Philip Morris Cuts Earnings Forecast

Philip Morris

, the largest publically traded tobacco company in the world, cut its earnings forecast Thursday as Marlboro cigarette sales abroad were hindered by the strength of the dollar. The news comes on the same day that the company announced plans to introduce a new, healthier cigarette by 2017. Philip Morris is currently developing three types of cigarette that would be sold under its brands, like Marlboro, one of which heats tobacco rather than burning it. In a speech prepared for investors, COO Andre Calantzopoulos said, "Our first objective has been to develop a series of products that provide adult smokers the taste, sensory experience and smoking ritual characteristics that are as close as possible to those currently provided by conventional cigarettes." CEO Louis Carnilleri also made a speech, saying, "We are on the eve of what we all believe could be a paradigm shift for our industry. The new products have the very real potential to not only be a game-changer, but also be the key to unlock several hitherto virgin territories, most notably the huge Chinese market.” Earnings per share for 2012 will be $5.10 to $5.20, according to Philip Morris, compared to the April forecast of $5.20 to $5.30. The cut comes as the U.S. dollar has gained 4.5% against the euro since April. That has an obvious impact, with Philip Morris getting 39% of its revenue from the European Union since last year. "Our results in 2011 were simply superb across all measures," said Camilleri. "We returned to organic volume growth, witnessed wide-spread market share gains and achieved record net revenues, operating companies income, earnings per share and cash flow... It will not come as a shock to you that currency has moved in the wrong direction since April. Accordingly, we are revising our 2012 full-year reported diluted EPS forecast, for these adverse currency movements only, and now project an EPS range of $5.10 to $5.20 versus $4.85 earned in 2011." On Thursday morning, Philip Morris is trading at about $88.50, down roughly 0.01%.