On a GAAP basis, EPS totaled $1.28. The company also said that currency exchange rates cut earnings by $0.07 a share.

Cigarette shipment volume fell 6.5% year-over-year globally and by 42.5% in the Philippines, where a new excise tax cut shipments by 10 billion units. European volume fell 10.1% and Asian shipments fell 10.4%. Only the Eastern Europe, Middle East and Africa posted a gain, and that a small one of 1.4%. The company was able to make up some of the decrease by raising prices.

The company lowered its full fiscal year EPS guidance to a range of $5.55 to $5.65, compared with full-year 2012 EPS of $5.22. The forecast includes a $0.19 per share reduction due to currency exchange rates. The consensus estimate had called for full-year EPS of $5.73 on revenues of $32.37 billion.

The company’s CEO noted:

Our first quarter was relatively difficult, with our headline results marred by a number of known factors, including inventory movements, the 2012 leap year effect, currency and a slowly improving – but nevertheless substantial erosion in our — volume in the Philippines. Despite this apparent weakness, our pricing actions and market share momentum provide us with the confidence to reiterate our annual constant-currency adjusted diluted EPS growth rate target of 10-12%.

What makes tobacco companies so attractive to investors is their dividend, and Philip Morris pays a quarterly dividend of $0.85. The company repurchased 16.7 million shares of its own stock in the first quarter at a cost of $1.5 billion. Philip Morris plans to spend $18 billion on share repurchases in a three-year program that began in the third quarter of last year. So far the company has spent $4.35 billion on share buybacks.

The company’s shares closed down about 1% last night, at $94.04 and are inactive so far this morning. The stock’s 52-week range is $81.10-$96.60. Thomson Reuters had a consensus analyst price target of around $97.60 before today’s report.

24/7 Wall St. wanted to come up with a list of companies that might fall victim to a portion of the public observing Lent by giving up something precious for more than 40 days all contained in the same quarter. We certainly are not trying to say that these products are all bad, because many are too well anchored in our culture to be eliminated for very long. Many of them are even too fun or too precious to give up.

It has been nearly two years since we gave our own list of the 10 things that Americans waste the most money on. You may guess many of them: certain apparel items, tobacco, entertainment, alcohol, TV and media, gifts, food outside of the home and more. We also want to stress that if you live your life to avoid all of those things, chances are high that you are considered the most boring person alive by your friends and neighbors.

All things being equal, many in America and the rest of the world actually do give up something during Lent. Some sacrifices are physical things that cost money. Other sacrifices are simple (or difficult) personal efforts that have nothing to do with wasting money or being bad for your health. We have picked the largest companies that we feel have large direct exposure to changes of public behavior, particularly that fit into the sin or waste category.

Not all of these companies would fit directly within the category of being “sin stocks.” We are not trying to identify companies as being sinful. We are showing many companies that could be adversely impacted if Joe Public takes Lent very seriously this year. As a reminder, we already had one quarter of negative gross domestic product growth, and consumer spending is up to 70% of that figure.

Its net revenues (outside of excise taxes) rose by 2.8% to $7.9 billion, versus the Thomson Reuters consensus of $8.03 billion. That sales figure was higher if you back out items.

Cigarette shipment volume was up by 2.9%, excluding acquisitions. Philip Morris International said that its reported operating companies income was up by 9.5% to $3.3 billion, but this would have been up by 13% outside of currency and acquisitions. The company also repurchased 22.4 million shares of its common stock for $2.0 billion in the quarter.

The international tobacco giant, formerly part of Altria Group Inc. (NYSE: MO), is now issuing guidance for 2013 in a range of $5.68 to $5.78 per share at prevailing exchange rates, versus $5.17 (or $5.22 ex-currency) per share in 2012, which represents 10% to 12% adjusted earnings growth over 2012. This includes a one-year gross productivity and cost savings target for 2013 of approximately $300 million, but it also includes a share repurchase target amount for 2013 of $6.0 billion. The current Thomson Reuters estimate is $5.79 in earnings per share.

This report sounds very mixed on the surface, and that seems to be as a result of the extraordinary items. Shares are currently trading up 0.5% at $88.12, against a 52-week range of $77.84 to $94.13. The consensus analyst target from Thomson Reuters before this report was almost $97 for a year out.

