Representing Adjusted
Diluted EPS of $5.97 to $6.07 and Organic Growth of Around 12% to
14%;
Now Expects to Be
Toward Upper End of Forecast Range
Regulatory News:
Philip Morris International Inc.’s (NYSE: PM) Chief Financial
Officer, Emmanuel Babeau, addresses investors today at the Barclays
Global Consumer Staples Conference.
The presentation and Q&A session will be conducted in a
virtual format, beginning at approximately 8:00 a.m. Eastern Time.
A live video webcast of the entire PMI session will be available,
in a listen-only mode, at www.pmi.com/2021barclays. Presentation
slides will be available on the same site.
An archived copy of the webcast will be available at
www.pmi.com/2021barclays until 5:00 p.m. Eastern Time on Thursday,
October 7, 2021. The archived webcast can also be accessed on iOS
or Android devices by downloading PMI’s free Investor Relations
Mobile Application at www.pmi.com/irapp.
“We remain on-track for an excellent performance in 2021,
underpinned by better combustible volumes and continued strong
demand for IQOS,” said Jacek Olczak, Chief Executive Officer. “We
are today reaffirming our full-year EPS forecast and now expect to
be toward the upper end of our 12% to 14% organic growth
range.”
“While the increased impact of the global semiconductor shortage
is currently limiting our ability to realize the full potential of
IQOS, the underlying momentum of the brand is clear – as evidenced
by the positive early results for IQOS ILUMA in Japan following the
launch last month.”
2021 Full-Year Forecast
PMI reaffirms its full-year reported diluted EPS forecast range
of $5.76 to $5.86, reflecting a favorable currency impact, at
prevailing exchange rates, of $0.18. On an organic basis, this
forecast represents a projected increase of around 12% to 14%
versus adjusted diluted EPS of $5.17 in 2020, as outlined in the
table below.
The company now expects to be toward the upper end of the
forecast range.
Full-Year
2021
Forecast
2020
Organic
Growth
Reported Diluted EPS
$
5.76
-
$
5.86
$
5.16
Saudi Arabia customs assessments
0.14
—
Asset impairment and exit costs
0.07
0.08
Fair value adjustment for equity security
investments
0.04
Tax items
(0.06
)
Brazil indirect tax credit
(0.05
)
Adjusted Diluted EPS
$
5.97
-
$
6.07
$
5.17
Currency
(0.18)
Adjusted Diluted EPS, excluding
currency
$
5.79
-
$
5.89
$
5.17
12
%
-
14
%
2021 Full-Year Forecast Assumptions
The assumptions underlying this forecast remain unchanged versus
those communicated by PMI in its earnings release of July 20, 2021,
with the following exceptions:
- Tighter IQOS device supply due to the ongoing global
semiconductor shortage, with reduced device assortment and
availability impacting IQOS user acquisition and the timing of
second-half 2021 ILUMA launches in certain markets; and,
consequently
- Full-year 2021 heated tobacco unit shipment volume that could
be toward the lower end of the 95-to-100-billion-unit range, if
shortages persist, with third-quarter heated tobacco unit shipment
volume of 23 to 24 billion units.
The full-year forecast continues to assume third-quarter
reported diluted EPS in a range of $1.50 to $1.55, now with a
favorable currency impact, at prevailing exchange rates, of around
$0.03 per share (versus $0.04 previously).
This forecast excludes the impact of any future acquisitions,
unanticipated or unquantifiable asset impairment and exit cost
charges, future changes in currency exchange rates, further
developments pertaining to the judgment in the two Québec Class
Action lawsuits and the Companies’ Creditors Arrangement Act (CCAA)
protection granted to PMI's Canadian subsidiary, Rothmans, Benson
& Hedges, Inc. (RBH), any unusual events, any further
intensification of the global shortage of semiconductors and the
related impact on the supply of our electronic devices, and any
COVID-19-related developments different from the assumptions set
forth in the company's forecast.
Factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to
these projections.
Forward-Looking & Cautionary Statements
This press release, the presentation and related discussion
contain projections of future results and other forward-looking
statements. Achievement of future results is subject to 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; changes in
adult smoker behavior; lost revenues as a result of counterfeiting,
contraband and cross-border purchases; governmental investigations;
unfavorable currency exchange rates and currency devaluations, and
limitations on the ability to repatriate funds; adverse changes in
applicable corporate tax laws; adverse changes in the cost,
availability, and quality of tobacco and other agricultural
products and raw materials, as well as components and materials for
our electronic devices; and the integrity of its information
systems and effectiveness of its data privacy policies. PMI's
future profitability may also be adversely affected should it be
unsuccessful in its attempts to produce and commercialize
reduced-risk products or if regulation or taxation do not
differentiate between such products and cigarettes; if it is unable
to successfully introduce new products, promote brand equity, enter
new markets or improve its margins through increased prices and
productivity gains; if it is unable to expand its brand portfolio
internally or through acquisitions and the development of strategic
business relationships; or if it is unable to attract and retain
the best global talent. Future results are also subject to the
lower predictability of our reduced-risk product category's
performance.
