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July 23, 2024

Philip Morris International Reports 2024 Second-Quarter and First-Half Results and Raises Full Year Guidance

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Second-Quarter Reported Diluted EPS grew 52.5% to $1.54
Adjusted Diluted EPS decreased by 0.6% to $1.59; and grew by 10.6% excluding currency

STAMFORD, CT--(BUSINESS WIRE)--Jul. 23, 2024-- Regulatory News:

Philip Morris International Inc. (PMI) (NYSE: PM) today announces its 2024 second-quarter and first-half results.1

The excellent momentum of our smoke-free business continued with an outstanding second-quarter and first-half performance, said Jacek Olczak, Chief Executive Officer.

“The powerful combination of excellent underlying performance and proactive measures across all categories enabled our business to outperform once again, and we are on track for a strong 2024. As a result, we are raising our full-year guidance, despite currency headwinds.”

Second Quarter Highlights

  • Smoke-free business (SFB): The smoke-free business accounted for 38.1% of our total net revenues (up by 2.7pp versus second-quarter last year), with 36.5 million estimated adult users of our smoke-free products (up by 3.2 million versus December 2023), which are available in 90 markets. Our SFB continues to deliver superior performance, with net revenues increasing by 13.6% (18.3% organically) and gross profit increasing by 15.6% (22.2% organically).
  • Inhalable smoke-free products (SFP): Total IQOS users at quarter-end were estimated at 30.8 million (up by 1.9 million versus December 2023), of which approximately 22.1 million had fully switched to IQOS and stopped smoking. The increase was broad-based, with notable gains in Japan following the launch of ILUMA i, as well as good progress in Europe (especially Greece, Hungary, Romania, Bulgaria, and Spain), South Korea, and low and middle income markets, notably Indonesia. Market share for HTUs in IQOS markets was up by 0.7pp to 8.1%. HTU adjusted in-market sales (IMS) volume, which excludes the net impact of estimated distributor and wholesaler inventory movements was up by an estimated 10.2%, in line with expectations.
    • In Japan, IQOS HTU market share increased by more than 3 percentage points to over 29%, and offtake share exceeded 30% for the first time in June. TEREA and SENTIA were the #1 and #3 nicotine brands respectively in the quarter. Adjusted IMS grew by 12.5%, the 7th consecutive quarter of double-digit growth.
    • In Europe, IQOS HTU adjusted market share increased by 0.8pp to 9.8% with adjusted IMS growth of 6.8%, which, as expected, was impacted by the EU characterizing flavor ban, especially in Italy.

In the vaping category, our focused strategy is showing promising early results, with VEEV taking the #1 position in the closed pod segment in 5 European markets within 12 months of launch.

  • Oral SFP2: Shipment volume increased by 23.5% in cans (20.0% in pouches or pouch equivalents), fueled by ZYN nicotine pouch growth in the U.S., where shipments reached 135.1 million cans, representing growth of 50.3% versus prior year. ZYN, despite supply constraints, performed in-line with the U.S. nicotine pouch category in terms of consumer offtake. Outside of the U.S., our nicotine pouch volume grew by over 50% with promising results in a number of new markets, notably Pakistan.
  • Combustibles: Net revenues grew by 1.2% (organically by 4.8%), driven by another quarter of high single-digit pricing and resilient industry volumes. After 7 consecutive quarters of gross margin contraction, profitability recovered in Q2 with very robust expansion of 40 bps (50 bps on an organic basis), primarily driven by pricing.
  • Dividend: We declared a regular quarterly dividend of $1.30 per share, or an annualized $5.20 per share.

__________________________
1 Explanation of PMI's use of non-GAAP measures cited in this document and reconciliations to the most directly comparable U.S. GAAP measures can be found in the “Non-GAAP Measures, Glossary and Explanatory Notes” section of this release, in Exhibit 99.2 to the company's Form 8-K dated July 23, 2024, and at www.pmi.com/2024Q2earnings.
2 Oral smoke-free products volume excludes snuff, snuff leaf and U.S. chew

Operating Review - Second Quarter

 

 

Total

 

HTU

 

Oral SFP3

 

Cigarettes

 

 

 

 

 

 

 

 

 

Shipment Volume (units bn)

 

197.3

 

35.5

 

4.2

 

157.6

vs. Q2 2023

 

2.8%

 

13.1%

 

20.0%

 

0.4%

 

 

PMI

 

Smoke-Free

Business

 

Combustibles

 

 

 

 

 

 

 

 

 

Net Revenues ($ bn)

 

$9.5

 

$3.6

 

$5.9

 

reported vs. Q2 2023

 

5.6%

 

13.6%

 

1.2%

 

organic vs. Q2 2023

 

9.6%

 

18.3%

 

4.8%

 

 

 

 

 

 

 

 

 

Gross Profit ($ bn)

 

$6.1

 

$2.3

 

$3.8

 

reported vs. Q2 2023

 

6.7%

 

15.6%

 

1.8%

 

organic vs. Q2 2023

 

11.5%

 

22.2%

 

5.5%

 

 

 

 

 

 

 

 

 

Operating Income ($ bn)

 

$3.4

 

 

 

 

 

reported vs. Q2 2023

 

34.2%

 

 

 

 

 

organic vs. Q2 2023

 

12.5%

 

 

 

 

 

 

 

Reported

Diluted

EPS

 

Adjusting

Items*

 

Adjusted

Diluted

EPS

 

Currency

Impact

 

Adjusted

Diluted

EPS ex. Currency

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$1.54

 

$(0.05)

 

$1.59

 

$(0.18)

 

$1.77

vs. Q2 2023

 

52.5%

 

 

 

(0.6)%

 

 

 

10.6%

(*) For a list of adjusting items refer to page 19

__________________________
3 In pouches or pouch equivalents

Full-Year Forecast

 

 

Full-Year

 

 

2024

Forecast

 

2023

 

Growth

 

 

 

 

 

 

 

 

 

 

 

Reported Diluted EPS

 

$5.89

-

$6.01

 

$ 5.02

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Asset impairment and exit costs

 

0.09

 

0.06

 

 

 

 

Termination of distribution arrangement in the Middle East

 

 

0.04

 

 

 

 

Impairment of goodwill and other intangibles

 

0.01

 

0.44

 

 

 

 

Amortization of intangibles(1)

 

0.43

 

0.25

 

 

 

 

Charges related to the war in Ukraine

 

 

0.03

 

 

 

 

Swedish Match AB acquisition accounting related items

 

 

0.01

 

 

 

 

Income tax impact associated with Swedish Match AB financing

 

0.09

 

(0.11)

 

 

 

 

South Korea indirect tax charge

 

 

0.11

 

 

 

 

Termination of agreement with Foundation for a Smoke-Free World

 

 

0.07

 

 

 

 

Fair value adjustment for equity security investments

 

(0.15)

 

(0.02)

 

 

 

 

Tax items

 

(0.03)

 

0.11

 

 

 

 

Total Adjustments

 

0.44

 

0.99

 

 

 

 

Adjusted Diluted EPS

 

$6.33

-

$6.45

 

$ 6.01

 

5.3%

-

7.3%

Less: Currency

 

(0.34)

 

 

 

 

 

 

Adjusted Diluted EPS, excluding currency

 

$6.67

-

$6.79

 

$ 6.01

 

11.0%

-

13.0%

(1) See forecast assumptions for details

Reported diluted EPS is forecast to be in a range of $5.89 to $6.01, at prevailing exchange rates, versus reported diluted EPS of $5.02 in 2023. Excluding a total 2024 adjustment of $0.44 per share, this forecast represents a projected increase of 5.3% to 7.3% versus adjusted diluted EPS of $ 6.01 in 2023. Also excluding an adverse currency impact of $0.34, at prevailing exchange rates, this forecast represents a projected increase of 11.0% to 13.0% versus adjusted diluted EPS of $6.01 in 2023, as outlined in the above table.

