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Dec 31, 2019
Philip Morris Q4 2019 Earnings Report
Philip Morris' Q4 2019 earnings decreased due to asset impairment and exit costs, but underlying business performance remained strong, driven by IQOS growth and solid pricing.
Key Takeaways
Philip Morris International's Q4 2019 earnings were impacted by asset impairment and exit costs, primarily related to a plant closure in Germany. However, the company saw revenue growth driven by heated tobacco unit volume and favorable pricing. Adjusted diluted EPS was down 2.4%, but up 4.3% on a like-for-like basis.
Reported diluted EPS of $1.04, down by 15.4%; also down by 15.4%, excluding currency.
Adjusted diluted EPS of $1.22, down by 2.4%; up by 4.3% on a like-for-like basis, excluding currency.
Net revenues up by 2.9%; up by 6.3% on a like-for-like basis, excluding currency.
Adjusted operating income margin up by 1.8 points to 36.7% on a like-for-like basis, excluding currency.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Philip Morris International anticipates headwinds in Indonesia but expects like-for-like currency-neutral net revenue and adjusted diluted EPS growth consistent with 2019-2021 targets.
Positive Outlook
- Reported diluted earnings per share forecast to be at least $5.50, at prevailing exchange rates, representing a projected increase of at least 19% versus reported diluted earnings per share of $4.61 in 2019.
- Excluding an unfavorable currency impact, at prevailing exchange rates, of approximately $0.04 per share, this forecast represents a projected increase of at least 8% versus pro forma adjusted diluted earnings per share of $5.13 in 2019
- Currency-neutral net revenue growth, on a like-for-like basis, of approximately 5%.
- An increase in full-year currency-neutral, like-for-like adjusted operating income margin of at least 150 basis points versus 2019, partly reflecting cost efficiencies that fully offset incremental net RRP investment.
- Operating cash flow of approximately $10.5 billion, subject to year-end working capital requirements and currency movements.
Challenges Ahead
- An estimated total international industry volume decline, excluding China and the U.S., of approximately 3% to 4%, partly reflecting the impact of an above-inflation excise tax increase in Indonesia (following no increase in 2019) and further out-switching to the cigarillo category in Japan, which together account for approximately 100 basis points of the decline
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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