Philip Morris International
Fabrice Coffrini/AFP via Getty Images
Philip Morris International beat earnings and revenue expectations in the fourth quarter as heated tobacco sales surged and cigarette volumes returned to growth.
The tobacco giant’s stock failed to significantly move despite a bullish full-year outlook, coming in comfortably ahead of Wall Street’s expectations.
Philip Morris International (ticker: PM) reported adjusted earnings per share (EPS) of $1.35 in the fourth quarter and net revenues of $8.1 billion, both beating expectations. Analysts polled by FactSet had expected adjusted EPS of $1.33 on sales of $7.75 billion.
The Marlboro maker said cigarette shipment volumes rose 2.4% in the quarter, having fallen 0.4% in the third quarter, while heated tobacco unit shipment volume grew 17% to 25.4 billion units.
The company launched its IQOS smoke-free heated tobacco product in 2016 and has been adding to its range ever since, unveiling the new IQOS ILUMA last year.
“We were especially pleased by the reacceleration of our business in the fourth quarter to deliver better-than-expected results. This included a step up in sequential IQOS user growth, as well as the outstanding initial performance of IQOS ILUMA,” CEO Jacek Olczak said.
Cigarette volumes climbed in the fourth quarter, despite falling 0.6% for the full year. Olczak said the company achieved “essentially stable category share” for cigarettes in the quarter, due to pandemic restrictions easing in many markets as well as a number of company initiatives.
Philip Morris’ total international market share for cigarettes, excluding China and U.S., fell 0.3 percentage points to 23.8% in the quarter, slipping 0.9 percentage points for the full-year.
In contrast, the company continues to grow market share for heated tobacco, up 0.4 percentage points to 3.5% in the fourth quarter.
The company said it expects adjusted EPS of $1.50 to $1.55 in the first quarter of 2022, compared with analyst expectations of $1.54.
Its full-year outlook was more positive, though, with guidance for adjusted diluted EPS of $6.57 to $6.75, or growth of 8% to 11%, compared with the FactSet analyst consensus of $6.35.
Philip Morris said its continued shift from cigarettes to smoke-free products, a more favorable product mix, would increase adjusted operating income margins by 50 to 150 basis points in the full year 2022. It also plans to keep reinvesting in growing its portfolio of smoke-free cigarette alternatives.
The stock, which was largely flat in premarket trading, has climbed 9.6% year-to-date, as of Wednesday’s close. In comparison the S&P 500 has fallen 3.8% so far in 2022.
Write to Callum Keown at [email protected]
