10-QPeriod: Q1 FY2022

Philip Morris International Inc. Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 28, 2022For Securities:PM

Summary

Philip Morris International Inc. (PM) reported its first-quarter 2022 results, showing a slight increase in net revenues to $7.746 billion, up 2.1% from $7.585 billion in the prior year period. This growth was primarily driven by favorable pricing and an increase in reduced-risk product (RRP) net revenues, which grew 10.7% to $2.350 billion. However, diluted earnings per share (EPS) saw a slight decline to $1.50 from $1.55 in the first quarter of 2021, impacted by unfavorable currency movements and charges related to the war in Ukraine. The company also noted a significant increase in net cash provided by operating activities, rising to $1.118 billion from $435 million in the prior year, largely due to lower working capital requirements. The company's strategic shift towards reduced-risk products continues to be a key focus, with significant growth in heated tobacco units, particularly in the European Union. Management's strategic priorities remain centered on developing and commercializing products that present less risk of harm to smokers who switch and educating consumers about these alternatives. However, the ongoing war in Ukraine and its impact on operations in Russia and Ukraine are expected to have a material adverse impact on the business.

Financial Highlights

48 data points
Beta

Revenue

$7.75B

66.3% Gross Margin

Net Income

$2.33B

30.1% Net Margin

EPS (Diluted)

$1.50

Total Assets

$41.73B

Cash & Equivalents

$4.63B

Free Cash Flow

$889.00M

Financial Statements
Beta
Revenue$7.75B
Cost of Revenue$2.61B
Gross Profit$5.14B
Operating Income$3.30B
Net Income$2.33B
EPS (Basic)$1.50
EPS (Diluted)$1.50
Shares Outstanding (Basic)1.55B
Shares Outstanding (Diluted)1.55B

Key Highlights

  • 1Net revenues increased by 2.1% to $7.746 billion, primarily driven by favorable pricing and growth in reduced-risk products.
  • 2Diluted EPS decreased by 3.2% to $1.50, impacted by unfavorable currency movements and charges related to the war in Ukraine.
  • 3Net cash provided by operating activities significantly increased to $1.118 billion, up from $435 million in the prior year, due to improved working capital management.
  • 4Reduced-risk product (RRP) net revenues grew by 10.7% to $2.350 billion, with strong performance in heated tobacco units (HTUs) in the EU.
  • 5The company announced an intention to exit the Russian market and has temporarily suspended operations in Ukraine due to the war, which is expected to have a material adverse impact.
  • 6PMI acquired the remaining stakes in its Turkish subsidiaries, now owning 100% ownership.
  • 7The company continues its share repurchase program, buying back 2.0 million shares for $199 million in Q1 2022.

Frequently Asked Questions

Philip Morris International reported a 2.1% increase in net revenues to $7.746 billion, driven by reduced-risk products and favorable pricing. However, diluted EPS saw a slight decline to $1.50 due to currency headwinds and charges related to the war in Ukraine. Net cash from operations significantly improved.

The company has announced plans to suspend investments and scale down operations in Russia, with intentions to exit the market. Operations in Ukraine have been temporarily suspended. These events are expected to have a material adverse impact on the business, results of operations, cash flows, and financial position.

RRP net revenues increased by 10.7% to $2.350 billion. Heated tobacco units showed strong growth, particularly in the European Union, indicating continued consumer adoption of these products.

PMI is strategically shifting towards reduced-risk products (RRPs) while managing its combustible product portfolio. Key priorities include developing RRPs that offer less harm than smoking and educating consumers to switch to these alternatives. The company has also expanded into the wellness and healthcare sector through acquisitions.