2024 Full-Year Forecast Assumptions

This forecast assumes:

  • A broadly stable total international industry volume for cigarettes and HTUs, excluding China and the U.S.;
  • Total cigarette, HTU and oral smoke-free product shipment volume growth for PMI of 1% to 2% driven by smoke-free products;
  • A second half acceleration in HTU adjusted IMS to deliver around 13% growth for the full year, and HTU shipment volumes of around 140 billion units. This assumes no volumes in Taiwan and a slightly greater impact from consumer adjustment to the EU characterizing flavor ban than previously assumed;
  • Nicotine pouch shipment volume in the U.S. of 560 to 580 million cans;
  • Net revenue growth of 7.5% to 9% on an organic basis;
  • Organic operating income growth of 11% to 13%;
  • An acceleration in organic smoke-free net revenue and gross profit growth compared to 2023;
  • Broadly unchanged net revenue and adjusted operating loss in Wellness and Healthcare segment compared to 2023;
  • No earnings impact from the May 15, 2024 Fiscal Court in Dusseldorf ruling related to the legality of a supplemental tax surcharge on HTUs in Germany, which went into effect in 2022. On June 19, 2024, a German subsidiary of PMI submitted an appeal;
  • Full-year amortization of acquired intangibles of $0.43 per share, which includes an estimate of amortization of IQOS commercialization rights in the U.S. following the closing of the agreement to end our commercial relationship with Altria Group, Inc. covering IQOS in the U.S. effective May 1, 2024;
  • Net financing costs of approximately $1.3 billion;
  • An effective tax rate, excluding discrete tax events, of approximately 21% to 22%;
  • Operating cash flow of approximately $11 billion at prevailing exchange rates, subject to year-end working capital requirements;
  • Capital expenditures of approximately $1.3 to $1.4 billion, including further investments in ZYN capacity in the U.S.;
  • Net debt to adjusted EBITDA ratio improvement of 0.3x to 0.5x at prevailing exchange rates as we continue to target a ratio of around 2x by the end of 2026;
  • No share repurchases in 2024; and
  • A strong second-half performance, with third quarter adjusted diluted EPS of $1.77 to $1.82 including an estimated adverse currency impact of 2 cents at prevailing exchange rates.

Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.

Conference Call

A conference call hosted by Emmanuel Babeau, Chief Financial Officer, will be webcast at 9:00 a.m., Eastern Time, on July 23, 2024. Access the webcast at www.pmi.com/2024Q2earnings.

Financial Review

TOTAL MARKET, CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE

Total Market Volume

Second-Quarter

Estimated international industry volume (excluding China and the U.S.) for cigarettes and HTUs increased by 1.5%, reflecting increases in the SSEA, CIS & MEA Region, partly offset by decreases in the Europe, Americas and EA, AU & PMI DF Regions, as described in the Regional sections below.

Six Months Year-to-Date

Estimated international industry volume (excluding China and the U.S.) for cigarettes and HTUs increased by 1.1%, reflecting increase in the SSEA, CIS & MEA Region, partly offset by decreases in the Europe and Americas Regions, and broadly stable in the EA, AU & PMI DF Region, as described in the Regional sections below.

Consolidated Shipment Volume

PMI Cigarettes and HTUs

 

Second-Quarter

 

Six Months Year-to-Date

(million units)

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

Cigarettes

 

157,618

 

157,010

 

0.4%

 

300,809

 

300,718

 

—%

Heated Tobacco Units

 

35,544

 

31,424

 

13.1%

 

68,678

 

58,820

 

16.8%

Total Cigarettes and HTUs

 

193,162

 

188,434

 

2.5%

 

369,487

 

359,538

 

2.8%

PMI Oral SFP(1)

 

Second-Quarter

 

Six Months Year-to-Date

(million cans)

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

Nicotine Pouches

 

149.9

 

99.5

 

50.6%

 

295.6

 

180.7

 

63.5%

Snus

 

58.8

 

62.6

 

(6.2)%

 

120.2

 

118.2

 

1.7%

Moist Snuff

 

34.2

 

34.1

 

0.2%

 

68.6

 

69.3

 

(1.1)%

Other Oral SFP(2)

 

1.0

 

1.2

 

(17.0)%

 

2.0

 

2.5

 

(16.8)%

Total Oral SFP

 

243.8

 

197.4

 

23.5%

 

486.4

 

370.7

 

31.2%

(1) Excluding snuff, snuff leaf and U.S. chew

(2) Includes chew bags and tobacco bits

Note: Sum may not foot due to roundings.

Second-Quarter

PMI's total cigarette and HTU shipment volume increased by 2.5% (HTU shipments increased by 13.1%, and cigarette shipments increased by 0.4%), with increases across all regions except the Americas.

PMI’s total oral product shipment volume in cans increased by 23.5%, predominantly reflecting growth in nicotine pouches.

Adjusted in-market sales for HTUs increased by 10.2%, including growth in Japan of 12.5% and Europe of 6.8%.

Six Months Year-to-Date

PMI's total cigarette and HTU shipment volume increased by 2.8% (HTU shipments increased by 16.8%, while cigarette shipments were stable).

PMI’s total oral product shipment volume in cans increased by 31.2%, primarily reflecting growth in nicotine pouches.

Adjusted in-market sales for HTUs increased by 11.4%, including growth in Japan of 12.9% and Europe of 8.0%. A net favorable impact of estimated distributor inventory movements for HTU shipments was driven most significantly by additional shipments to Japan in light of disruption to Red Sea shipping routes.

International Share of Market - Cigarettes and HTUs

 

 

Second-Quarter

 

Six Months Year-to-Date

 

2024

 

2023

 

Change
(pp)

 

2024

 

2023

 

Change
(pp)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total International Market Share(1)

 

28.7%

 

28.6%

 

0.1

 

28.3%

 

27.9%

 

0.4

Cigarettes

 

23.6%

 

24.0%

 

(0.4)

 

23.2%

 

23.4%

 

(0.2)

HTU

 

5.1%

 

4.7%

 

0.4

 

5.1%

 

4.6%

 

0.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Cigarette over Cigarette Market Share(2)

 

25.3%

 

25.5%

 

(0.2)

 

24.9%

 

24.9%

 

(1) Defined as PMI's cigarette and heated tobacco unit in-market sales volume as a percentage of total industry cigarette and heated tobacco unit sales volume, excluding China and the U.S., including cigarillos in Japan

(2) Defined as PMI's cigarette in-market sales volume as a percentage of total industry cigarette sales volume, excluding China and the U.S., including cigarillos in Japan

Note: Sum of share of market by product categories might not foot to total due to roundings.

