Philip Morris International (PMI) has lowered its full-year profit forecast for the third time in 2024, citing adverse currency fluctuations and increased competition in the US nicotine pouch market. The tobacco company now expects adjusted earnings per share between $8.26 and $8.41, down from previous guidance of up to $8.46 last month and $8.51 in April.

For the second quarter ending in June, PMI reported revenues of $11.2 billion, representing a 10.4% increase compared to the same period last year. Despite analyst expectations of declining cigarette sales, volumes rose by 1.1%. However, growth in the company’s “smoke-free” product segment, which includes nicotine pouches and vaping products, decelerated relative to the previous quarter.

PMI attributed its reduced earnings outlook partly to adverse currency conditions. The company also pointed to higher costs linked to the ongoing conflict in the Middle East, which has driven up expenses for transportation, energy, and other inputs.

As smoking rates have declined globally, PMI and other major tobacco firms such as British American Tobacco (BAT) have expanded into alternative nicotine products. PMI’s nicotine pouch brand Zyn, acquired through the $16 billion purchase of Swedish Match in 2022, has been a significant driver of growth in this category within the US market. Yet, Zyn’s recent expansion has slowed due to a more competitive environment, including rival products like BAT’s Velo Plus.

PMI highlighted challenges stemming from what it described as an “uneven competitive landscape” in the US, as well as delayed regulatory approvals by the US Food and Drug Administration (FDA). The company noted that limited FDA authorization constrained its access to key strength and flavor variants within the category. To address this, PMI introduced a higher-strength version, Zyn Ultra, in June.

The FDA recently granted PMI permission to market certain Zyn nicotine pouch products as less harmful alternatives to traditional cigarettes, potentially supporting the company’s efforts to shift toward “smoke-free” offerings.

Proponents within the tobacco industry argue that expanding access to products such as nicotine pouches and vapes is critical to helping smokers transition away from combustible tobacco. Conversely, the World Health Organization has raised concerns that these products may attract new and younger users to nicotine consumption rather than solely serving as cessation aids.

PMI’s performance reflects ongoing tensions in the tobacco sector as regulators, public health advocates, and companies navigate shifting consumer behaviors and competitive dynamics in the evolving nicotine marketplace.