Philip Morris Sales Miss Estimates, Hurt by Strong Dollarby
Forecast for 2016 profit also trails analysts' projections
CEO Andre Calantzopoulos says currency headwinds will persist
Philip Morris International Inc., the world’s largest publicly traded tobacco company, posted fourth-quarter revenue that trailed analysts’ estimates, hurt by the strong dollar.
Sales excluding excise taxes fell 11 percent to about $6.39 billion, the New York-based company said Thursday in a statement. Analysts estimated $6.48 billion, on average. The company, which sells Marlboro products outside of the U.S., has struggled as the dollar’s gains reduce the value of revenue generated abroad.
- Fourth-quarter earnings were 81 cents a share, excluding some items. That met analysts’ projections.
- Net income fell 23 percent to $1.25 billion.
- Cigarette shipment volume dropped 2.4 percent, excluding acquisitions.
The shares slid 0.8 percent to $89.10 at the close in New York. The stock gained 7.9 percent last year, compared with a 0.7 percent drop for the Standard & Poor’s 500 Index.
Philip Morris also forecast 2016 earnings would fall to $4.25 to $4.35 a share, from $4.42 last year. Analysts estimated $4.49.
“While currency headwinds endure, we fully expect to continue to grow our business and generously reward our shareholders,” Chief Executive Officer André Calantzopoulos said in the statement.
Health concerns have turned many consumers against cigarettes, and governments around the world are working to hasten the trend. Philip Morris and British American Tobacco Plc are taking the European Union to court over the EU’s 2014 orders to cover cigarette packaging with graphic pictures and warning signs. Countries including the U.K., France and Ireland also are backing plain-packaging initiatives, which strip the branding from cigarette packs.
To combat the trend, Philip Morris is partnering with Altria Group Inc. to create products that reduce the risks associated with smoking. The companies are working on the iQOS electronic cigarette, which heats tobacco without combustion. Philip Morris has announced that it is going to apply for a “modified risk” designation for the product from the U.S. Food and Drug Administration in 2016.