(Corrects to fix typo in paragraph 10)
By Neil J Kanatt
April 22 (Reuters) – Philip Morris International cut its annual profit forecast on Wednesday amid regulatory uncertainty over its Zyn nicotine pouches and rising competition in tobacco products.
The company, which sells Marlboro outside the U.S., has stepped up efforts to diversify beyond cigarettes, but faces growing competition from products such as British American Tobacco’s Velo, as well as regulatory delays in authorizing new versions of Zyn.
A complex regulatory environment continues to slow innovation and the shift of adult smokers to smoke‑free products, CFO Emmanuel Babeau said.
Popular nicotine pouch products have yet to be cleared for sale in the U.S. despite a fast-track Food and Drug Administration scheme, as the agency remains cautious about potential risks to new users, including children, Reuters reported earlier this month.
However, shares rose nearly 3% in early trading after the company beat first‑quarter sales and profit expectations.
Philip Morris expects full-year adjusted earnings per share of $8.36 to $8.51, down from its previous forecast of $8.38 to $8.53. The midpoint is about four cents above analysts’ expectations, according to data compiled by LSEG.
The company said it has factored in a small impact from the Middle East conflict in its forecast, but does not expect a prolonged effect.
First‑quarter revenue of $10.15 billion beat estimates of $9.91 billion, while adjusted profit per share of $1.96 topped expectations of $1.83.
Revenue from smoke-free products rose 12.4% in the quarter, slowing from 15% growth a year earlier. U.S. Zyn shipments fell 23.5%, which the company attributed mainly to distributor and retailer inventory adjustments.
However, Jefferies analyst Andrei Andon‑Ionita said the pressure on Zyn volumes suggests a continued momentum loss, running contrary to consensus expectations of a brand re-acceleration in the back half of the year. Velo will be the likely beneficiary of the declines, he said.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Shilpi Majumdar and Sriraj Kalluvila)
Comments