01—Abstract
Summary
Summary of the 10-Q filed April 28, 2022. Cited figures are marked; the original filing is the authoritative source.
Philip Morris International Inc. (PM) reported its first-quarter 2022 results, showing a slight increase in net revenues to $7.746 billiona, 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 billionb. 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.
02—Key points
Key Highlights
- Net revenues increased by 2.1% to $7.746 billion, primarily driven by favorable pricing and growth in reduced-risk products.
- Diluted EPS decreased by 3.2% to $1.50, impacted by unfavorable currency movements and charges related to the war in Ukraine.
- Net 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.
- Reduced-risk product (RRP) net revenues grew by 10.7% to $2.350 billion, with strong performance in heated tobacco units (HTUs) in the EU.
- The 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.
- PMI acquired the remaining stakes in its Turkish subsidiaries, now owning 100% ownership.
- The company continues its share repurchase program, buying back 2.0 million shares for $199 million in Q1 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2022, Philip Morris International Inc. kept $0.30.
- Revenue$7.75B100.0%
- Cost of revenue−$2.61B33.7%
- Gross profit$5.14B66.3%
- Operating costs−$1.84B23.8%
- Operating income$3.30B42.6%
- Interest, other & tax−$967.0M12.5%
- Net income$2.33B30.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2022filed April 28, 2022Financial Statements
Q1 FY2022 against Q1 FY2021
| Line item | Q1 FY2022Q1 FY2021 | Change |
|---|---|---|
| Revenue | $7.75B$7.58B | +2.1% |
| Cost of Revenue | $2.61B$2.27B | +14.7% |
| Gross Profit | $5.14B$5.31B | −3.3% |
| Operating Income | $3.30B$3.44B | −4.2% |
| Net Income | $2.33B$2.42B | −3.6% |
| EPS (Basic) | $1.50$1.55 | −3.2% |
| EPS (Diluted) | $1.50$1.55 | −3.2% |
| Shares Outstanding (Basic) | 1.55B1.56B | −0.5% |
| Shares Outstanding (Diluted) | 1.55B1.56B | −0.5% |
05—Questions
Frequently Asked Questions
What is the company's overall financial performance for the quarter?
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.
What is the impact of the war in Ukraine and operations in Russia on the company?
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.
How are the company's reduced-risk products (RRPs) performing?
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.
What is the company's strategy regarding its product portfolio?
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.
06—Continue