01—Abstract
Summary
Summary of the 10-Q filed May 3, 2013. Cited figures are marked; the original filing is the authoritative source.
Philip Morris International Inc. (PM) reported its first-quarter results for 2013, showing a slight increase in net revenues to $18.5 billiona, up 2.8% year-over-year, driven by price increases which offset a decline in shipment volumes.
Diluted earnings per share (EPS) also saw a modest increase to $1.28b, up 2.4% from $1.25 in the prior year, despite an unfavorable currency impact. The company's strategic focus remains on pricing power and managing costs, with a full-year EPS forecast of $5.55 to $5.65, indicating expected growth. The balance sheet shows a robust cash position of nearly $4 billion, though the company also carries significant long-term debt.
Operating income saw a slight decrease due to unfavorable volume/mix, currency fluctuations, and higher operating costs, partially offset by the positive impact of price increases. Management is focused on productivity initiatives and a substantial share repurchase program, signaling confidence in future performance and commitment to returning capital to shareholders.
02—Key points
Key Highlights
- Net revenues increased by 2.8% to $18.5 billion, primarily driven by price increases that offset a 6.5% decline in cigarette shipment volume.
- Diluted Earnings Per Share (EPS) rose to $1.28 from $1.25 in the prior year, representing a 2.4% increase, despite a $0.07 unfavorable currency impact.
- The company maintains a strong liquidity position with $3.98 billion in cash and cash equivalents as of March 31, 2013.
- Operating income saw a slight decrease of 0.5% to $3.39 billion, impacted by unfavorable volume/mix, currency, and higher operating costs, partially mitigated by price increases.
- Philip Morris International revised its full-year 2013 diluted EPS forecast to $5.55-$5.65, indicating anticipated growth and a significant share repurchase target of $6.0 billion for the year.
- The Asia segment experienced a 10.4% decrease in cigarette shipment volume, largely attributed to a disruptive excise tax increase in the Philippines.
- The company's long-term debt increased to $20.8 billion from $17.6 billion, reflecting new debt issuances to support working capital, share repurchases, and general corporate purposes.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2013, Philip Morris International Inc. kept $0.11.
- Revenue$18.53B100.0%
- Cost of revenue−$13.43B72.5%
- Gross profit$5.09B27.5%
- Operating costs−$1.70B9.2%
- Operating income$3.39B18.3%
- Interest, other & tax−$1.27B6.8%
- Net income$2.13B11.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2013filed May 3, 2013Financial Statements
Q1 FY2013 against Q1 FY2012
| Line item | Q1 FY2013Q1 FY2012 | Change |
|---|---|---|
| Revenue | $18.53B$18.02B | +2.8% |
| Cost of Revenue | $2.49B$2.44B | +1.9% |
| Gross Profit | $5.09B$5.01B | +1.8% |
| Operating Income | $3.39B$3.40B | −0.4% |
| Net Income | $2.13B$2.16B | −1.7% |
| EPS (Basic) | $1.28$1.25 | +2.4% |
| EPS (Diluted) | $1.28$1.25 | +2.4% |
| Shares Outstanding (Basic) | 1.65B1.72B | −4.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of the increase in net revenues?
The primary driver of the increase in net revenues was price increases across various markets, which more than offset the decline in cigarette shipment volumes.
How did currency fluctuations impact the company's results?
Currency fluctuations had an unfavorable impact on net revenues, decreasing them by $106 million, and also negatively affected operating income. The company noted specific impacts from the Argentine peso, Indonesian rupiah, and Japanese yen.
What is the company's outlook for full-year 2013 EPS?
Philip Morris International revised its full-year 2013 reported diluted EPS forecast to be in the range of $5.55 to $5.65, compared to $5.17 in 2012. This forecast anticipates approximately 10% to 12% growth on a constant-currency basis.
What is the status of the company's share repurchase program?
The company has a significant share repurchase program in place. For the first quarter of 2013, they repurchased 16.7 million shares for $1.5 billion, and have a target of $6.0 billion in repurchases for the full year 2013 under an $18 billion program.
06—Continue