Please ensure Javascript is enabled for purposes of website accessibility

Philip Morris International Sees Little COVID-19 Impact in Q1, But Pulls Full-Year Forecasts

By Rich Duprey – Apr 21, 2020 at 12:34PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The effects of the pandemic will be felt as the year progresses.

Cigarettes are said to be a recession-resistant product because people will smoke in good times and bad, and Philip Morris International (PM -3.58%) reported first-quarter that seems to underscore that belief.

Despite the coronavirus pandemic that has created havoc worldwide, the tobacco giant says it witnessed limited impact to its business during the period.

It did note, though, that as the healthcare crisis deepened and social distancing became more prevalent, it expects the stay-at-home orders in place around the globe will have an effect on its business, so it is withdrawing its full-year guidance. 

Cigarette butt stubbed out

Image source: Getty Images.

The harder times are coming

Philip Morris said revenue rose 10% on a currency-adjusted basis while adjusted earnings rose 11% to $1.21 per share as price increases and sales of its heated tobacco products continue to gain traction.

Where cigarette shipment volumes were down 4.4% year over year, shipments of its IQOS heat-not-burn electronic cigarette surged over 45% to 16.7 billion units.

CEO Andre Calantzopoulos said in a statement that although the first quarter was strong, "unemployment and related reductions in disposable income will have a temporary impact on market dynamics or the ability of certain small retailers to operate." 

As a result, the tobacco giant says it is withdrawing its forecast for earnings of at least $5.50 per share in 2020. However, Philip Morris International can offer second-quarter guidance, because it has greater visibility. It expects EPS to be in a range of $1 to $1.10, which includes a $0.12 per share hit from currency fluctuations. It also expects sales to fall 8% to 12% due to COVID-19, the disease caused by the coronavirus, including lower IQOS sales.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Philip Morris International Inc. Stock Quote
Philip Morris International Inc.
PM
$83.01 (-3.58%) $-3.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.