10-QPeriod: Q3 FY2013

Philip Morris International Inc. Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 1, 2013For Securities:PM

Summary

Philip Morris International (PM) reported its third-quarter and nine-month results for 2013, showcasing a mixed financial performance. For the nine months ended September 30, 2013, net revenues increased by 3.4% to $59.6 billion, while net earnings attributable to PMI decreased slightly by 1.7% to $6.6 billion, resulting in diluted EPS of $4.02, up 2.6% year-over-year. The company faced challenges including unfavorable currency movements, which impacted net revenues by $694 million, and higher manufacturing and marketing costs. Despite these headwinds, strategic price increases and disciplined cost management helped mitigate some of the negative impacts. For the three months ended September 30, 2013, net revenues rose 5.3% to $20.6 billion, with net earnings attributable to PMI increasing 5.1% to $2.3 billion, leading to a diluted EPS of $1.44, a 9.1% increase. The company continued its share repurchase program, returning significant capital to shareholders through dividends and buybacks, signaling confidence in its financial position and future prospects. Management highlighted ongoing efforts in developing reduced-risk products as a key strategic priority.

Financial Highlights

51 data points
Beta

Revenue

$20.63B

25.7% Gross Margin

Net Income

$2.34B

11.3% Net Margin

EPS (Diluted)

$1.44

Total Assets

$36.80B

Cash & Equivalents

$3.38B

Free Cash Flow

$3.01B

Financial Statements
Beta
Revenue$20.63B
Cost of Revenue$2.62B
Gross Profit$5.31B
Operating Income$3.60B
Net Income$2.34B
EPS (Basic)$1.44
EPS (Diluted)$1.44
Shares Outstanding (Basic)1.61B

Key Highlights

  • 1Net revenues for the nine months ended September 30, 2013, grew 3.4% to $59.6 billion, while net revenues for the third quarter increased 5.3% to $20.6 billion.
  • 2Diluted earnings per share (EPS) for the nine months were $4.02, up 2.6% from the prior year. For the third quarter, diluted EPS was $1.44, up 9.1%.
  • 3The company repurchased $4.5 billion of its common stock in the first nine months of 2013 and announced a $6.0 billion share repurchase target for the full year.
  • 4Dividends paid increased to $4.2 billion for the first nine months of 2013, reflecting a higher quarterly dividend rate.
  • 5Negative currency impacts affected net revenues, decreasing them by $694 million for the nine months and $109 million for the quarter.
  • 6The company continues to invest in developing reduced-risk products, with capital expenditures planned for new factories in Europe.
  • 7Goodwill decreased by $723 million primarily due to currency movements, while other intangible assets also saw a decrease due to currency impacts.

Frequently Asked Questions

For the nine months ended September 30, 2013, Philip Morris International (PMI) reported a 3.4% increase in net revenues to $59.6 billion and a slight decrease in net earnings attributable to PMI by 1.7% to $6.6 billion. Diluted EPS increased by 2.6% to $4.02. For the three months ended September 30, 2013, net revenues increased by 5.3% to $20.6 billion, and net earnings attributable to PMI grew by 5.1% to $2.3 billion, resulting in a 9.1% increase in diluted EPS to $1.44.

Currency movements had a negative impact on PMI's reported results. For the nine months ended September 30, 2013, currency movements decreased net revenues by $694 million. For the third quarter, the decrease in net revenues due to currency was $109 million. The company cited unfavorable impacts from currencies like the Argentine peso, Australian dollar, and Japanese yen, partially offset by the Euro.

PMI continued its commitment to returning capital to shareholders through significant share repurchases and dividend payments. In the first nine months of 2013, the company repurchased $4.5 billion of its common stock and paid $4.2 billion in dividends. The company also announced a $6.0 billion share repurchase target for the full year 2013 and increased its quarterly dividend.

A key strategic priority for PMI is the development and commercialization of reduced-risk products, with plans for new factories in Europe and significant capital expenditures allocated to this initiative. The company also provided a full-year 2013 diluted EPS forecast of $5.35 to $5.40, reflecting a cautious outlook on certain markets and anticipating a restructuring charge.