Philip Morris International lowered its yearly earnings outlook Wednesday as the tobacco giant grapples with regulatory hurdles affecting its Zyn nicotine pouches and intensifying competition across tobacco markets.
Despite the reduced forecast, the company’s stock jumped almost 3% in early trading after surpassing Wall Street expectations for first-quarter revenue and earnings.
The maker of Marlboro cigarettes sold outside the United States has been working to expand beyond traditional tobacco products but faces challenges from competing brands like British American Tobacco’s Velo and delays in getting regulatory approval for new Zyn varieties.
Nicotine pouch products remain unapproved for U.S. sales despite an expedited Food and Drug Administration review process, as agency researchers remain cautious about authorizing them due to concerns about potential risks to new users, particularly young people, according to earlier Reuters reporting this month.
The company now projects full-year adjusted earnings between $8.36 and $8.51 per share, down from its earlier estimate of $8.38 to $8.53.
The middle of this profit projection sits 4 cents higher than what Wall Street analysts anticipated, based on LSEG data.
Philip Morris indicated it has included a minor impact from Middle East conflicts in its projections but doesn’t anticipate lasting effects.
The tobacco company posted first-quarter sales of $10.15 billion, exceeding analysts’ average projection of $9.91 billion. Quarterly adjusted earnings of $1.96 per share also topped the $1.83 estimate.
Sales from smoke-free products increased 12.4% during the quarter, a slower pace compared to 15% growth in the same period last year, while U.S. Zyn shipment volumes dropped 23.5%.
