(Reuters) – Philip Morris International raised its annual adjusted profit forecast on Tuesday, owing to steady demand for its Zyn nicotine pouches and higher prices of its cigarettes.
Its shares were up 2% in premarket trading after the company also beat expectations for second-quarter revenue.
Zyn nicotine pouches have so far been at the forefront of the company’s effort to claim a larger chunk of the demand for alternatives to traditional cigarettes in the United States.
Zyn shipment volumes grew 50.3% in the second quarter, compared with the same period last year, despite supply constraints and a nationwide suspension of the product’s online sales. That followed a nearly 80% rise in the prior quarter.
Philip Morris expects an adjusted annual per-share profit, excluding currency, of between $6.67 and $6.79, compared with its earlier forecast of $6.55 to $6.67 per share.
The company also expects annual nicotine pouch shipment volumes in the U.S. of 560 million to 580 million cans, up from its earlier expectation of 560 million cans.
Like its peers, Philip Morris has been raising cigarette prices to offset volume declines amid stricter regulation and greater awareness of health risks, which have led to falling demand in some markets.
It has also been working to ramp up production of Zyn, which it acquired through a purchase of Swedish Match in 2022, to meet demand in the U.S.
The company is facing some resistance from anti-smoking groups ahead of the trial launch of its heated tobacco product, IQOS, in the country.
Overall shipment volume for its heated tobacco business rose 13.1% compared to a year ago, following a 20.9% rise in the prior quarter.
The company reported second-quarter revenue of $9.47 billion, beating analysts’ average estimate of $9.18 billion, according to LSEG data.
(Reporting by Juveria Tabassum and Emma Rumney; Editing by Pooja Desai)
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