Shares of Philip Morris International Inc. PM, -1.28% rallied 1.8% in premarket trading Thursday, after the cigarette and heated tobacco units seller reported third-quarter profit that and revenue that fell from a year ago, as rising costs hurt margins, but beat expectations amid increased pricing and a favorable mix shift to smoke-free products. Operating income fell to $2.97 billion from $3.46 billion and earnings per share dropped to $1.34 from $1.55 a share. Excluding nonrecurring items, adjusted EPS fell to $1.53 from $1.59, while also excluding earnings attributable to Russia and Ukraine, EPS fell to $1.33 from $1.44. The FactSet EPS consensus was $1.35. Revenue fell 1.1% to $8.03 billion, above the FactSet consensus of $7.27 billion. Cost of sales jumped 13.1% to $2.94 billion, and adjusted operating income margin contracted to 41.5% from 43.9%. Total cigarette shipments fell 1.7% to 161.97 billion units, as Marlboro shipments declined 1.7% to 64.04 billion units, while heated tobacco units sales surged 17.1% to 27.51 billion units; in total, shipments rose 0.6%. The stock slipped 3.7% over the past three months through Wednesday, while the S&P 500 SPX, -0.50% lost 6.7%. Separately, the company said overnight that it will pay $2.7 billion as it reached agreement with Altria Group Inc. MO, -1.59% to end their relationship covering IQOS in the U.S. as of April 2024, which will give Philip Morris full rights to commercialize IQOS in the U.S.