U.S. Markets open in 3 hrs 48 mins
  • S&P Futures

    4,268.25
    -18.25 (-0.43%)
     
  • Dow Futures

    33,878.00
    -103.00 (-0.30%)
     
  • Nasdaq Futures

    13,451.50
    -71.75 (-0.53%)
     
  • Russell 2000 Futures

    1,990.70
    -11.00 (-0.55%)
     
  • Crude Oil

    89.75
    -0.75 (-0.83%)
     
  • Gold

    1,767.40
    -3.80 (-0.21%)
     
  • Silver

    19.19
    -0.27 (-1.41%)
     
  • EUR/USD

    1.0095
    +0.0003 (+0.0303%)
     
  • 10-Yr Bond

    2.8800
    0.0000 (0.00%)
     
  • Vix

    20.11
    +0.21 (+1.06%)
     
  • GBP/USD

    1.1914
    -0.0019 (-0.1596%)
     
  • USD/JPY

    136.6400
    +0.7780 (+0.5726%)
     
  • BTC-USD

    21,783.19
    -1,704.50 (-7.26%)
     
  • CMC Crypto 200

    517.85
    -39.88 (-7.15%)
     
  • FTSE 100

    7,537.54
    -4.31 (-0.06%)
     
  • Nikkei 225

    28,930.33
    -11.81 (-0.04%)
     

Philip Morris International Inc. (PMI) Reports 2022 Second-Quarter and First-Half Results

  • Oops!
    Something went wrong.
    Please try again later.
·7 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Delivered 2022 Second-Quarter Reported Diluted EPS of $1.43 and Pro Forma (Excluding Russia and Ukraine) Adjusted Diluted EPS of $1.32, Representing Currency-Neutral Growth of 5.6%; Targets 2022 Full-Year Reported Diluted EPS of $5.73 to $5.88 (Including Russia and Ukraine) and Pro Forma Adjusted Diluted EPS of $5.23 to $5.34, Representing Currency-Neutral Growth of 10% to 12%

NEW YORK—(BUSINESS WIRE)—Regulatory News:

Philip Morris International Inc. (NYSE: PM) today announces its 2022 second-quarter and first-half results. Growth rates presented in this press release on an organic basis reflect adjusted results, excluding currency, acquisitions and disposals. Given the uncertainty and volatility regarding the company’s operations in Russia and Ukraine, PMI is also providing figures and comparisons on a pro forma basis, which exclude the company’s operations in these two markets for all periods and provide a more comparable view of PMI's business performance. A glossary of key terms, definitions and explanatory notes is included at the end of this press release. Adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures are included in the schedules to this press release.

2022 SECOND-QUARTER & YEAR-TO-DATE HIGHLIGHTS

Second-Quarter

Six Months Year-to-Date

Reported


Reported


Total Shipment Volume Growth

1.1

%

3.0

%

2.2

%

4.0

%

HTU Shipment Volume (units billion)

24.8

20.1

49.6

40.2

- Growth

1.9

%

7.4

%

7.7

%

12.6

%

Net Revenue Growth

3.1

%

6.2

%

(a)

2.6

%

8.1

%

(a)

Operating Income Growth

(2.3

)%

1.6

%

(a)

(3.3

)%

5.4

%

(a)

Operating Income Margin Growth

(2.2

)pp

(1.9

)pp

(a)

(2.5

)pp

(1.1

)pp

(a)

Diluted Earnings per Share

$1.43

$1.32

$2.93

$2.79

- Growth

2.9

%

5.6

%

(b)

%

10.4

%

(b)

(a) On an organic basis

(b) Excluding currency

Second-Quarter

  • 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 or 20.5% versus June 30, 2021), of which approximately 13.2 million had switched to IQOS and stopped smoking

  • Announced recommended public offer for Swedish Match AB of SEK 106 in cash per share (see "Swedish Match AB Offer" section on page 6) and suspension of PMI's three-year share repurchase program (see "Share Repurchase Program" section on page 6)

  • Declared regular quarterly dividend of $1.25 per common share, representing an annualized rate of $5.00

Six Months Year-to-Date

  • Net revenues from smoke-free products accounted for 30.5% of total net revenues, or 29.7% on a pro forma basis

  • Market share for heated tobacco units in IQOS markets up by 1.1 points to 7.5% on a pro forma basis

"First and foremost, the war in Ukraine continues to deeply affect the lives of our employees and families in the region," said Jacek Olczak, Chief Executive Officer. "My first priority is to give them the help they need and as a company we are focused on doing our utmost to support them throughout this conflict."

"Turning to our results, our strong underlying performance continued in the second quarter, with top- and bottom-line growth exceeding our initial expectations. This reflected 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."

"We are raising our outlook for the full year and now expect 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."

"Building on our excellent financial results in 2021, this year's outlook puts us well on track to comfortably exceed our minimum compound annual net revenue and adjusted diluted EPS growth targets for 2021 to 2023 on a pro forma basis."

