September 28, 2023
Philip Morris International Inc. Hosts 2023 Investor Day
Presents the Company’s Next Growth Phase, Including Its Ambition for Smoke-Free Products to Account for Over Two-Thirds of Its Total Net Revenues by 2030; Revises, for Currency Only, 2023 Full-Year Reported and Adjusted Diluted EPS Forecasts, While Reaffirming Currency-Neutral Adjusted Diluted EPS Growth Forecast of 8.0% to 9.5%
Philip Morris International Inc.’s (NYSE: PM) senior management presents the company’s business strategies and growth outlook today at its 2023 Investor Day, held at the company’s Operations Center in Lausanne,
Investor Day Highlights
The company:
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Provides 2024 to 2026 compound annual growth targets of:
- 6% to 8% for net revenues, on an organic basis, including growing total shipment volumes;
- 8% to 10% for adjusted operating income (OI), on an organic basis; and
- 9% to 11% for adjusted diluted EPS, excluding currency, assuming current corporate income tax rates;
- Provides 2026 heated tobacco unit shipment volume target of 180 to 200 billion units and nicotine pouch shipment volume target of 800 million to 1 billion cans;
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Expects ZYN to drive double-digit net revenue and adjusted OI compound annual growth for the company’s overall
U.S. operations over the 2024 to 2026 period, including the impact of IQOS investments; and - Announces its ambition to have more than two-thirds of its total net revenues come from smoke-free products in 2030.
“We have made significant and unparalleled progress on our smoke-free transformation, developing a more sustainable growth model while making important contributions to tobacco harm reduction, as more smokers switch to our smoke-free products and leave cigarettes behind," said
“Our ambitious 2024 to 2026 targets reflect our confidence in the future, underpinned by our two leading smoke-free brands – IQOS and ZYN – as well as continued innovation, with significant opportunities for further growth over the coming years – both in the
“By 2030, our ambition is to be a substantially smoke-free company, with over two-thirds of our total net revenues coming from smoke-free products. We see a realistic path to becoming a smoke-free company over time, and this will be achieved market-by-market – as we are already demonstrating today.”
Webcast Details
The presentations and Q&A session will be webcast live from approximately
2023 Full-Year and Third-Quarter Forecast & Assumptions
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Full-Year |
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2023
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2022 |
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Growth |
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Reported Diluted EPS |
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- |
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Adjustments |
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Asset impairment and exit costs |
0.06 |
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— |
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Termination of distr. arrangement in |
0.04 |
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— |
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Tax benefit assoc. with |
(0.06) |
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(0.13) |
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Impairment of goodwill and other intangibles |
0.44 |
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0.06 |
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Amortization of intangibles |
0.16 |
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0.09 |
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Costs associated with |
— |
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0.06 |
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Charges related to the war in |
— |
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0.08 |
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0.01 |
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0.06 |
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0.11 |
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— |
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Fair value adj. for equity security investments |
0.01 |
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(0.02) |
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Tax Items |
— |
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(0.03) |
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Total Adjustments |
0.77 |
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0.17 |
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Adjusted Diluted EPS |
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- |
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Less Currency |
(0.50) |
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Adjusted Diluted EPS, excluding currency |
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- |
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8.0% |
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9.5% |
PMI revises its 2023 full-year reported diluted EPS forecast – for currency only – to a range of
“Our excellent momentum continues, with further strong IQOS performance, resilient combustible trends and better-than-expected growth for ZYN,” said
The
The assumptions underlying this forecast remain unchanged versus those communicated by PMI in its earnings release of
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Full-year HTU shipment volume around the middle of the company’s 125-to-130-billion-unit range, including the impact of a later-than-expected market launch in
Taiwan and very limited growth inRussia andUkraine . The range also reflects some uncertainty related to inventory levels in theEurope Region , as trade partners adjust to the upcoming HTU flavor ban in the EU; - Full-year nicotine pouch shipment volume of 370 to 400 million cans;
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Operating cash flow of around
$10 billion at prevailing exchange rates, subject to year-end working capital requirements, with the change versus the prior range of$10 to$11 billion primarily reflecting the unfavorable estimated currency impact on net earnings; -
A third-quarter unfavorable currency impact on adjusted diluted EPS of
$0.17 per share, at prevailing exchange rates;-
Adjusted diluted EPS toward the lower end of the
$1.60 to$1.65 prior forecast range, reflecting the incremental currency impact almost fully offset by better-than-anticipated business performance;
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Adjusted diluted EPS toward the lower end of the
- Third-quarter HTU shipment volume around the middle of the company’s 31-to-33-billion-unit range, including typical seasonality in IQOS user and market share growth trends; and
- Third-quarter adjusted OI margin that is broadly stable organically versus the prior year period and up sequentially versus the second quarter.
