Philip Morris CR (PMCR) is said to significantly lower the distribution margin as of May 2 by 4.5%, according to Czech Tobacco Corporation. The lower distribution margin should help PMCR to fight the unfavourable market conditions, which are reducing PMCR’s market share and decreasing earnings. Lower distribution margin should smooth out the excise tax hikes reflected in cigarette price. We view the news as positive for PMCR.