We are experiencing some temporary issues. The market data on this page is currently delayed. Please bear with us as we address this and restore your personalized lists.
PM Q3 Earnings Top Estimates on Combustible Pricing, 2024 View Up
1 / 2
PM Q3 Earnings Top Estimates on Combustible Pricing, 2024 View Up
Philip Morris International Inc. PM posted strong third-quarter 2024 results, wherein both top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Results were fueled by robust momentum across all regions and product categories, including enhanced IQOS-adjusted in-market sales growth, solid ZYN volumes and resilience in the combustible unit.
Driven by a solid year-to-date show, this Zacks Rank #2 (Buy) company raised its full-year 2024 adjusted earnings per share (EPS) guidance.
PM’s Quarterly Performance: Key Metrics and Insights
Adjusted EPS came in at $1.91, which increased 14.4% year over year. Excluding currency effects, the adjusted EPS jumped 18%. The bottom line beat the Zacks Consensus Estimate of $1.83.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Philip Morris International Inc. Price, Consensus and EPS Surprise
Philip Morris International Inc. price-consensus-eps-surprise-chart | Philip Morris International Inc. Quote
Net revenues of $9,911 million increased 8.4% on a reported basis and 11.6% on an organic basis (excluding currency movements and acquisitions). Revenues came ahead of the Zacks Consensus Estimate of $9,571 million. The increase in organic revenues was backed by positive pricing variance (mainly backed by elevated combustible tobacco pricing) and favorable volume/mix (accountable to increased smoke-free product volumes).
During the quarter, net revenues from combustible products increased 5.2% and 8.6% organically due to high single-digit pricing and robust industry volumes.
Revenues from the smoke-free business increased 14.2% (up 16.8% on an organic basis) and formed 38% of the company’s total revenues (up by 1.9 percentage points compared with the year-ago period). Within the smoke-free business, inhalable smoke-free products (SFP) were driven by strength in IQOS, while oral SFP was fueled by increased shipment volumes of ZYN.
Total shipment volumes (including heated tobacco units, oral SFP and cigarettes) increased 2.9% to 203 billion units in the third quarter.
The adjusted operating income ascended 11.2% (up 13.8% on an organic basis) to $4,153 million due to improved pricing variance and a positive volume/mix, somewhat negated by increased manufacturing costs, mainly associated with tobacco leaf, as well as higher marketing, administration and research costs. The adjusted operating margin grew 1.1 percentage points or pp (up 0.9 pp organically) to 41.9%.
Decoding PM’s Region-Wise Performance
Net revenues in the European region grew 8.7% on an organic basis to $4,121 million. This was a result of favorable pricing and volume/mix. Total HTU and cigarette shipment volumes in the region increased 2.5% to 57.9 billion units.
In the SSEA, CIS & MEA regions, net revenues increased 12.1% organically to $2,964 million on improved pricing variance and a favorable volume/mix. Total shipment volumes rose by 3.2% to 98.6 billion units.
In the EA, AU & PMI DF regions, net revenues grew 7.4% organically to $1,602 million on favorable volume/mix and pricing variance. Total shipment volumes in the region climbed 2.4% to 26.7 billion units.
Revenues in the Americas surged 30.5% on an organic basis to $1,148 million. This was a result of the positive volume/mix and pricing. Total cigarette and HTU shipment volumes in the Americas dipped 1.1% to 15.4 billion units.
Philip Morris: Other Updates
In September 2024, Philip Morris unveiled the sale of its subsidiary, Vectura Group Ltd. (Vectura), to Molex Asia Holdings Ltd., along with the creation of master service agreements to advance Vectura Fertin Pharma’s proprietary inhaled therapeutics pipeline. The deal is expected to conclude by the end of 2024. The remaining divisions of Vectura Fertin Pharma will continue to operate independently under Philip Morris’ ownership, adopting a new corporate identity.
Revenues from the Wellness and Healthcare unit improved 2.7% year over year on an organic basis to $76 million. Management expects 2024 net revenues and the adjusted operating loss in the Wellness and Healthcare segment to remain mostly unchanged from 2023.
Philip Morris ended the quarter with cash and cash equivalents of $4,258 million, long-term debt of $44,237 million and a total shareholder deficit of $7,713 million.
Philip Morris raised its quarterly dividend by 3.8% to $1.35 per share. However, the company stated that it would not make share repurchases in 2024.
What to Expect From PM in 2024?
Adjusted EPS for 2024 is now envisioned in the $6.45-$6.51 range, suggesting 7.3-8.3% growth. Adjusted EPS, excluding currency, is likely to be in the $6.85-$6.91 band, indicating a year-over-year increase of 14-15%. For full-year 2024, PM expects reported EPS in the band of $6.20-$6.26 compared with the $5.02 reported in 2023.
Adjusted EPS for 2024 was earlier anticipated in the $6.33-$6.45 range, suggesting 5.3-7.3% growth. Adjusted EPS, excluding currency, was expected to be in the $6.67-$6.79 band, indicating a year-over-year increase of 11-13%. For full-year 2024, PM earlier projected reported EPS in the band of $5.89-$6.01.
The total international industry volume for cigarettes and HTUs (excluding China and the United States) is likely to grow up to 1% in 2024. This compares with the prior view of mostly stable. The total cigarette, HTU and oral smoke-free product shipment volume for Philip Morris is likely to rise 2-3% now, driven by smoke-free product strength compared with the previous view of 1-2% growth.
Nicotine pouch shipment volumes in the United States are now expected between 570 and 580 million cans for 2024 compared with 560 and 580 cans guided before.
For 2024, PM now expects net revenues to increase 9.5% on an organic basis compared with 7.5-9% growth expected before. The operating income on an organic basis is likely to rise 14-14.5%, up from the 11-13% growth forecasted earlier. Management expects an acceleration in organic smoke-free net revenue and gross profit increase from 2023.
Management expects operating cash flow of around $11 billion in 2024. Capital expenditures are likely to be $1.4 billion, including additional investments in ZYN.
Shares of PM have rallied 8.6% in the past three months compared with the industry’s growth of 5%.
Other Stocks to Consider
Freshpet FRPT manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FRPT’s current financial-year sales and earnings indicates advancements of 26.1% and 202.9%, respectively, from the prior-year figures. It has a trailing four-quarter earnings surprise of 132.9%, on average.
McCormick & Company, Inc. MKC is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for McCormick & Company’s current fiscal-year sales and earnings indicates advancements of 0.6% and 8.2%, respectively, from the year-ago reported figures. MKC has a trailing four-quarter earnings surprise of 13.8%, on average.
Flowers Foods FLO, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings implies growth of around 1% and 5%, respectively, from the year-ago reported numbers.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
