Summary
Philip Morris International (PM) reported its third-quarter and year-to-date results for 2016, showing a slight decrease in net revenues driven by unfavorable currency movements, particularly against a strengthening U.S. dollar. Despite a 3.9% decline in cigarette shipment volume for the nine months, the company managed to increase net revenues excluding excise taxes by 0.8% in the third quarter due to price increases, which offset unfavorable volume/mix and currency impacts. Diluted Earnings Per Share (EPS) for the nine months was $3.38, a 6.6% decrease year-over-year, largely due to currency headwinds, though the company reaffirmed its full-year reported diluted EPS forecast, indicating an expected growth of 10.5% to 11.5% excluding currency impacts. The company's operational performance showed mixed results across its segments. The European Union segment experienced revenue growth and increased operating companies income, driven by price increases. However, the Eastern Europe, Middle East & Africa (EEMA) segment saw a decline in both net revenues and operating companies income, primarily due to unfavorable currency and volume/mix. The Asia segment reported a slight decrease in net revenues excluding excise taxes but saw an increase in operating companies income for the quarter, driven by price increases and favorable currency. The Latin America & Canada segment reported decreases in net revenues and operating companies income, primarily due to currency and unfavorable volume/mix. Philip Morris International continues to invest in Reduced-Risk Products (RRPs), with significant capital expenditures planned for capacity expansion. The company is progressing with its iQOS product commercialization and anticipates RRPs to approach break-even operating income in 2017 and contribute positively in 2018. The company's financial position remains solid with substantial liquidity from committed credit facilities and no commercial paper outstanding. However, pending litigation remains a factor, with the company noting that unfavorable outcomes could materially affect its financial results.
Financial Highlights
51 data points| Revenue | $19.93B |
| Cost of Revenue | $2.43B |
| Gross Profit | $4.55B |
| Operating Income | $2.98B |
| Net Income | $1.94B |
| EPS (Basic) | $1.25 |
| EPS (Diluted) | $1.25 |
| Shares Outstanding (Basic) | 1.55B |
| Shares Outstanding (Diluted) | 1.55B |
Key Highlights
- 1Net revenues increased slightly in Q3 2016 year-over-year, driven by price increases in the EU and Asia segments, offsetting unfavorable currency and volume declines.
- 2Nine-month diluted EPS decreased by 6.6% to $3.38, primarily impacted by unfavorable currency movements, though the full-year EPS forecast remains positive excluding currency.
- 3Cigarette shipment volume declined by 3.9% for the nine months and 5.4% for the third quarter, with significant decreases in EEMA and Asia segments.
- 4The European Union segment showed resilience with revenue growth and increased operating income, driven by price increases and market share gains in key countries.
- 5Significant investment in Reduced-Risk Products (RRPs), particularly iQOS, with planned capacity expansions to meet growing demand.
- 6The company maintained strong liquidity with $8.0 billion in committed credit facilities and no commercial paper outstanding.
- 7Operating companies income in the EEMA segment decreased significantly due to adverse currency fluctuations and lower volume/mix.