Philip Morris cuts forecasts after CA$15bn court ruling
Marlboro-maker Philip Morris International cut its full-year guidance yesterday after a Canadian court last week turned down an appeal against a CA$15.6bn (£8.9bn) award to smokers to compensate for health problems.
The Canadian Court of Appeal last week ruled against Philip Morris subsidiary Rothmans, Benson & Hedges (RBH), alongside Imperial Tobacco Canada and JTI-Macdonald, confirming a 2015 decision by a lower court.
The court ordered that the tobacco companies deposit CA$1.1bn of the damages into trust accounts within 60 days.
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RBH’s share of the deposit is approximately CA$257m, it previously deposited CA$226m as security with the Court of Appeal.
Philip Morris International said it will incur a pre-tax charge of approximately $194m (£147m) in its first quarter results because of the ruling.
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It said ultimate liability “may differ significantly from this amount” based on what a “significant lack of clarity” with respect to the number of claimants, the process for verification of their applications and further court proceedings.
The company cut its full-year 2019 diluted earnings per share to at least $5.28 a share, down from at least $5.37.