Philip Morris Realigns Management

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Philip Morris Realigns Management

NEW YORK -- With signs of increased challenges at its domestic tobacco business, Philip Morris Cos. unveiled a streamlined management structure for Philip Morris U.S.A., its U.S. tobacco unit.

Michael Szymanczyk reassumes the title of chief executive of Philip Morris U.S.A., and will remain chairman of the unit, a role he has had for the past six months. He will continue to report to Louis Camilleri, chief executive of the division's parent, Philip Morris Cos., of New York, according to Dow Jones. John R. Nelson, who was president and chief executive, was named president, operations and technology, a new position. He will oversee product development, manufacturing and product integrity activities, and will report to Szymanczyk.

The company promoted David Beran, who was senior vice president of operations, to the newly created position of executive vice president of strategy, communications and consumer contact. Craig Johnson, who was senior vice president of sales and distribution, was promoted to the new role of executive vice president of sales and distribution. Beran and Johnson will both report to Szymanczyk, the report said.

The management realignment comes a day ahead of a Philip Morris board meeting, where some expect Camilleri to be named chairman.

Camilleri was named president and CEO of Philip Morris Cos. in April. He replaced Geoffrey Bible, who is expected to retire as chairman at the end of the month.

The news also comes on the heels of weak sales volumes in July. U.S. sales volume fell about 14.5 percent, Dow Jones reported. Although analysts had expected price competition from discount brands and a number of new state cigarette sales tax increases to hurt sales during the month, Philip Morris sales were even weaker than some had predicted. Perhaps most striking, Philip Morris's most important brand, Marlboro, lost market share during the month, the report said.

In a written statement announcing the changes, Szymanczyk alluded to the hurdles the U.S. tobacco business faces. "I have given significant thought to how we should structure the company to most effectively achieve our goals. The changes we are announcing today will ensure that we have the proper structure in place to deal with our key priorities in an external environment that poses both challenges and opportunities for our business," he said.

The new positions more clearly define three focus areas for the company: operations and technology; planning, communications and consumer contact; and sales and distribution, company spokeswoman Ellen Merlo, told Dow Jones. According to Merlo, the new framework also prepares the company for a "post- FDA-environment."

Philip Morris U.S.A said it supports the passage of legislation that would give the Food and Drug Administration authority over the manufacture, marketing and sales of tobacco.