Although it did not disclose the value of the investment, the company said its total investments in Romania over the last two decades are expected to reach RON450 million once the project has been completed.
Company representatives said the new production line in Otopeni will cover both the demand on the local market and the demand for export, “in accordance with the company’s international strategy to manage the brand portfolio.”
The company’s plant in Otopeni currently has a production capacity of 25 billion cigarettes a year.
Philip Morris International (PMI) exports more than 80% of the products manufactured in Romania and most of them go to other EU countries (over 15 markets), with Italy being the largest market. PMI is also one of Romania’s largest exporters of agri-food products.
The U.S. group, the world’s leading cigarette manufacturer, entered the Romanian market in 1993 and started production in 1998, following an investment of $100 million in a cigarette factory in Otopeni. The company’s portfolio includes brands like Marlboro, Parliament, Virginia Slims and L&M.
Philip Morris International operates in Romania through two companies: Philip Morris Trading (the distribution platform) and Philip Morris Romania (the cigarette factory). According to Finance Ministry data, the two companies registered cumulated turnover of RON2.19 billion (EUR496 million) in 2013, more than 9% lower from RON2.4 billion in 2012. Of the total amount, RON147 million is the net turnover of the factory, which also registered net profit of RON18 million in 2013, and RON2.04 billion is the turnover of the distribution business which switched to loss of RON8.3 million.
Philip Morris’ main competitors in Romania are British American Tobacco and JTI, which have production facilities on the local market.
According to a KPMG report, cigarette consumption in Romania was relatively stable in 2013, with legal sales falling 4% and the consumption of smuggled and counterfeit cigarettes growing 15%.