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Jun 30, 2022
Philip Morris Q2 2022 Earnings Report
Philip Morris's Q2 performance exceeded initial expectations with strong IQOS momentum and favorable cigarette category trends, leading to an increased full-year outlook.
Key Takeaways
Philip Morris International Inc. reported a strong underlying performance in the second quarter of 2022, with both top- and bottom-line growth exceeding initial expectations. The company's success was driven by excellent IQOS momentum, including accelerating growth in pro forma total IQOS users and heated tobacco unit in-market sales volume, as well as favorable cigarette category trends. As a result, PMI raised its outlook for the full year and now expects to deliver pro forma adjusted growth in net revenues and diluted EPS.
Net revenues from smoke-free products accounted for 29.9% of total net revenues, or 29.1% on a pro forma basis.
Market share for heated tobacco units in IQOS markets up by 1.2 points to 7.5% on a pro forma basis.
Pro forma total IQOS users at quarter-end estimated at approximately 19.0 million, up by 3.2 million versus June 30, 2021.
Announced recommended public offer for Swedish Match AB of SEK 106 in cash per share and suspension of PMI's three-year share repurchase program.
Philip Morris
Philip Morris
Philip Morris Revenue by Segment
Philip Morris Revenue by Geographic Location
Revenue by Segment
Combustible Products Revenue
CapyFin.comSmoke-Free Products Revenue
CapyFin.comRevenue by Geographic Location
European Union Revenue
CapyFin.comSouth & SE Asia, CIS, MEA Revenue
CapyFin.comEast Asia & Australia Revenue
CapyFin.com Forward Guidance
PMI is raising its outlook for the full year and now expects to deliver pro forma adjusted growth in net revenues of 6% to 8%, on an organic basis, and diluted EPS of 10% to 12%, excluding currency, underpinned by pro forma heated tobacco unit shipment volume of 90 to 92 billion units.
Positive Outlook
- The full contribution of the company's operations in Russia and Ukraine for the entire year.
- No asset impairment costs or further other charges related to the company's operations in Russia or Ukraine.
- No contribution from the operations of Swedish Match in 2022 following the assumed transaction close in the fourth quarter and no further costs associated with the Swedish Match offer.
- A continued gradual improvement in PMI's duty-free business outside Asia.
- An improving IQOS device supply situation, with some remaining uncertainty on the timing of full IQOS availability.
Challenges Ahead
- Continuing uncertainty over the pace of the ongoing recovery from pandemic-related effects on the operating environment, notably in select geographies in PMI's South & Southeast Asia Region.
- The impact on TEREA heated tobacco unit production capacity build-up due to the decision to cancel manufacturing plans in Russia.
- A pro forma estimated total international industry volume change, excluding China and the U.S., of approximately flat to +1%.
- Increased inflation in raw material and energy prices, and additional supply chain costs due to war-related disruptions.
- Wellness and Healthcare segment net revenues of around $300 million (including smoking cessation products), with an operating loss of around $150 million, primarily due to amortization of intangibles related to acquisitions; investments in research and development; and expenses related to employee retention and recruitment programs.
Revenue & Expenses
Visualization of income flow from segment revenue to net income