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10-QPeriod: Q2 FY2021

Philip Morris International Inc. Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 27, 2021For Securities:PM

Summary

Philip Morris International Inc. (PM) reported strong financial results for the six months ended June 30, 2021. Net revenues increased by 10.0% year-over-year to $15.2 billion, driven by a 39.1% surge in Reduced-Risk Products (RRPs) revenue, which reached $4.4 billion, and a modest 1.3% increase in combustible product net revenues. Diluted Earnings Per Share (EPS) grew by 21.1% to $2.93, reflecting operational improvements, favorable currency movements, and the positive impact of tax rate changes, partially offset by asset impairment charges and a significant Saudi Arabia customs assessment. The company's strategic shift towards smoke-free products continues to gain traction, with RRPs showing substantial growth across key markets like the EU and East Asia & Australia. Despite challenges such as a $246 million impact from Saudi Arabia customs assessments and ongoing restructuring costs, PMI demonstrated robust operational performance. The company also announced significant acquisitions in the pipeline, Vectura and Fertin Pharma, signaling a strategic expansion into adjacent health-related industries. PMI's balance sheet remains strong, with ample liquidity from its credit facilities and a new $7 billion share repurchase program authorized.

Financial Highlights

50 data points
Beta

Revenue

$7.59B

0.7% Gross Margin

Net Income

$2.17B

0.3% Net Margin

EPS (Diluted)

$1.39

Total Assets

$40.69B

Cash & Equivalents

$4.92B

Free Cash Flow

$3.50B

Financial Statements
Beta
Revenue$7.59B
Cost of Revenue$2.35B
Gross Profit$5.24B
Operating Income$3.13B
Net Income$2.17B
EPS (Basic)$1.39
EPS (Diluted)$1.39
Shares Outstanding (Basic)1.56B
Shares Outstanding (Diluted)1.56B

Key Highlights

  • 1Net revenues increased by 10.0% to $15.2 billion for the six months ended June 30, 2021, driven by strong growth in Reduced-Risk Products (RRPs).
  • 2Diluted EPS increased by 21.1% to $2.93 for the six months ended June 30, 2021, demonstrating improved profitability.
  • 3Reduced-Risk Products (RRPs) net revenues grew by 39.1% to $4.4 billion, highlighting the success of PMI's smoke-free transition strategy.
  • 4Favorable currency movements contributed positively to both net revenues and diluted EPS.
  • 5A significant unfavorable impact of $246 million was recorded from Saudi Arabia customs assessments, affecting net revenues and operating income.
  • 6Asset impairment and exit costs were incurred primarily due to organizational design optimization and South Korea distribution restructuring.
  • 7The company announced significant strategic acquisitions of Vectura Group plc and Fertin Pharma A/S to expand into health-related industries.

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