Philip Morris Q2 2020 Earnings Report
Key Takeaways
Philip Morris International Inc. reported a decrease in net revenues and diluted EPS for the second quarter of 2020, but delivered results above previously communicated expectations. The company provided a full-year 2020 forecast, reflecting like-for-like currency-neutral adjusted diluted EPS growth in the low-to-mid single digits.
Reported diluted EPS of $1.25, down by 16.1%; down by 12.1%, excluding currency
Adjusted diluted EPS of $1.29, down by 11.6%; down by 7.5%, excluding currency
Cigarette and heated tobacco unit shipment volume down by 14.5%
Total IQOS users at quarter-end estimated at approximately 15.4 million, of which approximately 11.2 million have stopped smoking and switched to IQOS
Philip Morris
Philip Morris
Philip Morris Revenue by Geographic Location
Forward Guidance
PMI provided a full-year 2020 forecast, reflecting like-for-like currency-neutral adjusted diluted EPS growth in the low-to-mid single digits.
Positive Outlook
- No recurrence of national lockdowns in PMI's key international markets during the second half of 2020
- Full enforcement of minimum retail selling price requirements in Indonesia as of September 2020, at the earliest
- A full-year heated tobacco unit shipment volume that keeps PMI on-track to reach its 2021 target of 90 to 100 billion units
- An increase in currency-neutral, like-for-like adjusted operating income margin of more than 150 basis points
- An effective tax rate of 22% to 23%, compared to approximately 23% assumed previously, notably reflecting changes in the company's earnings mix and a lower corporate tax rate in Indonesia
Challenges Ahead
- Lack of near-term recovery in PMI's duty-free business given the uncertain outlook for global travel, with current dynamics persisting at least through the third quarter
- An estimated total international industry volume decline, excluding China and the U.S., of approximately 7% to 9%
- A total cigarette and heated tobacco unit shipment volume decline for PMI of approximately 8% to 10% on a like-for-like basis, notably due to Indonesia and PMI Duty Free
- A currency-neutral net revenue decline in the low single digits, on a like-for-like basis. Excluding Indonesia and PMI Duty Free, this assumes currency-neutral net revenue growth in the low single digits on the same basis
- Reported diluted EPS in the third quarter broadly in line with the company's second-quarter 2020 EPS results, supported by a sequential improvement in reported net revenues in the quarter, offset by the unfavorable impact of the reversal of certain items from the first half and the timing of certain costs
Revenue & Expenses
Visualization of income flow from segment revenue to net income