Philip Morris says Middle East and Ukraine conflicts are raising costs, points to lower half of profit forecast

Philip Morris International said on Wednesday 21 October that conflicts in the Middle East and Ukraine were adding to its costs, and that it now expects full-year adjusted earnings to land in the middle to lower half of its forecast range of US$8.29 to US$8.44 a share.

Third-quarter net revenue rose 5.5% from a year earlier to US$11.44 billion, which the company said was a quarterly record, and adjusted earnings rose 5.4% to US$2.36 a share. Reuters reported that both sales and profit beat analysts’ estimates. Its forecast was unchanged when currency effects are excluded.

Philip Morris said higher energy costs linked to the Iran war were weighing on its cost base and would have a bigger effect in the fourth quarter. “The long-term situation remains unpredictable,” the company said, adding that the impact was manageable for now. It said the war in Ukraine had caused “certain disruptions” to its operations there, including damage from strikes on infrastructure.

US shipments of its Zyn nicotine pouches rose 4.2% to 3.2 billion pouches. Reuters said that was well below earlier growth rates as competition from rivals including British American Tobacco’s Velo increases. The company said it would put 20 pouches in most cans instead of 15, which Reuters said would cut revenue per pouch by about 25%.

Shares fell about 2% after the results, Reuters reported.