In addition, PMI’s business risks also include risks and
uncertainties related to PMI’s potential acquisitions of Fertin
Pharma A/S (“Fertin”) and Vectura Group plc (“Vectura”), including,
amongst other things: (1) the inability to consummate these
acquisitions in a timely manner; (2) the inability to complete
these acquisitions due to the failure to satisfy certain conditions
to complete the acquisitions, including any required regulatory
approvals, as applicable; (3) the failure of these acquisitions to
close for any other reason; (4) the possibility that the
integration of the operations of Fertin and Vectura with those of
PMI may be more difficult and/or take longer than anticipated, and
may not accelerate PMI’s desired entry into additional smoke-free
and beyond nicotine platforms as quickly as anticipated; (5) the
possibility that the respective integrations of Fertin and Vectura
into PMI may be more costly than anticipated and may have
unanticipated adverse results relating to Fertin, Vectura or PMI’s
existing businesses; (6) the inability to gain access to
differentiated proprietary technology and pharmaceutical
development expertise as anticipated by these acquisitions; (7)
risks associated with third-party contracts containing consent
and/or other provisions that may be triggered by the proposed
acquisitions; (8) negative effects of the announcement or the
consummation of the acquisitions on the market price of PMI’s
common stock; and (9) the ability of PMI to retain and hire key
personnel of Fertin and Vectura.
The COVID-19 pandemic has created significant societal and
economic disruption, and resulted in closures of stores, factories
and offices, and restrictions on manufacturing, distribution and
travel, all of which will adversely impact our business, results of
operations, cash flows and financial position during the
continuation of the pandemic. Our business continuity plans and
other safeguards may not be effective to mitigate the impact of the
pandemic. Currently, significant risks include our diminished
ability to convert adult smokers to our RRPs, significant volume
declines in our duty-free business and certain other key markets,
disruptions or delays in our manufacturing and supply chain,
increased currency volatility, and delays in certain cost saving,
transformation and restructuring initiatives. Our business could
also be adversely impacted if key personnel or a significant number
of employees or business partners become unavailable due to the
COVID-19 outbreak. The significant adverse impact of COVID-19 on
the economic or political conditions in markets in which we operate
could result in changes to the preferences of our adult consumers
and lower demand for our products, particularly for our mid-price
or premium-price brands. Continuation of the pandemic could disrupt
our access to the credit markets or increase our borrowing costs.
Governments may temporarily be unable to focus on the development
of science-based regulatory frameworks for the development and
commercialization of RRPs or on the enforcement or implementation
of regulations that are significant to our business. In addition,
messaging about the potential negative impacts of the use of our
products on COVID-19 risks may lead to increasingly restrictive
regulatory measures on the sale and use of our products, negatively
impact demand for our products, the willingness of adult consumers
to switch to our RRPs and our efforts to advocate for the
development of science-based regulatory frameworks for the
development and commercialization of RRPs.
The impact of these risks also depends on factors beyond our
knowledge or control, including the duration and severity of the
pandemic, its recurrence in our key markets, actions taken to
contain its spread and to mitigate its public health effects, and
the ultimate economic consequences thereof.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including the Form 10-Q for the
quarter ended June 30, 2021. PMI cautions that the foregoing list
of important factors is not a complete discussion of all potential
risks and uncertainties. PMI does not undertake to update any
forward-looking statement that it may make from time to time,
except in the normal course of its public disclosure
obligations.
Philip Morris International: Delivering a Smoke-Free
Future
Philip Morris International (PMI) is leading a transformation in
the tobacco industry to create a smoke-free future and ultimately
replace cigarettes with smoke-free products to the benefit of
adults who would otherwise continue to smoke, society, the company,
its shareholders and its other stakeholders. PMI is a leading
international tobacco company engaged in the manufacture and sale
of cigarettes, as well as smoke-free products, associated
electronic devices and accessories, and other nicotine-containing
products in markets outside the U.S. In addition, PMI ships
versions of its IQOS Platform 1 device and consumables to Altria
Group, Inc. for sale under license in the U.S., where these
products have received marketing authorizations from the U.S. Food
and Drug Administration (FDA) under the premarket tobacco product
application (PMTA) pathway; the FDA has also authorized the
marketing of a version of IQOS and its consumables as a Modified
Risk Tobacco Product (MRTP), finding that an exposure modification
order for these products is appropriate to promote the public
health. PMI is building a future on a new category of smoke-free
products that, while not risk-free, are a much better choice than
continuing to smoke. Through multidisciplinary capabilities in
product development, state-of-the-art facilities and scientific
substantiation, PMI aims to ensure that its smoke-free products
meet adult consumer preferences and rigorous regulatory
requirements. PMI's smoke-free product portfolio includes
heat-not-burn and nicotine-containing vapor products. As of June
30, 2021, PMI's smoke-free products are available for sale in 67
markets in key cities or nationwide, and PMI estimates that
approximately 14.7 million adults around the world have already
switched to IQOS and stopped smoking. For more information, please
visit www.pmi.com and www.pmiscience.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210908005636/en/
Philip Morris International Investor Relations: New York:
+1 (917) 663 2233 Lausanne: +41 (0)58 242 4666 Email:
InvestorRelations@pmi.com
Media: Lausanne: +41 (0)58 242 4500 Email:
Iro.Antoniadou@pmi.com
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