Philip Morris' shares rise on optimistic 2025 outlook

Reuters
02-06
UPDATE 2-Philip Morris' shares rise on optimistic 2025 outlook

Rewrites paragraph 1 to focus on outlook; adds CFO quote in paragraphs 4-5; adds analyst quote in paragraphs 8-9

Feb 6 (Reuters) - Cigarette giant Philip Morris International PM.N on Thursday forecast better-than-expected profit growth for 2025, with estimations for its fast-growing nicotine pouch brand ZYN also ahead of forecasts, sending its shares up nearly 10%.

The company's smoking alternatives, such as ZYN, have enjoyed strong demand in recent years, in part because smokers have looked for alternative ways to get a nicotine buzz amid concerns about the health consequences of tobacco.

In January, the U.S. Food and Drug Administration gave PMI a formal license to market ZYN in the country, saying it poses a lower risk of serious health conditions due to substantially lower amounts of harmful constituents.

Chief Financial Officer Emmanuel Babeau said ZYN, PMI's flagship heated tobacco device IQOS, and its traditional cigarette business would deliver again in 2025.

"We expect another year of strong growth from all categories," he told investors, adding this would support both PMI's top and bottom line.

The company, which sells Marlboro cigarettes around the world, forecast adjusted annual earnings per share in the range of $7.04 to $7.17, above analysts estimate of $7.03.

ZYN shipments to the U.S., by far its largest market, would rise by between 34% and 41% in 2025, it predicted, while IQOS shipments would also see between 10% and 12% growth.

Gaurav Jain, analyst at Barclays, said PMI's forecasts for group profit, volumes and revenues and ZYN growth were all ahead of expectations, building investors' hopes given PMI has previously under-promised at the beginning of the year.

"Investors are thinking: 'they are conservative, will they beat and raise throughout the year?' That's why the stock is up," he said.

Philip Morris reported adjusted earnings of $1.55 per share in its fourth quarter ended Dec. 31, topping analysts' expectations of $1.50 per share, as per data compiled by LSEG.

For the fourth quarter, its net sales rose 7.3% to $9.71 billion, compared with estimates of $9.44 billion, thanks to strong growth from ZYN and IQOS.

(Reporting by Aamir Sohail in Bengaluru and Emma Rumney in London; Editing by Mrigank Dhaniwala and Marguerita Choy)

((Aamir.Sohail@thomsonreuters.com;))

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