CONSOLIDATED FINANCIAL SUMMARY

Second-Quarter

Financial Summary -
Quarters Ended
 June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

9,468

 

 

$

8,967

 

 

5.6

%

 

9.6

%

 

501

 

 

(358

)

 

 

583

 

303

 

 

(27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales(1)

 

 

(3,345

)

 

 

(3,228

)

 

(3.6

)%

 

(5.9

)%

 

(117

)

 

63

 

 

12

 

 

(145

)

 

(47

)

Marketing, Administration and Research Costs(2)

 

 

(2,679

)

 

 

(2,508

)

 

(6.8

)%

 

(5.4

)%

 

(171

)

 

(36

)

 

 

 

 

 

(135

)

Impairment of Goodwill

 

 

 

 

 

(665

)

 

+100%

 

+100

%

 

665

 

 

 

 

 

 

 

 

665

 

Operating Income

 

$

3,444

 

 

$

2,566

 

 

34.2

%

 

46.6

%

 

878

 

 

(331

)

 

12

 

583

 

158

 

 

456

 

Impairment of Goodwill and Other Intangibles (3)

 

 

 

 

 

(680

)

 

+100%

 

+100

%

 

680

 

 

 

 

 

 

 

 

680

 

Amortization of Intangibles

 

 

(212

)

 

 

(82

)

 

-(100

)%

 

-(100

)%

 

(130

)

 

 

 

 

 

 

 

(130

)

South Korea Indirect Tax Charge

 

 

 

 

 

(204

)

 

+100%

 

+100

%

 

204

 

 

 

 

 

 

 

 

204

 

Adjusted Operating Income

 

$

3,656

 

 

$

3,532

 

 

3.5

%

 

12.5

%

 

124

 

 

(331

)

 

12

 

583

 

158

 

 

(298

)

Adjusted Operating Income Margin

 

 

38.6

%

 

 

39.4

%

 

(0.8

)pp

 

1.1

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes $16 million in 2024 and $22 million in 2023 related to the special items below.

(2) Includes $196 million in 2024 and $279 million in 2023 related to the special items below.

(3) Includes $665 million impairment of goodwill in 2023

Net revenues increased by 9.6% on an organic basis, mainly reflecting: a favorable pricing variance, primarily due to higher combustible tobacco pricing; and favorable volume/mix, driven by higher smoke-free products volume.

Adjusted operating income increased by 12.5% on an organic basis, mainly reflecting: the favorable pricing variance; and favorable volume/mix, mainly driven by smoke-free products volume, notwithstanding unfavorable cigarette mix; partly offset by higher costs, predominantly marketing, administration and research costs.

Six Months Year-to-Date

Financial Summary -
Six Months Ended June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

18,261

 

 

$

16,986

 

 

7.5

%

 

10.8

%

 

1,275

 

 

(552

)

 

 

1,032

 

767

 

 

28

 

Termination of distribution arrangement in the Middle East

 

 

 

 

 

(80

)

 

+100

%

 

+100

%

 

80

 

 

 

 

 

 

 

 

80

 

Adjusted Net Revenues

 

$

18,261

 

 

$

17,066

 

 

7.0

%

 

10.2

%

 

1,195

 

 

(552

)

 

 

1,032

 

767

 

 

(52

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

18,261

 

 

$

16,986

 

 

7.5

%

 

10.8

%

 

1,275

 

 

(552

)

 

 

1,032

 

767

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales (1)

 

 

(6,540

)

 

 

(6,266

)

 

(4.4

)%

 

(5.7

)%

 

(274

)

 

71

 

 

12

 

 

(314

)

 

(43

)

Marketing, Administration and Research Costs (2)

 

 

(5,232

)

 

 

(4,758

)

 

(10.0

)%

 

(6.2

)%

 

(474

)

 

(178

)

 

 

 

 

 

(296

)

Impairment of Goodwill

 

 

 

 

 

(665

)

 

+100

%

 

+100

%

 

665

 

 

 

 

 

 

 

 

665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

6,489

 

 

$

5,297

 

 

22.5

%

 

34.7

%

 

1,192

 

 

(659

)

 

12

 

1,032

 

453

 

 

354

 

Asset Impairment & Exit Costs

 

 

(168

)

 

 

(109

)

 

(54.1

)%

 

(54.1

)%

 

(59

)

 

 

 

 

 

 

 

(59

)

Termination of distribution arrangement in the Middle East (3)

 

 

 

 

 

(80

)

 

+100

%

 

+100

%

 

80

 

 

 

 

 

 

 

 

80

 

Impairment of Goodwill and Other Intangibles (4)

 

 

(27

)

 

 

(680

)

 

96.0

%

 

96.0

%

 

653

 

 

 

 

 

 

 

 

653

 

Amortization of Intangibles

 

 

(332

)

 

 

(163

)

 

-(100

)%

 

-(100

)%

 

(169

)

 

 

 

 

 

 

 

(169

)

Swedish Match AB acquisition accounting related items

 

 

 

 

 

(18

)

 

+100

%

 

+100

%

 

18

 

 

 

 

 

 

 

 

18

 

South Korea Indirect Tax Charge

 

 

 

 

 

(204

)

 

+100

%

 

+100

%

 

204

 

 

 

 

 

 

 

 

204

 

Adjusted Operating Income

 

$

7,016

 

 

$

6,551

 

 

7.1

%

 

17.0

%

 

465

 

 

(659

)

 

12

 

1,032

 

453

 

 

(373

)

Adjusted Operating Income Margin

 

 

38.4

%

 

 

38.4

%

 

pp

 

2.3

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes $32 million in 2024 and $62 million in 2023 related to the special items below.

(2) Includes $495 million in 2024 and $447 million in 2023 related to the special items below.

(3) Included in Net Revenues above.

(4) Includes $665 million impairment of goodwill in 2023.

Adjusted net revenues increased by 10.2% on an organic basis, mainly reflecting: a favorable pricing variance, primarily driven by higher combustible tobacco pricing; and favorable volume/mix, driven by higher smoke-free products volume, partly offset by unfavorable cigarette mix.

Adjusted operating income increased by 17.0% on an organic basis, mainly reflecting: the favorable pricing variance, predominantly driven by higher combustible tobacco pricing; and favorable volume/mix, mainly driven by higher smoke-free products volume; partly offset by higher marketing, administration and research costs (primarily due to inflationary impacts, notably related to wages, and higher commercial investments), as well as higher manufacturing costs (primarily due to inflationary impacts, notably related to tobacco leaf and the impact of the EU single-use plastics directive, partly offset by productivity).

EUROPE REGION

Total Market, PMI Shipment & Market Share Commentaries

Second-Quarter

The estimated total market for cigarettes and HTUs in the Region decreased by 1.7% to 138.0 billion units, reflecting a 2.8% decline for cigarettes, partly offset by an increase for HTUs. The decrease in the estimated total market was predominantly due to France (down by 11.4%), the UK (down by 15.4%), Germany (down by 3.3%), and the Netherlands (down by 20.7%), partly offset by Bulgaria (up by 10.6%), Romania (up by 5.0%), and Greece (up by 8.3%).

Six Months Year-to-Date

The estimated total market for cigarettes and HTUs in the Region decreased by 1.2% to 262.1 billion units, reflecting a 2.6% decline for cigarettes, partly offset by an increase for HTUs. The decrease in the estimated total market was predominantly due to France (down by 13.8%), the UK (down by 13.3%), and the Netherlands (down by 15.5%), partly offset by Bulgaria (up by 9.7%), Poland (up by 2.3%), Romania (up by 3.9%), and Greece (up by 7.1%).

