Tobacco giant Philip Morris International (PM 0.09%) reported its 2024 first-quarter earnings on Tuesday and they exceeded expectations on revenue and earnings. The company reported adjusted earnings per share (EPS) of $1.50, which not only surpassed the forecast of $1.41 but also marked a significant year-over-year growth. Robust revenue performance at $8.8 billion for the quarter topped analysts' estimates and signaled a 9.7% increase from 2023's Q1.
PMI's success was underpinned by a strategic emphasis on smoke-free products, which now represent a substantial portion of PMI's revenue.
| Earnings Data | Q1 2024 | Analyst Estimates | Q1 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $1.50 | $1.41 | $1.38 | 8.7% |
| Revenue | $8.8 billion | $8.47 billion | $8.02 billion | 9.7% |
| Smoke-free products' net revenue share | 39% | N/A | 34.9% | N/A |
| Shipment unit volume -- HTU | 33.1 million | N/A | 27.4 million | 20.9% |
| Shipment unit volume -- Oral SFP | 242.6 million | N/A | 173.3 million | 40% |
YOY = Year over year. EPS = earnings per share. HTU = Heated tobacco units (such as vape pens). SFP = Smoke-free products (like chewing tobacco).
Understanding Philip Morris International
Philip Morris International is a leader in the tobacco industry, pivoting significantly in recent years toward smoke-free products. This strategic transition aims to reshape the company's future, responding to growing consumer health concerns and stricter global regulations on tobacco use.
The company's smoke-free portfolio, including devices like IQOS, is part of a broader mission to phase out traditional cigarettes from its product lineup. The company is working to adapt to the evolving regulatory landscape and to consumer preferences for reduced-risk products.
Quarterly highlights
The first quarter of 2024 underscored Philip Morris's adept navigation through industry challenges and its strategic focus areas. The company continued its aggressive expansion of smoke-free products, achieving a notable 39% of its net revenue from this segment.
This quarter saw significant geographical expansions and improved market share for its heated tobacco units (HTUs) and oral smoke-free products (SFPs) domains. The strategic acquisitions, such as that of Swedish Match AB in February 2023, have fortified PMI's position in the smoke-free market, promising greater consumer reach and innovation potential.
Investments in research and development have bolstered the company's product pipeline, ensuring a steady flow of novel and improved offerings. PMI's product innovation, aligned with consumer preferences and regulatory standards, has been paramount in maintaining its competitive edge.
Looking ahead
Philip Morris's updated guidance for 2024 pointed to an improved adjusted EPS range (which excludes currency fluctuations) of $6.55 to $6.67. This adjustment mirrors the company's confidence in sustaining its growth trajectory (expected to be 10% better at the midpoint over 2023 totals) and its ability to navigate the complexities of global markets and regulatory environments.
Investors are encouraged to monitor PMI's performance in expanding its smoke-free product offerings and geographic reach. These factors, coupled with the company's agility in adapting to regulatory changes, will be crucial for its continued success in the evolving tobacco industry.