This values the international tobacco giant at 15.6 times expected 2013 earnings, and its dividend yield is 3.9%. As far as the former parent Altria, that is valued at 14.4 times the expected 2013 earnings, and its dividend yield is about 5.15%.

For the full year, Altria posted adjusted EPS of $2.21 on revenues of $24.62 billion, compared with EPS of $2.05 on revenues of $23.8 billion in 2011. The consensus estimate called for EPS of $2.21 on revenues of $17.4 billion.

The company’s CEO said:

Altria grew its full-year adjusted diluted earnings per share by 7.8% behind the business performance of our operating companies, complemented by higher earnings from our equity investment in SABMiller.

Altria owns about 27% of SABMiller, and while the company did add $0.01 to EPS in the fourth quarter to Altria’s earnings, for the full year SABMiller special items cost shareholders $0.08 per share.

For 2013, Altria forecasts adjusted diluted EPS in the range of $2.35 to $2.41, including estimated special items from its investment in SABMiller. The consensus estimate for 2013 calls for EPS of $2.38 on revenues of $17.6 billion. For the current quarter, analysts estimate EPS at $0.53 on $4 billion in revenue.

Altria’s shares are up 0.3% in premarket trading at $33.80 in a 52-week range of $28.19 to $36.29. Thomson Reuters had a consensus analyst price target of around $36.10 before today’s report.

Wells Fargo has noted that the recent price wars may be abating and this will be great news for the tobacco companies. If it is great news for them, that is great news for dividend investors chasing higher and higher payouts. Wells Fargo noted that Altria Group Inc. (NYSE: MO) has maintained the pricing leader stance but that it has eased some of its promotional pricing after likely market share gains. Lorillard, Inc. (NYSE: LO) was listed as having growth in the Newport Menthol, while Reynolds American Inc. (NYSE: RAI) may have seen some gains in its Camel.

• Altria Group Inc. (NYSE: MO) is up 0.8% at $33.28 and its yield is 5.3%. Its 52-week trading range is $28.00 to $36.29 and the consensus analyst target from Thomson Reuters is $36.09.
• Reynolds American Inc. (NYSE: RAI) is up 1.7% at $43.00 and its yield is 5.5%. Its 52-week trading range is $38.95 to $46.93 and the consensus analyst target from Thomson Reuters is $45.56.
• Lorillard, Inc. (NYSE: LO) is up 0.8% at $39.56 and its yield is 5.2%. Its 52-week trading range is $35.61 to $47.02 and the consensus analyst target from Thomson Reuters is $43.89.

What investors need to consider is that domestic cigarette case volumes have been on the decline for close to a generation now. The tobacco companies have ben able to grow earnings due to a more steady and known legal and regulatory environment. After all, states and cities get great tax revenue from selling the deadly tar and nicotine delivery systems. It is also unlikely that even the more recent “lights” cases will do the damage that the old cases from the 1980s and 1990s brought. How many smokers right now can claim that they were not aware that smoking was bad for them and that they did not know smoking is deadly?

One other concern that is not addressed that often is the so-called “e-cigarette” that is a vaporized delivery of nicotine without the tar, without the burning of tobacco, and without the social reaction to the smoke.

Lastly, we would ask investors one question: would you rather take the tobacco risk for close to the same dividend as the telecom leaders? AT&T Inc. (NYSE: T) yields about 5.4% and Verizon Communications Inc. (NYSE: VZ) yields closer to 4.8%. Both stocks are equally down from 52-week highs and analysts have close to the same upside projections to the consensus price targets.

For the first time in 10 years, tobacco underperformed the broader market and consumer staples in 2012. The shadow of rising taxes on dividends contributed to that underperformance, especially in the fourth quarter as portfolio managers rotated out of many dividend stocks. But if the team at UBS is right, tobacco pricing should improve in 2013 and help drive share prices higher.

Volatility always exists in the tobacco arena. This year alone, the FDA is expected to consider reports from advisory committees on as many as four separate areas: 1) menthol cigarettes, 2) new product development, 3) regulations on other tobacco products, and 4) likely review of e-cigarettes.

