01—Abstract
Summary
Summary of the 10-Q filed May 7, 2010. Cited figures are marked; the original filing is the authoritative source.
Philip Morris International Inc. (PM) reported strong financial results for the first quarter of 2010, with net earnings attributable to PMI increasing by 15.4% to $1.7 billiona compared to the same period in 2009.
Diluted Earnings Per Share (EPS) also saw a significant rise of 21.6% to $0.90b. This performance was driven by a combination of net price increases, favorable currency movements, and strategic acquisitions, notably the business combination in the Philippines. Despite a slight decrease in overall cigarette shipment volume excluding acquisitions (-2.3%), the company managed to grow revenue and operating income.
The company reaffirmed its 2010 full-year diluted EPS forecast of $3.75 to $3.85c, with a cautious outlook due to global economic uncertainties and currency volatility. Key financial highlights include robust net revenue growth of 17.3% to $15.6 billion. Operating income increased by 17.0% to $2.7 billion.
The company continued its aggressive share repurchase program, completing its $13 billiond, two-year program and initiating a new $12 billion program. The company maintains a strong liquidity position with substantial committed credit facilities.
Investors should note the company's continued reliance on price increases and favorable currency exchange rates to drive earnings growth, alongside ongoing efforts to manage costs and integrate acquisitions. The company's significant investments in share repurchases and dividends underscore a commitment to returning capital to shareholders.
02—Key points
Key Highlights
- Net earnings attributable to PMI increased by 15.4% to $1.7 billion for Q1 2010 compared to Q1 2009.
- Diluted EPS rose by 21.6% to $0.90 for Q1 2010.
- Net revenues grew by 17.3% to $15.6 billion, driven by price increases, favorable currency, and acquisitions.
- Operating income increased by 17.0% to $2.7 billion.
- Total cigarette volume increased by 0.7% to 204.7 billion units, primarily due to growth in Asia and Latin America & Canada, and the Philippines business combination. Excluding acquisitions, volume decreased by 2.3%.
- The company completed its $13 billion share repurchase program and initiated a new $12 billion program.
- PMI reaffirmed its 2010 full-year diluted EPS forecast of $3.75 to $3.85.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2010, Philip Morris International Inc. kept $0.11.
- Revenue$15.59B100.0%
- Cost of revenue−$11.46B73.5%
- Gross profit$4.12B26.5%
- Operating costs−$1.41B9.0%
- Operating income$2.71B17.4%
- Interest, other & tax−$1.01B6.5%
- Net income$1.70B10.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2010filed May 7, 2010Financial Statements
Q1 FY2010 against Q1 FY2009
| Line item | Q1 FY2010Q1 FY2009 | Change |
|---|---|---|
| Revenue | $15.59B$13.29B | +17.3% |
| Cost of Revenue | $2.37B$1.97B | +20.3% |
| Gross Profit | $4.12B$3.63B | +13.7% |
| Operating Income | $2.71B$2.32B | +17.0% |
| Net Income | $1.70B$1.48B | +15.4% |
| EPS (Basic) | $0.90$0.74 | +21.6% |
| EPS (Diluted) | $0.90$0.74 | +21.6% |
| Shares Outstanding (Basic) | 1.87B— | — |
| Shares Outstanding (Diluted) | 1.88B— | — |
05—Questions
Frequently Asked Questions
What drove the increase in Philip Morris International's net earnings in the first quarter of 2010?
The increase in net earnings was primarily driven by higher operating income, which benefited from net price increases, favorable currency movements, and the impact of acquisitions. Higher operating income was partially offset by increased interest expense.
How did the company's cigarette shipment volume perform in Q1 2010?
Total cigarette shipment volume increased by 0.7% to 204.7 billion units. This growth was mainly attributed to gains in Asia (driven by Indonesia and Korea) and Latin America & Canada, as well as the new business combination in the Philippines. However, excluding acquisitions, cigarette shipment volume declined by 2.3%, primarily due to decreases in the European Union and Eastern Europe, Middle East & Africa regions.
What is Philip Morris International's outlook for the full year 2010?
Philip Morris International reaffirmed its forecast for full-year 2010 reported diluted EPS to be in the range of $3.75 to $3.85. The company expressed a cautious outlook due to the fragile global economic recovery, its geographic disparity, and uncertain impacts on currency volatility. Excluding currency impacts, reported diluted EPS are projected to increase by approximately 10% to 13%.
What significant events or transactions occurred during the quarter?
A significant event was the business combination in the Philippines, combining Philip Morris Philippines Manufacturing Inc. with Fortune Tobacco Corporation to form PMFTC Inc. The company also continued its share repurchase program, completing its $13 billion, two-year program and initiating a new $12 billion program over three years. Additionally, PMI entered into a new $2.5 billion revolving credit facility.
06—Continue