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Philip Morris Suspends Operations at MTB Due to Coronavirus

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The impact of the coronavirus outbreak can be felt across all sectors. Owing to its rapid spread, Philip Morris International Inc. (PM - Free Report) is temporarily suspending all operations at Philip Morris Manufacturing & Technology Bologna S.p.A., Italy ("MTB"). Management is suspending production for a week in view of the current scenario and the government’s concerted endeavors to contain the spread.

Notably, MTB formed about 50% of HTU production, as of February. Nonetheless, the company’s HTU facilities are currently operational with an installed capacity of roughly 70 billion units annually. Thus, Philip Morris doesn’t anticipate facing any out-of-stock situation in any of its major operating income areas and expects customers to continue having access to its products.

In a similar move, Altria (MO - Free Report) recently announced a temporary suspension of its operations at PM USA's Manufacturing Center in Richmond, VA, for two weeks. It also announced a temporary suspension of some Middleton domestic operations as a result of supply-chain hurdles stemming from the global pandemic. However, PM USA believes it has adequate stock for at least the next two months, whereas Middleton has adequate cigar inventory for roughly three months.

Well, COVID-19 has jeopardized the global market. The virus, which originated in China, has spread enormously to the extent that cases and deaths outside the nation have exceeded the number in China, per a World Health Organization (WHO) report. Sadly, the pandemic has infected more than 300,000 people worldwide and the death toll has crossed 14,000.  

Coming back to Phillip Morris International, it remains highly committed toward employee protection, as part of which it has implemented several measures. These include travel restrictions, allowing work from home, calling off large gatherings, improving cleaning and sanitization, among others.

Other consumer staple companies like Mondelez International (MDLZ - Free Report) and J.M. Smucker (SJM - Free Report) , to name a few, are also undertaking measures to protect their employees. Incidentally, Mondelez announced an increase in hourly pay till May 2 alongside a per-week bonus for its sales representatives. Smucker is offering up to 12 weeks of full pay as well as benefits to employees who are associated with the facilities that have been shuttered. It is also providing a one-time hardship award and paid leaves, among other initiatives.   

Notably, Phillip Morris will assess the situation closely and restart operations as soon as possible, per regulatory requirements. Shares of this Zacks Rank #3 (Hold) company have lost 29.5% year to date, which is in line with the industry’s performance.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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