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Germany's relations with the United States plunged to a low point on Friday, with the government demanding the expulsion of the chief United States intelligence official stationed in Germany because, it said, Washington refused to co-operate with German inquiries into US intelligence activities.
"The representative of the US intelligence services at the United States embassy has been asked to leave Germany," government spokesman, Steffen Seibert, said.
German officials have been frustrated in their efforts to receive clarification from Washington since last year, when it was reported that the National Security Agency had been monitoring the digital communications of millions of Germans. The government tamped down that uproar, but fury flared anew when it was revealed that the NSA had been monitoring Chancellor
Although President
"The request occurred against the backdrop of the ongoing investigation by federal prosecutors, as well as the questions that were posed months ago about the activities of US intelligence agencies in Germany," Mr Seibert said. "The government takes the matter very seriously."
Mr Seibert said Germany continued to seek "close and trusting" co-operation with its Western partners, "especially the United States".
As is usual with intelligence matters, the US Embassy had no comment on the expulsion request. But in a statement, the embassy also said it was essential to maintain close co-operation with the German government "in all areas".
"Our security relationship with Germany remains very important," the embassy statement said. "It keeps Germans and Americans safe."
Dr Merkel, speaking two hours before the expulsion request was announced, said in response to reporters' questions that spying on allies was "a waste of energy". "We have so many problems," she said. "We should focus on important matters."
Despite the apparent effort to keep relations on an even keel, the expulsion marks a low point between two allies.
It comes at a time when they need strong co-operation, not just to combat terrorism and strengthen security measures in the digital age, but also to reach a broad trans-Atlantic trade agreement that is seen by both sides as a chance to create a single market of almost 800 million people.
Clemens Binninger, a member of Dr Merkel's centre-right party, said the move was "a political reaction of the government to the lack of willingness of US authorities to help clear up any questions" arising over the past year in connection with US surveillance of Germany and its leaders.
The first case of suspected espionage, concerning a mid-level employee of Germany's Federal Intelligence Service who was arrested last week, is far more serious than the second, in which "very many questions" linger, Mr Binninger said.
No arrest has been made in the second case.
On Thursday, police searched the Berlin office and apartment of the man in the second case, who is suspected of being a spy. Prosecutors declined to give further information, but German news media reported that the suspect worked for the defence ministry.
A ministry spokesman confirmed it was involved in an investigation. Mr Binninger and other members of his commission said there was still no evidence of espionage.
The arrested intelligence employee, who has been identified only by his age, 31, apparently fed US agents 218 documents, some consisting of many pages, from five large files to which he had access, Mr Binninger said.
Over the past two years, he copied the papers, took them home and then scanned them and put the files on a memory stick. Asked by reporters about security controls, he said the intelligence service did not have the right to check all 5000 employees as they come and go from the agency's headquarters near Munich.
A parliamentary commission said it had asked to see all the documents given to the Americans, but Mr Binninger said initial accounts suggested that they were relatively harmless, depicting day-to-day business rather than deep secrets.
The breaches of German security have not dimmed the mounting fury with Washington.
Hours before the expulsion request, Finance Minister Wolfgang Schauble condemned American "stupidity".
Interior minister Thomas de Maiziere, who like Schäuble is a close ally of Merkel, added to the uproar when he characterised the information the US had gained through the intelligence employee as "laughable". However, he stressed, "The political damage is by contrast already incomparably heavy."
New York Times, The New York Times


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The following maintenance activities will be taking place during our regular maintenance window beginning Thursday, March 21st at 9 p.m.:
Employee and TEC Classroom computers will receive critical security patches for Windows, Firefox, Thunderbird, Flash, Shockwave, and Adobe Reader beginning at 9 PM. Employees are encouraged to log out and leave their computers on when leaving for the day. This will enable these updates to run overnight and minimize any impact to our users.
Most campus web services will be restarted due to updates, logins to those services may be temporarily affected for 5 to 10 minutes between 9 PM and 10 PM.
The Banner system will be down for security updates between 9 PM and midnight.
If you have any questions, please call the ASU Computing Services Helpdesk at 7741 or contact us via email at firstname.lastname@example.com.
Thank you,
Computing Services

subset: commoncrawl


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- Bronx Banter - http://www.bronxbanterblog.com -
New York Minute
Posted By Alex Belth On March 20, 2012 @ 12:16 pm In New York City Pictures,New York Minute,NYC | Comments Disabled
More photo fun over at Gothamist [2].
Article printed from Bronx Banter: http://www.bronxbanterblog.com
URL to article: http://www.bronxbanterblog.com/2012/03/20/new-york-minute-226/
URLs in this post:
[1] Image: http://www.bronxbanterblog.com/wordpress/wp-content/uploads/2012/03/newyankeeopeningday1923.jpg
[2] photo fun over at Gothamist: http://gothamist.com/2012/03/19/flashbacks.php#photo-14
Click here to print.
Copyright © 2011 Bronx Banter. All rights reserved.


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12 E 49th St, New York, NY, United States
12 East 49th Street New York New York 10017 US
A small izakaya operated by Shinbashi Restaurant that focuses on the prestigious sake and rice of Niigata, Japan. Enjoy a complimentary sake tasting while we prepare an authentic lunch for you made with koshihikari rice! We also offer readily available bento boxes and onigiri rice balls during bento hours. In the evening, we offer Shinbashi's dinner menu and sushi to complement our wide selection of sake.


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RFE: Conference Listings
This service is a joint project of RFE and EconBiz.
European Banking Center, Tilburg University;Centre for Economic Policy Research CEPR;SNL Financial LC
- Dates:
- October 29-30, 2015
- Description:
- 7th European Banking Center Conference "Financial Sector Developments and the Performance of Entrepreneurial Firms"
- Location:
- Tilburg, Tilburg University, Netherlands
- Subject:
- The aim of this conference is to bring together researchers in different fields of banking, entrepreneurship, and finance working on issues related to the financing and governance of entrepreneurial firms and their impact on the creation, development, and performance of these firms. We are inviting high quality submissions of theoretical and empirical nature. Topics:- Bank financing and alternative sources of founds for entrepreneurial firms- Institutional aspects that influence entrepreneurial firms' access to capital- The financial crisis and its impact on small firms' performance[gem?_?? den Informationen des Anbieters - according to site editor's information]
- Notes:
- JEL Code:
- Sponsor:
- http://www.tilburguniversity.edu/research/institutes-and-research-groups/ebc/events/show/item-european-banking-center-conference-ebc/


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The merits of certain aquatic weeds, such as hydrilla, are often debated among fishermen, biologists and water managers. However, the weedy subject of this article should draw unanimous agreement. Giant salvinia is considered one of the worst aquatic weeds in the world and has become established in Alabama, Arizona, California, Florida, Georgia, Hawaii, Louisiana, Mississippi, North Carolina, Texas and Virginia in recent years. It will likely continue to spread causing environmental damage as it goes.
Giant salvinia is actually a fern without true roots, although it does have a modified leaf that resembles roots and functions as a root system. These "roots" do not attach to sediment so the plants free-float along with water currents. Giant salvinia typically has a distinct appearance from other free-floating plants. The foliage is extremely hairy and the hairs actually resemble egg-beaters if viewed under low magnification. Leaves will initially be spread out on the water surface, but will compress together as mats become denser and thicker. This plant will produce flowers.
Giant salvinia has one of the fastest documented growth rates among plants. Under perfect conditions, plant biomass can double in less than three days. This means that if a 10,000 acre lake were contaminated with four square inches of plant material, the entire lake could be covered in approximately 100 days. As salvinia spreads across a water body, it also forms dense mats that can be over 3 feet in thickness. These mats reduce oxygen in the water by preventing oxygen movement from air to water while decomposing vegetation removes oxygen already in the water. As a result, dissolved oxygen in the water drops well below levels needed to support fish. In addition, shading from the mats prevents growth of submersed aquatic vegetation causing further environmental damage.
Giant salvinia is regulated as a federal noxious weed. This means that interstate transport, sale or exchange is illegal. Many states also regulate this species as a noxious weed, thus prohibiting intrastate propagation, sale or transport. These regulations, however, are not perfect in preventing spread of this plant. As giant salvinia does not produce viable spores (seeds), the only method of spread is through plant fragments. These fragments can become entangled in boat props, trailers and other equipment and be transported along with those items. Spread has also occurred through the aquarium and water garden trade. It has occasionally been sold or traded as a novelty, but more frequently contaminates other aquatic nursery plants and is transported unnoticed.
