Philip Morris International Acquired E-Cigarette Company Nicocigs in 2014

According to news from the heated tobacco information network: Due to restructuring costs in the Netherlands and a significant currency deficit, Philip Morris International lowered its revenue forecast for the fiscal year 2014 on June 26. Philip Morris International held an investor day in Switzerland on June 26. The manufacturer of Marlboro and L&M brand cigarettes also announced that it has acquired Nicocigs Ltd., a UK-based e-cigarette company whose main brand is Nicocigs. The financial terms of the transaction have not been disclosed. In early April, Philip Morris's subsidiary—Philip Morris Netherlands—held talks with employee representatives regarding a proposal to cease cigarette production at the Behemo factory. After reaching an agreement with the union and its members on a social plan, Philip Morris Netherlands now plans to stop cigarette production on September 1, 2014. The company expects to achieve pre-tax earnings of approximately $495 million, or $0.24 per share, with most of the revenue expected to be recognized in the second quarter of 2014. The company will also incur a charge of $0.01 per share for asset impairment and exit costs for the first quarter of 2014, as the company decided to cease cigarette production in Australia by the end of 2014. As a result, Philip Morris now forecasts earnings for the fiscal year 2014 to be between $4.87 and $4.97 per share, down from a previous estimate of $5.09 to $5.19 per share. Last year, the company reported earnings of $5.26 per share. Based on adjusted figures, the company continues to forecast earnings per share for the fiscal year 2014 to increase by 6 to 8 percent over the adjusted earnings per share of $5.40 in 2013. On average, 15 analysts from Thomson Reuters expect the company to report earnings of $5.25 per share this year. Analysts' estimates typically do not include special items. Philip Morris also noted that its forecast includes $300 million in production and cost savings, as well as a $4 billion stock buyback target. Philip Morris International's CEO, André Calantzopoulos, stated: "We will continue to face significant currency headwinds, challenges from a still weak macroeconomic environment in the EU and Asia, and many markets' strong performance and contributions from our business development initiatives partially offset the adverse factors." Calantzopoulos added: "Additionally, we have noted significant price discounts in the low-end market in Australia, which, if this trend continues, may lead to our currency-neutral adjusted earnings guidance for the full year 2014 being at the lower end of the range, with diluted earnings per share growing by 6%-8%." Philip Morris stated that the acquisition of Nicocigs does not require regulatory approval and does not need to be included in the 2014 consolidated financial report, nor in operating performance or cash flow. Philip noted that this acquisition is a supplement to its previous statement regarding the authorization and distribution agreement for Altria Group's e-cigarette products. Furthermore, this transaction will allow Philip Morris International to quickly enter and significantly occupy the growing UK e-cigarette market. Nicocigs was established in 2008 and is headquartered in Birmingham, UK. The company currently has about 40 sales representatives and sells to over 20,000 points of sale within the UK. According to Nielsen, Nicocigs had a market share of 27.3% as of April 2014. The UK e-cigarette retail market is estimated to be worth $350 million. Philip Morris stated that its senior management will provide insights into the company's business outlook and long-term growth strategy during a two-day investor meeting at its operations center in Lausanne, Switzerland. The investor meeting starts on June 26.

Philip Morris International's stock price is $86.58, down $2.31 or 2.60%, with a total of 3.15 million shares.