Philip Morris Shelves US Cigar Unit Sale Amid Market Turmoil

[JohnS]

Philip Morris Shelves US Cigar Unit Sale Amid Market Turmoil

By Sabah Meddings -  April 23, 2025 at 9:25 PM GMT+10, Updated on April 23, 2025 at 10:39 PM GMT+10

(Bloomberg) -- Philip Morris International Inc. called off a sale or separation of its $1 billion US cigar business, citing the “current environment” in the latest deal to go awry amid market turmoil.

The tobacco maker said Wednesday that following a thorough review and after taking into account the current environment, it will not shed the cigar unit it acquired as part of its $16 billion purchase of rival Swedish Match. Reckitt Benckiser Group Plc also said Wednesday that market uncertainty may affect the timing of the sale of a portfolio of home care products.

Philip Morris wanted to dispose of US cigars as it continues to pin its future on a shift toward smoke-free alternatives to traditional tobacco products.

The company said strong sales of Zyn nicotine pouches — also acquired from Swedish Match — were driving performance as it boosted adjusted earnings per share guidance this year to as much as $7.49, compared with a previous targeted high of $7.17.

The smoke-free business includes Zyn and IQOS heated tobacco sticks and accounted for 42% of the first-quarter total net revenue. Philip Morris wants to generate more than two thirds of its sales from alternative products by 2030.

Manufacturing problems that dogged Zyn last year and caused shortages have eased, with production increasing ahead of schedule in March, the company said. Philip Morris is targeting 900 million cans of annual capacity at its Kentucky facility, and the new Colorado plant is expected to start producing pouches in early 2026.

Shipments of Zyn pouches in the US exceeded expectations during the first quarter, with the company forecasting volumes of between 800 million and 840 million cans in 2025, representing comparable growth of as much as 45%.

Health concerns around tobacco are fueling demand for nicotine pouches, which are taken orally by stuffing them under the upper or lower lip. The US Food and Drug Administration approved all Zyn pouches currently marketed in the country earlier this year.

Since then, under the new administration, the FDA has ousted its chief tobacco regulator, Brian King, as part of sweeping cuts at the agency.

Shares of Philip Morris rose as much as 5.2% in premarket trading. The stock is up about 36% since the start of the year through Tuesday’s close.

--With assistance from Subrat Patnaik.

(Updates with detail from fifth paragraph.)

Source: https://www.bloomberg.com/news/articles/2025-04-23/philip-morris-shelves-us-cigar-unit-sale-citing-market-turmoil