Philip Morris cuts outlook after ruling

NEW YORK — Philip Morris International Inc. cut its 2019 profit outlook after a Quebec court ruling that’s seen as threatening the tobacco industry’s existence in Canada. The company and British American Tobacco PLC plan to challenge the decision.

The Canadian units of British American Tobacco, Philip Morris and Japan Tobacco Inc. were ordered Friday to pay damages of about $12.8 billion after losing an appeal of class actions filed by Quebec smokers.

If the tobacco companies lose this battle, cigarette makers will probably need to put their Canadian units into administration, according to Adam Spielman, an analyst at Citigroup. The companies face even more possible penalties as Canada’s 10 provinces are also suing the tobacco industry to recover health care costs, he said.

The Quebec Court of Appeal upheld a lower-court decision with minor changes, according to the ruling released Friday. The lawsuits were in favor of smokers seeking damages for smoking-related diseases. The smokers argued they were never warned of the risks.

Philip Morris reduced its 2019 profit forecast by 9 cents, citing the decision. The company also warned that the “ultimate liability may differ significantly” from the amount in the ruling, because of a “significant lack of clarity” on the number of claimants and how their claims are being processed.

The decision comes a week after the U.S. Supreme Court turned away the tobacco industry’s effort to derail lawsuits by thousands of Florida smokers. Tobacco companies have been undergoing a major shift as they try to lower their reliance on traditional cigarettes, seeking a future with alternative products as smoking demand wanes and countries tighten regulations.