Key takeaways from Philip Morris International’s earning report

Philip Morris International (NYSE:PM) tracked higher in premarket trading on Tuesday after topping estimates on both lines of its Q3 earnings report and setting full-year profit guidance ahead of expectations.

IOQS and ZYN boost results

Revenue rose 8.4% year-over-year during the quarter to $9.91 billion. On an organic basis, revenue jumped 11.6%. Total shipment volume was up 2.9% from a year ago to 203.0 billion units. Adjusted operating income increased 8.4% during the quarter and was up 13.8% on an organic basis. EPS came in at $1.91 vs. $1.56 consensus and $1.67 a year ago. “In the third quarter, we delivered an exceptionally strong performance, with record quarterly net revenues and earnings per share,” noted CEO Jacek Olczak. “This reflects excellent momentum across all regions and categories, with a reacceleration in IQOS adjusted in-market sales growth, strong ZYN volumes, and resilient combustible performance,” he highlighted.

Europe shows improvement

Philip Morris’ (PM) total cigarette and HTU shipment volume in Europe increased by 2.5%, with increases in Ukraine and Poland helping to offset declines in Belgium and Netherlands. PM’s estimated HTU adjusted in-market sales volume in the region increased by 11.3% in the quarter, reflecting continued growth momentum for IQOS. PMI’s HTU share of the total cigarette and HTU market in the Region increased by 0.8 percentage points on an adjusted basis. Oral SFP shipments increased by 4.2%, primarily driven by nicotine pouches.

The smoke-free business gains strength

Quarterly shipments of smoke-free products, available in 92 markets, reached close to 40 billion units. The smoke-free business accounted for 38% of PM’s total net revenues and 40% of gross profit, and continues to deliver strong performance, with net revenue increasing by 14.2% (16.8% organically) and gross profit increasing by 15.9% (20.2% organically).

Looking ahead

Philip Morris International (PM) sees full-year adjusted EPS of $6.45 to $6.51 (midpoint $6.48) vs. a prior outlook for $6.33 to $6.45 and $6.41 consensus. The company sees met revenue growth of around 9.5% on an organic basis. Shares of PM were up 1.99% in premarket trading. Rivals Altria (MO) and British American Tobacco (BTI) were also slightly higher.