(Reuters) -Philip Morris International raised its annual profit forecast for the third time this year on Tuesday, benefiting from strong demand for its smoking alternatives, including nicotine pouch Zyn and inhalable IQOS.
Shares of the world’s largest tobacco company by market capitalization were up 4% in premarket trading.
The company has been counting on its newer products, such as Zyn, to offset long-term declines in cigarette brands Marlboro, Chesterfield and others.
“Our global smoke-free portfolio is outgrowing the industry by a clear margin, driving positive total volumes, strong top-line growth and impressive margin expansion,” CEO Jacek Olczak said.
With ever-stricter regulations and health concerns pushing consumers away from tobacco, cigarette makers are heavily investing in developing products such as pouches and vapes to replace lost revenues and profits.
Though, PMI’s Zyn has become the leading pouch label in the U.S., its sales performance in the last few quarters had disppointed, due to stiff competition from rivals, economic challenges and pressure from campaigners who say tobacco companies’ new products pose health risks.
PMI recently regulated the pricing for Zyn, which helped its sales pick up pace in the quarter.
“While this had an impact on Americas Region Q3 net revenue and operating income growth, we expect U.S. Zyn to remain best-in-class in terms of profitability for the group, reinforcing the attractive outlook for the category,” PMI said.
The company expects an adjusted annual profit of $7.46 to $7.56 per share, compared with its prior forecast of $7.43 to $7.56.
Analysts expect PMI to log an adjusted profit of $7.53 per share for the year.
The company reported a third-quarter adjusted profit of $2.24 per share, beating analysts’ average estimate of $2.09 per share, according to data compiled by LSEG.
(Reporting by Prerna Bedi in Bengaluru and Emma Rumney in London; Editing by Shinjini Ganguli)
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