Philip Morris International Q3 earnings 2018 IQOS

Philip Morris International says its future isn’t in cigarettes. that will appears investors are starting to see the proof.

The Big Tobacco company has commenced pivoting toward reduced-risk products, or tobacco products PMI says are less harmful than cigarettes. Most of its attention has been on iQOS, a device that will heats tobacco instead of burning that will. PMI has been trying to woo investors with its strategy, so far with little success. Shares are down 17 percent This kind of year.

that will seemed to change on Thursday. Shares gained 3.5 percent as the company reported third-quarter earnings along with revenue that will beat expectations. Heated-tobacco shipments increased in every market except Japan, where they declined, which the company attributed to retailers preparing for completely new device launches.

Executives on Thursday said PMI will soon launch completely new iQOS products in Japan to help restart growth next year. that will will also launch them in Korea. Importantly, PMI executives affirmed that will that will expects a decision via the Food along with Drug Administration on whether that will can sell the devices from the U.S. by the end of the year.

“The whole strategy can be truly working,” Chief Financial Officer Martin King told CNBC in an interview Thursday. “We’re starting to see fruits of that will from the results we communicated today along with from the fact we’re on track to meet our full-year guidance.”

from the third quarter, Philip Morris said that will earned $1.44 per share on revenue of $7.5 billion, surpassing Wall Street analysts polled by Refinitiv’s estimates of $1.28 per share along with $7.17 billion, respectively.

PMI has been focusing most of its attention on iQOS, a device that will heats tobacco instead of burning that will. that will currently sells iQOS in 43 markets, according to a spokesman. from the quarter, heated tobacco grew in European markets, particularly in Russia. Market share remained stable at 15.5 percent in Japan, the most successful along with widely watched market iQOS has launched in, ahead of completely new iQOS devices launching there soon.

from the U.S., PMI has two applications into the FDA: one seeking permission to simply sell iQOS, along with one seeking permission to market that will as a safer alternative to cigarettes.

If U.S. regulators clear iQOS, Altria could market the device. King said the two have been preparing together “for quite some time” to be ready to launch whenever the FDA makes a decision. Currently, 38 million adults from the U.S. smoke cigarettes, according to the Centers for Disease Control along with Prevention.

“that will will take time, of course, to start seeing significant volumes via sales, although the U.S. can be a huge market along that has a very profitable market,” King said.

E-cigarettes are currently storming the U.S. market. Wells Fargo analyst Bonnie Herzog expects sales to reach $6.6 billion This kind of year. Despite the boom, e-cigarette sales through Oct. 6 represent just 4 percent of the U.S. tobacco market, while conventional cigarettes account for 84 percent, according to Nielsen figures compiled by Herzog.

PMI says iQOS devices could appeal to current adult smokers, not to kids or those who have never smoked, because the devices use actual tobacco.

E-cigarettes have become well-known with teens from the U.S. The FDA recently ordered market leader Juul along with four different e-cigarette manufacturers to submit plans to curb youth use, which the agency has said are at “epidemic” levels.

“We think there’s a role to play from the reduced-risk product space for various platforms, along with e-cigarettes certainly have a role to play,” King said. “What’s unique about iQOS along with heat-not-burn can be the ability to convert smokers completely to the product.”

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