Philip Morris Lowers Full-Year Profit Forecast on Currency Headwinds, Zyn Investment

Philip Morris International trimmed its full-year profit forecast for the third time this year, citing adverse currency movements and plans to ramp up investment in its popular Zyn nicotine pouch brand, even as it reported second-quarter results that surpassed analyst expectations.

Revised Outlook and Market Reaction

The company now projects full-year adjusted earnings per share (EPS) in a range of $8.26 to $8.41, down from its previous guidance of $8.31 to $8.46. Philip Morris said its forecast for adjusted profit on a currency-neutral basis remains unchanged at $8.11 to $8.26 per share, highlighting the strain from a strengthening U.S. dollar on its international operations.

Following the announcement, shares of the company, which sells Marlboro cigarettes outside the U.S., were down 1% in premarket trading.

Strong Quarter Tempered by Headwinds

The revised outlook came despite a strong second-quarter performance. Philip Morris reported revenue of $11.19 billion, a 10.4% increase that beat the $10.63 billion consensus estimate compiled by LSEG.

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Quarterly adjusted EPS rose 15.2% to $2.20, which included a 3-cent negative impact from currency fluctuations but still exceeded analysts' expectations of $2.05 per share. The results show solid operational performance being offset by macroeconomic factors and strategic spending decisions.

Strategic Focus on Zyn

A key factor in the lowered forecast is the company's decision to increase spending on its Zyn brand in the U.S. to defend its market-leading position against intensifying competition. PMI has been investing heavily to diversify away from traditional tobacco products.

"To support the newly expanded Zyn portfolio, we intend to accelerate U.S. investments in the second half to maximize the long-term value of the brand," the company said in a statement. This strategy includes the recent launch of Zyn Ultra, a higher-strength variant priced to compete with rivals like British American Tobacco's Velo, and the planned introduction of new strength variants in the current quarter.