10-QPeriod: Q2 FY2012

Philip Morris International Inc. Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 3, 2012For Securities:PM

Summary

Philip Morris International Inc. (PM) reported its financial results for the second quarter and the first six months of 2012. For the six-month period, net revenues increased by 3.5% to $38.1 billion, driven by price increases and favorable volume/mix, despite an unfavorable currency impact. Operating income saw a 4.3% increase to $7.0 billion. Net earnings attributable to PMI rose by 3.5% to $4.5 billion, resulting in diluted EPS of $2.60, up 7.4% year-over-year. The company reaffirmed its full-year 2012 reported diluted EPS forecast of $5.10 to $5.20. For the three-month period, net revenues saw a slight decrease of 1.0% to $20.0 billion, primarily due to unfavorable currency and volume/mix, partially offset by price increases. Operating income decreased by 2.9% to $3.6 billion. Net earnings attributable to PMI decreased by 3.8% to $2.3 billion, leading to diluted EPS of $1.36, a 0.7% increase year-over-year. The company continues to navigate complex global markets, with growth driven by pricing and operational efficiencies, while managing the impacts of currency fluctuations and evolving regulatory landscapes.

Financial Highlights

52 data points
Beta

Revenue

$20.04B

27.2% Gross Margin

Net Income

$2.32B

11.6% Net Margin

EPS (Diluted)

$1.36

Total Assets

$35.80B

Cash & Equivalents

$3.85B

Free Cash Flow

$3.23B

Financial Statements
Beta
Revenue$20.04B
Cost of Revenue$2.67B
Gross Profit$5.45B
Operating Income$3.60B
Net Income$2.32B
EPS (Basic)$1.36
EPS (Diluted)$1.36
Shares Outstanding (Basic)1.70B
Shares Outstanding (Diluted)1.70B

Key Highlights

  • 1For the six months ended June 30, 2012, net revenues increased 3.5% to $38.06 billion, driven by price increases and favorable volume/mix.
  • 2Operating income for the six months increased 4.3% to $7.01 billion.
  • 3Net earnings attributable to PMI for the six months increased 3.5% to $4.48 billion, resulting in diluted EPS of $2.60, up 7.4% from $2.42 in the prior year.
  • 4For the three months ended June 30, 2012, net revenues decreased 1.0% to $20.04 billion, impacted by unfavorable currency and volume/mix, partly offset by price increases.
  • 5Operating income for the three months decreased 2.9% to $3.60 billion.
  • 6Net earnings attributable to PMI for the three months decreased 3.8% to $2.32 billion, resulting in diluted EPS of $1.36, up 0.7% from $1.35 in the prior year.
  • 7Philip Morris International reaffirmed its 2012 full-year reported diluted EPS forecast to be in a range of $5.10 to $5.20.

Frequently Asked Questions

For the six months ended June 30, 2012, Philip Morris International Inc. reported net revenues of $38.06 billion, an increase of 3.5% compared to $36.76 billion in the same period of 2011. Net earnings attributable to PMI increased by 3.5% to $4.48 billion, up from $4.33 billion in the prior year. Diluted earnings per share (EPS) were $2.60, a 7.4% increase from $2.42 in the prior year.

Currency movements had an unfavorable impact on net revenues. For the six months ended June 30, 2012, currency movements decreased net revenues by $2.0 billion, and net revenues excluding excise taxes by $494 million. For the three months ended June 30, 2012, currency movements decreased net revenues by $1.4 billion, and net revenues excluding excise taxes by $402 million. The unfavorable impact was primarily due to movements in the Argentine peso, Brazilian real, Euro, Indonesian rupiah, Polish zloty, Russian ruble, and Turkish lira, partially offset by gains from the Japanese yen and Swiss franc.

Philip Morris International reaffirmed its 2012 full-year reported diluted EPS forecast to be in a range of $5.10 to $5.20, compared to $4.85 in 2011. The company also expects a total unfavorable currency impact of approximately $0.27 per share for the full year. On a currency-neutral basis, reported diluted EPS in 2012 are projected to increase by approximately 10% to 12% versus adjusted diluted EPS of $4.88 in 2011.

The increase in operating income for the six months ended June 30, 2012, was primarily driven by price increases ($832 million), partially offset by unfavorable currency ($264 million), higher marketing, administration, and research costs ($254 million), and unfavorable volume/mix ($21 million).