Philip Morris boosted by rising demand for smoke-free products

Philip Morris International Inc. raised its full-year outlook after strong sales of its heated tobacco and nicotine pouch products. 

The tobacco company, whose brands include Marlboro cigarettes, IQOS heated tobacco sticks and Zyn nicotine pouches, now expects adjusted earnings per share of as much as $6.67 in 2024 on a currency neutral basis. This compares to previous guidance of up to $6.55 a share. 

PMI is in the midst of transforming its business to reduce its reliance on cigarettes. Sales of IQOS now rival its best-known cigarette brand Marlboro — which PMI distributes outside the US — and the group’s alternative products in total accounted for 39% of net revenue in the first quarter. 

Chief executive officer Jacek Olczak has said cigarettes “belong in a museum” and wants more than half its revenue to be generated from other products by 2025 or 2026, before rising to more than two-thirds by 2030. 

Shipments of its Zyn nicotine pouches to the US rose nearly 80% to 131.6 million cans during the quarter, the company said. 

PMI acquired Zyn-maker Swedish Match in 2022 in a $16 billion takeover deal giving it US distribution network. Since then it has ramped up marketing for Zyn, drawing criticism for targeting young people from some lawmakers including US Senate Minority leader Chuck Schumer. 

PMI is also beginning to trial its IQOS heated tobacco product in the US. Heated tobacco is currently less popular than vaping in the US among users of cigarette alternatives seeking an nicotine fix.

The company and rival British American Tobacco Plc disclosed a wide-ranging legal settlement earlier this year that allowed PMI to sell IQOS in the US and for BAT to sell the latest versions of its vape and heated tobacco products in Europe and the US.

PMI said cigarette net revenue rose 3.5% to $5.4 billion, in line with analyst expectations. –BLOOMBERG