Philip Morris Sees Profit Growth as High as 9% on Demand for Zyn

This content was published on February 23, 2024 - 17:02

2 minutes

(Bloomberg) — Philip Morris International Inc. forecast high single digit profit growth in 2024 as shipments of its Zyn nicotine pouches surge in the US, offsetting lower cigarette sales.

Adjusted earnings per share should rise 7% to 9% with relatively flat total shipments of nicotine products, the maker of Marlboro cigarettes and IQOS heated tobacco sticks said Thursday.

The company said it shipped 116 million cans of Zyn in the US in the fourth quarter, an increase of 78%. US shipments of the product, which Philip Morris acquired through the $16 billion takeover of Swedish Match in 2022, rose 62% for the year.

Philip Morris shares fell 2% in pre-market trading. The earnings forecast was short of analysts’ estimates.

As cigarette shipments fall, the largest of the Big Tobacco firms is restructuring its business to focus on smoking alternatives that it says are less harmful ways for consumers to consume nicotine.

The company derived about 40% of its revenue and profit from products other than cigarettes in the fourth quarter.

Philip Morris reported $13.3 billion in adjusted operating income on revenue of $35.3 billion. Analysts expected $13.1 billion adjusted operating income and sales of $35.1 billion.

The company and rival British American Tobacco Plc disclosed a wide-ranging legal settlement last week that will pave the way for PMI to sell its IQOS heated tobacco products in the US and for BAT to sell the latest versions of its vape and heated tobacco products in Europe and the US.