10-QPeriod: Q3 FY2024

Philip Morris International Inc. Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 24, 2024For Securities:PM

Summary

Philip Morris International Inc. (PM) reported strong financial performance for the nine months ended September 30, 2024. Net revenues increased by 7.8% to $28.2 billion, and diluted EPS grew by 35.5% to $4.89, driven by favorable pricing across combustible tobacco and growth in smoke-free products, particularly ZYN nicotine pouches and IQOS heated tobacco products. The company's strategic shift towards a smoke-free future continues to gain momentum, with smoke-free product revenues up 16.1% year-over-year. Despite currency headwinds and ongoing investments in its smoke-free portfolio, PMI demonstrated robust operational improvements. However, the company did record an impairment charge of $198 million related to the expected sale of its Vectura Group business and a $45 million charge for an Egypt sales tax assessment. Management provided an updated full-year outlook, expecting net cash provided by operating activities of approximately $11 billion, reflecting confidence in continued growth and profitability.

Financial Highlights

46 data points
Beta

Revenue

$9.91B

66.0% Gross Margin

Net Income

$3.08B

31.1% Net Margin

EPS (Diluted)

$1.97

Total Assets

$66.89B

Cash & Equivalents

$4.30B

Free Cash Flow

$2.96B

Financial Statements
Beta
Revenue$9.91B
Cost of Revenue$3.37B
Gross Profit$6.54B
Operating Income$3.65B
Net Income$3.08B
EPS (Basic)$1.98
EPS (Diluted)$1.97
Shares Outstanding (Basic)1.55B
Shares Outstanding (Diluted)1.56B

Key Highlights

  • 1Net revenues increased by 7.8% to $28.2 billion for the nine months ended September 30, 2024, compared to the prior year.
  • 2Diluted EPS rose significantly by 35.5% to $4.89 for the nine months ended September 30, 2024.
  • 3Smoke-free product revenues saw a substantial increase of 16.1% for the nine months ended September 30, 2024.
  • 4The Americas region showed particularly strong revenue growth of 19.8%, largely driven by ZYN nicotine pouches in the U.S.
  • 5The company recorded an impairment charge of $198 million related to the planned sale of its Vectura Group business.
  • 6An Egypt sales tax charge of $45 million was recorded, impacting the SSEA, CIS & MEA segment.
  • 7PMI anticipates full-year net cash provided by operating activities to be around $11 billion.

Frequently Asked Questions

The increase in net revenues was primarily driven by favorable pricing, particularly in combustible tobacco, and strong volume/mix performance in smoke-free products, notably ZYN nicotine pouches in the Americas and IQOS heated tobacco units across various regions.

PMI recorded an impairment charge of $198 million in the third quarter of 2024 related to Vectura's classification as held for sale. The company expects to close the sale of Vectura Group by the end of 2024.

Unfavorable currency movements had a negative impact, particularly on net revenues, due to fluctuations in the Egyptian pound, Japanese yen, and Russian ruble. For the nine months ended September 30, 2024, this unfavorable currency impact on net revenues was approximately $841 million.

Philip Morris International is strategically focused on growing its smoke-free portfolio. Smoke-free product revenues increased by 16.1% year-over-year for the nine months ended September 30, 2024, driven by strong performance in brands like ZYN and IQOS, indicating continued positive momentum in this strategic area.