01—Abstract
Summary
Summary of the 10-Q filed November 6, 2009. Cited figures are marked; the original filing is the authoritative source.
Philip Morris International Inc. (PM) reported its third-quarter and nine-month results for 2009, reflecting a challenging economic environment and the continued impact of currency fluctuations.
For the nine months ended September 30, 2009, net earnings attributable to PMI decreased to $4.82 billiona from $5.45 billion in the prior year, with diluted EPS falling to $2.44 from $2.60. This decline was attributed to unfavorable currency impacts, higher interest expenses, and operational challenges in certain regions, partially offset by price increases and strategic acquisitions. The company continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.
Despite a decrease in overall cigarette volume, PM demonstrated market share gains in several key markets. The company also raised its full-year diluted EPS forecast, signaling confidence in its operational performance and strategies despite macroeconomic headwinds. Investors should note the ongoing impact of currency volatility and regulatory landscapes, particularly within the European Union and emerging markets.
02—Key points
Key Highlights
- Net earnings attributable to PMI for the nine months ended September 30, 2009, were $4.82 billion, a decrease from $5.45 billion in the same period of 2008.
- Diluted earnings per share (EPS) for the nine months ended September 30, 2009, were $2.44, down from $2.60 in the prior year.
- The company raised its full-year 2009 reported diluted EPS forecast to $3.20-$3.25.
- Cigarette volume for the nine months decreased by 1.0% year-over-year, with gains in Asia and Latin America & Canada offset by declines in the European Union and EEMA.
- Net revenues (excluding excise taxes) for the nine months decreased by 6.5% to $18.3 billion, impacted by unfavorable currency movements and lower volume/mix, partially offset by price increases and acquisitions.
- PMI repurchased approximately $4.2 billion of its common stock during the first nine months of 2009.
- The company continued to acquire businesses, including Swedish Match South Africa for approximately $262 million in September 2009 and an agreement to acquire Protabaco Ltda. in Colombia for $452 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2009, Philip Morris International Inc. kept $0.11.
- Revenue$16.57B100.0%
- Cost of revenue−$12.31B74.3%
- Gross profit$4.27B25.7%
- Operating costs−$1.42B8.6%
- Operating income$2.85B17.2%
- Interest, other & tax−$1.05B6.3%
- Net income$1.80B10.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2009filed November 6, 2009Financial Statements
Q3 FY2009 against Q3 FY2008
| Line item | Q3 FY2009Q3 FY2008 | Change |
|---|---|---|
| Revenue | $16.57B$17.36B | −4.6% |
| Cost of Revenue | $2.32B$2.48B | −6.5% |
| Gross Profit | $4.27B$4.47B | −4.6% |
| Operating Income | $2.85B$2.89B | −1.4% |
| Net Income | $1.80B$2.08B | −13.6% |
| EPS (Basic) | $0.93$1.01 | −7.9% |
| EPS (Diluted) | $0.93$1.01 | −7.9% |
| Shares Outstanding (Basic) | 1.93B— | — |
| Shares Outstanding (Diluted) | 1.93B— | — |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in net earnings and EPS year-over-year?
The decrease in net earnings and EPS for the nine months ended September 30, 2009, was primarily driven by unfavorable currency fluctuations, which reduced reported revenues and operating income, along with higher interest expenses. These factors were partially offset by operational improvements in certain segments and strategic price increases.
How is the company managing shareholder returns?
Philip Morris International continued its significant share repurchase program during the first nine months of 2009, buying back approximately $4.2 billion of its common stock. Additionally, the company paid $3.2 billion in dividends to public stockholders and approved a 7.4% increase in its quarterly dividend to $0.58 per share.
What is the company's outlook for the remainder of 2009?
The company raised its full-year 2009 diluted EPS forecast to a range of $3.20 to $3.25, indicating confidence in its performance despite the challenging global economic environment. This updated guidance includes an anticipated unfavorable currency impact of $0.52 per share.
What are the key risks or challenges the company faces, as highlighted in the filing?
Key risks include significant government actions and regulatory requirements aimed at reducing tobacco use, such as increasing excise taxes, restrictions on marketing and advertising, larger health warnings, and bans on smoking in public places. The company also faces intense competition, currency exchange rate volatility, and ongoing litigation related to tobacco products.
06—Continue