The most effective management tool for salvinia control is prevention, so exercise caution to prevent the spread of this invasive species and report new infestations early. Once established, control options are generally limited to insect biological control and herbicides. Both of these options can effectively control or suppress salvinia, but eradication from water bodies is extremely difficult.


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Congress has passed a bill that limits the amount of sulfur permissible in wallboard products, and directs the Administration to pressure Chinese manufacturers to compensate victims of faulty Chinese-made material.
Congress marked the New Year by passing the Drywall Safety Act and sending it to the President for his signature. The measure sets a new limit on sulfur, reports the Sun-Sentinel ("Bill passes to ban further use of tainted Chinese drywall," by William E. Gibson). "A bill sponsored by South Florida Congressman Ted Deutch essentially bans high-sulfur building products and also raised hopes that homeowners will be able to bring Chinese manufacturers to court to recover the cost of replacing dangerous drywall," the paper says.


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Geeezzzz....never thought that she would sing one of my favorite songs from Paula Abdul.^^ now that I listened to her rendition....gooosh..I really hope that she wins AI this year. *I never thought that the 80's sound could be so 21st century...^^ in the magic of Candice. Well...even if she does not, she does not have to worry coz her album(s) will be easily sold fast.
Candice Glover, thanks for singing this song.
I wonder what Paula thought of this. Looks like every time you sing, you give no rooms for even the original artists to look back. ^^ (a compliment)
*AI has been of the ways (once again) for me to 'relax' myself on weekend.
and...oh oh..
I'll never forget her way of singing last week's "Love Song"


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Avout is locally owned IT company with a multiple channel service. They handle everything Oracle, whether it be licensing, staffing, or project outsourcing – all while bringing a mix of friendliness and professionalism that's hard to find anywhere else. Last year, we worked with them to do some basic updates to their existing site for an upcoming product launch. This year, they came to us ready for a full upgrade to their brand.
We took Avout's existing brand and worked with them to build a look that showed their level of expertise while providing a friendly business brand. In addition to a new site, we also designed a logo for the company racing team and a site badge to highlight their community involvement. Avout has a history of bringing a hometown attitude to an enterprise level business, and we wanted to pull that to the forefront of their brand.


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Professional photographer L.B. "Jeff" Jeffries breaks his leg while getting an action shot at an auto race. Confined to his New York apartment, he spends his time looking out of the rear window observing the neighbors. He begins to suspect that a man across the courtyard may have murdered his wife. Jeff enlists the help of his high society fashion-consultant girlfriend Lisa Freemont and his visiting nurse Stella to investigate.
Directed by:
Alfred Hitchcock
James Stewart, Grace Kelly, Thelma Ritter, Raymond Burr, Judith Evelyn, Alfred Hitchcock


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Select Streets in the City, Downtown Area, Edna Valley and Marsh Street Entrance and Exit Ramps @ Highway 101 Will be Closed
San Luis Obispo, CA – The San Luis Obispo Marathon + Half announces the road closures for the Inaugural race that takes place on Sunday, April 22, 2012 from 5 a.m. to 2 p.m. Below is the list and detailed times for the 26.2 mile street closures. The entire course roads will be closed to all vehicles, with the exception of marathon staff, emergency and special needs citizens at the below listed times. Please reference your area on the overall course map, along with the detailed road closure listing to see how you will be affected.
San Luis Obispo Marathon/Half Marathon Road Closures/Restrictions (Times shown are the maximum durations/streets will open after designated times)
Closed- 5:00 am – 7:30 am
California Street- Closed from San Luis Drive to Monterey Street
Monterey Street- Closed from California Street to Chorro Street
Chorro Street- Closed from Palm to Marsh Street
Higuera Street- Closed from Morro Street to Marsh Street
Marsh Street- Closed from Higuera Street to Nipomo Street
Nipomo Street- Closed from Monterey Street to Marsh Street
Buchon Street- Closed from Nipomo Street to Santa Rosa Street
Santa Rosa Street- Closed from Buchon Street to Marsh Street
Marsh Street- Closed from Santa Rosa Street to Johnson Avenue
Johnson Avenue- Closed from Marsh Street to San Luis Drive
Closed- 6am- 8am
Johnson Avenue- Restricted traffic from San Luis Drive to Orcutt Road
Closed – 6am-1pm
Orcutt Road- Closed to traffic from Johnson Avenue to Tank Farm Road
Closed – 6am-12:45pm
Orcutt Road- Closed to traffic from Tank Farm Road to Biddle Ranch Road
Closed – 6am- 10:30am
Orcutt Road- Closed to traffic from Biddle Ranch Road to Varian Ranch Circle (Southern entrance)
Closed - 6am- 10:30am
Tiffany Ranch Road- Closed to traffic
Closed – 6am – 11am
Corbett Canyon Road- Closed to traffic from Verde Canyon Road to Hwy 227
Open/Expect Delays and Pilot Car – 6am – 11:30am
Hwy. 227 from Buckley Road to Noyes Road Price Canyon Road from City of Pismo Beach to Hwy. 227
Closed – 6am - 12pm
Biddle Ranch Road- Closed from Hwy. 227 to Orcutt Road
Closed - 6am – 1:30pm
Osos Street- Closed from Jennifer Street Bridge to Santa Barbara Street
Closed - 6am-1:30pm
Santa Barbara Street- Closed from Osos Street to Islay Street
Closed - 6am – 1:45pm
Islay Street- Closed from Santa Barbara Street to High Street
Closed – 6am-2pm
High Street – Closed from Islay Street to Archer Street
Closed – 6am-2pm
Archer Street- Closed from High Street to Marsh Street
Closed from 4am– 3pm
Marsh Street- Closed ramps @ Hwy 101
For the safety of the 2,800 runners and walkers participating, the marathon staff appreciates your support in finding alternate routes. The marathon and half marathon courses will be staffed all day by the San Luis Obispo Police Department and California Highway Patrol officers, as well as hundreds of volunteer Course Marshalls and Traffic Control.
We invite our neighbors and community to come out to support and cheer on our athletes as they make their way through our beautiful town. The public is also invited to the finish line and SLO Life Expo at the Madonna Inn/ Madonna Meadows.
For further information on road closures, please visit www.slomarathon.com/the-races/road-closures. Questions regarding the road closures can be directed to Samantha Pruitt, Certified Race Director, at (805) 458-0655.


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WASHINGTON - As the investigation into the leak of a CIA agent's name hurtles to an apparent conclusion, Special Prosecutor Patrick Fitzgerald has zeroed in on the role of Vice President Dick Cheney's office, according to lawyers familiar with the case and government officials. The prosecutor has assembled evidence that suggests Cheney's long-standing tensions with the CIA contributed to the unmasking of operative Valerie Plame.
In grand jury sessions, including with New York Times reporter Judith Miller, Fitzgerald has pressed witnesses on what Cheney may have known about the effort to push back against ex-diplomat and Iraq war critic Joseph Wilson, including the leak of his wife's position at the CIA, Miller and others said. But Fitzgerald has focused more on the role of Cheney's top aides, including Chief of Staff I. Lewis Libby, lawyers involved in the case said.
One former CIA official told prosecutors early in the probe about efforts by Cheney's office and his allies at the National Security Council to obtain information about Wilson's trip as long as two months before Plame was unmasked in July 2003, according to a person familiar with the account.
It is not clear whether Fitzgerald plans to charge anyone inside the Bush administration with a crime. But with the case reaching a climax - administration officials are braced for possible indictments as early as this week - it is increasingly clear that Cheney and his aides have been deeply enmeshed in events surrounding he Plame affair from the outset.
It was a request by Cheney for more CIA information that, unknown to him, started a chain of events that led to Wilson's mission three years ago. His staff pressed the CIA for information about it one year later. And it was Libby who talked about Wilson's wife with at least two reporters before her identity became public, according to evidence Fitzgerald has amassed and which parties close to the case have acknowledged.
Lawyers in the case said Fitzgerald has focused extensively on whether behind-the-scenes efforts by the vice president's aides and other senior Bush aides were part of a criminal campaign to punish Wilson in part by unmasking his wife.
In a move people involved in the case read as a sign that the end is near, Fitzgerald's spokesman Monday told the Associated Press that the prosecutor planned to announce his conclusions in Washington, where the grand jury has been meeting, instead of Chicago, where the prosecutor is based. Some lawyers close to the case cited courthouse talk that Fitzgerald might announce his findings as early as Wednesday.
In the course of the investigation, Fitzgerald has been exposed to the intense, behind-the-scenes fight between Cheney's office and the CIA over prewar intelligence and the vice president's central role in compiling and then defending the intelligence used to justify the war. Miller, in a first-person account Sunday in the Times, recalled that Libby complained in a June 23, 2003, meeting in his office that the CIA was engaged in ''selective leaking'' and a ''hedging strategy'' that would make the agency look equally prescient whether or not weapons of mass destruction were found in Iraq.
