Philip Morris warns on impacts of global conflicts on its business
PM•Philip Morris beat Wall Street estimates for third-quarter sales and profit but warned that energy-related inflation and Ukraine-related disruptions were hurting its business. Adjusted profit was $2.36 per share, above the $2.29 estimate, while the company maintained its full-year adjusted EPS outlook of $8.11 to $8.26.
1. Conflicts weigh on costs
Philip Morris said higher prices driven by the war in the Middle East were starting to bite, while strikes in Ukraine disrupted its operations and supply chain infrastructure. Energy-related inflation increasingly affected its cost base in the third quarter, and the company expects that impact to increase in the fourth quarter. It said the situation remains manageable but is difficult to assess, and expects Ukraine-related pressures to continue weighing on operating income this year.
2. Quarterly results and outlook
The company reported adjusted profit of $2.36 per share for the quarter, compared with analysts’ average estimate of $2.29. It continued to expect full-year adjusted earnings per share of $8.11 to $8.26, excluding currency effects. Strong cigarette demand in Turkey and Indonesia and higher tobacco prices helped its cigarette business.
3. Zyn investments
Philip Morris reported another quarter of US growth for Zyn nicotine pouches, at 4.2%, though growth was below past rates as the brand faced competition from British American Tobacco’s Velo. The company said it would increase investments to support Zyn, including raising the number of pouches per can from 15 to 20 across most of the range. Its shares fell 3% in premarket trade.
