Philip Morris Posts Rise In Profit -- WSJ

By Dave Sebastian 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 22, 2020).

Philip Morris International Inc. said its profit and sales rose for the latest quarter but withdrew its guidance for 2020, expecting reduced travel amid the Covid-19 pandemic to further dent its duty-free sales.

The tobacco company on Tuesday posted first-quarter earnings of $1.83 billion, or $1.17 a share, up from $1.35 billion, or 87 cents a share, in the comparable quarter last year. Adjusted earnings were $1.21 a share, ahead of the $1.13 a share analysts had expected.

Sales rose 6% to $7.15 billion. Analysts were looking for $6.84 billion.

The pandemic in its early stages had limited effect on the company, but it will hurt the company's full-year results, Chief Executive André Calantzopoulos said.

Mr. Calantzopoulos said the pandemic has reduced duty-free sales, slowed user acquisition for IQOS, a tobacco heating device developed by Philip Morris and sold by Altria Group Inc., and delayed minimum-price enforcement in Indonesia.

"We also have to assume that, in certain markets, unemployment and related reductions in disposable income will have a temporary impact on market dynamics or the ability of certain small retailers to operate," he said.

The company also pulled the guidance it provided on Feb. 6, citing the coronavirus pandemic's uncertainty.

For the second quarter, the company expects earnings of $1 a share to $1.10 a share, including a currency effect of about 12 cents a share. It also guided currency-neutral revenue to decline about 8% to 12%, partly due to lower IQOS sales.

Philip Morris sees the pandemic hurting distributor and trade-inventory movements by 10 cents a share and duty-free sales by 9 cents a share for the second quarter. It also expects the delay in minimum-price enforcement in Indonesia, as well as reductions in daily consumption and down-trading in certain developing markets, to weigh on results by 5 cents to 15 cents a share.

The company said some factories that account for 20% of its global cigarette-production capacity are currently affected by government-mandated shutdowns or production limitations.

Shipment volume of cigarettes and heated tobacco units for the first quarter fell 1.2%. Market share of heated tobacco units for IQOS rose 1.9 points to 6.6% outside the U.S.

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(END) Dow Jones Newswires

April 22, 2020 02:47 ET (06:47 GMT)

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