The special prosecutor has personally interviewed numerous officials from the CIA, White House and State Department.
Starting in the days after the Sept. 11, 2001, terrorist attacks, the vice president was at the forefront of a White House campaign to persuade Congress and the American public that invading Iraq was central to defeating terrorists worldwide. Cheney, a longtime proponent of toppling Saddam Hussein, led the White House effort to build the case that Iraq was an imminent threat because it possessed a dangerous arsenal of weapons.
Before the war, he personally traveled to CIA headquarters for briefings, an unusual move that some critics interpreted as an effort to pressure intelligence officials into supporting his view of the evidence.
Administration officials acknowledge that Cheney was immersed in Iraq intelligence, and pressed aides repeatedly for information on weapons programs. He regularly requested follow-up information from the CIA and others when a piece of intelligence caught his eye. Wilson's trip, for example, was triggered by a question Cheney asked during a regular morning intelligence briefing. He had received a Defense Intelligence Agency report alleging Iraq had sought uranium from Niger and wanted to know what else the CIA may have known. Cheney's office was not told ahead of time about the Wilson mission to investigate the claim.
In the Bush White House, Cheney typically has operated secretly, relying on advice from a tight circle of longtime advisers, including Libby, David Addington, his counsel, and his wife and two children, including Liz, a top State Department official.
But, a former Cheney aide, who requested anonymity, said it is ''implausible'' that Cheney himself was involved in the leaking of Plame's name because he rarely, if ever, involved himself in press strategy.


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Serums, Serums Everywhere! Part II: Vitamin C Boosters
Welcome to part II of Serums, Serums Everywhere! This installment will focus on facial serums that contain Vitamin C as a primary ingredient. I hope you checked out part I which focuses on lifting and energizing serums.
Studies show the regular use of Vitamin C products can significantly help to regulate melanin production and hinder hyper-pigmentation in your skin. This means that Vitamin C can seriously fight early signs of aging on your face! Here are my top three picks for Vitamin C infused facial serums. Enjoy!
SkinCeuticals Serum 15 AOX, $75 for 1 oz. This serum combines 15% L-Ascorbic Acid with Ferulic Acid to provide antioxidant and anti-aging benefits. Apply four to five drops in the morning after cleansing your face and neck and follow with a moisturizer and sunscreen for best results.
The serum may tickle for a second when you first apply it because of the highly concentrated Vitamin C, but when it dries, it will leave your skin glowing.
For one more Vitamin C serum,
Cellex-C Serum for Sensitive Skin, $90, claims to make you look five to ten years younger! It's a lightweight, oil-free, serum that helps improve elasticity and resilience in your skin with a pH balance especially for those with sensitive skin.
It contains a bunch of ingredients including: L-Ascorbic Acid, tyrosine, and zinc, which work together to create a firm and youthful looking face with less fine lines, wrinkles or age spots.


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Philip Morris International (NYSE:PM)
Q2 2012 Earnings Call
July 19, 2012 9:00 am ET
Nicholas Rolli - Former Vice President of Investor Relations & Financial Communications
Hermann G. Waldemer - Chief Financial Officer
David J. Adelman - Morgan Stanley, Research Division
Bonnie Herzog - Wells Fargo Securities, LLC, Research Division
Judy E. Hong - Goldman Sachs Group Inc., Research Division
Andrew Kieley - Deutsche Bank AG, Research Division
Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division
Rogerio Fujimori - Crédit Suisse AG, Research Division
Thilo Wrede - Jefferies & Company, Inc., Research Division
Thilo Wrede - Crédit Suisse AG, Research Division
Vivien Azer - Citigroup Inc, Research Division
Erik A. Bloomquist - Berenberg Bank, Research Division
Ann H. Gurkin - Davenport & Company, LLC, Research Division
Christopher Ferrara - BofA Merrill Lynch, Research Division
Michael Avery
David Hayes - Nomura Securities Co. Ltd., Research Division
Karen Lamark
Thomas Adrian Russo - Gardner Russo & Gardner
Good day, and welcome to the Philip Morris International Second Quarter 2012 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by Philip Morris International management and the question-and-answer session. [Operator Instructions]
I will now turn the call over to Mr. Nick Rolli, Vice President of Investor Relations and Financial Communications. Please go ahead, sir.
Nicholas Rolli
Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2012 second quarter results. You may access the release on our website at www.pmi.com.
During our call today, we will be talking about results for the second quarter 2012 and comparing them with the same period in 2011, unless otherwise stated. References to volumes are to PMI shipments. Industry volume and market shares are the latest data available from a number of internal and external sources. Organic volume refers to the [ph] volume excluding acquisitions, and net revenues exclude excise taxes. Operating Companies Income or OCI is defined as operating income before general corporate expenses and the amortization of intangibles.
You will find data tables showing adjustments to net revenues and OCI, for currency, acquisitions, asset impairment, exit and other costs, free cash flow calculations and adjustments to earnings per share or EPS, as well as reconciliations to U.S. GAAP measures at the end of today's webcast slides, which are posted on our website.
Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the Forward-Looking and Cautionary Statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements.
It's now my pleasure to introduce Hermann Waldemer, Chief Financial Officer. Hermann?
Hermann G. Waldemer
Thank you, Nick, and welcome, ladies and gentlemen. We again achieved strong underlying business results in the second quarter, with actual results impacted by both unfavorable currency movements and the hurdle we faced in Japan due to our extraordinarily results there during the second quarter last year.
Our organic cigarette volume in the quarter was down 1.2% to 238.3 billion units. However, excluding the Japan hurdle of 6.3 billion units, organic cigarette volume was up 1.4%. In addition, our organic volume of other tobacco products increased by 11.8% in the quarter.
Net revenues and adjusted OCI, excluding currency and acquisitions, were up by 2.9% and 3.5%, respectively. Without the Japan hurdle, our growth rates would have been in line with our annual mid- to long-term currency-neutral targets of 4% to 6% and 6% to 8%, respectively.
Adjusted diluted EPS reached $1.36 in the second quarter, slightly ahead of last year and were up by 9%, excluding the currency. If one also takes into consideration the previously disclosed Japan hurdle of $0.10 at an EPS level, then adjusted diluted EPS, excluding currency, was up by a very strong 17.7% in the second quarter.
Our results for the first half of the year were excellent. Organic cigarette volume was up 1.8%. Excluding currency and acquisitions, net revenues and adjusted OCI grew by 6.5% and 8.3%, respectively. Finally, adjusted diluted EPS increased by 13.3%, excluding currency.
These results confirm our expectation of solid organic cigarette volume growth in 2012. We have the best geographic footprint in the industry and leadership in both emerging and developed markets. Our volume is growing strongly in many markets in both the Asia and EEMA regions, offsetting weaker volume trends in the EU region due to the deterioration of the economic situation and weaker consumer confidence. Consequently, we expect to continue to grow currency-neutral profitability at a rapid pace, with sustained strong pricing and a favorable product mix only partially offset by an unfavorable geographic mix.
Exchange rates, however, continue to be volatile. At prevailing exchange rates, the forecast currency headwind this year is slightly higher than the $0.25 per share that we predicted in June. However, our underlying business is very strong, and this is expected to offset the additional unfavorable currency impact of $0.02 per share.
We are therefore today reaffirming our reported diluted 2012 EPS guidance of $5.10 to $5.20 compared to $4.85 in 2011. On a currency-neutral basis, our guidance implies a forecast growth rate of approximately 10% to 12% compared to adjusted diluted EPS of $4.88 in 2011, this despite the Japan hurdle and weak industry volume in Europe. Let me remind you that our mid- to long-term currency-neutral annual growth target for adjusted diluted EPS is also 10% to 12%.
As we indicated during our Investor Day last month, cigarette industry volumes in the EU region were unusually depressed in the second quarter. The overall decline was 9.7%, with significant reductions not only in markets such as Greece and Spain, but also in Italy and Poland, with even Germany suffering a 5.1% drop. The decline was driven by a reduction in daily consumption, while smoking incidence has remained relatively stable.
For the first half of the year, cigarette industry volume in the EU region was down 5.8%. This confirms that the second quarter decline was unusually severe as adult smokers adjusted to the renewed recessionary environment and there were some unfavorable timing issues. Our current expectations for the second half of the year is that the decline rate for cigarette industry volume in the EU region should be similar to that experienced during the first half of the year.