In terms of price performance, the top UBS pick is Lorillard Inc. (NYSE: LO). This maker of top-selling menthol cigarette Newport closed Friday at $117.87 and could be poised for a 27% rise to $141. However, UBS favors cigarette giant Altria Group Inc. (NYSE: MO), makers of the iconic Marlboro brand, which closed Friday at $32.54, as their number one overall pick. The estimate for Altria is an 11% price gain in 2013 to $36.12.

So why not go for the bigger upside in Lorillard? After more than a year of waiting and debate, the FDA is expected to publish its report on menthol cigarettes in the first quarter of this year. While it remains very unlikely that the agency will ban menthol, the chatter ahead of the report could push down the share price.

Both stocks are a total return investor’s dream, raising their dividends almost every year. Lorillard currently pays a 6.2% dividend quarterly. Altria pays a 5.40% dividend quarterly. In addition to capital appreciation and dividends, investors also can sell covered calls on their stocks.

There is always a degree of risk in owning stocks where the product can ultimately kill the consumer. Tobacco companies frequently are targeted in individual and class-action lawsuits. But there is one hidden aspect in these stocks that tends to balance that risk. The Tobacco Master Settlement Agreement (MSA) was entered in November of 1998 between the four largest tobacco companies and 46 states. The companies agreed to pay a $206 billion settlement over the next 25 years. This is in addition to lower annual payments in perpetuity for medical-related costs to the states.

How does this hedge the risk? The states in their never-ending search for revenue packaged large parts of these settlements and amortized the future payments in the form of tobacco bonds. Should litigation become too onerous on the companies, they can always threaten bankruptcy. If they filed bankruptcy and defaulted on their settlements, the states that already sold the bonds could have severe funding issues. Without the settlement payments, the states individual bonds could default. That would not bode well for states already facing current funding issues.

The beer and spirit industry has always cast a wary eye at legalized marijuana. The last thing Diageo PLC (NYSE: DEO), maker of popular liquor brands like Smirnoff, Johnny Walker and Captain Morgan, wants to see is marijuana cannibalizing their sales. Based on current industry sales numbers, the wide availability of marijuana already, and the probability of extremely restricted and regulated access for anyone under 21, the liquor industry probably has little to fear.

To many, it seems that Altria Group Inc. (NYSE: MO) or Reynolds American Inc. (NYSE: RAI) would have a big interest in legal marijuana. After all, the principal products of both companies are cigarettes. They have distribution, manufacturing and retailing down to a science. Sales of cigarettes by case volume have declined for years. A new product line could be just what they need to resume margin growth. When national prohibition of pot ends, expect both companies to quickly ramp up for business. Altria seems well prepared, by having already secured the domain Altriamarijuana.com.

One other big and powerful industry might have something to lose: Big Pharma. It is estimated that the global pharmaceutical market will be worth more than $1 trillion by 2014. Industry giants Merck & Co. (NYSE: MRK), Johnson & Johnson (NYSE: JNJ), Pfizer Inc. (NYSE: PFE) and Abbott Laboratories (NYSE: ABT) have warded off patent cliffs for years using their large cash reserves to acquire smaller companies with robust product pipelines. The last thing these companies want see is current product lines that are producing dependable revenue flow to be dented by legal marijuana. The big pharmaceutical firms have a lot of money to spread around, so when it comes to lobbying efforts, very few have this group’s clout. One thing it wants is for marijuana to remain illegal.

There are countless maladies where the ingestion of marijuana has been believed to help alleviate or control the symptoms. These include glaucoma, multiple sclerosis, AIDS-related complications, Crohn’s disease, fibromyalgia, chemotherapy complications and others. Big pharma has tried to come up with their own pot pill. There are more than 400 chemicals in marijuana, 80 of which are called “cannabinoids.” Drug companies have tried reducing it to one chemical and results have been poor. Researchers find that when you reduce cannabis to just tetrahydrocannabinol (THC), you lose efficacy and gain side effects.

In a book critical of the pharmaceutical industry called “Our Daily Meds,” author Melody Petersen offers a statistic showing more than 100,000 people die each year from prescription drugs. This includes death from abuse and overdose, side effects, misdiagnosis and interaction error. Many physicians may currently be reluctant to prescribe legalized marijuana. A national mandate would provide many physicians with the moral and ethical cover they need to be more aggressive if they feel medical marijuana may help their patients. Then it is very possible that medical marijuana prescriptions will put a dent in many currently prescribed drugs. This is not an outcome that big pharma is likely to tolerate well, unless they get in on the action themselves.

