By Granth Vanaik and Emma Rumney
(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.
The Marlboro cigarette maker 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.
Philip Morris (NYSE:PM) 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.
Any sustained slowdown in IQOS sales was a problem for Philip Morris given its significance for the business and the company's premium relative to peers, analysts said.
But Mark Giambrone, a portfolio manager at Barrow Hanley, a sub-adviser to American Beacon's Large Cap Value Fund which invests in PMI, was not too concerned.
IQOS is set to test launch in the United States, the world's largest market for smoking alternatives, this year with a full roll-out later.
"When that happens it will be a boon for the stock and for their earnings base," Giambrone said.
The company's shares fell 3%, but recovered to stand around 1.6% lower by 11:20 a.m. ET (1620 GMT).
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.