Philip Morris Hits Record After Beating Estimates on Zyn Demand
(Bloomberg) — Philip Morris International Inc. soared to a record after reporting better-than-expected profit driven by sales of Zyn nicotine pouches.
The tobacco maker, which sells Marlboro cigarettes outside the US but is shifting toward smoke-free products, generated adjusted diluted earnings per share of $1.55 in the fourth quarter, beating analyst estimates. It is forecasting adjusted earnings per share of $7.04 to $7.17 in 2025, also above expectations.
Shares of Philip Morris rose as much as 12% in early trading in New York, extending a 43% surge over the past 12 months through Wednesday’s close.
The performance has been driven by the growing popularity of Zyn pouches, which contain nicotine but not tobacco and are taken orally by stuffing them under the upper or lower lip. Sales rose 25% last year, and Philip Morris shipped almost 165 million cans in the key US market in the fourth quarter, up 42% compared with a year earlier.
Health concerns around tobacco are fueling demand, and the company was boosted by a decision this year by the US Food and Drug Administration to approve all Zyn pouches currently marketed in the country.
Philip Morris is building a new manufacturing facility in Colorado to meet demand for Zyn products, and expects US nicotine pouch shipments of between 780 million to 820 million cans next year, growth of between 34% and 41%.
In a presentation, Chief Financial Officer Emmanuel Babeau said Zyn stock shortages should be normalized in 2025 as production capacity increases. Philip Morris is targeting 900 million cans of annual capacity at its Kentucky facility, and the new Colorado plant is expected to come online in early 2026.
While Zyn products contain fewer of the particles and chemicals that have linked cigarettes to cancer and heart disease, their popularity has sparked fears that young people who have never smoked have become hooked on them.
The FDA found 1.8% of high school students reported using nicotine in 2024, equating to 480,000 people, with Zyn the most popular brand. Still, the regulator said youth usage remained low despite growing sales and Philip Morris said it would take additional steps to limit youth exposure, including not using models in marketing that are younger than 35.
The smoke-free business, which includes Zyn as well as IQOS heated tobacco sticks, currently accounts for 40% of the company’s total net revenue.
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