Philip Morris trims annual profit forecast amid nicotine pouch uncertainty

Containers of Zyn, a smokeless nicotine pouch, are displayed for sale at a newsstand on Feb. 23, 2024, in New York. (AP Photo/Bebeto Matthews, File)

Philip Morris International cut its annual profit forecast on Wednesday amid regulatory uncertainty over its Zyn nicotine pouches and rising competition in tobacco products.

Still, its shares rose nearly three per cent in premarket trade after the company beat expectations for first-quarter sales and profit.

Philip Morris, which sells Marlboro outside the U.S., has stepped up efforts to diversify beyond cigarettes, but has faced rivalry from brands such as British American Tobacco’s Velo and regulatory delays in authorizing new versions of Zyn.

Popular nicotine pouch products have yet to be ​cleared for sale in the U.S. despite a fast-track Food and Drug Administration scheme, as agency scientists hesitate to authorize them due to potential risks to new users, ‌including children, Reuters reported earlier this month.

Philip Morris expects full-year adjusted earnings per share of $8.36 to $8.51, compared with its previous forecast of $8.38 to $8.53.

The midpoint of the profit forecast is 4 cents above analysts’ expectations, according to data compiled by LSEG.

The company said it has factored in a small impact from the Middle East conflict in its forecast, but does not expect a prolonged effect.

Philip Morris reported first-quarter revenue of $10.15 billion, compared with analysts’ average expectation of $9.91 billion. Quarterly adjusted profit of $1.96 per share also beat the estimate of $1.83.

Revenue from smoke-free products rose 12.4per cent in the quarter, slowing from 15per cent growth a year earlier, while Zyn shipment volumes in the U.S. fell 23.5per cent.

Growth in U.S. shipments of PMI’s Zyn slowing down as it faces heavy competition

(Reporting by Neil J Kanatt in Bengaluru; Editing by Shilpi Majumdar)