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Stocks of Philip Morris Fall Premarket as Profit Exceeds Expectations, but Outlook Misses

April 23, 2024
minute read

Shares of Philip Morris International Inc. experienced a decline on Tuesday following the release of its first-quarter earnings report. While the company surpassed profit expectations for the quarter, it provided a less optimistic outlook for the second quarter.

During premarket trading, the stock fell by 1%. This came after a period of strong performance, with a five-day winning streak that resulted in a 6.2% increase in share value leading up to Monday. Notably, the stock had rebounded from a six-month low reached on April 15.

Net income for the first quarter rose to $2.15 billion, or $1.38 per share, compared to $2 billion, or $1.28 per share, in the same period last year. Adjusted earnings per share, excluding one-time items such as asset impairment costs and fair value adjustments of equity investments, increased to $1.50 from $1.38, surpassing the FactSet consensus of $1.41.

Net revenue also showed growth, rising by 9.7% to $8.79 billion, exceeding the FactSet consensus of $8.44 billion. The company's gross margin improved to 63.7% from 62.1%, primarily driven by a 5.2% decrease in the cost of sales, which amounted to $3.2 billion.

Philip Morris International's smoke-free business segment contributed 39% of total revenue, consistent with the previous quarter. While cigarette shipments declined by 5.3% to 37.09 billion units, shipments of heated tobacco units increased by 12.3% to 11.34 billion units, and nicotine pouches experienced a significant surge of 79.3% to 145.7 million cans. Additionally, the shipment volume of oral smoke-free products, including snuff, snuff leaf, and U.S. chew, increased by 40%.

CEO Jacek Olczak expressed confidence in the company's smoke-free business momentum, highlighting the rapid progression in underlying volume and the accelerating organic net revenue and gross profit growth driven by the operating leverage of IQOS and the favorable economics of ZYN.

Looking forward, Philip Morris International anticipates second-quarter adjusted EPS in the range of $1.50 to $1.55, falling below the FactSet consensus of $1.62. The company also projects full-year adjusted EPS to be between $6.19 and $6.31, which is lower than the market expectations of $6.35.

Year to date, the stock has seen a marginal decline of less than 0.1%, contrasting with the 5.1% gain in the S&P 500 index through Monday.

John Liu
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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