July 22 (Reuters) – Philip Morris International cut its annual profit forecast for the third time this year on Wednesday, hurt by intensifying competition in tobacco products and negative currency swings.
The company, which has been investing heavily to diversify beyond traditional tobacco products, is looking to double down on its Zyn nicotine pouches though. It had recently received regulatory approval allowing certain Zyn nicotine pouches to be marketed as less harmful than cigarettes.
Despite the FDA’s favorable stance towards the pouches – which users insert under their lip to get a nicotine buzz – increased competition and pricing pressures have raised concerns about PMI’s ability to maintain its market-leading position.
The company launched Zyn Ultra, a higher-strength moist pouch variant, in June and priced it below PMI’s flagship Zyn products on a per-pouch basis, as the company looks to defend market share from rival products such as British American Tobacco’s Velo.
“To support the newly expanded Zyn portfolio, we intend to accelerate U.S. investments in the second half to maximize the long-term value of the brand,” the company said in a statement, adding that it plans to launch 1.5 mg and 8 mg variants of Zyn in the current quarter.
The company expects full-year adjusted earnings per share of $8.26 to $8.41, compared with its previous forecast of $8.31 to $8.46. Excluding currency impact, it continues to forecast an adjusted profit per share of between $8.11 and $8.26.
The company, which sells Marlboro outside the U.S., has been facing the strain of a strengthening dollar.
Shares of the company were down 1% in premarket trading.
Philip Morris’ second-quarter revenue rose 10.4% to $11.19 billion, exceeding analysts’ estimate of $10.63 billion, according to data compiled by LSEG.
Quarterly adjusted profit per share, which included a 3 cent currency hit, rose 15.2% to $2.20. Analysts expected a profit of $2.05 per share.
(Reporting by Neil J Kanatt in Bengaluru and Emma Rumney in London; Editing by Devika Syamnath)
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