Companies and Brands
Philip Morris Cuts Earnings Forecast Following Plant Closures
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In its announcement, Philip Morris said it is cutting its earnings per share (EPS) guidance from a previous range of $5.09 to $5.19 to a new range of $4.87 to $4.97 for the 2014 fiscal year. Adjusted EPS in 2013 totaled $5.40.
The company said it took a first-quarter charge of $0.01 per share as an asset impairment for closing its Australian plant, and will take a second-quarter pretax charge of $0.24 per share related to its “contemplated” decision to close its plant in the Netherlands. The company also estimates that the currency exchange impact for the full year will be $0.61.
Philip Morris said that total cigarette industry volume excluding the United States and China will decline by 2% to 3% in 2014, and the company is “cautiously optimistic” that in 2015 the decline will revert to the historical average of 1% to 2%.
Other items included in the revised guidance are realizing a cost-savings target of $300 million and a share repurchase totaling $4 billion.
Philip Morris also announced today that it has acquired British e-cigarette maker E-vapor. The company did not disclose the purchase price, but did say that the deal was not material to earnings and did not require regulatory approval.
Philip Morris pays a dividend yield of 4.1% and remains committed to $2 billion to $3 billion annually in share repurchases in 2015 and “for the near term” according to Thursday’s announcement. The company said that excluding currency effects and including buybacks, Philip Morris targets adjusted EPS growth of 8% to 10%.
Shares are down about 2.4% in premarket trading Thursday, at $86.75 in a 52-week range of $75.28 to $91.81.
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