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Mar 31, 2023
Philip Morris Q1 2023 Earnings Report
Reported diluted EPS of $1.28 and adjusted diluted EPS of $1.38, exceeding expectations.
Key Takeaways
Philip Morris International's Q1 2023 results show a strong performance with adjusted diluted EPS of $1.38, exceeding expectations. Net revenues increased by 3.5% on a reported basis and 3.2% organically. The integration of Swedish Match contributed positively, and the company is reaffirming its full-year 2023 forecast for organic net revenue growth and currency-neutral adjusted diluted EPS growth.
Reported net revenues up by 9.6%, excluding currency.
Combustible tobacco net revenue decline of 1.5%; growth of 3.0% on an organic basis, driven by pricing of 7.4%.
Market share for HTUs in IQOS markets up by 0.9 points to 9.0%.
ZYN nicotine pouch (NP) shipment volume in the U.S. of 73.2 million cans, representing growth of 46.7% versus first-quarter 2022 Swedish Match shipments of 49.9 million cans
Philip Morris
Philip Morris
Forward Guidance
The company is reaffirming its full-year 2023 forecast for organic net revenue growth of 7% to 8.5% and currency-neutral adjusted diluted EPS growth of 7% to 9%.
Positive Outlook
- An estimated total international industry volume decline for cigarettes and HTUs, excluding China and the U.S., of 1% to 2%.
- A total cigarette and HTU shipment volume change for PMI of approximately flat to +1%.
- HTU shipment volume of 125 to 130 billion units, broadly in line with anticipated adjusted in-market sales volume and reflecting an acceleration in growth versus 2022.
- Net revenue growth of approximately 7% to 8.5% on an organic basis.
- Strong full-year performance for Swedish Match’s existing operations, underpinned by strong shipment volume growth for ZYN in the U.S.
Challenges Ahead
- A cigarette shipment volume decline of approximately 2.5% to 3.5%.
- An adjusted operating income margin decline of 50 to 150 basis points on an organic basis, primarily reflecting continued global inflationary pressures.
- Wellness and Healthcare segment net revenues of around $300 million (including smoking cessation products), with an adjusted operating loss of around $150 million, primarily due to investments in research and development.
- Incremental net interest costs of around $200 million versus 2022 on PMI borrowings excluding Swedish Match-related financing, notably reflecting higher borrowing costs on refinanced debt.
- No share repurchases in 2023.