On July 23, 2024, Philip Morris International Inc (PM, Financial) released its 8-K filing for the second quarter and first half of 2024, showcasing robust financial results and an upward revision of its full-year guidance.
Company Overview
Created from the international operations of Altria in 2008, Philip Morris International sells cigarettes and reduced-risk products, including heatsticks, vapes, and oral nicotine offerings primarily outside of the US. With the 2022 acquisition of Swedish Match, a leading manufacturer of traditional oral tobacco products and nicotine pouches primarily in the US and Scandinavia, PMI has not only diversified away from smokeable products but also gained a toehold into the US to sell its iQOS heatsticks.
Performance and Challenges
Philip Morris International Inc (PM, Financial) reported a 52.5% increase in reported diluted EPS to $1.54 for Q2 2024, surpassing the analyst estimate of $1.47. However, adjusted diluted EPS decreased by 0.6% to $1.59, though it grew by 10.6% excluding currency impacts. The company's revenue for the quarter stood at $9.5 billion, above the estimated $9.18 billion.
The company's smoke-free business (SFB) continues to be a significant growth driver, accounting for 38.1% of total net revenues, up by 2.7 percentage points from the same quarter last year. Despite currency headwinds, the company has raised its full-year guidance, reflecting strong underlying performance and proactive measures across all categories.
Financial Achievements
Philip Morris International Inc (PM, Financial) achieved notable financial milestones in Q2 2024:
- Net revenues increased by 5.6% year-over-year to $9.5 billion, with organic growth of 9.6%.
- Gross profit grew by 6.7% to $6.1 billion, with organic growth of 11.5%.
- Operating income surged by 34.2% to $3.4 billion, with organic growth of 12.5%.
These achievements underscore the company's ability to navigate a challenging market environment and deliver strong financial performance.
Income Statement Highlights
| Metric | Q2 2024 | Change (YoY) |
|---|---|---|
| Net Revenues | $9.5 billion | +5.6% |
| Gross Profit | $6.1 billion | +6.7% |
| Operating Income | $3.4 billion | +34.2% |
| Reported Diluted EPS | $1.54 | +52.5% |
| Adjusted Diluted EPS | $1.59 | -0.6% |
Analysis and Commentary
Philip Morris International Inc (PM, Financial) continues to make significant strides in its transition to a smoke-free future. The company's smoke-free products, including IQOS and ZYN, have shown strong growth, contributing to the overall revenue increase. The company's ability to raise its full-year guidance despite currency headwinds is a testament to its robust business model and strategic initiatives.
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."
Conclusion
Philip Morris International Inc (PM, Financial) has demonstrated strong financial performance in Q2 2024, driven by its smoke-free products and strategic initiatives. The company's ability to exceed earnings estimates and raise its full-year guidance highlights its resilience and growth potential in the evolving tobacco industry. For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Philip Morris International Inc for further details.
