Philip Morris International Inc on Friday said its Canadian unit, Rothmans, Benson & Hedges Inc (RBH), was granted creditor protection, following a tobacco class action ruling in Quebec earlier this month.
The company said it would deconsolidate RBH from its financial statements, and it cut its full-year 2019 diluted earnings per share forecast to at least US$4.90 at prevailing exchange rates, from at least US$5.28 in the forecast it made on March 4, shortly after the ruling in Quebec.
The Court of Appeal of Quebec upheld the bulk of a 2015 decision that awarded around CUS$15 billion (US$11.19 billion) to smokers in the Canadian province, a blow to several big tobacco companies, including RBH.
On an adjusted basis, the current forecast for full-year 2019 represents earnings per share growth of at least 8% over last year, the Marlboro cigarette maker said.
The deconsolidation, which will not have an impact on the company's current annualized dividend rate, will result in an estimated one-time non-cash charge of about US$ 0.10 per share, it said.
The operating cash flow for full-year 2019 is now estimated to be about US$ 9.5 billion, down from at least US$ 10 billion in the forecast it made on Feb. 7.
The creditor protection process, granted by the Ontario Superior Court of Justice, will allow RBH to carry on its business in the ordinary course, Philip Morris added.