Philip Morris International Inc. has cut their full year earnings prediction. The tobacco company is dealing with a variety of changes: currency fluctuations, a growing e-cigarette market, an unfavorable economic climate in parts of Asia (one of its largest markets), and lower prices in their Australian market.
While they were originally seeing earnings of $5.09 to $5.19 a share, they are now estimating a more modest $4.87 to $4.97 a share. Analysts outside of the organization predicted earnings of between $5.18 and $5.25 per share, regardless of this cut.
There was also the matter of closing factories. Philip Morris International will stop producing cigarettes at a plant in the Netherlands by September 1st. It will also stop production in Australia by the end of 2014.
While Philip Morris' future earnings seem rocky, they did make two major pushes into the future of tobacco usage this week. For an undisclosed price, Philip Morris purchased Nicocigs Ltd. Nicocigs makes e-cigarettes in the UK.
Philip Morris is also pushing forward a Marlboro branded e-cigarette style product, the Marlboro HeatStick. It will first be released in Japan and Italy, two major markets for the tobacco giant, and expand further in 2015. Rather than burn the tobacco, Heatstick, well ... heats it up. Philip Morris has been working on a product like this for some time, with some failed prior models. Improvements to the heating process and the general increased popularity of e-cigarettes could help give Heatstick the opportunity Philip Morris has been hoping for.