Philip Morris International reported third-quarter earnings that exceeded analysts’ estimates as the Marlboro maker’s IQOS smoking alternative gained market share.
- Adjusted earnings per share amounted to $1.43 in the third quarter, the company said. Analysts had expected $1.36.
- Heated tobacco shipments rose 85%, ahead of estimates. That business is now gaining a new major market as sister company Altria started marketing IQOS in the US, beginning in Atlanta. Incoming bans of flavoured e-cigarettes are likely to give IQOS a competitive advantage, according to Wells Fargo analyst Bonnie Herzog.
- While investors pin their hopes on the future growth potential of IQOS, traditional cigarette volumes continued their decline with a worse-than-expected 5.9% slide.
- Philip Morris lowered its forecast for full-year diluted earnings per share to at least $4.73 at current exchange rates. That’s partially due to a tax issue in Russia, where authorities said Philip Morris underpaid excise taxes and VAT by some $374 million. The company has paid the amount in full and said it may mount a legal challenge.
- The decline in cigarette consumption translates into excess production capacity. Philip Morris may cut some 950 jobs as it considers ending cigarette production at a plant in Berlin by January, which is expected to lead to significant costs, which aren’t yet included in the forecasts.
- Philip Morris shares have gained 18% this year. The shares are up 1.2% in early trading in New York.
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