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Philip Morris International, the world’s largest publicly traded tobacco company, saw more than $6.5bn sliced off its market value on Thursday after it delivered first quarter sales and earnings that missed analyst expectations.

Shares in the Swiss-based but US-listed company fell as much as 4.4 per cent in early trading before recovering slightly to trade 3.7 per cent lower as investors question whether the group’s traditional go-to strategy of raising cigarette prices to offset volume decline has run its course.

The number of smokers stubbing out their cigarettes habits has been steadily growing over the past decade and the trend was underscored by the 11.5 per cent slump in cigarette shipment volume PMI recorded during the first quarter.

This along with headwinds from a strong dollar prompted net revenues, excluding excise taxes, to fall 0.3 per cent to $6.06bn during the period, confounding expectations for a rise to $6.47bn.

Excluding sales gains generated by new tobacco technology products (or so called “reduced risk products”), the drop in revenue excluding excise tax generated by traditional cigarette products is even steeper at 6.6 per cent.

Net income was up 3.9 per cent at $1.59bn. But on an adjusted basis, diluted earnings of 98 cents a share were estimates for $1.02.

“Our results were in line with our previously communicated expectation of a relatively weak first quarter, due to lower cigarette volume — primarily related to low-price brands in specific markets where the impact on our profitability was limited — and certain timing factors,” said chief executive André Calantzopoulos.

The sales and earnings miss overshadowed the move by PMI to raise its full year guidance. The company is now forecasting diluted earnings per share to come in at between $4.84 to $4.99 for 2017, up from the $4.70 to $4.85 range it had previously predicted, thanks to a one off tax benefit.

PMI sells brands such as Marlboro and Parliament overseas. Despite Thursday’s losses, shares in the company are still up more than 12 per cent over the past 12 months amid renewed investor appetite for stocks that offer steady dividend streams.

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