Philip Morris International (PMI) will not sell its U.S. cigar business as previously announced, the tobacco company said in reporting its first-quarter earnings on Wednesday.
“For U.S. cigars, following a thorough review and evaluation of strategic options taking the current environment into consideration, we have decided not to pursue a sale or separation of the business at this time,” PMI said.
PMI acquired its cigar unit in 2022 when it purchased Stockholm-based Swedish Match, which has U.S. headquarters in Richmond, Virginia.
It also gave an update on smoke-free products, which PMI said accounted for 42% of total net revenues and 44% of the company’s total gross profit.
“Our smoke-free business goes from strength to strength, delivering organic growth of over 20% in net revenues and over 33% in gross profit,” said CEO Jacek Olczak.
For the quarter, PMI said the Zyn nicotine pouch brand delivered strong growth and exceeded the company’s initial expectations.
Shipments in the U.S. reached 202 million cans, representing growth of nearly 53% versus prior year, the company said. This is a jump from the fourth quarter as well, which reached nearly 165 million cans, representing growth of nearly 42% versus prior year, the company said.
PMI reported that operating profit for the first quarter increased 16% to $3.5 billion and that revenue was up 5.8% to $9.3 billion.
“We remain confident in our ability to deliver superior results, despite an uncertain and volatile global economic environment,” Olczak said.
In March, PMI started selling the cigarette maker’s heated tobacco device Iqos in Austin, Texas, to further its smoking alternatives in the United States.
“While intentionally small scale, we have received strong interest with further Iqos pilots planned in the coming months as we prepare for the at-scale launch of Iqos Iluma,” said PMI’s CFO Emmanuel Babeau on the earnings call.
PMI’s global corporate headquarters is in Stamford, Connecticut.
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