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What Are Some Of The Challenges Philip Morris International Faces?

Philip Morris will release its Q3 report this week.

The company continues to face challenges with lack of growth in shipments.

The adverse impact of a stronger U.S. dollar on revenue and income has subsided as it didn't pick up in recent months.

In the first two quarters of 2015, Philip Morris International (NYSE:PM) was able to beat market expectations in its net earnings per share. If the company does it again for Q3, this could further boost its stock, which rallied by more than 6.5% in the past month. The company is still expect to face challenges - mainly in increasing its shipments in times of economic slowdown, strong U.S. dollar and tougher regulations. Let's review some of the factors that will impact the company's bottom line.

Currency continues to adversely impact its profits

Unlike Altria (NYSE:MO), one of the major issues that has been bringing down the revenue of PM is the strengthening of the U.S. dollar - mainly during the first few months of the year, as presented in the chart below.

Source: FRED

Since then, however the U.S. dollar's rally has subsided and hasn't strongly appreciated further against major currencies. In part, this relates to the decision of the Federal Reserve to delay raising rates as there are growing concerns over a possible slowdown in the growth in U.S. economy in the coming months. In the past few quarters, the adverse impact of a stronger U.S. dollar...