Is Phillip Morris' Weak Volumes a Concern for Tobacco Firms?

Philip Morris International Inc.’s PMnot-so-impressive first-quarter 2018 results gave investors cold feet, yesterday.  Well, Philip Morris’ results were mainly dampened by declining shipment volumes across some of the key market regions, thanks to lower cigarette sales.

The hurdles and their persistence were evident from investors’ bearish stance on the stock that fell 15.

6% yesterday, slipping to a 52-week low of $83.50 and closing at $85.64. Per sources, this single day plunge counts amongst its biggest in almost 10 years. Apart from giving a jolt to Phillip Morris’ investors, softness in the cigarettes category also sent ripples of fear in the industry, dragging shares of other major players as well.

We note that the Zacks Tobaccoindustry has been sailing on rough seas, due to regulatory hurdles in the form of limitations on marketing, anti-smoking campaigns and higher excise duties. These factors have taken a serious toll on cigarette sales volumes, globally. Apart from this, rising health consciousness among consumers around the world lowered cigarette consumption. Indeed, such limitations have hindered the growth of the Tobacco industry that lost close to 17% in the past six months, versus the S&P 500 Index’s gain of 5.3%.