Philip Morris International Inc. Chief Executive Officer Jacek Olczak said the Marlboro maker’s target to get most of its revenue from smoke-free products by 2025 is probably out of reach after growth has been dented in Russia and Ukraine, two of its key markets.
(Bloomberg) — Philip Morris International Inc. Chief Executive Officer Jacek Olczak said the Marlboro maker’s target to get most of its revenue from smoke-free products by 2025 is probably out of reach after growth has been dented in Russia and Ukraine, two of its key markets.
The CEO said PMI will probably need a few more quarters to reach the goal of 50%, speaking on an investor webcast Thursday. The company reiterated its confidence in products such as heated tobacco and nicotine pouches, predicting industry growth rates for them as high as 20% and 35% respectively.
The tobacco company set a new goal Thursday to reduce the proportion of revenue from cigarettes to less than a third by 2030 as it prepares to start selling its IQOS heated tobacco product in the US next year.
Philip Morris has spent $16 billion buying snus and nicotine pouch maker Swedish Match AB as it tries to lead the tobacco industry in a shift away from combustibles. Last year, PMI got two-thirds of its net revenue from cigarettes.
The maker of Marlboro products sold outside the US forecast 9% to 11% compound earnings per share growth between 2024 and 2026 but warned that currency shifts mean that third-quarter profit will be at the lower end of its forecast range.
Third-quarter earnings growth excluding currency shifts has actually been better than its forecast in July, but that’s been overshadowed by adverse foreign exchange movements, PMI said.
This year’s growth in heated tobacco has also been set back by a later-than-expected launch in Taiwan.
Philip Morris plans to submit an application to the US Food and Drug Administration to sell its IQOS Iluma product in that market in October. The company aims to attain a 10% share of the US market for cigarettes and heated tobacco products within five years of launching Iluma there.
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