Image: Philip Morris.

Investors have bemoaned the difficulty that global tobacco player Philip Morris International (PM -0.79%) has had in overcoming the negative impact of a strong U.S. dollar. For a company that gets all of its revenue from abroad, weak foreign currencies have created huge downward pressure on revenue and earnings, and coming into Philip Morris International's third-quarter financial report Thursday morning, investors understood that the company would continue to face those same headwinds. Yet Philip Morris' financials revealed some encouraging signs of a brighter future for the tobacco company. Let's look more closely at what Philip Morris International said about its results and its outlook for the future.

Philip Morris keeps finding ways to strike back against currency challenges
As we've seen for a while now, Philip Morris International's headline numbers looked ugly, but they were in fact substantially stronger than most investors had expected. Sales fell almost 12% to $6.93 billion, but that was quite a bit better than the 14% decline that investors were looking to see. Similarly, net income of $1.94 billion was down about 10% from the year-ago quarter, but the resulting adjusted earnings of $1.24 per share were $0.13 higher than the consensus forecast, essentially chopping the decline that investors had expected by half.

As we've seen before, though, taking out the impact of the strong dollar reveals a much different picture. The revenue hit from currency effects was $1.4 billion, and reversing that impact would have given Philip Morris growth of nearly 6%. Similarly, the earnings hit from the dollar amounted to $0.37 per share, and that would have produced a nearly 16% jump from the year-ago quarter's earnings figures.

Looking more closely at the company's different focus areas, cigarette shipments across the system fell 1.5%, with the biggest declines in Asia offsetting gains in the eastern Europe, Middle East, and Africa segment. Yet Marlboro shipments rose more than 2%, with notable strength in Spain, Japan, and Saudi Arabia offsetting weakness in Brazil and Argentina. From an operating income perspective, only the Latin America and Canada segment posted gains in U.S. dollar terms, but all four of Philip Morris International's major regions saw rising operating profit on a currency-neutral basis. Market share climbed in nearly a dozen and a half key markets across the globe.

CEO Andre Calantzopoulos was quick to highlight the encouraging signs at Philip Morris when you take out the dollar's huge impact. "Organic volume, market share, and pricing trends remain very robust against the backdrop of in improved macroeconomic environment," Calantzopoulos said, "particularly in our [European Union] and [Eastern Europe, Middle East, and Africa] regions."

Will Philip Morris International bring a brighter finish to 2015?
Philip Morris International was so encouraged by its performance over the past quarter that it chose once again to boost its guidance for the full year. Even though currency headwinds will still play a major role in holding back overall gains, Philip Morris now believes that it will see constant-currency adjusted earnings per share rise 11% to 12% for the full year, up from its previous guidance for 9% to 11% growth. That would equate to adjusted earnings per share of roughly $5.57 to $5.62 per share, providing a stark contrast to the company's GAAP earnings projections for $4.35 to $4.40 per share.

A key element of Philip Morris' continued growth will come from its reduced-risk products. Calantzopoulos highlighted the company's efforts on that front, noting that Philip Morris "continues to progress with the commercialization and clinical assessment of our reduced-risk product iQOS, and as previously announced, are accelerating our spending to support additional city launches and national expansions this year and next." Despite criticism from researchers at Imperial Tobacco that included disparaging comments about iQOS, Philip Morris stands behind its heat-not-burn product and believes it can play a fundamental role in the company's long-term growth prospects.

Overall, investors in Philip Morris were pleased with the favorable outlook, as the stock climbed 1.5% by midday following the announcement. As annoying as the dollar's strength is, Philip Morris has shown remarkable resiliency in the face of huge currency headwinds, and that should bode well for whatever point in the future the foreign-exchange markets start behaving more normally.