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Philip Morris International Inc. (PMI) (NYSE: PM) has reported an exceptionally strong performance for the third quarter of 2024, achieving record quarterly net revenues and earnings per share (EPS). The company’s net revenues increased by 8.4% to $9.9 billion, with an organic growth rate of 11.6%. This growth was driven by a favorable pricing variance and an increase in smoke-free product volumes, which now account for 38% of PMI’s total net revenues. The smoke-free segment saw a robust growth of 14.2% in net revenues and a 15.9% increase in gross profit, demonstrating PMI’s strategic focus on transitioning towards a smoke-free future.

The company’s total shipment volume for cigarettes and heated tobacco units (HTUs) rose by 2.6%, with HTU shipments alone increasing by 8.9%. This growth was fueled by strong performances across various regions, including Japan and Europe, where IQOS, PMI’s leading smoke-free product, continued to gain market share.

In Japan, IQOS’s market share increased by 3.2 percentage points, reaching nearly 30% of the total nicotine offtake share in major cities like Tokyo and Yokohama. In Europe, the adjusted in-market sales growth for HTUs reaccelerated to 11.3%, driven by significant growth in markets such as Italy, Greece, and Germany.

Philip Morris Beats Third Quarter Expectations with Ease

Philip Morris International’s performance in the third quarter of 2024 exceeded market expectations and set records. Analysts had projected an EPS of $1.82 and revenue of $9.68 billion for the quarter.

However, PMI reported an adjusted diluted EPS of $1.91, surpassing expectations by 4.9%. The reported diluted EPS saw a remarkable increase of 49.2% year-over-year, reaching $1.97, highlighting the company’s ability to navigate challenges and capitalize on growth opportunities.

The company’s strategic focus on smoke-free products has been a significant factor in exceeding expectations. The smoke-free business contributed 40% of PMI’s gross profit, with notable growth in IQOS and ZYN products.

Additionally, PMI’s combustible tobacco segment also performed well, with net revenues growing by 5.2%, driven by high single-digit pricing and resilient industry volumes. This balanced growth across both smoke-free and traditional tobacco products underscores PMI’s robust business model and adaptability in a dynamic market environment.

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PM Raises Full Year 2024 guidance, Expects Diluted EPS in Range of $6.20 to $6.26

In light of its strong year-to-date performance, Philip Morris International has raised its full-year guidance for 2024. The company now expects its reported diluted EPS to be in the range of $6.20 to $6.26, up from $5.02 in 2023. This revised guidance reflects a projected increase of 7.3% to 8.3% in adjusted diluted EPS, excluding a total adjustment of $0.25 per share.

Furthermore, excluding an adverse currency impact of $0.40, PMI anticipates a growth of 14.0% to 15.0% in adjusted diluted EPS, highlighting its confidence in sustained growth momentum.

The company’s optimistic outlook is supported by several key assumptions, including an estimated total international industry volume growth of up to 1% for cigarettes and HTUs, excluding China and the U.S. PMI also expects its total cigarette, HTU, and oral smoke-free product shipment volume to grow by 2% to 3%, driven by smoke-free products.

Additionally, the company forecasts organic net revenue growth of around 9.5% and organic operating income growth of 14% to 14.5%.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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