Philip Morris reports better than expected earnings

Philip Morris International (PMI) has reported a better than expected third quarter result, and has raised its full-year forecast.

PMI reported earning $2.31 billion in the third quarter, up 28.7 per cent on the same period last year.

Its full year 2020 reported diluted EPS forecast has been raised to a range of $5.03 to $5.08, compared to previously communicated range of $4.92 to $4.99.

The third quarter saw cigarette and heated tobacco unit volumes fall by 7.6 per cent, and cigarette shipment volume was down by 9.8 per cent.

Heated tobacco unit shipment volume, which includes PMI’s heat-not-burn IQOS products, was up by 18.7 per cent in the quarter.

PMI reported that total IQOS users at the end of the quarter were around 16.4 million, of which around 11.7 million have quit smoking and switched to IQOS.

“We delivered stronger-than-anticipated results in the third quarter, despite the ongoing challenges of the pandemic, with adjusted diluted EPS growth of 5.6 per cent on an organic basis,” said André Calantzopoulos, Chief Executive Officer.

“The sustained momentum of IQOS was excellent, with an estimated 16.4 million total users at the end of September and smoke-free products accounting for nearly one-fourth of our total net revenues in the quarter.

“Furthermore, our combustible tobacco business recorded an improved sequential performance, supported by better underlying total industry volumes across both developed and emerging markets.

“Despite continued headwinds for our duty-free business and in Indonesia, we are raising our full-year 2020 guidance and now anticipate adjusted diluted EPS growth of around five per cent to six per cent on an organic basis, compared to a range of approximately 3.5 per cent to five per cent previously.”

C&I reported earlier in the month that PMI CEO, Calantzopoulos had flagged that cigarette sales could end within 15 years.

PMI’s portfolio includes high profile brands such as Marlboro, Benson & Hedges and Parliament. Acknowledging that the best option was to never begin smoking in the first place or to quick tobacco and nicotine completely, he argued that smoking alternatives were being overlooked, which he believed was detrimental to those seeking alternatives to smoking, though these too were not risk free, he said.

At the time, Calantzopoulos highlighted that 11.2 million smokers globally had already shifted from cigarettes to PMI’s heat-not-burn IQOS products. That number has now risen to 16.4 million.

However, while marketed as safer alternatives, Australian health bodies and the Therapeutic Goods Administration hold concerns, particularly around devices delivering unreliable doses of nicotine, the potential for leaking nicotine or containing toxic chemicals or carcinogens. 

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