The average unemployment rate across the European Union increased by 0.7 points between June 2011 and May 2012, with significantly more pronounced increases in Greece, Spain and Italy. Only Germany showed a meaningful [indiscernible] .
As a result of the deteriorating job markets, the average unemployment level in the EU stood at 10.3% in May, with Spain and Greece double this level. France and Italy are just below the EU average, while Germany and the Netherlands continue to have relatively low levels of unemployment.
We have always highlighted unemployment levels and trends as key indicators for industry volume. We therefore do not expect a return to the normal underlying decline rate of 2% to 3% in the EU region until the issue is addressed in a meaningful way.
We have achieved a resilient market share performance in the second quarter, with 38.5% overall in the EU region, 0.2 points below the previous year's level. On a half year basis, our share of 37.9% was down 0.4 points.
We are very encouraged by the performance of Marlboro in this difficult economic environment. In the second quarter, Marlboro's share in the region grew by 0.3 points to 18.4%, and it was up slightly on a 6-month basis. Marlboro gained share in the quarter notably in Belgium, Czech Republic, Finland, Germany, Greece, Hungary, Italy and Poland. L&M continued to grow share in such markets as Finland, Germany, Poland and Slovakia, but this was not enough to offset declines in the quarter in Greece, the Netherlands, Portugal and Spain. Chesterfield is performing very well and is being successfully established as a strong second leg for us in the low-price segment in the EU region.
We are rapidly gaining share in the growing fine cut category. Industry volumes increased by nearly 8% in both the second quarter and the first half as adult smokers down-traded to less expensive options. Our share of the fine cut category rose by 1.4 points in the quarter and by 1.7 points in the first half to 14.1% and 14%, respectively.
The market situation in Italy deserves specific attention. Cigarette industry volume in Italy declined by 10.5% in the second quarter and by 8.5% in the first half of 2012. The most important single factor has been a reduction in consumer purchasing power, aggravated by the payment of increased property taxes in June and the increase in cigarette prices over the last 12 months. This unfavorable development in the cigarette industry is not a unique phenomenon as a wide range of consumer products have been affected by the economic slowdown.
Impacting specifically the cigarette industry, there has also been down-trading to the fine cut category and an increase in illicit trade, particularly the so-called illicit whites, with brands such as Jin Ling and Classic. Despite recent price increases, the fine cut category grew by 74.6% in the quarter, though it still represents a relatively modest 6.5% of total tobacco industry volume.
In terms of market share, Marlboro is performing strongly. It gained 0.3 points to reach a 23% share in the quarter, despite the continued pressure on the Premium segment. However, our overall cigarette market share declined in both the quarter and the first half, as the strong performance of Marlboro and the launch of Philip Morris Selection in the low-price segment were unable to offset the decline of our local heritage brand Diana. In contrast, our share in fine cut grew by 24.5 points in the quarter to a record level of 31%, firmly establishing us as the category leader in Italy.
In Germany, cigarette industry volume declined in the quarter by 5.1%. This was attributable to the impact of the recent price increases, a decline in consumer confidence in spite of low unemployment rates, a difficult comparison with the second quarter last year that was up 4.6% and some timing issues. We believe that the first half year decline of 1.3% is a better reflection of the underlying trend.
PMI continued to strong perform strongly with further share gains in the second quarter. Our share in cigarettes was up 0.3 points to 36.4%, and our share in fine cut grew by 1.2 points to 16%. We are very pleased by the improved performance of Marlboro, which gained 0.3 points in the cigarette category and 1.2 points in the fine cut category, while L&M continued to grow share in the cigarette category and Chesterfield gained in both the cigarette and in the fine cut categories.
As a consequence of the industry volume declines, our second quarter results were soft in the EU region. Cigarette volume was down 9.4%, only partially offset by a strong 18.2% growth in OTP volumes. Net revenues and adjusted OCI, excluding currency and acquisitions, were down 0.7% and 2.7%, respectively. We were largely able to offset the lower volumes with higher prices. Excluding currency and acquisitions, June year-to-date net revenues increased by 2%, and adjusted OCI was just above the prior-year level on the same basis.
In contrast, we had another very strong quarter in the EEMA region, and our results year-to-date June were equally excellent. In the quarter, organic volume grew by 4.9%, while net revenues and adjusted OCI, excluding currency and acquisitions, increased by 12.7% and 22.9%, respectively.
While pricing at $114 million continued to be a significant contributor to the growth in EEMA's OCI, it was almost matched in the quarter by our $104 million volume/mix variance. This is in fact the fifth consecutive quarter of positive volume/mix in the region.
This was driven by the strength of our brand portfolio, with a particularly encouraging performance of our premium brands, with volume up 7.4% in the second quarter. Overall, 9 of our top 10 brands in that EEMA region grew volume in the quarter, with just Chesterfield down. Marlboro had a strong quarter, with a volume gain of over 1 billion units or 5%, driven mainly by North Africa, Saudi Arabia and Serbia. The performance of Parliament was truly outstanding, with volume up 1.1 billion units or 16.3%, driven mainly by Eastern Europe and Turkey.
On a market basis, our strong results were led by Russia, so let me provide you with further details on this important market.
Though we do not have definitive data yet, we believe that the Russian cigarette market grew slightly during the first half of the year. We attribute this to an improvement in the economy and a return of foreign workers as the construction industry has started to pick up again. As a result of recent price increases in cigarettes, foreseen hikes in utility prices and the slightly slower expected economic growth in the second half of the year, we forecast that full-year industry cigarette volume should reach a level similar to last year's.
We are outpacing industry volume. During the second quarter, our volume increased at a much faster rate of 8.7% and was 5% higher in the first half. Two very important positive aspects of the Russian market were uptrading by adult smokers in spite of significant price increases and our ability to gain market share, thanks to the strength and breadth of our brand portfolio. For the quarter through the end of May, our market share was 0.7 points higher at 26.1%, thanks to the strong performance of Parliament, L&M, Bond Street and Next.
We took a further price increase of RUB 3 per pack across our portfolio in July.
We launched Marlboro ClearTaste in Russia in June. This is a much smoother-tasting line of products, which addresses adult smoker product preference. We started the launch in key cities and have already achieved outstanding distribution at point of sale. Initial consumer feedback and trial data are positive. It will of course take several months before we can draw any firm conclusions.
Our performance in the Asia region was again very strong in the second quarter. This was however masked by the aforementioned hurdle in Japan.
Our organic cigarette volume in the quarter was up 7.4%, excluding the Japan hurdle, driven primarily by Indonesia, though down 0.7% on a reported basis. Likewise, excluding the Japan hurdle, adjusted OCI, excluding currency and acquisitions, would have shown a strong increase, but it was down 2.6% including the full comparison for Japan.
Industry volume in Japan increased by nearly 10% in the second quarter compared to the distorted period last year. For 2012, we are now forecasting a stable total market, though the underlying trend remains a moderate decline of 1% to 2% a year going forward.
During the first half of this year, Japan Tobacco accelerated its program of new launches, and this has had some impact on our market share, which reached 27.8% in the second quarter. This was 0.2 points lower than the previous quarter but still substantially above the pre-earthquake share levels.
Lark Hybrid 100s maintained an 0.4% market share, and we launched Marlboro Black Menthol Edge 8 and Marlboro Menthol Edge 1 during the second quarter. Our latest launch this month is Marlboro Ice Blast in 5-milligram and 1-milligram variants, 8-milligram variant having achieved a 1.3% market share during the second quarter. With these efforts and additional new launches in the pipeline, we are confident that we should be able to stabilize our market position going forward.
On the fiscal front, the Japanese government obtained Parliamentary approval for a two-step increase in consumption tax from 5% today to 8% in 2014 and 10% in 2015. While prices remain government-controlled, the last tax increases resulted in margin-enhancing price increases.
Volumes continued to grow in the second quarter in Indonesia, albeit as expected at a slower rate than in the first quarter. Industry volume grew by 6.9% in the second quarter, while PMI volume increased by 17.8%. Supported by a strong economy, adult smokers have been uptrading to the Premium segment, which has grown by 2 points in the first 6 months this year.
PMI has the strongest and broadest portfolio in the Indonesian market, along with an unmatched national distribution network and highly qualified and motivated employees. Our market share grew by 3.1 points in the quarter to 33.5% as Sampoerna A remained the fastest-growing brand in terms of share gains, with an increase of 1.2 points to 13.1%, and we continued to benefit from rounded price points.
Going forward, we forecast a market growth of around 8% for the full year and look for further PMI share growth, though at a slower pace than in the first half of this year.