Europe Key Data

 

Second-Quarter

 

Six Months Year-to-Date

 

 

 

 

 

 

Change

 

 

 

 

 

Change

 

 

2024

 

2023

 

% / pp

 

2024

 

2023

 

% / pp

PMI Shipment Volume (million units)

 

 

 

 

 

 

 

 

 

 

 

 

Cigarettes

 

43,467

 

43,741

 

(0.6)%

 

80,556

 

82,898

 

(2.8)%

Heated Tobacco Units

 

12,935

 

11,705

 

10.5%

 

24,275

 

21,804

 

11.3%

Total Europe

 

56,402

 

55,446

 

1.7%

 

104,831

 

104,702

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

PMI Market Share

 

 

 

 

 

 

 

 

 

 

 

 

Cigarettes

 

30.2%

 

30.3%

 

(0.1)

 

30.1%

 

30.3%

 

(0.2)

Heated Tobacco Units

 

9.6%

 

8.8%

 

0.8

 

9.8%

 

8.9%

 

0.9

Total Europe

 

39.8%

 

39.1%

 

0.7

 

40.0%

 

39.2%

 

0.8

Note: Sum may not foot due to roundings.

Europe Oral SFP

 

Second-Quarter

 

Six Months Year-to-Date

 

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

PMI Shipment Volume (million cans)

 

 

 

 

 

 

 

 

 

 

 

 

Nicotine Pouches

 

11.8

 

9.3

 

26.9%

 

24.1

 

17.2

 

40.2%

Snus

 

58.0

 

61.4

 

(5.6)%

 

118.7

 

115.8

 

2.5%

Other Oral SFP(1)

 

1.0

 

1.2

 

(17.0)%

 

2.0

 

2.5

 

(16.8)%

Total Europe

 

70.8

 

71.9

 

(1.6)%

 

144.8

 

135.4

 

6.9%

(1) Includes chew bags and tobacco bits

Note: Sum may not foot due to roundings.

Second-Quarter

PMI's total cigarette and HTU shipment volume in the Region increased by 1.7% to 56.4 billion units. Total cigarette and HTU shipment volume increased notably in Italy (up by 7.6%), mainly driven by cigarettes, and Poland (up by 6.0%), and decreased notably in France (down by 11.7%) and the Netherlands (down by 19.5%), both driven by cigarettes.

PMI's estimated HTU adjusted in-market sales volume in the Region increased by 6.8% in the quarter, reflecting continued growth momentum for IQOS, partly offset by the impact from the EU characterizing flavor ban.

PMI's HTU share of the total cigarette and HTU market in the Region increased by 0.8 points on an adjusted basis.

Oral SFP shipments decreased by 1.6% with decline of snus (down by 5.6%), partly offset by nicotine pouches (up by 26.9%).

Six Months Year-to-Date

PMI's total cigarette and HTU shipment volume in the Region increased by 0.1% to 104.8 billion units. Total cigarette and HTU shipment volume increased notably in Poland (up by 7.9%), Greece (up by 9.6%), and Germany (up by 1.9%), and decreased notably in France (down by 21.7%) and the Netherlands (down by 15.2%), both driven by cigarettes.

PMI's estimated HTU adjusted in-market sales volume in the Region increased by 8.0%, reflecting continued growth momentum for IQOS, partly offset by the impact from the EU characterizing flavor ban.

PMI's HTU share of the total cigarette and HTU market in the Region increased by 0.9 points on an adjusted basis.

Oral SFP shipments increased by 6.9%, driven by growth of nicotine pouches (up by 40.2%) and snus (up by 2.5%).

Financial Summary

Second-Quarter

Financial Summary -
Quarters Ended
June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

3,815

 

 

$

3,574

 

 

6.7

%

 

7.0

%

 

241

 

 

(9

)

 

 

205

 

45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

1,660

 

 

$

1,619

 

 

2.5

%

 

5.3

%

 

41

 

 

(45

)

 

 

205

 

2

 

(121

)

Adjustments (1)

 

 

(40

)

 

 

(28

)

 

(41.8

)%

 

(41.8

)%

 

(12

)

 

 

 

 

 

 

(12

)

Adjusted Operating Income

 

$

1,701

 

 

$

1,647

 

 

3.3

%

 

6.0

%

 

54

 

 

(45

)

 

 

205

 

2

 

(109

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin

 

 

44.6

%

 

 

46.1

%

 

(1.5

)pp

 

(0.4

)pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 10 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 7.0% on an organic basis, reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, primarily driven by higher HTU volume, partly offset by lower cigarettes volume.

Adjusted operating income increased by 6.0% on an organic basis, reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; partly offset by higher marketing, administration and research costs as well as manufacturing costs, including the impact of the EU single-use plastics directive.

Six Months Year-to-Date

Financial Summary -
Six Months Ended June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

7,180

 

 

$

6,642

 

 

8.1

%

 

7.1

%

 

538

 

69

 

 

 

368

 

101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

3,116

 

 

$

2,834

 

 

10.0

%

 

11.0

%

 

282

 

(31

)

 

 

368

 

66

 

(121

)

Adjustments (1)

 

 

(80

)

 

 

(103

)

 

22.0

%

 

22.0

%

 

23

 

 

 

 

 

 

23

 

Adjusted Operating Income

 

$

3,197

 

 

$

2,937

 

 

8.9

%

 

9.9

%

 

260

 

(31

)

 

 

368

 

66

 

(143

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin

 

 

44.5

%

 

 

44.2

%

 

0.3

pp

 

1.2

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 11 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 7.1% on an organic basis, primarily driven by the same factors as for the quarter.

Adjusted operating income increased by 9.9% on an organic basis, reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, primarily driven by higher HTU volume, notwithstanding lower cigarette volume; partly offset by higher marketing, administration and research costs as well as manufacturing costs, including the impact of the EU single-use plastics directive.

SSEA, CIS & MEA REGION

Total Market, PMI Shipment & Market Share Commentaries

Second-Quarter

The estimated total market for cigarettes and HTUs in the Region increased by 3.7% to 393.9 billion units. The increase in the estimated total market was mainly due to Russia (up by 6.2%), Pakistan (up by 42.4%), Egypt (up by 18.6%), Bangladesh (up by 8.5%), and Turkey (up by 4.1%), partly offset by Thailand (down by 19.5%) and Kazakhstan (down by 8.8%).

Six Months Year-to-Date

The estimated total market for cigarettes and HTUs in the Region increased by 2.5% to 767.0 billion units. The increase in the estimated total market was mainly due to Turkey (up by 10.3%), Russia (up by 5.3%), Indonesia (up by 3.1%), and Bangladesh (up by 6.5%), partly offset by Thailand (down by 14.1%) and Philippines (down by 7.9%).

PMI Shipment Volume

 

Second-Quarter

 

Six Months Year-to-Date

(million units)

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

Cigarettes

 

87,391

 

84,415

 

3.5%

 

167,582

 

160,946

 

4.1%

Heated Tobacco Units

 

6,937

 

5,853

 

18.5%

 

13,015

 

11,300

 

15.2%

Total SSEA, CIS & MEA

 

94,328

 

90,268

 

4.5%

 

180,597

 

172,246

 

4.8%

Second-Quarter

PMI's total cigarette and HTU shipment volume in the Region increased by 4.5% to 94.3 billion units, mainly driven by Turkey (up by 9.7%) and Saudi Arabia (up by 68.9% due to inventory movements), partly offset by Indonesia (down by 6.4%), Thailand (down by 24.9%) and the Philippines (down by 9.7%). PMI's estimated HTU adjusted in-market sales volume increased by 11.4%, with 18.5% HTU shipment volume growth. HTU shipment growth in Russia primarily reflects timing and cross-border dynamics, with limited underlying growth.

