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Jun 30, 2023
Philip Morris Q2 2023 Earnings Report
Reported diluted EPS of $1.01 and adjusted diluted EPS of $1.60, representing currency-neutral growth of 16.9%.
Key Takeaways
Philip Morris International's second-quarter results showed strong business momentum with total cigarette and HTU shipment volume growth of 3.3%, driving double-digit growth in net revenues and currency-neutral adjusted diluted EPS. The acquisition of Swedish Match, fueled by ZYN's growth in the U.S., is accelerating the company's smoke-free transformation.
Reported net revenues were up by 19.0%, excluding currency.
Market share for HTUs in IQOS markets increased by 1.6 points to 9.2%.
Total IQOS users at quarter-end were estimated at approximately 27.2 million, with 19.4 million having switched to IQOS and stopped smoking.
ZYN nicotine pouch shipment volume in the U.S. reached 89.9 million cans, a 53.1% increase versus second-quarter 2022 Swedish Match shipments.
Philip Morris
Philip Morris
Forward Guidance
PMI is raising its full-year 2023 forecast for organic net revenue growth to a range of 7.5% to 8.5% and currency-neutral adjusted diluted EPS growth to a range of 8.0% to 9.5%.
Positive Outlook
- An estimated total international industry volume decline for cigarettes and HTUs, excluding China and the U.S., of 0.5% to 1.5%.
- Total cigarette and HTU shipment volume growth for PMI of up 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 7.5% 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 1.5% to 2.5%.
- An adjusted operating income margin decline of 50 to 150 basis points on an organic basis, with the decline likely toward the upper (150 basis point) end of the range, notably due to technical factors.
- Incremental investments to drive future growth, including the commercialization of ILUMA and around $150 million with a broadly even split between the U.S. and the Wellness and Healthcare segment.
- 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.
- No share repurchases in 2023.