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Jun 30, 2020
Philip Morris Q2 2020 Earnings Report
Philip Morris International's results were impacted by COVID-19 and organizational design optimization.
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
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%
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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