Philip Morris lowers guidance as Russian tax authority issues $374m fine

US tobacco giant Philip Morris cut its full-year profit guidance on Thursday following an investigation by a Russian tax authority that concluded its local affiliate had underpaid taxes.

Philip Morris now expects earnings for 2019 to be somewhere in the vicinity of $4.73 per share, down from the $4.94 it had previously expected and the $5.04 predicted on the Street.

In terms of its third-quarter earnings, Philip Morris made $1.9bn during the three months ended 30 September - down 16% year-on-year, while earnings per share dropped from $1.44 to $1.22.

Adjusted earnings per share came in at $1.43, which was shy of the $1.46 expected by analysts.

Net revenue was up 1.8% to $7.64bn but profits were hit by a 30% increase in administration and research costs, which included a $374m charge levied against the firm by the Moscow Tax Inspectorate for Major Taxpayers for underpaying its taxes between 2015 to 2017.

Cigarette shipping volumes dipped just over 2% and the group went as far as to caution that it may cut some 950 jobs as it looks at ending cigarette production in Berlin by January, which is expected to lead to significant costs not yet included in its forecasts.

Heated tobacco shipments rose 85%, ahead of estimates.

As of 1400 BST, Philip Morris shares were up 1.45% in pre-market trading at $80.25 each.