Philip Morris Cuts 2012 Earnings Forecast on Currency Swings
Philip Morris International Inc. (PM), the world’s largest publicly traded tobacco company, cut its 2012 earnings forecast as the strength of the dollar hurts sales generated abroad by the maker of Marlboro cigarettes.
Earnings per share this year will be $5.10 to $5.20 based on prevailing rates, the New York-based company said in a statement today, compared with an April forecast of $5.20 to $5.30. Philip Morris said currency shifts will cut 25 cents from EPS, more than the 15 cents forecast in April.
The U.S. dollar has gained 4.5 percent against the euro in the past two months. Philip Morris, created in 2008 when Altria Group Inc. (MO) spun off its businesses outside the U.S., got 39 percent of revenue from the European Union in 2011.
Philip Morris also said today that it has made progress on next-generation tobacco products that may transform the industry and allow it to enter the Chinese market.
“We are on the eve of what we all believe could be a paradigm shift for our industry and for PMI, in particular,” Chief Executive Officer Louis Camilleri said in the text of a speech that he will make to investors today. Such products have “the very real potential to not only be a game-changer, but also be the key to unlock several hitherto virgin territories, most notably the huge Chinese market.”
The forecast cut was “not a big deal,” as it had been anticipated, said Erik Bloomquist, an analyst at Berenberg Bank. “What is really important is that PMI is getting ready to commercialize next-generation products, with factories being built, and it is confident that the science base they have developed is robust enough to move forward.”
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