Shares of Philip Morris (NYSE:PM) were slipping today on a pullback in the broader market, and after the company said it was suspending operations at a facility in Bologna, Italy. It also shared information on production facilities elsewhere that may be impacted by the COVID-19 coronavirus outbreak.
As a result, the stock was down 4.5% as of 2:51 p.m. EDT on Monday, compared with a 2.7% decline in the S&P 500.
This morning in a press release, the company said that it would suspend operations at its manufacturing and technology facility in Bologna for one week due to the COVID-19 outbreak. Italy has been the country hardest hit by the coronavirus pandemic so far with more than 6,000 dead, and has been in a near-lockdown state for about two weeks. So it seems strange that the facility, which produces half of the company's heated tobacco units, is only closing now.
Philip Morris added that several governments have mandated temporary suspension of factories for one or two weeks, but also said that it had adequate inventory of finished goods across markets, with an average supply of more than 1 1/2 months of cigarettes, 2 months for heated tobacco units, and 3 months for heated tobacco devices.
Philip Morris' announcement came shortly after Altria (NYSE:MO), its domestic peer, had said it would temporarily close its main manufacturing plant in Virginia. Both closures show that the tobacco industry (especially Philip Morris as an international producer) could see supply chain headwinds if it is forced to close more facilities around the world as the pandemic spreads.