Summary
Philip Morris International Inc. (PM) reported a solid third quarter for 2018, with net revenues increasing by 0.4% to $7.5 billion, driven by a 3.3% increase excluding unfavorable currency impacts. This growth was primarily fueled by favorable pricing across all regions and increased fees for certain distribution rights. Diluted Earnings Per Share (EPS) saw a significant increase of 13.4% to $1.44, benefiting from improved operational performance, lower interest expenses, and a reduced effective tax rate, partly influenced by the Tax Cuts and Jobs Act. The company continues its strategic transformation towards smoke-free products, with Reduced-Risk Products (RRPs) showing substantial revenue growth of 48.7% for the nine months ended September 30, 2018, reaching $2.97 billion. This segment is a key focus for future growth, although it is capital-intensive. The company reaffirmed its full-year 2018 diluted EPS forecast, projecting a significant year-over-year increase.
Financial Highlights
48 data points| Revenue | $7.50B |
| Cost of Revenue | $2.62B |
| Gross Profit | $4.89B |
| Operating Income | $3.16B |
| Net Income | $2.25B |
| EPS (Basic) | $1.44 |
| EPS (Diluted) | $1.44 |
| Shares Outstanding (Basic) | 1.55B |
| Shares Outstanding (Diluted) | 1.55B |
Key Highlights
- 1Net revenues for Q3 2018 increased by 0.4% to $7.5 billion, driven by favorable pricing and a 3.3% increase excluding currency impacts.
- 2Diluted EPS grew by 13.4% to $1.44 for Q3 2018, reflecting strong operational performance, lower interest expenses, and a reduced effective tax rate.
- 3Net revenues from Reduced-Risk Products (RRPs) surged by 48.7% for the nine months ended September 30, 2018, reaching $2.97 billion, indicating strong momentum in this strategic growth area.
- 4Total shipment volume for cigarettes decreased by 1.7% in Q3 2018, but heated tobacco unit shipments saw a significant increase across most regions, though overall heated tobacco unit shipments declined by 11.0% in Q3 due to inventory adjustments in Japan.
- 5The company reaffirmed its full-year 2018 diluted EPS forecast, projecting a year-over-year increase of 28% to 29%, demonstrating confidence in continued growth.
- 6Operating income increased by 2.2% to $3.16 billion in Q3 2018, with currency-neutral operating income growing by 7.6%, driven by favorable pricing across all regions.
- 7PMI's balance sheet remains strong with $5.9 billion in cash and cash equivalents at the end of Q3 2018 and $8 billion in committed credit facilities, with no borrowings outstanding.