10-QPeriod: Q1 FY2011

Philip Morris International Inc. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:PM

Summary

Philip Morris International Inc. (PM) reported its first-quarter 2011 financial results, demonstrating robust top-line growth and improved profitability. Net revenues increased by 6.0% to $16.53 billion, driven by strong pricing across all segments and favorable currency movements. Net earnings attributable to PMI rose by 12.7% to $1.92 billion, translating to a 17.8% increase in diluted earnings per share (EPS) to $1.06. The company's operational performance was solid, with total cigarette volume up 1.6% year-over-year, largely propelled by significant growth in the Asian market, particularly Indonesia and the Philippines, and a favorable impact from the Philippines business combination. Despite some volume declines in the European Union and EEMA regions due to market dynamics and geopolitical factors, the overall volume growth, combined with strategic pricing actions and efficient cost management, contributed to a substantial increase in operating income. The company also reiterated its positive outlook for the full year 2011, raising its diluted EPS forecast.

Financial Highlights

52 data points
Beta

Revenue

$16.53B

27.2% Gross Margin

Net Income

$1.92B

11.6% Net Margin

EPS (Diluted)

$1.06

Total Assets

$35.55B

Cash & Equivalents

$1.32B

Free Cash Flow

$2.24B

Financial Statements
Beta
Revenue$16.53B
Cost of Revenue$2.29B
Gross Profit$4.50B
Operating Income$3.01B
Net Income$1.92B
EPS (Basic)$1.06
EPS (Diluted)$1.06
Shares Outstanding (Basic)1.79B
Shares Outstanding (Diluted)1.79B

Key Highlights

  • 1Net revenues increased by 6.0% to $16.53 billion, driven by price increases and favorable currency.
  • 2Net earnings attributable to PMI grew by 12.7% to $1.92 billion.
  • 3Diluted Earnings Per Share (EPS) increased by 17.8% to $1.06.
  • 4Total cigarette volume increased by 1.6% to 207.92 billion units, with notable growth in Asia.
  • 5Operating income saw a substantial increase of 10.8% to $3.01 billion.
  • 6The company raised its full-year 2011 diluted EPS forecast to a range of $4.55 to $4.65.
  • 7Cost of sales decreased by 3.2% due to volume/mix and currency movements.

Frequently Asked Questions

The primary drivers for the increase in net revenues were price increases across all segments, favorable currency movements, and the impact of acquisitions, particularly the business combination in the Philippines. These factors more than offset the impact of lower volume/mix in certain regions.

Cost of sales decreased by 3.2% due to favorable volume/mix and currency movements, partially offset by the impact of acquisitions. Marketing, administration, and research costs increased by 4.3%, primarily due to higher expenses and currency impacts.

Philip Morris International raised its full-year 2011 reported diluted EPS forecast to a range of $4.55 to $4.65, indicating confidence in continued growth, driven by business outlook improvements and favorable currency trends.

The Asia segment showed the most significant growth in net revenues, increasing by 20.4% to $4.29 billion, driven by strong price increases, favorable currency, and the impact of the Philippines business combination. This segment also saw a substantial increase in operating companies income.