Pricing continues to be the most important single driver of PMI's profitability. The pricing variance was $463 million in the quarter, giving a half year pricing variance of $832 million. This year, we have increased prices notably in Argentina, Australia, Brazil, Germany, Indonesia, Italy, Korea, Mexico, the Philippines, Poland, Russia, Saudi Arabia, Spain and Ukraine.
Our volume/mix variance was obviously negative in the quarter due to the Japan hurdle. However, as you can see on the chart, excluding the hurdle, 8 of our top 10 brands grew volume in the first half of the year and the other 2 were essentially stable. In volume terms, Marlboro achieved the largest growth, while in percentage terms, Fortune, Sampoerna A, Parliament and Lark all recorded double-digit growth.
We are continuing to expand our market share in our top 30 OCI markets. Our June 3-month moving average share of 36.9% is above both our 12-month moving share and the 2011 results and 1.4 share points above the 2010 share level.
Free cash flow declined in the second quarter by $703 million to $3.2 billion. Unfavorable currency movements were responsible for over half this decrease. In addition, we built up finished goods stock in Brazil and Russia, and working capital consequently increased by $388 million. This will be reversed during the third quarter when this inventory is sold.
During the second quarter, we spent a further $1.5 billion to repurchase 17.8 million shares. In June, the board approved a new 3-year $18 billion share repurchase program, which will start in August when funds from the previous program will have been fully utilized ahead of schedule. Our target remains to spend $6 billion on share repurchases this year.
Since the spin [ph] through the end of June this year, we spent $24.4 billion to repurchase 449.9 million shares, representing 21.3% of our shares outstanding at the time of the spin [ph] at an average price of $54.21.
In conclusion, the second quarter of 2012 was, as expected, a very strong one in terms of underlying business momentum, but a challenging one in terms of reported results due to the Japan hurdle and unfavorable currency movements.
As we foresaw during our June Investor Day, EEMA and Asia region results were very strong in the second quarter, enabling us to offset unusually weak cigarette industry volume in the EU region.
The breadth of our geographic footprint, the continued strong pricing environment based on our superior brand portfolio and productivity gains enabled us to grow both net revenues and adjusted OCI in the second quarter, excluding currency and acquisitions.
Adjusted diluted EPS, ex currency, increased by 9% in the second quarter. If the $0.10 hurdle related to Japan were excluded, the increase in adjusted diluted EPS, ex currency, was a very substantial 17.7%, confirming the overall strength of our business.
We have reaffirmed today our 2012 reported diluted EPS guidance of $5.10 to $5.20. Compared to adjusted diluted EPS of $4.88 in 2011, this represents a growth rate of approximately 10% to 12%, excluding currency.
Thank you. I'll be happy to answer your questions now.
Question-and-Answer Session
[Operator Instructions] Our first question comes from the line of David Adelman with Morgan Stanley.
David J. Adelman - Morgan Stanley, Research Division
Two things I wanted to ask you. First, in the EU, do you think that you can maintain on a local currency basis the overall profitability of the business for the foreseeable future if volume declines persist at these above trend rates, maybe not the rate in the second quarter but at higher than historical rates of decline?
Hermann G. Waldemer
Well, I'd say for this year -- I mean, for the second half we expect a similar decline, but at the same time, we continue to be cautiously optimistic to achieve low single-digit OCI growth, excluding currency, nevertheless. In the EU region, in years before where we had similar decline rates, we had similar results. Yes, we see continued market declines there, but there are also, talking for this year, also several positives in there. In Italy, there was still the potential VAT increase looming in September that has been called off, postponed to next year but who knows what happens until September of 2013. But it's not going to happen this year. In Spain, the VAT increase of 3% on all goods is being compensated for cigarettes by ad valorem decrease. That's good news, too, of course. And in France, some sort of price increase is going to come in the remainder of the year, and despite this economic trouble in the entire region, the Marlboro share is actually up. So overall, yes, I think we can do that, we can still achieve low single-digit OCI growth also in the EU region.
David J. Adelman - Morgan Stanley, Research Division
Okay. And then second question, Hermann. Can you just update us all on the status of the potential excise tax increase in the Philippines and the potential for fairly substantial duty increase potentially in the GCC countries?
Hermann G. Waldemer
Okay. Philippines first. The situation there is that the House of Representatives has passed a bill with pretty substantial disruptive excise increases for 2013. Thereafter, even in that bill, the positive is that it takes a multiyear approach, but that is for now the House of Representatives. The legislative processes is by far not being closed. After the summer recess, first the Senate is expected to weigh in on the question. Then should there be disagreement between Senate and House of Representatives, then it goes into the so-called bicameral committee. So what I'm telling you here is there is more discussions to come in the third and in the fourth quarter. Then on GCC, while there is a discussion going on, that discussion we have had many years also -- for many years also in the past, it's still an open question. I really don't have an update to that one. We'll see in the remainder of the year.
Your next question comes from the line of Bonnie Herzog with Wells Fargo.
Bonnie Herzog - Wells Fargo Securities, LLC, Research Division
Just a follow-up on the Philippines. Thanks for the update on the tax situation, which is helpful, but could you provide just a little more color on the current market dynamics just in terms of the market declining there, what's going on and how you expect this to evolve as the year unfolds and into next year?
Hermann G. Waldemer
Well, okay. First of all, I mean, let me start then with the economy. I see that the economic outlook in the Philippines, which is actually brilliant, I mean, the GDP, the last number I saw, I believe that was the quarter 1 number, up 6.4%, with an inflation, I think it has been May, a little less than 3%. Remittances of Filipinos working abroad, up substantially in 1 month. That's about an amount of $1.7 billion coming to the country. Therefore, I mean, in terms of consumer environment, that's actually pretty good. That translates now in the total market that for the full year, we would expect a slight growth. So I would say the full year market, about 100 billion cigarettes. Last year was 97.5 billion roughly. So a slight increase therefore in the total market despite the price increases that was there. In terms of shares, yes, share, we lost a bit of share, and we lost that share essentially to some local company there, which, let me put it this way, sells at surprisingly low prices.
Bonnie Herzog - Wells Fargo Securities, LLC, Research Division
Okay. Hermann, just a second question on your Be Marlboro campaign. Could you give us just further details on the rollout and then maybe a little more color on just some key markets where this campaign has been having a positive impact on Marlboro?
Hermann G. Waldemer
Well, first of all, it is, of course where it started it's in the German market, where it has been doing tremendously well, continues to do tremendously well. I mean, it is -- as you know, it is the continuation at the end of the day and the translation into modern values of what was the Marlboro campaign, the cowboy campaign stood for. So it's receiving excellent feedback, continues to receive excellent consumer feedback in the German market. In adaptations, you will find it in more and more markets around the world. It's not always going to be exactly the same what you see in Germany, but it's the same idea, the same philosophy behind. And we will roll it out from there. It has started in some Latin American markets, and it will go further. It is the new worldwide campaign.
Your next question comes from the line of Judy Hong with Goldman Sachs.
Judy E. Hong - Goldman Sachs Group Inc., Research Division
First, in Japan, so the consumption tax proposals that you've talked about in Japan, other than the consumption tax increases, are there any discussions of national or regional tax increases that are being discussed at this point?
Hermann G. Waldemer
Well not regional, what will come later in the year is, of course, a discussion on the excise tax outlook. Typically, as the budgetary year of the government goes from 1st of April to the end of March, there, as you, of course, [indiscernible] These discussions will start in December, with a decision kind of by year-end. At this point in time, I really couldn't predict the outcome there, but it is obvious and clear that we will be advocating for a multiyear excise tax plan, which would be beneficial for both the government in their quest to maximize revenues and could also be profitable for us at the same time.
Judy E. Hong - Goldman Sachs Group Inc., Research Division
Is there anything to glean from the fact that they did approve the other consumption tax increase?
Hermann G. Waldemer
Yes, I would say it is a positive there, it is a first step to developing an entire refinancing plan, if you like, for all the funds needed to cope with the cost of the natural disaster of last year. So in that context, the discussions take place. Consumption tax was, of course, the key element in there. Excise tax, I believe, is going to be a normal discussion. It will not be dominated by that question on the consumption tax. To put that a bit into the context, that's something that is going to be manageable for us. It always depends of course what you assume to be the price level when the consumption tax kicks in at that time, April 2014 and October 2015. But kind of the first increase means a rollover of about JPY 15, and the second one means a rollover of about JPY 10 per pack. That's manageable, of course.
Judy E. Hong - Goldman Sachs Group Inc., Research Division
Right. Okay. And you've talked about the market in Japan, the market consumption decline this year being now more stable. Can you just talk about why at least this year the market seems to be doing better than expected?
