Philip Morris Q2 2023 Financial NYSE:PM Stock Growth

Philip Morris International Inc. (PMI), the globally recognized tobacco corporation, recently revealed its financial performance for Q2 2023, showcasing promising results. The report underlines a robust momentum of the business driven by substantial results in both core and emerging sectors.

The corporation, with a market cap of $153.71 billion, started its stock at $99.78, reaching a high of $100.70 and a low of $99.01. The trading takes place at a P/E ratio of 17.69, and the company provides a dividend yield of 5.13%.

PMI has shown a solidified market position by reporting a 6% increase in net revenue for combustible tobacco. The increase was 7.4% on an organic basis, mainly fueled by over 9% in pricing. Importantly, the company's market share for heated tobacco units (HTUs) in IQOS markets climbed by 1.6 points to 9.2%.

After discounting the net favorable impact of estimated distributor and wholesaler inventory movements, the adjusted in-market sales volume for HTUs increased by an estimated 16%. At the end of the quarter, the total IQOS users numbered around 27.2 million, a rise of 1.4 million compared to March 2023.

The company's subsidiary, Swedish Match, manufactures a nicotine pouch (NP) named ZYN, which recorded a remarkable shipment volume of 89.9 million cans in the U.S., marking a 53.1% growth versus Q2 2022. This considerably outperformed the 58.7 million cans shipped by Swedish Match in the same timeframe.

Furthermore, PMI declared a regular quarterly dividend of $1.27 per share, implying an annualized rate of $5.08 per share, highlighting the company's dedication to return capital to shareholders while also reinvesting in its future growth operations.

CEO Jacek Olczak expressed that they're witnessing strong business momentum, reinforced by a 3.3% growth in the total cigarette and HTU shipment volume. He praised Swedish Match's performance and its contribution to PMI's smoke-free transformation through ZYN's rapid growth in the U.S.

The company's organic net revenues for Q2 2023 increased by 10.5%, driven by a 3.3% growth in total cigarette and HTU shipment volume and the favorable product mix impact associated with the rising proportion of smoke-free products within PMI's product portfolio.

Thanks to this strong performance, PMI projects organic net revenue growth between 7.5% to 8.5% for the full year 2023 and a currency-neutral adjusted diluted EPS growth between 8.0% to 9.5%. This forecast presumes a total international industry volume decrease for cigarettes and HTUs, excluding China and the U.S., of 0.5% to 1.5%.

In light of the ongoing conflict in Ukraine, PMI emphasizes the safety and security of its 1,300 employees and their families as its primary concern. The company also announced a $30 million investment in a new production facility in the Lviv region of Western Ukraine, slated to begin operations in Q1 2024.

Additionally, PMI is continuously evaluating the evolving situation in Russia, considering the recent regulatory restrictions and international regulations.

PMI's product assessment program is gaining credibility in the regulatory science sector. The company received Premarket Tobacco Product Application (PMTA) authorizations for the IQOS Tobacco Heating System from the U.S. FDA in 2019 and 2020, and they are on track for their IQOS ILUMA PMTA submission in Q4 2023 to seek market authorization in the U.S.

In addition to IQOS ILUMA, PMI already has PMTA authorization for IQOS 3 and 3 DUO, IQOS 2.4 Plus, and its accompanying HeatSticks, including Marlboro HeatSticks, Marlboro Smooth Menthol HeatSticks, and Marlboro Fresh Menthol HeatSticks. This accomplishment underlines the FDA's recognition of these products as Modified Risk Tobacco Products (MRTP), suggesting their potential as lower-risk alternatives to traditional cigarettes.

Despite the uncertainties brought by the COVID-19 pandemic, PMI's robust performance in H1 2023 and the promising growth of its smoke-free portfolio imply a bright future for the company. PMI's commitment to a smoke-free future and the continuous growth and development of its innovative product offerings align with global trends favoring harm reduction and healthier lifestyle choices.

The company is also bolstering its corporate social responsibility initiatives aiming to minimize the environmental impact of its operations, make positive contributions to communities, and uphold the highest standards of corporate conduct and transparency.

Q2 2023 has been a period of considerable progress and transformative change for PMI. With its strategic focus on smoke-free, innovative products and a commitment to creating a healthier, sustainable future, PMI stands firm in its mission to continue delivering value to stakeholders while minimizing the harm associated with combustible tobacco products.

PMI, with its varied product portfolio, solid global brand presence, effective strategies, and robust financial performance, seems ready to maintain its momentum through H2 2023 and beyond. The company's ongoing commitment to research and development and a clear strategic vision lay a strong foundation for future growth and success in a rapidly evolving industry landscape.
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