percent decrease in the sales of tobacco products.

However, tobacco giants reported last week about the higher than predicted earnings, and raised their average profit expectations for the current fiscal year.

Despite Philip Morris International, the maker of legendary Marlboros and six other brands of the top 15 most eminent cigarette brands in the world, and Reynolds American, the second-leading cigarette maker in America, with flagship Camel and Winston brands raised prices of their products, the earnings still remained unhurt. As regards Reynolds, it said that the growing popularity of smokeless products contributed to higher profits and would become the key products for the company in the nearest future.

Industry experts are thoroughly monitoring the results showed by American tobacco giants in the third quarter, because smokers have got accustomed with the higher prices and are returning to their ordinary consumption. According to the earlier reports, cigarette demand fell dramatically in the first six months of 2009, when the new federal tobacco tax became valid.

Nevertheless, Reynolds American reported a 72 percent profits growth as compared to the third quarter of 2008, when restructuring expenses and the dropping value of its principal brands affected the company’s earnings. The Camel-maker reported $362 million net revenue for the third quarter, in comparison with $211 million during the same period in 2008.

Susan M. Ivey, Chairman of Reynolds American considered that tax increases and economic downturn reduced the demand for tobacco products by 10 percent, but mentioned that its smokeless items manufacturing unit Conwood Co., shipped 11.7 percent more products  than in the third quarter of 2008. However, sale drops are far less dramatic in the rest of the world.

Philip Morris International sold 219.3 billion sticks in 3Q, which is 3% less in comparison with the third quarter in 2008. But, drops in Arab countries and Europe were counterbalanced by growing sales in Latin America, Asia and Canada after PMI acquired Rothmans Inc. in 2008.

The cigarette tycoon that owns trademarks like Marlboro, L&M and Virginia, reported that their profits fell by 14 percent in the third quarter due to strong dollar which triggered the decline in earnings in other countries.

PMI, which is based both in the United States and Switzerland and United States recorded $1.79 billion in net profits in the third quarter that ended on Sep, 30.

Philip Morris International is the largest privately-owned tobacco company in the world and second-largest after China National Tobacco Corp, owned by the Chinese government. PMI merged to become independent in 2008, after the spin-off from Altria Group, which owns of Philip Morris USA.

Altria as well reported about higher earnings than it was earlier predicted due to solid cigar sales and cuts on expenses. The profits grew by 1.7 percent, but the company sold 12 percent fewer cigarette as compared to average industry decline of 10 percents.

The experts are now waiting the report by Lorillard Inc., the leader in menthol cigarettes segment with flagship Newport brand, which is expected to reveal the 3Q report next week.