Hermann G. Waldemer
Well, at the first quarter call, I think I still expected 1% to 2% decline there. It's of course -- to be honest, it's a hard market to read with all the distortions from last year into this year. We had a prolonged period where incidence -- smoking incidence had stayed stable. It has come down a little bit the last 2 months but not much. So that's why I think that the underlying, really, is probably a 1% to 2% decline going forward. Now I'm talking next years and thereafter. That's of course [indiscernible] pricing. I'm talking about the underlying trend. But this year, when we take it all together, the obvious estimate is now [ph] that it should be about flat.
Judy E. Hong - Goldman Sachs Group Inc., Research Division
Okay. And then just in terms of your guidance, so if you look at first half, your adjusted earnings up 13.3%, excluding currency, even with the hurdle that you faced in second quarter from Japan. It sounds like, just based on your guidance, maybe a little bit of a slowdown in the back half. I'm just wondering if there are any other factors that sort of makes you think that the earnings growth could slow down in the back half. Are you thinking just in terms of Europe potentially a bit more conservative stance? I'm just wondering if there's anything to think about in the back half.
Hermann G. Waldemer
No, I mean, there is nothing on the underlying business trends there. It is simply some -- often a question of comparisons. If I take the Japan hurdle out, then organic volume in the first half has been going 3.3%. I mean, I can't expect 3.3% for the full year, I think nobody does, although we are optimistic to achieve our mid- to long-term organic volume growth target of 1% despite the hurdle in Japan. To give you one example of tough comps, if you go to the EEMA region, then the first half volume results compared to declining trends in the first half of 2011, whilst the second half of the year will compare to already an overall growth rate of 2.4% in the second half of 2011 last year in that region. So it's a bit of comps, but underlying our business is in very good shape. And Europe has, of course, been factored in into our full year guidance.
Your next question comes from the line of Andrew Kieley with Deutsche Bank.
Andrew Kieley - Deutsche Bank AG, Research Division
Just going back to Europe and Southern Europe specifically, could you just talk about if the volume trend in those countries has changed much compared to what you indicated at the Investor Day? And what gives you confidence that the volume in Southern Europe will have been most weakest this quarter and then stabilize more in the second half?
Hermann G. Waldemer
Okay. Well, it seems they have not really changed much compared to the Investor Day projections. The quarter has come out slightly worse than what we already had highlighted there. I mean, in terms of market sizes, then the best will be we go to the biggest markets there. Germany, which has been down in the second quarter by 5.2%, is down on a year-to-date basis 1.3%. I would say in Germany, expect about 1.5% for the full year. So the 5% are not representative at all in that sense. Italy is a complicated market these days. I mean, I had it in my prepared remarks, austerity measures and consumer confidence going down, doesn't make it easier. However, I would say for the full market for Italy, I would expect something like 7.5%, maybe 8% decline. The first quarter was down 6%, the second quarter was down 10.5%. 7.5% [ph] to 8% could be a full year number there in Italy. Spain, I think the forecast that we had of something in the range of 10% for the full year outlook is still a reasonable assumption. It is, of course, was very important that the VAT increase has been offset by reduced ad valorem rates. Therefore, in that context, I think the minus 10% for Spain is still a realistic number. If I add in then France, there I would say take out the technical factors and stuff. Something like 3% is probably a realistic assumption for France.
Andrew Kieley - Deutsche Bank AG, Research Division
Okay. And then the other question I had is just your commentary in the guidance, the language about the anticipated business improvement in Asia and EEMA regions. Does that mean -- I mean, it sounds like that's mainly -- you're seeing better macro trends in Russia, your growth in Indonesia. Are there any other specific positives that you are calling out in those 2 regions?
Hermann G. Waldemer
Well, we just raised our prices by RUB 3 in Russia in July. That plays into that one as well. But other than that, yes, I mean, the overall environment is really good. The economic environment is kind of the antipode of what we see in the EU region. And with the right portfolios, the right brands, we are benefiting from those trends in those parts of the world.
Your next question comes from the line of Chris Growe with Stifel, Nicolaus.
Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division
Hermann, I want to ask you 2 questions, if I could. The first was a bit of a follow-on to Japan, and it sounds like you're now expecting sort of share stabilization there for the year. And really just more a question about why. Do you have less new productivity or are you seeing a little bit more competitive activity, of course, out of Japan Tobacco? Maybe it's a combination of factors, but I just want to get a little more perspective on your expectation for share in Japan.
Hermann G. Waldemer
We had a very slight loss here. I mean, we came down from 28% to 27.8%. That's a slight loss. We are competitive people. We don't like that. But one also has to acknowledge that competitors are not asleep on the switch either. We have had a very successful launch with Marlboro Black Menthol, as you remember. JT has come out now also with a successful highly mentholated product that they pushed into the market, that has had some share consequence on us, but that's the second quarter. As I said, we are already out there in July. Our sales with new launches with 5-milligram and 1-milligram versions of Marlboro Ice Blast. The 8-milligram version is the one that has 1.3% share, which is after such a not-so-long period in the market a fantastic share. But competition will go on, and we're never afraid of competition. But we take also the other [indiscernible] Serious, that's all there is.
Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division
It sounds like it's not a change though. And so your new product introductions are plans for, say, the second half of the year though. Correct?
Hermann G. Waldemer
No, we have still more in the pipeline for the second half of the year, of course.
Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division
Okay. I just want to be clear on that. And then I just had a question for you, a follow-up on the EU. Obviously, we had obviously a difficult quarter this quarter, an expectation for that to improve a bit from where we were this quarter. And I want to be clear. In the second quarter, were there any -- was there any negative effect on volumes from inventory distortions or movements that made this quarter look a little worse than what the underlying results would have shown?
Hermann G. Waldemer
I mean, Germany has been comparing to the second quarter in 2011. That was up by 4.6%, and it happens to be that Easter is in the first quarter and in the second quarter from 1 year to the next. That's just very, very technical there. So yes, there were some inventory movements in there. And typically, at quarter ends, you sometimes see intense activity of some competitors with the trades, which we don't do.
Your next question comes from the line of Rogerio Fujimori with Crédit Suisse.
Rogerio Fujimori - Crédit Suisse AG, Research Division
Hermann, you flagged the problem of illicit trade in Italy. Has the problem of illicit trade in Spain got worse in Q2?
Hermann G. Waldemer
Illicit trade in Spain should be about 10%, 12%. I would assume there, so it's increased -- it's on the increase there as well.
Rogerio Fujimori - Crédit Suisse AG, Research Division
Okay. My second question, Hermann, is whether you could give us some color on the phasing of marketing spend this year. Should we expect any change to the usual skew towards second half and Q4 in particular?
Hermann G. Waldemer
No, I wouldn't expect a change in general trends there. It's really -- it's kind of a lot of activities going to the second quarter before the summer break, and then you have -- it's picking up towards year-end. That's a very normal pattern which has not changed over the years. I don't see a change now either.
Rogerio Fujimori - Crédit Suisse AG, Research Division
Okay. And my last question is just any early reading on volume trends in Brazil, both the tax-driven price increase and the minimum price.
Hermann G. Waldemer
Sorry, volume trends in Brazil, you said?
Rogerio Fujimori - Crédit Suisse AG, Research Division
That's correct.
Hermann G. Waldemer
Brazil. Okay. Well, in Brazil, you of course have now had -- the pricing is implemented, the tax increase was made first. All the prices are there. We do see an adherence of local manufacturers to the new minimum price of BRL 3 there, but as the minimum price is still relatively low, I think the real effect will only come with the already scheduled and foreseen minimum price increases over the years. We don't see, however, really, an improvement on the illicit product flowing in from Paraguay into Brazil.
Your next question comes from the line of Thilo Wrede with Jefferies.
Thilo Wrede - Jefferies & Company, Inc., Research Division
Hermann, I would have expected L&M to do a little bit better in the EU, given that there's probably down-trading going on. What am I missing there?
Hermann G. Waldemer
Well, sometimes you can't have it all. Marlboro is doing better. I think the 2 are a bit linked now. But seriously, that's -- L&M did nothing wrong. The brand is going well. In Germany, the growth has -- it's still growing, but it has slowed down a little bit. But that's fine with me it's recuperated with Marlboro. And then when you go over to Spain, well, in Spain, the declines there in Spain are actually linked to brands that absorb part of the minimum tax today there. I'm talking about brands that fell at less than EUR 3.55. This is today the kick-in with minimum tax. That kick-in actually is going to EUR 3.77 of September 1. So I look forward to that date.
Thilo Wrede - Jefferies & Company, Inc., Research Division
Okay. And then in Japan, at what point do you think the innovation disadvantage that you have relative to JT right now? At what point will that start to fade?