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Third-Quarter |
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2023
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2022 |
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Currency |
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Var. excl.
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Reported Diluted EPS |
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– |
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29%-33% |
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Amort. and impairment of intangibles (a) |
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0.04 |
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0.08 |
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Costs assoc. w/ |
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-- |
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0.11 |
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Adjusted Diluted EPS |
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– |
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16%-19% |
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(a) Includes a non-cash impairment charge of |
Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.
2024-2026 Targets & Assumptions
The company communicates the following key targets related to the three-year period from 2024 to 2026:
- Positive total shipment volume compound annual growth;
- Annual HTU shipment volume of 180 to 200 billion units in 2026;
- Annual nicotine pouch shipment volume of 800 million to 1 billion cans in 2026;
- Net revenue compound annual growth of 6% to 8% on an organic basis;
- Adjusted OI compound annual growth of 8% to 10% on an organic basis;
- Adjusted diluted EPS compound annual growth of 9% to 11%, excluding currency;
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Gross manufacturing productivities of
$1 billion and SG&A efficiencies of$1 billion ; -
$36 to$39 billion in total operating cash flow over the three-year period at prevailing exchange rates; and - Adjusted net debt to EBITDA of around 2-times by the end of 2026 at prevailing exchange rates.
The company communicates the following key assumptions related to the three-year period from 2024 to 2026:
- Excise tax developments consistent with recent trends and current multi-year tax plans;
- Mid-single-digit annual combustible tobacco pricing variance as a percentage of prior year net revenues and moderate net pricing on HTUs;
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Double-digit compound annual growth in net revenues and adjusted OI for the company’s
U.S. operations, including the impact of IQOS investments; - Limited growth in Wellness and Healthcare segment net revenues and no increase in investment levels in the segment;
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No contribution from any potential favorable court ruling related to the legality of a supplemental tax surcharge on HTUs in
Germany ; - Higher net financing costs;
- Current corporate income tax rates, excluding any potential impact of the OECD Pillar One and Pillar Two international tax proposals;
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$3.5 to$3.7 billion in total capital expenditures over the three-year period, with ~75% related to smoke-free products; - No share repurchases reflected in the growth targets for the period.
Capital Allocation
Subject to the discretion of the Board of Directors:
- The company will maintain its progressive dividend policy while targeting a long-term dividend payout ratio of around 75% of adjusted diluted EPS;
- The company could consider share repurchases once confirmed that it is fully on-track for 2-times net debt to adjusted EBITDA leverage target.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and goals and other forward-looking statements, including statements regarding business and regulatory plans, expectations, opportunities, ambitions, targets, and strategies. These forward-looking statements and anticipated results reflect the current views and assumptions of management and are inherently subject to significant risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI.
PMI’s business risks include: excise tax increases and discriminatory tax structures; increasing marketing and regulatory restrictions that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products in certain markets or countries; health concerns relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke; litigation related to tobacco use and intellectual property; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; the impact and consequences of Russia’s invasion of
PMI is further subject to other risks detailed from time to time in its publicly filed documents, including PMI’s Annual Report on Form 10-K for the fourth quarter and year ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20230927950525/en/
Investor Relations:
Lausanne: +41 (0)58 242 4666
InvestorRelations@pmi.com
Media:
Lausanne: +41 (0)58 242 4500
David.Fraser@pmi.com
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