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The cigarette maker Philip Morris International increased its yearly profit projection on Tuesday, citing rising cigarette pricing and the success of its nicotine pouch brand ZYN, while lowering its expectations for its heated tobacco division.
Despite the fact that heated tobacco device IQOS is at the core of their strategy to increase revenues from smoking alternatives, the world’s largest tobacco company by market value disappointed investors last year with lower-than-expected shipments.
Regular price increases for cigarettes have partially offset consistent volume declines across the industry, with ZYN emerging as an exception due to explosive growth.
PMI raised its yearly revenue and profit projections, citing increased ZYN shipment quantities as a primary factor.
“We are on track for a strong 2024,” CEO Jacek Olczak announced, signaling robust momentum throughout PMI’s operations.
In premarket trade, PMI shares were up 2% following the company’s second-quarter revenue results that were better than expected.
New product releases in countries like Indonesia and Japan contributed to in-market sales volume increase of 10.2%, which was in line with forecasts, and IQOS and other heated tobacco products acquired consumers in the second quarter.
In spite of this, PMI warned that the yearly growth rate of heated tobacco in-market sales volume would be lower than anticipated, pointing to the greater-than-expected impact of the European Union’s prohibition on flavoured heated tobacco.
Following a first-quarter earnings drop of 99%, Nissan reduced its yearly outlook on Thursday.
According to Mark Giambrone, a portfolio manager at Barrow Hanley, this did not cast a shadow over the results and forecasts of American Beacon’s Large Cap Value Fund, which invests in PMI.
“The quarter was excellent,” he proclaimed.
After previously predicting $6.55 to $6.67 in adjusted earnings per share for the full year, PMI now anticipates a range of $6.67 to $6.79. Revenue for the second quarter came in at $9.47 billion, which was higher than the average analyst forecast of $9.18 billion, according to LSEG statistics.
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