Lee Jackson

Altria’s goal is to grow its adjusted diluted earnings per share (EPS) at an average annual rate of 7% to 9% over time. They also have an objective to return 80% of their adjusted diluted EPS to shareholders through dividends. The company aims to achieve these goals on a consistent basis over the long term and manage their businesses accordingly.

Marty Barrington, Altria’s chairman and CEO, is speaking at the Morgan Stanley Global Consumer Conference this Tuesday, and he is trying to maintain that Altria’s targets are to keep delivering the same sort of earnings growth and payout rates.

Barrington said:

Altria has delivered excellent total returns to shareholders by focusing on these objectives. Altria grew its adjusted diluted EPS at a compounded annual rate of 7.9% from 2007 through 2011. We paid shareholders $13.5 billion in dividends and returned more than $3.1 billion in additional cash through share repurchases from the time of the spin-off of Philip Morris International Inc. (NYSE: PM) in early 2008 through October 2012. Altria’s total shareholder return has outperformed the S&P 500 Index each year since the PMI spin-off, extending a track record of outperformance that has now run for 12 straight years through 2011. Through November 9th of this year, Altria has delivered a double digit total shareholder return of 10.4% versus the 11.8% return of the S&P 500 Index. Altria also grew its adjusted diluted EPS 7.8% through the first nine months of this year.

Altria is targeting 2012 earnings per share growth of 7% to 9%. More importantly, the company stated its goal of growing adjusted diluted earnings per share at an average annual rate of 7% to 9% over time. Altria also is maintaining an objective to return 80% of its adjusted diluted earnings per share to shareholders through dividends.

Altria closed at $31.10 on Monday and the 52-week range is $27.00 to $36.29 and its dividend yield is back up to about 5.6% due to the recent sell-off seen in the stock. Thomson Reuters still has a consensus price target up around $36 as analysts raised its target over and over as the rally went up from $29 to $31 to $34 and ultimately more than $36 before shares came back to reality.

Another bit of news came out in the tobacco sector today that is along the lines of dividends and shareholder implications. Lorillard, Inc. (NYSE: LO), which also has a dividend of close to 5.6%, declared a 3-for-1 stock split. At $112.59, its 52-week range is $106.64 to $141.07.

After looking at the performance and the drop from the peak, these tobacco stocks have sold off significantly. Lorillard is down 20.2% from its peak, and the losses from the peak for Altria and Philip Morris International are down 14.3% and 9.7%, respectively.

JON C. OGG

Some other major countries which have partial bans in place have been Australia, Brazil, Canada, France, Italy and others. Whether or not they are enforced is another issue entirely. The question to ask is if Russia would really enforce the laws enough in any manner to make a noticeable difference. If you have not been to a bar (or in a taxi cab) in Russia, let’s just nicely say that smokers won’t be chased out of any establishments in Russia. It is also not exactly a secret that Russian business owners pay for “protection” in certain matters.

Most nations are very unlikely to ever go for the real jugular when it comes to smoking. The conflict of interest comes from the issue that smoking does generate billions of dollars in global taxation revenues. Any time a nation needs to raise more money chances are high that they can do it by adding more tobacco taxes through time.

Any large nation placing restrictions or bans on tobacco is not merely a Philip Morris story. The reason it matters here so much is that Altria Group Inc. (NYSE: MO) separated this company out entirely and Philip Morris International Inc. (NYSE: PM) is exclusively a play on the international tobacco market.

The good news for Philip Morris International is that other nations in general tend to not be as litigious as America. The bad news is that those same nations may look for more retribution as their healthcare costs rise.

It may also sound like good news that Philip Morris is now yielding 4.0%, but that is not good if you bought in recent months. At $31.10, the 52-week range is $27.00 to $36.29. Altria is way off of its highs too and its yield is back up to 5.6% due to selling pressure on the higher dividend stocks.

JON C. OGG

Read: The 10 Countries Where People Smoke Most

In some countries, people rarely smoke at all. In others, tobacco use is widespread. The number of cigarettes smoked per capita each year in China, the largest by population, is 1,711. In the third largest nation by population, the United States, the figure is 1,028. The number of cigarettes smoked per capita each year in India, the second most populated nation in the world, is only 96. The three nations represent a vast range of tobacco use without a simple explanation.

