(Bloomberg) -- Philip Morris International Inc. said full-year earnings will be lower, as the Marlboro maker plans to exit the Russian market in a move that may weigh on growth of its IQOS heated-tobacco system.
Adjusted earnings per share will range from $5.45 to $5.56 this year. That compares with its previous guidance for a range of $6.12 to $6.30.
The company is working on options for leaving the Russian market because it has become too complex to do business there amid the war in Ukraine. It’s a tough move to make, as Russia makes up almost 10% of its total volumes and some 6% of its net revenue.
Philip Morris said it will have no impairment costs on Russia this year and that the business there has about $1.4 billion in total assets. Imperial Brands Plc said Wednesday that it transferred its business in Russia to local investors and will write off 225 million pounds ($293 million).
Russia is the world’s fourth-largest cigarette market by volume and it’s also been an important region for growth of cigarette alternatives, such as IQOS.
Still, heated-tobacco shipments at Philip Morris jumped 14% in the first quarter. There were about 17.9 million IQOS users by the end of March, up more than a million from the end of the previous quarter. The company estimated that there were about 4.8 million users in Russia and Ukraine at the end of last year.
Supply constraints for IQOS have eased and will likely continue to do so in the second quarter.
First-quarter adjusted EPS amounted to $1.56, beating analysts’ estimates of $1.49.
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