Six Months Year-to-Date

PMI's total cigarette and HTU shipment volume in the Region increased by 4.8% to 180.6 billion units, mainly driven by Turkey (up by 16.0%), partly offset by the Philippines (down by 14.2%). PMI's estimated HTU adjusted in-market sales volume increased by 13.1%, with 15.2% HTU shipment volume growth.

Financial Summary

Second-Quarter

Financial Summary -
Quarters Ended
June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

2,771

 

 

$

2,668

 

 

3.9

%

 

13.3

%

 

103

 

(251

)

 

 

229

 

123

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

891

 

 

$

880

 

 

1.3

%

 

26.0

%

 

11

 

(230

)

 

12

 

229

 

50

 

(50

)

Adjustments (1)

 

 

(5

)

 

 

(5

)

 

6.8

%

 

6.8

%

 

 

 

 

 

 

 

 

Adjusted Operating Income

 

$

896

 

 

$

885

 

 

1.2

%

 

25.9

%

 

11

 

(230

)

 

12

 

229

 

50

 

(50

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin

 

 

32.3

%

 

 

33.2

%

 

(0.9

)pp

 

3.7

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 10 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 13.3% on an organic basis, primarily reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, driven by higher HTU and cigarettes volume, as well as favorable HTU and cigarette mix.

Adjusted operating income increased by 25.9% on an organic basis, primarily reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, driven by higher smoke-free products and cigarettes volume, notwithstanding unfavorable cigarette mix; partly offset by higher manufacturing costs (primarily due to higher cost of tobacco leaf).

Six Months Year-to-Date

Financial Summary -
Six Months Ended June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

5,429

 

 

$

5,145

 

 

5.5

%

 

14.2

%

 

284

 

 

(445

)

 

 

384

 

267

 

78

 

Adjustment (1)

 

 

 

 

 

(80

)

 

+100

%

 

+100

%

 

80

 

 

 

 

 

 

 

80

 

Adjusted Net Revenues

 

$

5,429

 

 

$

5,225

 

 

3.9

%

 

12.4

%

 

204

 

 

(445

)

 

 

384

 

267

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

5,429

 

 

$

5,145

 

 

5.5

%

 

14.2

%

 

284

 

 

(445

)

 

 

384

 

267

 

78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

1,663

 

 

$

1,614

 

 

3.0

%

 

31.5

%

 

49

 

 

(471

)

 

12

 

384

 

96

 

28

 

Adjustments (2)

 

 

(10

)

 

 

(122

)

 

92.1

%

 

92.1

%

 

112

 

 

 

 

 

 

 

112

 

Adjusted Operating Income

 

$

1,673

 

 

$

1,736

 

 

(3.6

)%

 

22.8

%

 

(63

)

 

(471

)

 

12

 

384

 

96

 

(84

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin

 

 

30.8

%

 

 

33.2

%

 

(2.4

)pp

 

3.1

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) Termination of distribution arrangement in the Middle East.

(2) See Schedule 11 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Adjusted net revenues increased by 12.4% on an organic basis, primarily reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, driven by higher cigarette and HTU volume and favorable cigarettes mix.

Adjusted operating income increased by 22.8% on an organic basis, primarily reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, driven by higher cigarette and HTU volume, notwithstanding unfavorable cigarette mix; partly offset by higher manufacturing costs (primarily due to higher cost of tobacco leaf).

EA, AU AND PMI DF REGION

Total Market, PMI Shipment & Market Share Commentaries

Second-Quarter

The estimated total market for cigarettes and HTUs in the Region, excluding China, decreased by 0.7% to 80.2 billion units, with a decline in cigarettes, partly offset by HTU growth. The decrease in the estimated total market was mainly driven by Australia (down by 29.1%), South Korea (down by 1.9%), and Taiwan (down by 4.2%), partly offset by International Duty Free (up by 8.5%) and Japan (up by 0.9%).

Six Months Year-to-Date

The estimated total market for cigarettes and HTUs in the Region, excluding China, was stable at 156.0 billion units, with HTU growth partly offset by a decline in cigarettes. The increase in the estimated total market was mainly driven by International Duty Free (up by 12.4%) and Japan (up by 1.0%), partly offset by Australia (down by 29.4%).

PMI Shipment Volume

 

Second-Quarter

 

Six Months Year-to-Date

(million units)

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

Cigarettes

 

11,872

 

13,351

 

(11.1)%

 

23,440

 

26,461

 

(11.4)%

Heated Tobacco Units

 

15,474

 

13,714

 

12.8%

 

31,073

 

25,462

 

22.0%

Total EA, AU & PMI DF

 

27,346

 

27,065

 

1.0%

 

54,513

 

51,923

 

5.0%

Second-Quarter

PMI's total cigarette and HTU shipment volume in the Region increased by 1.0% to 27.3 billion units, driven by Japan (up by 5.0%), partly offset by Australia (down by 28.5%).

PMI's estimated HTU adjusted in-market sales volume in the Region increased by 13.3% in the quarter, including growth in Japan of 12.5%.

Six Months Year-to-Date

PMI's total cigarette and HTU shipment volume in the Region increased by 5.0% to 54.5 billion units, driven by Japan (up by 12.6%), partly offset by Australia (down by 27.2%).

PMI's estimated HTU adjusted in-market sales volume in the Region increased by 14.1%, including growth in Japan of 12.9%.

Financial Summary

Second-Quarter

Financial Summary -
Quarters Ended
June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

1,673

 

 

$

1,680

 

 

(0.4

)%

 

6.7

%

 

(7

)

 

(120

)

 

 

88

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

753

 

 

$

557

 

 

35.2

%

 

51.5

%

 

196

 

 

(91

)

 

 

88

 

2

 

197

 

Adjustments (1)

 

 

(1

)

 

 

(205

)

 

99.7

%

 

99.7

%

 

204

 

 

 

 

 

 

 

204

 

Adjusted Operating Income

 

$

753

 

 

$

762

 

 

(1.2

)%

 

10.8

%

 

(9

)

 

(91

)

 

 

88

 

2

 

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin

 

 

45.0

%

 

 

45.4

%

 

(0.4

)pp

 

1.7

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 10 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 6.7% on an organic basis, reflecting: a favorable pricing variance and favorable volume/mix, mainly driven by higher HTU volume, partly offset by lower cigarette volume.

Adjusted operating income increased by 10.8% on an organic basis, primarily driven by the same factors as for net revenues.

Six Months Year-to-Date

Financial Summary -
Six Months Ended June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

3,357

 

 

$

3,200

 

 

4.9

%

 

12.1

%

 

157

 

(229

)

 

 

218

 

168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

1,516

 

 

$

1,194

 

 

27.0

%

 

45.1

%

 

322

 

(216

)

 

 

218

 

74

 

246

Adjustments (1)

 

 

(1

)

 

 

(225

)

 

99.3

%

 

99.3

%

 

224

 

 

 

 

 

 

224

Adjusted Operating Income

 

$

1,517

 

 

$

1,419

 

 

6.9

%

 

22.1

%

 

98

 

(216

)

 

 

218

 

74

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin

 

 

45.2

%

 

 

44.3

%

 

0.9

pp

 

4.0

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 11 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 12.1% on an organic basis, reflecting: a favorable pricing variance and favorable volume/mix, mainly driven by higher HTU volume, partly offset by lower cigarette volume.

