NEW YORK (TheStreet) -- Cigarette company Philip Morris (PM) cut its 2014 earnings forecast, attributing the move to significant currency headwinds, as it also announced the acquisition of e-cigarette maker Nicocig.
Cigarette-maker Philip Morris cut its 2014 earnings forecast, citing what it calls a "complex and truly atypical" year.
It attributed significant currency headwinds, an improving but weak macro-economic environment in the European Union and challenges in Asia to the reduced forecast. The company also must take a pretax charge of $495 million, or 24 cents a share, in the second quarter, tied to its decision to stop cigarette production in the Netherlands by September. It said that if price discounting in Australia continues, it may have to reduce the lower end of its 2014 guidance for adjusted earnings per share growth of 6% to 8%.
As more consumers seek less harmful alternatives to cigarettes, Philip Morris announced it acquired British e-cigarette maker Nicocig for an undisclosed price. It also plans to launch its own e-cigarette in 2016 as it seeks to gain a bigger piece of what is a $2 billion industry and growing, according to the Electronic Cigarette Industry Group.
Philip Morris will follow several of its competitors in their attempt to capitalize on the growing popularity of e-cigarettes. Reynolds American (RAI) subsidiary R.J. Reynolds began a national rollout of its Vuse Digital Vapor Cigarette on June 23, while Altria (MO) subsidiary NuMark is planning national distribution of its MarkTen e-cigarettes by year-end. They'll all face competition from the nation's top e-cigarette brand, Blu eCigs, from Lorillard (LO), which has annual sales that now top $200 million.
In New York, I'm Brittany Umar reporting for TheStreet.
-- Written by Brittany Umar in New York