Philip Morris International Inc. (ticker: PM) shares dipped more than 2 percent in early Thursday trading after the international tobacco giant reported disappointing second-quarter earnings and another quarter of declining cigarette sales volumes.
Philip Morris reported earnings per share of $1.14 on revenue of $19.32 billion in the quarter. Both numbers came up short of consensus analyst expectations of $1.23 and $20.07 billion, respectively.
Cigarette shipment volumes were also down 7.5 percent on the quarter after an 11.5 percent decline in the first quarter of the year.
The Philip Morris brand was the best-performing cigarette brand in the second quarter, with shipment volume up 42.4 percent. Chesterfield shipment volume also jumped 17.7 percent.
“Our quarterly results were robust with, as expected, sequential improvement in our volume performance as well as strong currency-neutral net revenue growth of 7 percent versus last year,” CEO Andre Calantzopoulos says.
However, Philip Morris cut its full-year EPS guidance from a previous range between $4.84 and $4.99 to a new range between $4.78 and $4.93.
Asia represented the strongest global growth region in the quarter, with cigarette sales rising 11.8 percent to $2.384 billion. Cigarette sales in North America and Europe have been under pressure, but Philip Morris has identified India as a potential future growth opportunity. Recently-revealed internal documents from 2015 said the company is focused on “winning the hearts and minds” of 18- to 24-year old Indian consumers, according to Reuters.
Philip Morris is also investing heavily in its smoke-free iQOS cigarette alternative. In the second quarter, the company reported that more than 40 percent of its total shipments in Japan were Marlboro HeatSticks.
Back in May, Piper Jaffray initiated coverage of Philip Morris at “overweight” and said that the iQOS system would help drive 8 to 9 percent average organic sales growth and 12 to 13 percent average annual EPS growth over the next three years. The firm also set…
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