Tobacco giant Philip Morris (NYSE: PM) surprised Wall Street by reporting growth in earnings in the second quarter. Adjusted net income grew 3.5% to $1.46 per share, even as analysts were expecting a decline. The company also raised its 2019 full-year EPS guidance.
Q2 revenues edged down 0.3% to $7.7 billion, hurt by currency headwinds. However, this still came in above the analysts’ estimate of $7.4 billion. Without the impact of currency, net revenues improved 5.4% year-over-year.
Following the better-than-expected results, PM shares gained 1.8% during pre-market trading on Thursday. The stock has gained 21% so far this year.
Cigarette and heated tobacco unit shipment volume was down by 1.4% during the quarter. Individually, cigarette shipment volume declined 3.6%, while heated tobacco unit shipment volume was up 37%.
The company said it currently expects full-year 2019 reported EPS of at least $4.94, compared to the earlier projection of $4.87. During the same period last year, the company had reported earnings of $5.08 per share.
On an adjusted basis, the Malboro-maker currently expects at least 9% year-over-year growth in full-year EPS.
CEO André Calantzopoulos said, “In the markets where they are sold, our heated tobacco brands held a sizable combined share of 5.0% year-to-date, driving a total international share of 2.1%, up by 0.6 points.”
The company has been aiming to ultimately replace cigarettes with smoke-free products. Marlboro, along with Bond Street, Chesterfield, L&M, Lark and Philip Morris, has remained the company’s major global cigarette brands and these contribute to the top-line growth. The volume growth could depend on the strength of the combustible business and smoke-free product portfolios.
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