Hermann G. Waldemer
I would say that I just admitted that they have had a real hit with the highly mentholated product that has come out under Mild Seven. We have [indiscernible] had a series of very good ones, too. We will keep on working on our new launches, and being competitive in the market. A onetime hit does not change this plan.
Thilo Wrede - Crédit Suisse AG, Research Division
Okay. And then last question I have for you. With illicit trade picking up again in Canada, is that a cautionary tale that may be a sustainable fighting of illicit trade is much harder than some short-term successes might imply?
Hermann G. Waldemer
Honestly, to the contrary, although you might further elaborate thereafter, to the contrary, I have big hopes that illicit trade will come further down in Canada because the province of Ontario has declared that they are essentially copying the measures that the province of Québec had implemented, was it now 2 years ago, which have brought quite a bit of volume back into the legal tax-paying market. So as the enforcements in Ontario kicks in and the total illicit trade in Ontario is estimated to be about 4 billion cigarettes, so quite a bit of that could come through and the legal market could benefit from that. So honestly, I would expect the opposite going forward in Canada.
Your next question comes from the line of Vivien Azer with Citi.
Vivien Azer - Citigroup Inc, Research Division
My first question has to do with the launch of the new Marlboro line in Russia. You guys posted volume growth on the Marlboro brand in that market for the first time in a number of quarters, and I'm curious if you could give us a sense of how much of that growth was from the selling of the new products versus any kind of underlying benefit to organic volumes for Marlboro.
Hermann G. Waldemer
Yes. In the second quarter on Marlboro ClearTaste, there is, of course -- and now we talk shipment numbers. We don't talk Nielsen numbers, we talk shipment numbers. It's still, of course, a pipelining effect, bringing the product to the distributor, and from there, into wholesale and retail trade. The volume, total volume increase in the EEMA region in the quarter was 3.8 billion cigarettes. Out of that, roughly 10% has been Marlboro ClearTaste. So yes, it's there. It's some pipelining effect, but it's just 10% of the overall growth.
Vivien Azer - Citigroup Inc, Research Division
Understood. My next question again on EEMA has to do with Turkey. At your Analyst Day, you highlighted some early successes in reductions in the illicit trade, and it sounds like that was, again, a benefit onto the Turkish market in the quarter. Given the acceleration you've seen there -- I think 4.5% roughly year-to-date volume growth for the industry -- do you have a sense of how much volume is coming back into that market?
Hermann G. Waldemer
Yes, our latest estimate is that illicit trade has come down by about 3 percentage points, national average from 20% actually to 17%. That's our latest estimate, these are of course by definition always estimates. So the 4% growth that you quoted, that's actually a good estimate for the full year. So I would expect the total market to be in the range of 95 billion cigarettes.
Vivien Azer - Citigroup Inc, Research Division
Wonderful. And my last question has to do with Spain. And I hate to split hairs here, Hermann, but if I think about your outlook for the full year of 10% in line with year-to-date and I look at the comps that you face, I think it implies some kind of improvement in the back half of the year because 1 half of '11, the market was down 19%, and then you finished the year, down 17%. So is it the VAT change or is there something else that gets you on the margin incrementally more positive that despite a tougher comp, you can maintain the trend?
Hermann G. Waldemer
[indiscernible] There's a multitude of factors at play here. There were the price increases that we have seen, several ones that you remember. There is now -- there hasn't been a price increase now for a while, and the VAT threat has been avoided. Then in terms of comparisons, it was also a question of how much volume is in retail trades. But at the end of the day, that's the best estimate we have coming out of the Spanish market. Can it be 11%? Can it be 12%? It could, but we talk something around 10% for the full year.
Your next question comes from the line of Erik Bloomquist with Berenberg Bank.
Erik A. Bloomquist - Berenberg Bank, Research Division
I'd like to ask about the plain packaging, and I'm wondering if there's a difference in the WTO challenge, having the Dominican Republic file a complaint. Does this mean that there's more momentum in the formal adjudication panel? And then secondly, is there any read through from that to what may happen in the U.K. with the consultation underway and then perhaps with the results some time toward the end of this year, beginning of next year?
Hermann G. Waldemer
Okay. I mean, on plain packaging, you have actually mentioned 2 of the 3 developments in that area. The WTO claim of the DR that has now officially filed a request for consultation with Australia, actually, I believe yesterday or the day before yesterday. That adds another country and it adds more doubt and pressure into the procedure. We continue to be optimistic that more countries will actually follow that example, so that put simply more weight into the WTO claims between those governments. On the U.K., the extension of the consultation period by another month now to mid-August because that was supposed to end mid-July, is simply driven that a lot of people have made submissions and continue to make submissions to the government. I take it as a sign that the government is serious about their evaluation efforts in that process. And if that is all happening on a rational basis -- and I continue to think that this is the case, then I would also expect that the U.K. government comes to the same rational conclusion as they came 2.5 years ago not to implement. The third new element, the new one is actually under the bilateral investment treaty claim that Philip Morris has. The first procedural hearing is actually now scheduled for July 30 in Singapore.
Erik A. Bloomquist - Berenberg Bank, Research Division
And then coming back to the Turkish market, could you update us on the outlook for any tax increases at the end of this year, beginning of next year? Are they thinking about raising the ad valorem again or is that somewhat off the table?
Hermann G. Waldemer
Okay. Remember, when we were here at the first quarter call, there we had had the press statement of the Finance Minister and the Deputy Prime Minister that they will address the excise tax structure. That has happened. The Council of Ministers has authorized specific tax to be implemented to an amount of up to 20% of the minimum excise tax. The timing and the actual percentage and amounts, that's still to be defined, but I would expect it still this year. So I think that is a positive development and a sign of rationality in the whole process.
Your next question comes from the line of Ann Gurkin with Davenport.
Ann H. Gurkin - Davenport & Company, LLC, Research Division
I was wondering if you could just help me with the Marlboro brand franchise. We saw volume flow sequentially from Q1 to Q2, and we saw good share of growth continuing in Q2. But how should I think about that franchise in the second half, the impact of market pricing innovation? Can you just help me think about volume and share progression as the year unfolds?
Hermann G. Waldemer
Well, first of all, I mean, really, I mean, not even the quarter [indiscernible] year-to-date. Yes, for Asia, I have to pick the hurdle out. But excluding the hurdle in Asia, Marlboro is up 0.24 to 6.2%. That's all year-to-date June numbers. In the EU, it's up 0.3 to 18.4. In EEMA, it's up 0.1 to 6.9, despite still measured by Nielsen declines in Russia. Latin America, up 0.4 to 14.2. So yes, it's growing. It's also growing in terms of shipments. So even year-to-date, excluding -- including the hurdle, it's up 1.7. Excluding the hurdle, it's up 2.9. And if I then move over to really to the big markets, where it's really substantially up, then you have there -- first of all, I would think of Mexico. It's growing -- I mean, the quarter, 1.2 percentage points to 53.2. I mean, the brand is in terrific shape there. It's growing by 0.9% in Poland. In Poland, you see a phenomenon that the top 10 brands really capture more and more of the market volume, and you see a consolidation into fewer brands. That's clear uptrading [ph] potential for us and for a Marlboro [indiscernible] element there. Germany, we talked about earlier on the call. Italy, it's growing despite recessionary environment. And 0.3 percentage point to 4.5 in Indonesia, given the size of the Indonesian market, it's quite some volume. Then you go to those markets where Marlboro is actually down, and there are very specific reasons in there, understandable reasons, which are not there to be forever. Korea, it's down 0.9 to 7.7, while that is clearly driven by our price increases that we implemented and we compare still to the periods that we had price advantage versus international competitors and were at par with the Korean competitors. In France, it's down 0.8 in the quarter to 25.2, very simply driven by the fact that Marlboro is the only big brand who is retailing at above EUR 6. There are a lot of brands retail below EUR 6. As I mentioned earlier, there's a price increase coming up in France. And in Spain, the decline -- in such a recessionary environment, what else could we expect? But take it all together, driven by the innovation, driven by new campaigns, driven by better execution on the marketing and sales level, a new commercial approach, Marlboro is doing well. Pockets of weakness like Russia exist, and we work on those. I'm very positive on Marlboro overall.
Ann H. Gurkin - Davenport & Company, LLC, Research Division
So tracking where you all would expect for the year? Is that fair?
Hermann G. Waldemer
Could you say again? I could not hear.
Ann H. Gurkin - Davenport & Company, LLC, Research Division
Is it tracking in line with expectations for the year, Marlboro, overall for the first half?
Hermann G. Waldemer
Absolutely. Yes.
Your next question comes from the line of Chris Ferrara with Bank of America.
