Weak IQOS shipments drive Philip Morris' Q4 disappointment

(Reuters) - Philip Morris International on Thursday missed estimates for fourth quarter profit and forecasts for 2024, with slowing sales of its flagship heated tobacco product IQOS in particular concerning analysts.

PMI has so far led a transition among tobacco giants towards smoking alternatives, with IQOS at the core of that effort, consuming the vast majority of over $10 billion PMI has poured into its transformation since 2008.

It said on Thursday that shipments of heated tobacco units grew by 6.1% in the fourth quarter, compared with 18% growth in the third quarter.

The Marlboro maker added that it expected a further hit to shipments over the coming year as a result of a ban on flavoured heated tobacco in the European Union.

Chief Executive Jacek Olczak said however IQOS had now surpassed Marlboro in terms of net revenues.

"We are entering 2024 with strong momentum," he said in a statement.

But the slowdown in IQOS sales left some analysts worried.

"A huge portion of PMI's premia relative to peers is driven by IQOS, and with these premia close to all-time highs, any sustained slowdown risks significant valuation pressure," Callum Elliott, analyst at Bernstein, said in a note.

Shares of PMI were down 3% in premarket trade.

After previously saying cost pressures should ease in the second half of the year, PMI also flagged higher costs from manufacturing, marketing, energy, tobacco leaf and more that hit its margins.

PMI reported fourth-quarter adjusted profit of $1.36 per share. Analysts had on average had expected a profit of $1.45.

It expects adjusted annual profit of between $6.32 and $6.44 per share, while analysts were expecting $6.60 per share, LSEG data showed.

The downbeat forecast contrasts with that of rival Altria Group, which last week projected 2024 profit in line with expectations.

(Reporting by Granth Vanaik in Bengaluru and Emma Rumney in London; Editing by Milla Nissi and Jonathan Oatis)