NEW YORK - Two of the world's biggest cigarette makers reported Thursday that they emerged from the second quarter in better shape than analysts expected, having raised prices and cut costs to offset falling demand in the U.S. and Europe and to cope with a new tax in the U.S.

Philip Morris International Inc., which sells Marlboros and other cigarettes overseas, said its second-quarter profit fell 9 percent as the strong dollar shrunk sales made in other currencies. But its shares rose because the results beat Wall Street expectations and it raised its 2009 profit estimate.

Reynolds American Inc. - the second-biggest cigarette seller in the U.S., with brands such as Camel and Pall Mall - reported Thursday that its second-quarter profit climbed 4 percent because it raised prices and cut costs as sales volumes slipped and a 62-cent-per-pack federal tax took hold. Reynolds beat profit forecasts, and its shares also rose Thursday as it too raised its outlook for 2009.

A day earlier, Altria Group Inc., owner of Philip Morris USA, reported that its second-quarter profit rose 9 percent as it cut costs. Altria sells Marlboros in the U.S., as well as Black & Mild cigars and Copenhagen chewing tobacco. Both Altria and Reynolds more than offset the new tax with price hikes and cost reductions.

A third U.S. cigarette seller, Lorillard Tobacco Co. - maker of Newport, Kent and True - plans to report its quarterly results Monday.

Philip Morris International - the world's biggest non-governmental cigarette maker, second only to state-controlled China National Tobacco Corp. - raised prices to offset weaker demand in Europe. Shipment volume fell 3 percent as Poland raised taxes and Spain's economy worsened.

Chief Financial Officer Hermann Waldemer said the company's core profit growth, with the effect of currency exchange rates stripped out, is sustainable because the company has not done "abrupt" price increases that are much higher than inflation. He said cigarettes are still relatively affordable, even in many emerging markets.

The company earned $1.55 billion, or 79 cents per share, in the three months that ended in June, down from $1.69 billion, or 80 cents per share, a year earlier. Excluding one-time charges, the company earned 83 cents per share, beating an analyst forecast of 77 cents per share.

The stronger dollar cut Philip Morris's per-share profit 19 cents per share. Revenue fell 9 percent to $15.21 billion from $16.7 billion. Excluding excise taxes, revenue was $6.13 billion, just short of analysts' $6.18 billion forecast.

The company raised its 2009 profit forecast to a range of $3.10 to $3.20 per share from a range of $2.85 to $3 per share. Analysts expect $3.12 per share.

Analysts expected the raised outlook and volume declines, said Stifel Nicolaus & Co. analyst Christopher Growe, who kept a "Buy" rating on the shares, writing in a note to investors that the stock could rise if the dollar weakens.

Philip Morris International spun off from Altria in 2008 and has offices in Lausanne, Switzerland, and in New York. Altria is based in Richmond, Va.

At Reynolds, executives boosted their full-year adjusted earnings forecast above Wall Street's expectations to $4.40 to $4.60 per share from a previous estimate of $4.15 to $4.45 per share. Analysts expect net annual income of $4.34 per share.

Reynolds said clarity on the federal excise tax hike and inventory and shipping patterns improved its outlook. Earnings for the period ended June 30 rose to $377 million, or $1.29 per share, from $364 million, or $1.23 per share, a year earlier.

Revenue for the Winston-Salem-based company dipped 4 percent to $2.25 billion from $2.34 billion.

Analysts polled by Thomson Reuters, who typically exclude one-time items, forecast profit of $1.16 per share on sales of $2.27 billion.

Philip Morris International shares rose $2.89, or 6.6 percent, to $46.77 in afternoon trading. Altria shares rose 10 cents, or 0.6 percent, to $17.49, while Reynolds shares rose $1.01, or 2.5 percent, to $42.19.

A service of YellowBrix, Inc.