01—Abstract
Summary
Summary of the 10-Q filed October 26, 2017. Cited figures are marked; the original filing is the authoritative source.
Philip Morris International Inc. (PM) reported solid financial results for the nine months ended September 30, 2017, with net earnings attributable to PMI increasing by 1.6% to $5.3 billiona, or $3.43 per diluted share, up from $5.26 billion, or $3.38 per diluted share, in the prior year period.
This growth was driven by higher pricing and favorable volume/mix in key segments like Asia and Latin America & Canada, partially offset by unfavorable currency impacts. The company also experienced a significant increase in net revenues from Reduced-Risk Products (RRPs), primarily driven by strong performance in Japan, indicating progress in their strategic shift towards smoke-free alternatives. The company's balance sheet shows a healthy increase in cash and cash equivalents to $7.7 billionb, up from $4.2 billion at the end of 2016, supported by strong operating cash flows.
Despite an increase in total liabilities, particularly long-term debt, the company maintains significant liquidity with substantial unused committed credit facilities. Management reaffirmed its 2017 full-year diluted EPS forecast, signaling confidence in continued operational performance and strategic execution.
02—Key points
Key Highlights
- Net earnings attributable to PMI increased by 1.6% to $5.3 billion for the first nine months of 2017.
- Diluted EPS grew by 1.5% to $3.43 for the first nine months of 2017.
- Net revenues from Reduced-Risk Products (RRPs) saw a substantial increase, reaching $2.1 billion for the nine-month period, primarily driven by sales in Japan.
- Cash and cash equivalents significantly increased to $7.7 billion as of September 30, 2017, up from $4.2 billion at the end of 2016.
- Total shipment volume for cigarettes and heated tobacco units decreased by 4.9% for the nine months ended September 30, 2017, primarily due to declines in the European Union and EEMA regions.
- The company reaffirmed its 2017 full-year diluted EPS forecast, projecting a range of $4.75 to $4.80.
- Philip Morris International continues to invest in RRPs, with capital expenditures for capacity expansion reaching $995 million in the first nine months of 2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2017, Philip Morris International Inc. kept $0.26.
- Revenue$7.47B100.0%
- Cost of revenue−$2.73B36.6%
- Gross profit$4.74B63.4%
- Operating costs−$1.65B22.1%
- Operating income$3.09B41.3%
- Interest, other & tax−$1.12B15.0%
- Net income$1.97B26.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed October 26, 2017Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $7.47B$19.93B | −62.5% |
| Cost of Revenue | $2.73B$2.43B | +12.5% |
| Gross Profit | $4.74B$4.55B | +4.1% |
| Operating Income | $3.09B$2.98B | +3.7% |
| Net Income | $1.97B$1.94B | +1.7% |
| EPS (Basic) | $1.27$1.25 | +1.6% |
| EPS (Diluted) | $1.27$1.25 | +1.6% |
| Shares Outstanding (Basic) | 1.55B1.55B | +0.1% |
| Shares Outstanding (Diluted) | 1.55B1.55B | +0.2% |
05—Questions
Frequently Asked Questions
What was the overall financial performance for the nine months ended September 30, 2017?
For the nine months ended September 30, 2017, Philip Morris International Inc. reported net earnings attributable to PMI of $5.3 billion, a 1.6% increase compared to $5.26 billion in the same period of 2016. Diluted EPS rose by 1.5% to $3.43 from $3.38.
How did the company's Reduced-Risk Products (RRPs) perform?
Net revenues from RRPs increased significantly to $2.1 billion for the nine months ended September 30, 2017, up from $394 million in the prior year period, driven primarily by strong sales in Japan. This indicates continued growth and consumer adoption of their smoke-free alternatives.
What is the company's liquidity position and outlook?
The company's liquidity position appears strong, with cash and cash equivalents at $7.7 billion as of September 30, 2017, a substantial increase from $4.2 billion at the end of 2016. They also have $8.0 billion in committed credit facilities, with no borrowings outstanding as of the reporting date. The company reaffirmed its full-year 2017 EPS forecast, suggesting confidence in ongoing operations.
What were the main drivers of the decline in shipment volume?
Total shipment volume for cigarettes and heated tobacco units decreased by 4.9% for the nine months ended September 30, 2017. This decline was primarily attributed to lower cigarette shipment volumes in the European Union and the Eastern Europe, Middle East & Africa (EEMA) regions, with specific impacts noted in countries like Germany, Italy, Spain, Saudi Arabia, and Russia.
06—Continue