Adjusted operating income increased by 22.1% on an organic basis, primarily driven by the same factors as for net revenues.

AMERICAS REGION

Total Market, PMI Shipment & Market Share Commentaries

Second-Quarter

The estimated total market for cigarettes and HTUs in the Region, excluding the U.S., decreased by 2.7% to 45.2 billion units, primarily reflecting a decline for cigarettes. The decrease in the estimated total market was mainly due to Argentina (down by 20.0%) and Canada (down by 12.6%), partly offset by Brazil (up by 9.6%).

Six Months Year-to-Date

The estimated total market for cigarettes and HTUs in the Region, excluding the U.S., decreased by 2.8% to 89.9 billion units, primarily reflecting a decline for cigarettes. The decrease in the estimated total market was mainly due to Argentina (down by 13.8%) and Canada (down by 12.9%), partly offset by Brazil (up by 6.5%).

PMI Shipment Volume

 

Second-Quarter

 

Six Months Year-to-Date

(million units)

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

Cigarettes

 

14,888

 

15,503

 

(4.0)%

 

29,231

 

30,413

 

(3.9)%

Heated Tobacco Units

 

198

 

152

 

30.3%

 

315

 

254

 

24.0%

Total Americas

 

15,086

 

15,655

 

(3.6)%

 

29,546

 

30,667

 

(3.7)%

Note: Sum may not foot due to roundings.

Americas Oral SFP1

 

Second-Quarter

 

Six Months Year-to-Date

 

 

2024

 

2023

 

Change

 

2024

 

2023

 

Change

PMI Shipment Volume (million cans)

 

 

 

 

 

 

 

 

 

 

 

 

Nicotine Pouches

 

135.1

 

89.9

 

50.3%

 

266.7

 

163.1

 

63.5%

Moist Snuff

 

34.2

 

34.1

 

0.2%

 

68.6

 

69.3

 

(1.1)%

Snus

 

0.8

 

1.2

 

(37.3)%

 

1.5

 

2.4

 

(38.4)%

Total Americas

 

170.1

 

125.2

 

35.8%

 

336.7

 

234.8

 

43.4%

(1) Excluding U.S. chew

Note: Sum may not foot due to roundings.

Second-Quarter

PMI's total cigarette and HTU shipment volume in the Region decreased by 3.6% to 15.1 billion units, mainly due to Argentina (down by 19.9%), partly offset by Brazil (up by 8.7%).

Oral products shipments increased by 35.8%, driven by ZYN nicotine pouches (up by 50.3%) in the U.S.

Six Months Year-to-Date

PMI's total cigarette and HTU shipment volume in the Region decreased by 3.7% to 29.5 billion units, mainly due to Argentina (down by 14.7%), partly offset by Brazil (up by 9.4%).

Cigar shipment volume declined by 18.3%, predominantly due to a tough comparison related to trade inventory movements in the prior-year around the April 2023 price increase. Gross profit grew robustly.

Oral products shipments increased by 43.4%, driven by ZYN nicotine pouches (up by 63.5%) in the U.S.

Financial Summary

Second-Quarter

Financial Summary -
Quarters Ended
 June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

1,129

 

 

$

969

 

 

16.5

%

 

14.2

%

 

160

 

 

22

 

 

55

 

110

 

(27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

183

 

 

$

243

 

 

(24.7

)%

 

(39.1

)%

 

(60

)

 

35

 

 

55

 

104

 

(254

)

Adjustments (1)

 

 

(152

)

 

 

(33

)

 

-(100

)%

 

-(100

)%

 

(119

)

 

 

 

 

 

(119

)

Adjusted Operating Income

 

$

335

 

 

$

276

 

 

21.4

%

 

8.7

%

 

59

 

 

35

 

 

55

 

104

 

(135

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin

 

 

29.7

%

 

 

28.5

%

 

1.2

pp

 

(1.4

)pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 10 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 14.2% on an organic basis, primarily reflecting: favorable volume/mix, mainly due to the growth of ZYN nicotine pouches in the U.S., partly offset by lower cigarette volume and unfavorable cigarette mix outside of the U.S.; and favorable pricing variance, predominantly driven by higher combustible tobacco pricing.

Adjusted operating income increased by 8.7% on an organic basis, mainly reflecting: favorable volume/mix and price variance, mainly due to the same factors as for net revenues; partly offset by higher marketing and administration costs, including incremental investment in the U.S.

Six Months Year-to-Date

Financial Summary -
Six Months Ended June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

2,125

 

 

$

1,837

 

 

15.7

%

 

12.9

%

 

288

 

 

51

 

 

54

 

231

 

(48

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

282

 

 

$

426

 

 

(33.8

)%

 

(47.2

)%

 

(144

)

 

57

 

 

54

 

217

 

(472

)

Adjustments (1)

 

 

(379

)

 

 

(95

)

 

-(100

)%

 

-(100

)%

 

(284

)

 

 

 

 

 

(284

)

Adjusted Operating Income

 

$

661

 

 

$

521

 

 

26.9

%

 

15.9

%

 

140

 

 

57

 

 

54

 

217

 

(188

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin

 

 

31.1

%

 

 

28.4

%

 

2.7

pp

 

0.7

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 11 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 12.9% on an organic basis, primarily reflecting: favorable volume/mix, mainly due to growth of ZYN nicotine pouches in the U.S., partly offset by cigarette volume declines outside of the U.S.; and favorable cigarette pricing.

Adjusted operating income increased by 15.9% on an organic basis, mainly reflecting: favorable volume/mix, mainly due to the same factors as for net revenues; and favorable cigarette pricing; partly offset by higher marketing and administration costs, including incremental investment in the U.S.

WELLNESS AND HEALTHCARE

The results of PMI’s Vectura Fertin Pharma business are reported in the Wellness and Healthcare segment.

Second-Quarter

Financial Summary -
Quarters Ended
 June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

80

 

 

$

76

 

 

5.3

%

 

5.3

%

 

4

 

 

 

6

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income / (Loss)

 

$

(43

)

 

$

(733

)

 

94.1

%

 

94.1

%

 

690

 

 

 

6

 

 

684

 

Adjustments (1)

 

 

(14

)

 

 

(695

)

 

97.9

%

 

97.9

%

 

681

 

 

 

 

 

681

 

Adjusted Operating Income / (Loss)

 

$

(29

)

 

$

(38

)

 

23.7

%

 

23.7

%

 

9

 

 

 

6

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income / (Loss) Margin

 

 

(36.3

)%

 

 

(50.0

)%

 

13.7

pp

 

13.7

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 10 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 5.3% on an organic basis. The adjusted operating loss of $29 million was primarily due to R&D and administration costs.

Six Months Year-to-Date

Financial Summary -
Six Months Ended
June 30,

 

 

 

 

 

Change

Fav./(Unfav.)

 

Variance

Fav./(Unfav.)

 

2024

 

2023

 

Total

 

Excl.
Curr. &
Acquis.

