01—Abstract
Summary
Summary of the 10-Q filed August 6, 2009. Cited figures are marked; the original filing is the authoritative source.
Philip Morris International Inc. (PM) reported its financial results for the six months ended June 30, 2009.
The company experienced a decrease in Net Revenues and Net Earnings attributable to PMI compared to the same period in the prior year. This was largely driven by unfavorable currency exchange rates, particularly the strengthening U.S. dollar against key international currencies. Despite these headwinds, the company saw an increase in Operating Companies Income due to higher pricing and strategic acquisitions, particularly the Rothmans acquisition in Canada.
Key financial metrics indicate a mixed performance. While Net Revenues saw a decline, partly due to excise taxes and currency impacts, operating income benefited from price increases and acquisitions, partially offset by currency headwinds and increased interest expenses.
The company maintained its share repurchase program, indicating confidence in its financial position and commitment to returning capital to shareholders. Management has also raised its full-year EPS forecast, signaling optimism for the remainder of 2009.
02—Key points
Key Highlights
- Net revenues for the six months ended June 30, 2009, decreased by 8.2% to $28.5 billion, primarily due to unfavorable currency movements and lower volume/mix, partially offset by net price increases and acquisitions.
- Net earnings attributable to PMI decreased by 10.2% to $3.0 billion for the six months ended June 30, 2009, compared to $3.4 billion in the prior year.
- Diluted Earnings Per Share (EPS) declined to $1.52 for the six months ended June 30, 2009, down from $1.59 in the same period of 2008.
- The company repurchased 71.4 million shares of common stock for $2.7 billion in the first six months of 2009 as part of its ongoing $13.0 billion share repurchase program.
- Operating income for the six months ended June 30, 2009, decreased by 7.5% to $4.7 billion, impacted by unfavorable currency, lower volume/mix, and higher interest expenses.
- A significant charge of $135 million (pre-tax) was recorded in the second quarter of 2009 related to the Colombian Investment and Cooperation Agreement.
- The company raised its full-year 2009 diluted EPS forecast to a range of $3.10 to $3.20.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2009, Philip Morris International Inc. kept $0.10.
- Revenue$15.21B100.0%
- Cost of revenue−$11.26B74.0%
- Gross profit$3.95B26.0%
- Operating costs−$1.52B10.0%
- Operating income$2.43B16.0%
- Interest, other & tax−$883.0M5.8%
- Net income$1.55B10.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2009filed August 6, 2009Financial Statements
Q2 FY2009 against Q2 FY2008
| Line item | Q2 FY2009Q2 FY2008 | Change |
|---|---|---|
| Revenue | $15.21B$16.70B | −8.9% |
| Cost of Revenue | $2.19B$2.46B | −11.3% |
| Gross Profit | $3.95B$4.25B | −7.0% |
| Operating Income | $2.43B$2.61B | −6.9% |
| Net Income | $1.55B$1.69B | −8.6% |
| EPS (Basic) | $0.79$0.81 | −2.5% |
| EPS (Diluted) | $0.79$0.80 | −1.3% |
| Shares Outstanding (Basic) | 1.96B— | — |
| Shares Outstanding (Diluted) | 1.96B— | — |
05—Questions
Frequently Asked Questions
What was the primary driver of the decrease in Net Revenues?
The primary driver of the decrease in Net Revenues for the six months ended June 30, 2009, was unfavorable currency exchange rates, primarily the strengthening of the U.S. dollar against major international currencies. Lower volume/mix also contributed, though this was partially offset by net price increases and the impact of acquisitions.
How did the company's share repurchase program perform during this period?
Philip Morris International Inc. continued its share repurchase program, repurchasing 71.4 million shares of common stock for $2.7 billion in the first six months of 2009. This was part of a larger $13.0 billion program, indicating management's confidence and commitment to returning capital to shareholders.
What significant one-time charges impacted the company's results?
The company recorded a pre-tax charge of $135 million in the second quarter of 2009 related to the Colombian Investment and Cooperation Agreement. Additionally, in the second quarter of 2008, there was a $124 million charge related to the Rothmans, Benson & Hedges Inc. (RBH) legal settlement.
What is the company's outlook for the rest of 2009?
Philip Morris International Inc. raised its full-year 2009 diluted EPS forecast to a range of $3.10 to $3.20, indicating an optimistic outlook despite the challenging economic environment and currency headwinds.
06—Continue