10-QPeriod: Q1 FY2013

Philip Morris International Inc. Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 3, 2013For Securities:PM

Summary

Philip Morris International Inc. (PM) reported its first-quarter results for 2013, showing a slight increase in net revenues to $18.5 billion, 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 $1.28, 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.

Financial Highlights

49 data points
Beta

Revenue

$18.53B

27.5% Gross Margin

Net Income

$2.13B

11.5% Net Margin

EPS (Diluted)

$1.28

Total Assets

$37.42B

Cash & Equivalents

$3.98B

Free Cash Flow

$1.12B

Financial Statements
Beta
Revenue$18.53B
Cost of Revenue$2.49B
Gross Profit$5.09B
Operating Income$3.39B
Net Income$2.13B
EPS (Basic)$1.28
EPS (Diluted)$1.28
Shares Outstanding (Basic)1.65B

Key Highlights

  • 1Net revenues increased by 2.8% to $18.5 billion, primarily driven by price increases that offset a 6.5% decline in cigarette shipment volume.
  • 2Diluted 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.
  • 3The company maintains a strong liquidity position with $3.98 billion in cash and cash equivalents as of March 31, 2013.
  • 4Operating 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.
  • 5Philip 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.
  • 6The Asia segment experienced a 10.4% decrease in cigarette shipment volume, largely attributed to a disruptive excise tax increase in the Philippines.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.