Philip Morris sees a 13% decline in sales due to Coronavirus lockdowns

Philip Morris (NYSE: PM) boasted to have topped analysts’ estimates for earnings and revenue in the second quarter on Tuesday resulting in shares of the company jumping 3.3% in premarket trading. Philip Morris had also published a stronger than expected earnings report for Q1 in April.

Shares of the company jumped another 2% on market open on Tuesday. At £60.56 per share, Philip Morris is currently 10% down year to date in the stock market after recovering from a low of £47.25 per share in March when the impact of COVID-19 was at its peak. Learn more about the capital markets.

Philip Morris’ Q2 financial results versus analysts’ estimates

According to FactSet, experts had forecast the company to print £5.12 billion in revenue in the second quarter. In terms of earnings per share (EPS), they had estimated 87 pence. In its report on Tuesday, Philip Morris topped both estimates posting a higher £5.25 billion in revenue and £1.02 of adjusted earnings per share.

At £1.54 billion, the Marlboro-parent said that its net income came in significantly lower than £1.83 billion in the same quarter last year. On a year over year basis, its sales were also down by just over 13%.

In the second quarter, the company saw a 17.6% decline in cigarette shipment volume that was offset by a 24.3% volume increase in heated tobacco segment shipment that also includes its world-renowned IQOS product.

By the end of Q2, Philip Morris boasted 15.4 million IQOS users in total out of which, the company claimed 11.2 million users to have switched from cigarettes. The New York-based company has been committed to marketing its IQOS product as a cigarette alternative. Recently, the U.S. FDA allowed it to sell its item as a “modified risk” product.  

Philips Morris’ earnings guidance for the full year

As of 30^th June, Philip Morris valued its cash and investment securities at £3.31 billion. The company said that it expects its adjusted annual earnings per share to lie in the range of £3.88 per share to £4.00 per share. Analysts, on the other hand, have forecast the company to note £3.88 per share of EPS in the ongoing financial year.

According to Philip Morris, its guidance assumes that it will not have to face another lockdown in any of its key markets in the upcoming months.

At the time of writing, the American multinational cigarette and tobacco manufacturing company has a market capitalisation of £94 billion and a price to earnings ratio of 15.62.