Summary
Philip Morris International Inc. (PM) reported its third-quarter and year-to-date results for the period ending September 29, 2023. The company experienced an increase in net revenues driven by favorable pricing and strong performance in heated tobacco units (HTUs) and oral nicotine products, partly offset by a decline in cigarette volumes and adverse currency movements. The acquisition of Swedish Match continues to be a significant driver of growth, particularly in the oral nicotine segment. Despite revenue growth, diluted earnings per share (EPS) saw a decline year-over-year due to several factors, including substantial non-recurring charges such as goodwill impairment in the Wellness and Healthcare segment, the South Korea indirect tax charge, and costs associated with the termination of an agreement with the Foundation for a Smoke-Free World. These items, combined with higher interest expenses related to the Swedish Match acquisition and increased operating costs due to inflation, weighed on profitability. The company remains focused on its long-term transformation towards a smoke-free future, with significant investments in its reduced-risk product portfolio.
Financial Highlights
48 data points| Revenue | $9.14B |
| Cost of Revenue | $3.17B |
| Gross Profit | $5.98B |
| Operating Income | $3.37B |
| Net Income | $2.05B |
| EPS (Basic) | $1.32 |
| EPS (Diluted) | $1.32 |
| Shares Outstanding (Basic) | 1.55B |
| Shares Outstanding (Diluted) | 1.55B |
Key Highlights
- 1Net revenues increased by 10.7% for the nine months ended September 30, 2023, reaching $26.1 billion, primarily driven by higher pricing and strong growth in heated tobacco units and oral nicotine products.
- 2Diluted EPS decreased by 15.5% to $3.61 for the nine months ended September 30, 2023, compared to $4.28 in the prior year period, impacted by significant one-time charges.
- 3The Wellness and Healthcare segment recorded a goodwill impairment charge of $665 million due to challenges in product development.
- 4The Swedish Match acquisition, completed in late 2022, is showing strong performance, particularly in oral nicotine products, with net revenues of $1.8 billion for the first nine months of 2023.
- 5PMI continues to invest in its smoke-free product portfolio, with RRPs (Reduced-Risk Products) accounting for $9.3 billion in net revenues for the first nine months of 2023, an increase of 28.0%.
- 6The company's financial performance was impacted by a $204 million indirect tax charge in South Korea and $140 million related to the termination of an agreement with the Foundation for a Smoke-Free World.
- 7Net cash provided by operating activities was $5.9 billion for the first nine months of 2023, a decrease from $7.7 billion in the prior year period, largely due to higher working capital requirements.