So, it's finally happened. After years of concerns about slowing cigarette sales and rising debt levels, Philip Morris International (PM 2.82%) has finally come out and said that investors might have to get used to lower returns from the company.

Philip Morris made this announcement at the Morgan Stanley Global Consumer Conference last week. In particular, the company revealed that 2014 was going to be a tough year of low growth and high investment, as it sought to drive growth within regions of the world where its market share was not as high as it would like.

Management also stated that they expect the volume of cigarettes shipped by the company to continue to decline through 2014 but recover slightly during 2015. However, with Philip Morris' volume of cigarettes shipped down 5% during the first nine months of this year, another year of declining cigarette sales is going to put the company in a position where it must work hard to drive sales higher again.

Furthermore, the company expects currency neutral earnings per share to grow 6% to 8% during 2014; that's below the adjusted growth figure of 10% expected for this year and below management's own long-term growth target of 10% to 12%. But with cigarette sales declining around the world and buybacks under pressure, the question is, will Philip Morris be able to return to its lofty growth rates of the past?

Falling shareholder returns
Philip Morris' management also commented on investor returns during the conference. Unfortunately, it would appear that investors are going to have to get used to lower returns as well.

Philip Morris' management is quick to point out that since its spin-off from Altria, the company has returned cash to investors at a pace that has exceeded free cash flow. As a result, net debt to earnings before interest, taxes, depreciation, and amortization has risen from 1x two years ago to 1.6x as of the third quarter of 2013.

However, the company is not yet worried about its level of debt. Management has stated that it plans to continue repurchasing shares at a rate that is supported by the company's credit rating.

What does this mean? Well, according to management, a rate of buybacks supported by the company's credit rating will be approximately 100% of free cash flow after dividends. Based on 2012 numbers, this will be around $3 billion per year, less than the company's current $18 billion three-year program, which works out to about $6 billion per year.

Lagging the pack
Unfortunately, it appears that Philip Morris is the only tobacco company suffering a slowdown of this magnitude. Indeed, reading through the third-quarter reports of Philip Morris' close domestic peers, Altria Group (MO 1.91%), Reynolds American (RAI), and Lorillard (LO.DL), it seems that all of these companies are guiding for high single- to double-digit earnings growth for this year.

Lorillard in particular has achieved double-digit earnings growth of 13% for the first nine months of this year, and analysts are guiding for full-year earnings growth of 11.2%. It would seem that Lorillard is now the growth company of the tobacco sector.

In addition, Reynolds's American has narrowed its earnings guidance for the full year to a range of $3.17 to $3.27, up 7% to 10% from 2012's adjusted EPS of $2.90.

Meanwhile, Altria is guiding for full-year earnings per share of $2.57 to $2.62, excluding extraordinary items. Including extraordinary items, Altria is guiding for full-year earnings per share of $2.36 to $2.41, representing a growth rate of 7% to 9% from an adjusted, diluted earnings-per-share base of $2.21 reported for full-year 2012.

Foolish summary
So all in all, after years of sector-leading buybacks and growth, Philip Morris' excessive spending habits are finally starting to catch up with the company. What's more, slowing cigarette sales are hurting the company's top and bottom line, something that's not affecting its peers to the same degree.

Overall, investors need to assess whether Philip Morris can continue to give them the returns they desire. Otherwise they may need to look elsewhere for growth.