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As sales soar elsewhere, Philip Morris shrugs off the United States import ban on IQOS
The import prohibition on Philip Morris International's heated tobacco device IQOS into the United States had no negative impact on the cigarette giant's fourth quarter results, which showed sales and earnings both above anticipated forecasts.
The cigarette firm remains committed to a smoke free future in which electronic cigarettes such as the IQOS serve as the principal source of nicotine delivery. Despite not knowing if it would be able to overcome the significant obstacle posed by the IQOS import prohibition, CEO Jacek Olczak said: "We enter 2022 with solid foundations, anchored by IQOS, and exciting innovation to look forward to."
The company's fourth quarter sales of $8.1 billion was up 8.9% year over year, or 8.4% adjusted, as IQOS shipping volumes increased 17% to 25.4 billion units and combustible cigarette shipments up 2.4% (Corporate Event Data provided by Wall Street Horizon). IQOS market share increased one percentage point to 7.1% even without the advantage of the US market.
After British American Tobacco sued Philip Morris in federal court, the heated tobacco device was barred from being imported into the United States. According to the International Trade Commission, IQOS infringed on British American patents.
Because the United States is the largest market for reduced risk products like IQOS, the fact that they can't be marketed here is a major setback for both Philip Morris and Altria. Altria, in instance, has no e-cigarettes to sell because it stopped making them in preparation of selling the IQOS. Fortunately, sales are picking up in other areas. Eastern Europe, East Asia and Australia all increased by 8% and 7%, respectively, while the European Union increased by 35% to 7.8 billion units. Despite the fact that IQOS is the future of Philip Morris, combustible cigarettes remain the company's most profitable product. Cigarettes were six times greater, with 158 billion units supplied in the quarter, compared to 25.4 billion IQOS units.
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