2022 SECOND-QUARTER SUMMARY

Pro forma adjusted net revenues increased by 6.2% on an organic basis, notably reflecting pro forma total shipment volume growth of 3.0%, driven by cigarettes (+2.4%) and heated tobacco units (+7.4%). As anticipated in April, heated tobacco unit shipment volume in the quarter was adversely impacted by the timing of shipments to Japan (approximately 2 billion units, which are expected in the second half) as the company manages the cancellation of planned heated tobacco unit manufacturing in Russia and disruptions in global supply chains generally. In-market sales for heated tobacco units increased by 19.9% in the quarter on a pro forma basis, a slight acceleration versus the first quarter.

Pro forma adjusted net revenue per unit increased by 3.0% on an organic basis, reflecting a further increase in the proportion of heated tobacco units in PMI’s sales mix (albeit at a lower rate than in prior quarters, due to the above-mentioned timing impact involving heated tobacco unit shipments to Japan) and higher pricing. Pro forma pricing for combustible products increased by 3.5%, or by almost 5% excluding Indonesia.

Pro forma adjusted operating income margin declined by 1.9 points on an organic basis, primarily reflecting: (i) investment to further expand and match the speed of growth of PMI's smoke-free portfolio, including the initial higher cost of ILUMA devices and heated tobacco units, as well as the transitory dilutive margin impact of higher device sales from the roll-out of ILUMA and the replenishment of distribution channels as device constraints ease (following component-related shortages) to support re-accelerating IQOS user growth; (ii) the impact of supply chain disruptions, notably due to the war in Ukraine; and (iii) cost inflation driven by the global pandemic recovery and exacerbated by the war in Ukraine, notably for certain direct materials, wages, energy and transportation costs. The decline also reflected a challenging prior year comparison, which included substantial productivity savings.

Despite the specific margin pressures in the quarter, the company’s strong net revenue growth, coupled with the positive effects from higher pricing and operating cost efficiencies, drove adjusted diluted EPS of $1.48 and pro forma adjusted diluted EPS of $1.32, reflecting currency-neutral growth of 3.8% and 5.6%, respectively, as shown in the table below.

Quarters Ended June 30,

2022

2021

Currency


Reported Diluted EPS

$ 1.43

$ 1.39

$ (0.16)

14.4%

Asset impairment and exit costs

0.04

Amortization of intangibles

0.02

0.01

Saudi Arabia customs assessments

0.14

Costs associated with Swedish Match AB offer

0.02

Charges related to the war in Ukraine

0.04

Tax items

(0.03)

Adjusted Diluted EPS

$ 1.48

$ 1.58

$ (0.16)

3.8%

Less: Net earnings attributable to Russia and Ukraine

0.16

0.15

0.03

Pro Forma Adjusted Diluted EPS

$ 1.32

$ 1.43

$ (0.19)

5.6%

2022 FULL-YEAR FORECAST

Full-Year


Forecast

2021

Growth

Reported Diluted EPS

$5.73

-

$5.88

$ 5.83

Adjustments:

Asset impairment and exit costs

0.12

Equity investee ownership dilution

(0.04)

Amortization of intangibles

0.08

0.05

Saudi Arabia customs assessments

0.14

Charges related to the war in Ukraine

0.07

Fair value adj. for equity security investments (1)

0.03

Asset acquisition cost

0.03

Costs associated with Swedish Match AB offer

0.02

Tax items

(0.03)

Total Adjustments

0.17

0.30

Adjusted Diluted EPS

$5.90

-

$6.05

$ 6.13

Less: Net earnings attributable to Russia and Ukraine (2)

0.67

-

0.71

0.60

Pro Forma Adjusted Diluted EPS

$5.23

-

$5.34

$ 5.53

Less: Pro Forma Currency

(0.86)

Pro Forma Adjusted Diluted EPS, ex-currency

$6.09

-

$6.20

$ 5.53

10%

-

12%

1) Reflects the adjustment resulting from share price movements in PMI's investments in India and Sri Lanka, which are publicly traded entities that are not controlled or influenced by PMI

2) Includes a favorable currency variance of $0.17 per share for full-year 2022

Reported diluted EPS is forecast to be in a range of $5.73 to $5.88, at prevailing exchange rates, versus reported diluted EPS of $5.83 in 2021. Excluding (i) 2022 adjustments of $0.17 per share, (ii) net earnings attributable to Russia and Ukraine of $0.67 to $0.71 per share assumed for full-year 2022, and (iii) an adverse pro forma currency impact, at prevailing exchange rates, of $0.86 per share, this forecast represents a projected increase of 10% to 12% versus pro forma adjusted diluted EPS of $5.53 in 2021, as outlined in the above table.

To read the full article and see all related financial tables on businesswire.com, please click here.