 

Total

 

Cur-

rency

 

Acqui-
sitions

 

Price

 

Vol/

Mix

 

Cost/

Other

(in millions)

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

$

170

 

 

$

162

 

 

4.9

%

 

3.7

%

 

8

 

2

 

 

8

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income / (Loss)

 

$

(88

)

 

$

(771

)

 

88.6

%

 

88.3

%

 

683

 

2

 

 

8

 

 

673

 

Adjustments (1)

 

 

(56

)

 

 

(709

)

 

92.1

%

 

92.1

%

 

653

 

 

 

 

 

653

 

Adjusted Operating Income / (Loss)

 

$

(32

)

 

$

(62

)

 

48.4

%

 

45.2

%

 

30

 

2

 

 

8

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income / (Loss) Margin

 

 

(18.8

)%

 

 

(38.3

)%

 

19.5

pp

 

18.1

pp

 

 

 

 

 

 

 

 

 

 

 

 

(1) See Schedule 11 in Exhibit 99.2 to the Form 8-K dated July 23, 2024, for additional detail.

Net revenues increased by 3.7% on an organic basis. The adjusted operating loss of $32 million was primarily due to R&D and administration costs.

Philip Morris International: Delivering a Smoke-Free Future

Philip Morris International (PMI) is a leading international tobacco company, actively delivering a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector. The company’s current product portfolio primarily consists of cigarettes and smoke-free products. Since 2008, PMI has invested over $12.5 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. In 2022, PMI acquired Swedish Match – a leader in oral nicotine delivery – creating a global smoke-free champion led by the companies’ IQOS and ZYN brands. The U.S. Food and Drug Administration has authorized versions of PMI’s IQOS devices and consumables and Swedish Match’s General snus as Modified Risk Tobacco Products and renewal applications for these products are presently pending before the FDA. As of June 30, 2024, PMI's smoke-free products were available for sale in 90 markets, and PMI estimates that 36.5 million adults around the world use PMI's smoke-free products. Smoke-free business accounted for approximately 38% of PMI’s total first-half 2024 net revenues. With a strong foundation and significant expertise in life sciences, PMI announced in February 2021 its ambition to expand into wellness and healthcare areas and, through its Vectura Fertin Pharma business, aims to enhance life through the delivery of seamless health experiences. For more information, please visit www.pmi.com and www.pmiscience.com.

Forward-Looking and Cautionary Statements

This press release contains projections of future results and goals and other forward-looking statements, including statements regarding expected financial or operational performance; capital allocation plans; investment strategies; regulatory outcomes; market expectations; and business plans and strategies. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI.

PMI's business risks include: excise tax increases and discriminatory tax structures; increasing marketing and regulatory restrictions that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products in certain markets or countries; health concerns relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke; litigation related to tobacco and/or nicotine use and intellectual property; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; the impact and consequences of Russia's invasion of Ukraine; changes in adult smoker behavior; the impact of natural disasters and pandemics on PMI's business; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost, availability, and quality of tobacco and other agricultural products and raw materials, as well as components and materials for our electronic devices; and the integrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful in its attempts to introduce, commercialize, and grow smoke-free products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce new products, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and the development of strategic business relationships; if it is unable to attract and retain the best global talent, including women or diverse candidates; or if it is unable to successfully integrate and realize the expected benefits from recent transactions and acquisitions. Future results are also subject to the lower predictability of our smoke-free products performance.

PMI is further subject to other risks detailed from time to time in its publicly filed documents, including PMI's Annual Report on Form 10-K for the fourth quarter and year ended December 31, 2023, and the Quarterly Report on Form 10-Q for the second quarter ended June 30, 2024, which will be filed in the coming days. PMI cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations.

Non-GAAP Measures, Glossary and Explanatory Notes

Reconciliations of non-GAAP measures in this release to the most directly comparable U.S. GAAP measures can be found in Exhibit 99.2 to the Form 8-K dated July 23, 2024, and at www.pmi.com/2024Q2earnings. A glossary of key terms, definitions and explanatory notes is available in the aforementioned Exhibit 99.2 and on the same webpage, where additional financial schedules, as well as adjustments and other calculations have also been made available.

Management reviews net revenues, gross profit, operating income, operating income margin, operating cash flow and earnings per share, or "EPS," on an adjusted basis, which may exclude the impact of currency and other items such as acquisitions, asset impairment and exit costs, tax items and other special items. Additionally, starting in 2022 and on a comparative basis, for these measures other than net revenues and operating cash flow, PMI includes adjustments to add back amortization expense on acquisition related intangible assets that are recorded as part of purchase accounting and contribute to PMI’s revenue generation, as well as impairment of intangible assets, if any. While amortization expense on acquisition related intangible assets is excluded in these adjusted measures, the net revenues generated from these acquired intangible assets are included in the company's adjusted measures, unless otherwise stated. Currency-neutral and organic growth rates reflect the way management views underlying performance for these measures. PMI believes that such measures provide useful insight into underlying business trends and results. Management reviews these measures because they exclude changes in currency exchange rates and other factors that may distort underlying business trends, thereby improving the comparability of PMI’s business performance between reporting periods. Furthermore, PMI uses several of these measures in its management compensation program to promote internal fairness and a disciplined assessment of performance against company targets. PMI discloses these measures to enable investors to view the business through the eyes of management.

Non-GAAP measures used in this release should neither be considered in isolation nor as a substitute for the financial measures prepared in accordance with U.S. GAAP.

Diluted EPS reconciliation

 

 

Second-Quarter

 

 

2024

 

2023

 

% Change

Reported Diluted EPS

 

$

1.54

 

 

$

1.01

 

 

52.5

%

Impairment of goodwill and other intangibles

 

 

 

 

 

0.44

 

 

 

Amortization of intangibles

 

 

0.11

 

 

 

0.04

 

 

 

South Korea indirect tax charge

 

 

 

 

 

0.11

 

 

 

Income tax impact associated with Swedish Match AB financing

 

 

0.02

 

 

 

(0.01

)

 

 

Fair value adjustment for equity security investments

 

 

(0.08

)

 

 

0.01

 

 

 

Adjusted Diluted EPS

 

$

1.59

 

 

$

1.60

 

 

(0.6

)%

Less: Currency

 

 

(0.18

)

 

 

 

 

Adjusted Diluted EPS, excluding Currency

 

$

1.77

 

 

$

1.60

 

 

10.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix 1

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Key Market Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended June 30,

Market

 

Total Market,

bio units

 

PMI Shipments, bio units

 

PMI Market Share(2), %

 

 

Total

 

Cigarette

 

HTU

 

Total

 

HTU

 

2024

2023

% Change

 

2024

2023

% Change

 

2024

2023

% Change

 

2024

2023

% Change

 

2024

2023

pp Change

 

2024

2023

pp Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total(1)(2)

 

657.2

647.2

1.5

 

193.2

188.4

2.5

 

157.6

157.0

0.4

 

35.5

31.4

13.1

 

28.7

28.6

0.1

 

5.1

4.7

0.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

France

 

6.7

7.6

(11.4)

 

3.3

3.7

(11.7)

 

3.3

3.7

(11.3)

 

0.1

(37.6)

 

41.5

42.4

(0.9)

 

0.6

0.8

(0.2)

Germany(3)

 

17.3

17.9

(3.3)

 

6.8

6.9

(0.6)

 

5.8

6.1

(6.0)

 

1.1

0.7

43.4

 

39.0

39.2

(0.2)

 

6.0

5.4

0.6

Italy(3)

 

18.1

18.4

(1.5)

 

10.6

9.8

7.6

 

8.0

7.0

14.5

 

2.5

2.8

(9.7)

 

53.6

53.6

 

16.7

17.1

(0.4)

Poland(3)

