Philip Morris forecasts higher profits, shrugging off threats from rivals

By Angela Christy M and Emma Rumney

BENGALURU/LONDON, Feb 6 (Reuters) - Philip Morris International PM.N forecast higher-than-expected 2026 profit on Friday, even as some investors worry its leading nicotine pouch brand Zyn could struggle to fend off competitors eating into its market share.

The world's largest tobacco company by market capitalisation, which sells Marlboro outside the U.S., said it expects to grow adjusted earnings per share by 11.1% to 13.1% this year, beating analyst estimates.

However, shares in the company fell in pre-market and early trading, before recovering to stand 2% higher by 1621 GMT.

PMI investors have been rattled by a growing threat from rivals, including British American Tobacco BATS.L, which is capturing a larger share of category growth, raising concerns about Zyn’s momentum.

CEO Jacek Olczak told Reuters in an interview that factors that make rival products more popular today may not be long-term trends, and in any case PMI was ready to launch updated versions of Zyn to better compete, pending regulatory licences.

Zyn also had a strong, leading position, he continued: "If I take the magnitude of the difference between Zyn and the next competitor... it's an x-fold difference."

KEY PRODUCTS UNDER PRESSURE

The company said U.S. volumes of the nicotine pouch grew 19% in the fourth quarter, but revenues declined as the company used promotions and other commercial support to sell more pouches.

Its flagship heated tobacco device IQOS also faces growing competitive pressures in key markets like Japan. A tax increase and additional price rise there may affect the category's growth and volumes in 2026.

Nevertheless, PMI said it had achieved its 2024-2026 growth targets one year ahead of schedule, and was renewing them through 2028.

It added that it expected its portfolio of smoking alternatives, built to offset revenues lost as smoking rates decline in some markets, would drive shipment volume growth with rates in the high single digit to low teens.

Jefferies analyst Andrei Andon-Ionita said the company's new targets provide a "reassuring outlook" on future growth, but BAT remained well-positioned to win market share in U.S. nicotine pouches.

Philip Morris expects full-year adjusted earnings per share of $8.38 to $8.53 for 2026, higher than analysts' estimate of $8.33, according to data compiled by LSEG.