Investors sent shares in Philip Morris International Inc (NYSE:PM) down sharply in morning trade even though the cigarette maker beat Wall Street’s estimates on revenue and profit in the second quarter.
The New York-based cigarette maker reported earnings of US$1.41 per share on adjusted revenue of US$7.73bn. These figures surpassed the expectations of analysts who had expected Philip Morris to earn US$1.23 per share on revenue of US$7.53bn.
The company’s heated tobacco products proved popular in the quarter as its shipment volume jumped 73% from the year-ago quarter to 11 billion units. Sales of cigarettes, meanwhile, slipped in the quarter, with shipment volumes dropping 1.5% to 190.7 billion.
The results left investors unimpressed, with Philip Morris stock falling 6.5% to US$76.84 in early trade.
Read: Philip Morris profit falls 2.5% on lower cigarette shipments to Europe; Stock tumbles
Andre Calantzopoulos, Philip Morris’s CEO, said the company was seeing improvement in the sale of heated tobacco and cigarettes in markets previously considered challenging. Increasing prices also pushed up revenue, he said.
“Reflecting better execution, our heated tobacco portfolio … is performing well notably in key markets such as the EU,” Calantzopoulos said in a statement.
“We are implanting the right marketing and product measures to reinvigorate growth in Japan, which is undoubtedly well below our initial expectation this year,” he added.
Philip Morris projects that its full-year earnings will fall between US$5.02 to US$5.12 per share.
Contact Ellen Kelleher at [email protected]
