Philip Morris expects COVID-19 to weigh on full-year financial performance

Philip Morris (NYSE: PM) released its earnings report for the first quarter on Tuesday that beat experts’ forecast for earnings and revenue. The tobacco company, however, cited the Coronavirus uncertainty as it withdrew its full-year financial guidance for 2020. As per the company, its business is taking a hit amidst the ongoing health crisis.

Ahead of the financial results, Philip Morris International (PMI) was reported trading 1% down in after-hours trading on Monday.

Philip Morris’ Q1 Financial Results

The Swiss multinational cigarette and tobacco manufacturing company recorded its earnings in the first quarter at £1.49 billion that translates to 95 pence per share and tops the year-ago figure of £1.10 billion (71 pence per share).

On an adjusted basis, Philip Morris’ earnings came at 98 pence per share in Q1 that was stronger than 92 pence that experts had forecast.

At £5.82 billion, PMI’s sales in the recent quarter marked a 6% increase. Analysts had anticipated the company to note £5.56 billion in sales in Q1.

According to CEO Andre Calantzopoulos, the impact of COVID-19 may not have been broadly evident in Q1 results, but a more material effect is expected on the company’s full-year financial performance. So far, Calantzopoulos added, the health emergency decreased duty-free sales, deferred the company’s plans of enforcing minimum-price in Indonesia, and slowed IQOS adoption.

The CEO further commented:

“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.”

In terms of shipment volume, PMI reported a 1.2% decline in its cigarettes and heated tobacco segment. Outside the United States, the company added, IQOS’ share in the market of heated tobacco units climbed to 6.6% (1.9 points increase).

British American Tobacco Sues Philip Morris For Violating Its Patent

Earlier in April, British American Tobacco said that IQOS violates its U.S patents and filed a lawsuit against Philip Morris (IQOS manufacturer) and Altria Group Inc. (IQOS seller).

At £62 per share, Philip Morris is currently around 10% down year to date in the stock market. It dropped to as low as £49 per share in late March.

In 2019, PMI’s performance in the stock market was fairly upbeat with an annual gain of around 25%.

At the time of writing, Philip Morris is valued at £97.45 billion and has a price to earnings ratio of 16.68.