Philip Morris International Inc. said it is working on options to leave the Russian market, joining scores of multinationals that are scaling back operations in the country after its invasion of Ukraine.
The maker of Marlboro cigarettes said Thursday it intends to leave and is considering ways to do so in an orderly fashion as it’s become too complex to do business there.
It’d be a big step out of a key market which generated 6% of total revenue last year. The country is the world’s fourth-largest cigarette market by volume, but it’s also been an important region for growth of the company’s IQOS cigarette alternative.
The cigarette maker said it will update its full-year forecast when it reports first-quarter results on April 21.
Philip Morris has already reduced manufacturing operations, suspended marketing and canceled product launches in Russia.
“Our focus and all our efforts over the last four weeks have been to ensure the safety and security of our Ukrainian colleagues,” Chief Executive Officer Jacek Olczak said in the statement. “We stand in solidarity with the innocent men, women and children who are suffering.”
The company has more than 3,200 employees in Russia, who will continue to be paid. Philip Morris shares fell 1% in premarket trading.
British American Tobacco Plc and Imperial Brands Plc have said they plan to transfer their local businesses to Russian partners.
Philip Morris has been facing the dilemma of limiting the damage to its reputation or staying and continuing to benefit from its second-largest IQOS market, Owen Bennett, an analyst at Jefferies, wrote earlier this month. Russia makes up about 5% of the company’s profit and consumes almost a fifth of Philip Morris’s IQOS production, Bennett said.