 

15.0

15.0

0.1

 

6.5

6.1

6.0

 

5.1

4.9

4.4

 

1.4

1.2

12.5

 

43.3

41.1

2.2

 

9.1

8.6

0.5

Spain

 

11.2

11.3

(0.6)

 

3.5

3.6

(3.2)

 

3.2

3.3

(3.7)

 

0.3

0.3

2.4

 

29.2

29.2

 

2.6

2.2

0.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SSEA, CIS & MEA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Egypt

 

19.0

16.1

18.6

 

6.7

6.0

11.6

 

6.3

5.7

11.8

 

0.3

0.3

8.2

 

34.5

37.2

(2.7)

 

1.9

1.8

0.1

Indonesia

 

71.9

72.2

(0.5)

 

19.6

21.0

(6.4)

 

19.4

20.8

(7.1)

 

0.3

0.1

89.1

 

27.3

29.1

(1.8)

 

0.4

0.2

0.2

Philippines

 

9.7

10.2

(4.8)

 

5.1

5.7

(9.7)

 

5.0

5.6

(10.1)

 

0.1

 

52.7

55.6

(2.9)

 

0.7

0.5

0.2

Russia

 

55.1

51.9

6.2

 

17.4

16.5

5.3

 

12.9

12.6

2.6

 

4.4

3.9

14.1

 

31.6

32.8

(1.2)

 

8.2

7.9

0.3

Turkey

 

38.9

37.4

4.1

 

20.3

18.5

9.7

 

20.3

18.5

9.7

 

 

52.3

49.6

2.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EA, AU & PMI DF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Australia

 

1.4

1.9

(29.1)

 

0.4

0.6

(28.5)

 

0.4

0.6

(28.5)

 

 

32.8

32.5

0.3

 

Japan(2)

 

37.9

37.6

0.9

 

17.5

16.7

5.0

 

4.1

4.9

(16.7)

 

13.4

11.8

14.0

 

40.9

39.4

1.5

 

29.4

26.3

3.1

South Korea

 

18.2

18.5

(1.9)

 

3.6

3.6

(1.3)

 

2.2

2.3

(6.0)

 

1.4

1.3

6.9

 

19.6

19.5

0.1

 

7.7

7.0

0.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Argentina

 

5.9

7.3

(20.0)

 

3.6

4.5

(19.9)

 

3.6

4.5

(19.9)

 

 

61.5

61.5

 

Mexico

 

7.4

7.4

0.9

 

4.6

4.6

(0.4)

 

4.6

4.6

(1.0)

 

0.1

 

62.2

63.0

(0.8)

 

0.8

0.4

0.4

 

(1) Market share estimates are calculated using IMS data, unless otherwise stated

(2) Total market and market share estimates include cigarillos in Japan

(3) PMI market share reflects estimated adjusted IMS volume share

Note: % change for Total Market and PMI shipments is computed based on millions of units. "-" indicates volume below 50 million units and market share below 0.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix 2

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries

Key Market Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

Market

 

Total Market,

bio units

 

PMI Shipments, bio units

 

PMI Market Share(2), %

 

 

Total

 

Cigarette

 

HTU

 

Total

 

HTU

 

2024

2023

% Change

 

2024

2023

% Change

 

2024

2023

% Change

 

2024

2023

% Change

 

2024

2023

pp Change

 

2024

2023

pp Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total(1)(2)

 

1,274.9

1,261.5

1.1

 

369.5

359.5

2.8

 

300.8

300.7

 

68.7

58.8

16.8

 

28.3

27.9

0.4

 

5.1

4.6

0.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

France

 

13.0

15.1

(13.8)

 

5.9

7.5

(21.7)

 

5.8

7.4

(21.5)

 

0.1

0.1

(33.3)

 

40.9

42.3

(1.4)

 

0.6

0.8

(0.2)

Germany(3)

 

33.3

33.7

(1.2)

 

13.2

12.9

1.9

 

11.1

11.6

(4.7)

 

2.1

1.3

61.4

 

39.4

39.3

0.1

 

6.2

5.4

0.8

Italy(3)

 

35.6

35.6

 

18.5

18.7

(0.9)

 

13.7

13.9

(1.3)

 

4.8

4.8

 

53.1

53.7

(0.6)

 

17.2

17.0

0.2

Poland(3)

 

29.1

28.5

2.3

 

12.5

11.6

7.9

 

9.9

9.2

7.8

 

2.7

2.5

8.4

 

43.1

41.0

2.1

 

9.1

9.0

0.1

Spain

 

20.9

21.2

(1.1)

 

6.3

6.5

(2.9)

 

5.8

6.0

(4.2)

 

0.5

0.4

15.7

 

29.1

29.1

 

2.7

2.2

0.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SSEA, CIS & MEA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Egypt

 

38.4

38.5

(0.3)

 

12.0

11.7

2.0

 

11.3

11.3

0.6

 

0.6

0.5

35.4

 

30.7

30.4

0.3

 

1.9

1.4

0.5

Indonesia

 

145.8

141.4

3.1

 

39.4

40.5

(2.9)

 

39.4

40.5

(2.9)

 

0.5

0.2

+100

 

27.3

28.8

(1.5)

 

0.3

0.2

0.1

Philippines

 

20.0

21.7

(7.9)

 

10.6

12.3

(14.2)

 

10.4

12.2

(14.6)

 

0.1

0.1

30.0

 

52.8

56.7

(3.9)

 

0.7

0.5

0.2

Russia

 

101.9

96.7

5.3

 

32.9

31.2

5.4

 

24.4

23.5

3.7

 

8.5

7.7

10.5

 

32.0

32.0

 

8.8

8.1

0.7

Turkey

 

70.1

63.5

10.3

 

36.3

31.3

16.0

 

36.3

31.3

16.0

 

 

51.9

49.3

2.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EA, AU & PMI DF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Australia

 

2.7

3.8

(29.4)

 

1.0

1.3

(27.2)

 

1.0

1.3

(27.2)

 

 

35.2

34.2

1.0

 

Japan(2)

 

73.7

72.9

1.0

 

35.4

31.5

12.6

 

8.4

9.6

(12.6)

 

27.0

21.9

23.6

 

41.0

39.4

1.6

 

29.4

26.3

3.1

South Korea

 

34.7

35.4

(2.1)

 

6.9

6.9

0.5

 

4.2

4.4

(5.6)

 

2.8

2.5

11.7

 

20.0

19.5

0.5

 

7.9

6.9

1.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Argentina

 

13.0

15.1

(13.8)

 

8.0

9.4

(14.7)

 

8.0

9.4

(14.7)

 

 

61.6

62.2

(0.6)

 

Mexico

 

13.7

13.5

1.3

 

8.3

8.3

 

8.2

8.3

(0.6)

 

0.1

0.1

78.4

 

61.1

61.9

(0.8)

 

0.8

0.4

0.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Market share estimates are calculated using IMS data, unless otherwise stated

(2) Total market and market share estimates include cigarillos in Japan

(3) PMI market share reflects estimated adjusted IMS volume share

Note: % change for Total Market and PMI shipments is computed based on millions of units. "-" indicates volume below 50 million units and market share below 0.1%

 

Philip Morris International
Investor Relations:
Stamford, CT: +1 (203) 905 2413
Lausanne, Switzerland: +41 582 424 666
InvestorRelations@pmi.com

Media:
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David.Fraser@pmi.com

Source: Philip Morris International