The reason why people smoke is too complex to have a single answer, but a review of smoking habits by country offers some powerful clues about why some use while others do not. Based on data compiled jointly by the American Cancer Society and the World Lung Foundation in its annual Tobacco Atlas report, 24/7 Wall St. identified the 10 countries with the highest smoking rates.

A look at the history of the tobacco industry in the U.S. illustrates many of the factors that affect smoking. For decades, cigarette companies were among the largest advertisers in print, on radio and on television. In 1964 that began to change, when the government issued the results of “Smoking and Health: Report of the Advisory Committee to the Surgeon General.” Among its most important findings was the direct link between tobacco use and cancer. A ban on cigarette TV and radio advertising soon followed.

A series of marketing restrictions and public relations disasters only made things worse for the American tobacco industry. In 1998, following successful actions brought by 46 state attorneys general, tobacco companies were forced to accept a settlement of $246 billion to be paid over 25 years.

It became clear to the public that tobacco companies had known about the health hazards for decades and had concealed the information to protect profits. As a result, billions spent and made on cigarette advertising was essentially wiped out by a wave of mistrust directed against the industry and its products.

Similar efforts in China are only in their early stages, and government action has gone largely unenforced. According to the Council on Foreign Relations, the severity and breadth of the tobacco problem have failed to prompt a strong response from the government. According to its findings, “none of the Politburo Standing Committee members (all of them nonsmokers) have made any public statements against tobacco production and consumption.”

The effects of limited tobacco regulation are also seen in the smoking rates of Eastern European countries. In an interview with 24/7 Wall St., Tobacco Atlas lead author Michael Eriksen explained, “As a rule, Eastern European countries have been weak on tobacco control programs, particularly low excise taxes, to a large extent due to the undue influence of the tobacco industry on Eastern European governments.”

As might be expected, prices relative to income in each of the 10 countries with the highest rates — six of which are in Eastern Europe — are among the lowest in the world. In Russia, one of the countries with the highest rates of smoking, the cost of cigarettes relative to per capita income is lower than all but four large countries. “Because prices are low,” Eriksen said, cigarettes are affordable, and “smoking becomes a ‘cheap pleasure’ for residents of these countries.”

Despite the availability of inexpensive cigarettes, poverty still appears to keep smoking rates low in some regions. In many poor African nations, rates of tobacco use are the lowest in the world. Limited government resources would suggest these rates are not the result of government controls.

In fact, it is more likely that the reason is limited corporate profits. Large tobacco companies may consider potential sales constrained by the poor and widely distributed populations of Africa. However, the potential size of the continent’s markets means it may become attractive to companies that have begun to reach product saturation elsewhere.

According to Eriksen, while cigarette use in Africa is among the lowest in the world, public health organizations are concerned that tobacco companies will increase cigarette demand. “Africa has the potential of being the only place in the world to prevent the occurrence of the tobacco epidemic, that has elsewhere lasted a century and caused millions of deaths,” said Eriksen.

A review of smoking across the world suggests that the U.S. story reflects a number of common issues, though at very different stages. The large global tobacco companies understand that marketing is critical to getting people to smoke. So is pricing. Government taxes and profit-hungry manufacturers can increase prices high enough to discourage the use of tobacco. The government can play an additional critical role of a health watchdog. In the United States, this began in earnest five decades ago.

To determine the countries that smoked the most, 24/7 Wall St. reviewed data from The Tobacco Atlas, a joint study between the American Cancer Society and the World Lung Foundation. We then analyzed data for all available nations with a population of more than 5 million, in order to study the countries with the largest numbers of smokers. The percentage of smoking among men, women and total adults in each nation are from 2010 or reflect the most-recently available data for that country. Because no combined normalized rate was available for these groups, we used actual data instead of normalized figures. For smoking rates among children aged 13 to 15, data reflects 2011 or the most-recently available year. Information on deaths attributed to tobacco was provided by The Tobacco Atlas for 2004, while information on tobacco production and the number of cigarettes smoked per capita is from 2009. Pricing information is from 2011, and reflects the cost of a 20 cigarette pack of Marlboro cigarettes, or their equivalent.

These are the 10 countries where people smoke the most.