JPMorgan Downgrades PMI Stock Over the War in Ukraine
According to foreign media reports, the war in Ukraine could seriously affect Philip Morris International's sales. Earlier this week, JPMorgan downgraded the multinational company's stock rating, citing its exposure to Russia and Ukraine. According to the
According to foreign media reports, the war in Ukraine could seriously affect Philip Morris International’s sales. Earlier this week, JPMorgan downgraded the multinational company’s stock rating, citing its exposure to Russia and Ukraine.
According to the investment bank, about 8% of PMI Group’s sales come from Russia and Ukraine. These two countries account for around 23% of PMI’s heated tobacco HNB volume. Heated tobacco products are a key part of PMI’s next-generation growth strategy because they are reportedly less harmful than cigarettes.
PMI entered the Ukrainian market in 1994. In 2021, Ukraine accounted for about 2% of PMI’s total cigarette and heated tobacco HNB shipment volume and less than 2% of PMI’s total net revenue. The company has one factory and about 1,300 employees in the country.
In 2021, Russia accounted for nearly 10% of PMI’s total cigarette and heated tobacco HNB shipment volume and about 6% of PMI’s total net revenue. PMI opened its first representative office in Russia in 1992 and has more than 3,200 employees there.
According to a filing the company submitted to the U.S. Securities and Exchange Commission, PMI’s cigarette shipments in Russia declined from 55.6 billion sticks to 52.5 billion sticks, while the percentage of total cigarette shipments fell from 8.8% to 8.4%.
For heated tobacco HNB products, shipment volume in Russia increased from 13.6 billion sticks to 16.3 billion sticks, while Russia’s share of total heated tobacco HNB shipments slipped from 17.9% to 17.2%.
Meanwhile, PMI’s heated tobacco HNB market share in Russia rose from 6.3% to 7.4%, while the company’s overall heated tobacco HNB market share increased from 3% to 3.5%.
On March 9, PMI announced that it was suspending its planned investments in Russia, including all new product launches as well as commercial, innovation, and manufacturing investments. Amid ongoing supply chain disruptions and a changing regulatory environment, PMI also launched plans to scale down its manufacturing operations in Russia.