Christopher Ferrara - BofA Merrill Lynch, Research Division
Hermann, just one last clarification on the EU. Not to beat this thing to death, but it does sound like you're indicating broadly across the segment that I guess the first half volume numbers may be a better indicator of what the go forward looks like than are the Q2 numbers, right? Even though it looks like things have continued to worsen, especially from a macro perspective, and the number was a little worse than you even thought a month ago. So I guess can you, I guess, give a little bit more color on what the inventory/timing piece of the EU is that will cause Q3 and Q4 to get better than Q2? I'm just trying to understand why we'd think that, that first half number is a better indicator than the more recent Q2 number.
Hermann G. Waldemer
Well, I mean, there is many markets in there. And as I said earlier, Germany is just -- I think it's the most flagrant example there. I mean, you had Q2 down by 5.2, whereas year-to-date, it's down by 1.3. And our full-year estimate for the German market is down 1.5. So you have this technical reason in the second quarter where in Q2 2011, you compare to an up of 4.6%. These are comps. Let's not get hung up too much really on quarters. Year-to-date trends are the more reliable indicator. I'm not talking it rosy here. Yes, EU region is not easy, but there is no reason to believe that the EU region is now going to be down 10% for the rest of the year. It's not going to be down 10% for the year, it's going to be down in the range of where the year-to-date is, which is anything around 6.
Your next question comes from the line of Michael Avery with CLSA.
Michael Avery
One quick question. You had said your estimate for the increase in leaf costs was around 2% for 2012. Has that changed at all with the drought in the U.S.? Is there upward pressure on that?
Hermann G. Waldemer
No. I mean, what we see there really is about 2%, 2.5%. 2.5%, I think, is the most realistic number of the kilo prices going up. The drought in the U.S., I mean, this is a worldwide business. One individual geography does not change total trends. So maybe marginally but not substantially.
Michael Avery
Okay, that's helpful. And then you had cited Thailand and Vietnam as a couple of the drivers for growth in Asia. Those are obviously relatively small markets for you, but can you give a little color on what's going on there? Were they up quite a lot to be worth mentioning? What sort of growth that you're seeing there?
Hermann G. Waldemer
Vietnam, remember, we have kind of restructured a bit our business set up there last year, which has given us a better influence on marketing and sales of our products. We are actually from a very low place, almost doubling volumes in that market, but admittedly from a low base. We concentrate on the 5 or 6 big cities. The best example that highlights the future growth potential is actually that in the city of Hanoi, we now have a market share of about 15%. So there's plenty of possibility going forward. Thailand is a bit more a volatile environment where we are up against a well-protected Thai monopoly. But we have good trends there, but it's a bit more complicated there, I would say.
Michael Avery
Well, that's helpful. And lastly, just in Indonesia, obviously, the volume growth there is very strong. What kind of pricing gain did you see in the quarter?
Hermann G. Waldemer
In Indonesia, the way we implement pricing in Indonesia is actually that we increased several times over the year. That can be anything between 5 to 8x on average per year. Our trading price is into the wholesale trade. So it's not like in many other places where you have whatever an excise increase and the morning thereafter all the prices changes. So Indonesia has constant pricing throughout the year.
Michael Avery
So that just continued like normally [indiscernible]?
Hermann G. Waldemer
Yes. There's nothing particular there.
Your next question comes from the line of David Hayes with Nomura.
David Hayes - Nomura Securities Co. Ltd., Research Division
Two, if I can. Just coming back to this, the guidance not changing. Obviously, as you made the point, the EU was a little bit worse since we saw you in June. The currency obviously got a little bit worse as well. Could you just be a little bit more specific about which markets have got better over the last, I guess, 4 to 6 weeks that leave you confident that you're still in that range? Or was there a little bit of comfort baked into the previous guidance and you're just not through that level yet? And then secondly, just following up on the Indonesian point. Clearly, that's been a huge successful year both in terms of the market but your market share performance. Are you seeing anything from competitors in terms of trying to arrest that market share momentum that you seeing? Or would you be confident that, that will continue, given what you're doing there through the second half in terms of market share?
Hermann G. Waldemer
Let me start with Indonesia. As I said [indiscernible] before, I mean, we don't -- nobody can expect continued share growth in the range of 3 percentage points all the way along. We have said that this is going to slow down a bit. But that being said, I'm just convinced that we have the best company there, we have the best brands, we have great management, we have great employees, we have great distribution. We're just doing extremely well. And overall, the pricing environment is rational, the government, yes, is increasing excise taxes every year but has not done that for years in a disruptive manner. So the elements are all there for a very positive performance to continue in the Indonesian market. And then for your first question on the overall guidance, I mean, let me answer that way. We are all very pleased to see that our Asian growth engine is now complemented by very strong performance also in Eastern Europe.
David Hayes - Nomura Securities Co. Ltd., Research Division
Okay. Is that Russia? I mean, it sounds like the presentation in the release that maybe Russian trends were stepping up a little bit in the last and then I guess your performance there with the investment behind Marlboro. Is that one of the key markets to your point that's kind of got better than you were hoping for over the last couple of months?
Hermann G. Waldemer
Russia, by its sheer size, of course, is the most important market in the EEMA region. But there is also Turkey, there is also Ukraine, there is Kazakhstan, there is North Africa, there is the GCC countries, which are also very prosperous countries with growing population and growing purchasing power. So there are many places in that region. Of course Russia is the most important but there are many others.
Your next question comes from the line of Karen Lamark with Federated Investors.
Karen Lamark
Just wanted to go back to the EU and ask you to comment on how you see the balance of volume and pricing in light of apparent increase in price elasticity and the illicit trade. And really, what I'm trying to get at is whether or not these conditions and competitive dynamics might warrant a change in thinking about pricing, particularly if macro pressures seem, as they do, seem likely to persist.
Hermann G. Waldemer
Honestly, I don't think so because when it comes to pricing, then the first thing you need to think about is excise tax, and governments all across Europe have been rational. I think there can't be a more convincing example of the very recent one in Spain that disruptive measures do not maximize excise revenues, but regular moderate steps maximize excise revenues. That is, at the same time, the best not only for the governments, but also the best for industry competitors like ours. So I do not see a change in the rational environment. You have seen a continuation of that rational environment. If you look back over the last 2 years, the European crisis is already going on for a little longer and then the last 6 months. And I see no sign why that all of a sudden would turn and change into an unreasonable environment. I can't see that.
Your final question comes from the line of Thomas Russo with Gardner Russo & Gardner.
Thomas Adrian Russo - Gardner Russo & Gardner
My 2 quick questions. Can you spend a second talking about the role of Lark in Japan? It seems like the brand that's most impacted by the Japan hurdle and tell us about the strength of Lark and the innovation applied to Lark in Japan. And then the second question was just to look for an update, any kind of narrative on the next generation of products that you tipped [ph] us to recently and whether there's been anything newsworthy.
Hermann G. Waldemer
Okay. I mean, on Lark in Japan, let me put it this way. Lark is more of a traditional brand, more of a Japanese brand, as funny as that might sound. And that's why it's probably a little bit more vulnerable than a truly international brand like Marlboro is. That's why successful launches of competitors, as the one I was quoting, probably is putting more of a dent into a Lark than it eventually could put into a Marlboro. That being said, it has been a big growth driver last year. So everything has 2 sides. So we did have a lot of additional smokers into Lark during the special situation, the crisis of last year. In terms of NGPs, there's really nothing new to report compared to our presentations that we had at our Investor Day, really, only a month ago.
That was our final question. I'd now like to turn the floor back over to management for any closing remarks.
Hermann G. Waldemer
Okay. I'd like to close with some personal remarks here. It was an exciting journey over the last 5 years, which started with preparing the spinoff, the spinoff itself, and then life as an independent company. Quoted at the stock exchange has been a wonderful period of my life. It was a great pleasure for me to work with you all. And more importantly, to get to know you, the analysts following our company and many of our investors. Let me thank you for your confidence and trust over these years. I will certainly remain a shareholder of PMI because it's simply a superb company, and I hope to get a chance to see you again in the future. Thank you, and all the best to all of you.
Nicholas Rolli
Hermann, thank you very much, and let me add my personal congratulations and best wishes to you. Certainly, on behalf of the Investor Relations team, we appreciated everything you did for us, your support, your commitment, your wisdom, your friendship, and we wish you nothing but the best in your retirement. So congratulations and thank you.
And with that, we'll thank you all for joining the call as well. And that concludes our call. If you have any follow-up questions, you can contact the PMI Investor Relations team in Lausanne. Thank you. Have a great day.
Thank you. This concludes today's conference call. You may now disconnect.
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