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10-QPeriod: Q2 FY2020

Philip Morris International Inc. Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 29, 2020For Securities:PM

Summary

Philip Morris International Inc. (PM) reported its second quarter and first half 2020 financial results, showing a decrease in net revenues and operating income compared to the prior year, largely attributed to the ongoing impact of COVID-19 and unfavorable currency movements. For the six months ended June 30, 2020, net revenues were $13.8 billion, a decrease of 4.5% (1.8% excluding currency), while operating income increased by 5.4% (11.1% excluding currency). Diluted EPS for the first half of the year was $2.42, up 2.5% (10.6% excluding currency). The company experienced a significant decline in combustible product net revenues across most segments, offset by strong growth in reduced-risk products (RRPs), particularly in the European Union and Eastern Europe. The company continued its strategic shift towards smoke-free alternatives, highlighting the FDA's authorization of IQOS as a modified risk tobacco product. Despite the challenging operating environment due to the pandemic, PMI maintained a strong liquidity position with $4.2 billion in cash and cash equivalents.

Financial Highlights

49 data points
Beta

Revenue

$6.65B

0.7% Gross Margin

Net Income

$1.95B

0.3% Net Margin

EPS (Diluted)

$1.25

Total Assets

$39.16B

Cash & Equivalents

$4.20B

Free Cash Flow

$1.78B

Financial Statements
Beta
Revenue$6.65B
Cost of Revenue$2.18B
Gross Profit$4.47B
Operating Income$2.73B
Net Income$1.95B
EPS (Basic)$1.25
EPS (Diluted)$1.25
Shares Outstanding (Basic)1.56B
Shares Outstanding (Diluted)1.56B

Key Highlights

  • 1Net revenues for the six months ended June 30, 2020, decreased by 4.5% to $13.8 billion, primarily due to COVID-19 impacts and unfavorable currency.
  • 2Operating income for the six months increased by 5.4% to $5.52 billion, driven by favorable pricing and lower cost/other impacts year-over-year.
  • 3Diluted EPS for the six months increased by 2.5% to $2.42.
  • 4Reduced-Risk Products (RRPs) net revenues increased by 16.7% for the six months, signaling continued progress in the company's smoke-free future strategy.
  • 5The FDA authorized the marketing of a version of PMI's Platform 1 product as a 'modified risk tobacco product' with specific reduced exposure claims.
  • 6PMI maintained a strong liquidity position with $4.2 billion in cash and cash equivalents as of June 30, 2020.
  • 7Shipment volume of Heated Tobacco Units increased by 33.4% for the six months, outpacing the decline in cigarette shipment volume.

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