Philip Morris International Inc. (PM – Free Report) reported weaker-than-expected first-quarter 2017 results, wherein both earnings and revenues lagged the Zacks Consensus Estimate. Shares were down 3.4% in the pre-market trading. The weak results were primarily due to lower cigarette volume and certain timing factors.

Adjusted earnings per share of 98 cents missed the Zacks Consensus Estimate of $1.03 by 4.85% in first-quarter 2017. However, it was flat from the year-ago quarter. While the company benefited from strong pricing, lower cigarette volumes related to low-price brands in specific markets however led to the decline. Notably, currency did not impact earnings in the quarter.

Philip Morris International Inc Price, Consensus and EPS Surprise

Philip Morris International Inc Price, Consensus and EPS Surprise | Philip Morris International Inc Quote

Revenues & Margins

Net revenue, excluding excise taxes, was $6.1 billion, which was down 0.3% (up 1.7% excluding unfavorable currency of $120 million) in the first quarter. Revenues were way behind the Zacks Consensus Estimate of $6.4 billion by 5.6%. Revenues benefited from favorable pricing across all regions, especially Eastern Europe, the Middle East & Africa (EEMA) and Asia, but were partly offset by unfavorable volume/mix in the regions of European Union (EU), EEMA and Latin America & Canada.

Revenues from combustible products declined 6.6% (down 4.3% excluding negative currency) to $5.6 billion. On the contrary, Reduced Risk Products (RRPs) reported a whooping increase from last year quarter, stemming from the shift of customer preference away from tobacco products.

Total cigarette and heated tobacco unit shipment volume fell 9.4% to 178.0 billion units, due to a tough year-over-year comparison as well as low-price volumes in specific markets, including Pakistan and Philippines. Last year, the results were benefited from the favorable estimated impact of the leap year.