Philip Morris Profit Tops Estimates, Helped by Higher Pricesby
Philip Morris International Inc., the world’s largest publicly traded tobacco company, posted third-quarter profit that beat analysts’ estimates as higher cigarette prices boosted revenue.
Earnings were $1.25 a share, excluding some items, the New York-based company said in a statement Tuesday. That beat the analyst consensus estimate of $1.23. Sales excluding excise taxes rose to $6.98 billion, matching analysts’ average projection.
The maker of Marlboros benefited from selling more expensive cigarettes, outweighing the effect of global volume declines. The company also saw increased sales of its so-called reduced-risk products. Philip Morris on Tuesday also reaffirmed its forecast that adjusted earnings this year would rise to a range of $4.53 to $4.58 a share.
“Cost controls and higher pricing led the way on earnings growth in the third quarter,” Jack Russo, an analyst at Edward Jones, said in an e-mail.
The shares rose 0.9 percent to $96.35 at 10:31 a.m. in New York. The stock had gained 8.6 percent this year through Monday.
With combustible-cigarette volumes declining as governments around the world campaign against the products, Philip Morris Chief Executive Officer Andre Calantzopoulos is betting his company’s future on cigarette alternatives.
Philip Morris has spent more than $3 billion dollars developing a potentially reduced-risk portfolio. The first of four platforms -- an electronic product called iQOS that heats tobacco rather than burning it -- is currently in stores in 10 markets. The company has said iQOS will be in 20 markets by the end of 2016 and 35 by the end of 2017. Calantzopoulos has previously said he expects the new products to add $700 million to $1.2 billion to earnings by 2020.
Philip Morris could introduce iQOS to the U.S. as early as next year. It plans to file a modified-risk tobacco product application with the U.S. Food and Drug Administration by the end of this year and a premarket-tobacco application early next year. Altria Group Inc., which sells Marlboros in the U.S., will provide the product under a licensing agreement.
(A previous version of this story was corrected to fix the number of markets for iQOS in 2017.)