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Philip Morris International Reports First-Quarter 2024 Results and Updates Full Year Guidance
Philip Morris International Inc. (PMI) (NYSE: PM) today announces its 2024 first-quarter results(1).
"The strength of our first-quarter results with excellent top-line growth and significant margin expansion gives us the confidence to raise our 2024 currency-neutral guidance," said Jacek Olczak, Chief Executive Officer.
"Strong smoke-free momentum continues with rapid underlying volume progression and accelerating organic net revenue and gross profit growth, fueled by the operating leverage of IQOS and the best-in-class economics of ZYN."
"We are executing efficiently and effectively in a dynamic operating environment of geopolitical and economic tensions that accentuate currency volatility. We are doing our utmost to mitigate these challenges and deliver robust growth and value creation."
Highlights ----------
Smoke-free business (SFB): The smoke-free business accounted for 39% of our total net revenues. The path to achieving our ambition of becoming a smoke-free company is shown by the EA, AU & PMI DF region, where SFB accounted for almost two-thirds of revenue, led by Japan and Korea. Our SFB continues to deliver superior top-line growth, with net revenues increasing by 21.1% (24.8% organically) as well as a 31.8% (37.5% organic) increase in gross profit. Inhalable smoke-free products (SFP): IQOS continues to strengthen its position as the second largest nicotine 'brand' in markets where present, including the #1 position in 11 markets. HTU adjusted in-market sales (IMS) volume, which excludes the net impact of estimated distributor and wholesaler inventory movements, was up by an estimated 12.5%. In Europe, IQOS HTU market share exceeded 10% for the first time with adjusted IMS growth of 9.4%, which was influenced, as expected, by the impact from the EU characterizing flavor ban. In Japan, IQOS HTU market share increased by more than 3 percentage points to over 29%, with adjusted IMS growth of 13.3%. Notably, the heat-not-burn category surpassed combustible cigarettes in Tokyo, a demonstration of the vast potential of IQOS around the world. To celebrate the 10-year anniversary of the IQOS launch in Japan, we introduced IQOS ILUMA i, our most innovative offering to-date, with very positive initial consumer feedback.
In the vaping category, our focused strategy for VEEV is showing promising early results on both consumer traction and profitability.
Oral SFP(2): Shipment volume increased by 40.0% in cans (35.8% in pouches or pouch equivalents), fueled by ZYN nicotine pouch growth in the U.S., where shipment volume reached 131.6 million cans, representing growth of 79.7% versus prior year. Our share of the category in the U.S. increased for the fourth consecutive quarter to over 74%, up 1.3 percentage points sequentially. Combustibles: Net revenues grew by 3.5% (organically by 3.7%), fueled by another quarter of strong pricing across markets. Our category share increased by 0.3 percentage points with Marlboro gaining 0.4 percentage points. Dividend: Declared regular quarterly dividend of $1.30 per share, or an annualized rate of $5.20 per share.
_______________________ (1) Explanation of PMI's use of non-GAAP measures cited in this document and reconciliations to the most directly comparable U.S. GAAP measures can be found in the "Non-GAAP Measures, Glossary and Explanatory Notes" section of this release, in Exhibit 99.2 to the company's Form 8-K dated April 23, 2024, and at www.pmi.com/2024Q1earnings. (2) Oral smoke-free product volume excludes snuff, snuff leaf and U.S. chew
Operating Review ----------------
Total HTU Oral SFP Cigarettes
-------------------------- -------------------- -------------------- -------------------- --------------------
Shipment Volume (units bn) 180.5 33.1 4.2 143.2
-------------------------- -------------------- -------------------- -------------------- --------------------
PMI Smoke-Free Combustibles
Business
------------------------ -------------------- -------------------- --------------------
Net Revenues ($ bn) $8.8 $3.4 $5.4
9.7% 21.1% 3.5%
reported vs. Q1 2023
------------------------ -------------------- -------------------- --------------------
11.0% 24.8% 3.7%
organic vs. Q1 2023
------------------------ -------------------- -------------------- --------------------
Gross Profit ($ bn) $5.6 $2.1 $3.5
12.4% 31.8% 3.0%
reported vs. Q1 2023
------------------------ -------------------- -------------------- --------------------
13.7% 37.5% 2.3%
organic vs. Q1 2023
------------------------ --------------------
Operating Income ($ bn) $3.0
11.5%
reported vs. Q1 2023
------------------------ --------------------
Reported Adjusting Adjusted Currency Adjusted
Diluted Items(1) Diluted Impact Diluted
EPS EPS EPS ex.
Currency
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
EPS $1.38 $(0.12) $1.50 $(0.20) $1.70
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
7.8% 8.7% 23.2%
vs. Q1 2023
-------------------- -------------------- -------------------- --------------------
The $0.20 unfavorable currency variance in the first quarter includes a $0.09 impact from the devaluation of the Egyptian pound (EGP), including a transactional impact of approximately $0.06 primarily related to the balance sheet remeasurement of foreign currency payables. Our proactive pricing decisions and accelerated cost initiatives allowed us to mitigate this incremental currency headwind in the quarter.
Full-Year Forecast ------------------
Full-Year
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 Growth
Forecast
------------------------------------------------------------ -------------------- -------------------- -------------------- ------------------------------------------------------------
Reported Diluted EPS $5.70 - $5.82 $ 5.02
Adjustments:
0.09 0.06
Asset impairment and exit costs(1)
-- 0.04
Termination of distribution arrangement in the Middle East
0.01 0.44
Impairment of goodwill and other intangibles
0.43 0.25
Amortization of intangibles(2)
-- 0.03
Charges related to the war in Ukraine
-- 0.01
Swedish Match AB acquisition accounting related items
0.07 (0.11)
Income tax impact associated with Swedish Match AB financing
-- 0.11
South Korea indirect tax charge
-- 0.07
Termination of agreement with Foundation for a Smoke-Free World
(0.08) (0.02)
Fair value adjustment for equity security investments
(0.03) 0.11
Tax items
------------------------------------------------------------ --------------------
0.49 0.99
Total Adjustments
Adjusted Diluted EPS $6.19 - $6.31 $ 6.01
Less: Currency (0.36)
------------------------------------------------------------ -------------------- -------------------- -------------------- --------------------
Adjusted Diluted EPS, excluding currency $6.55 - $6.67 $ 6.01 9.0% - 11.0%
-------------------- -------------------- --------------------
(1) See Impairment and Exit Costs section for details
Reported diluted EPS is forecast to be in a range of $5.70 to $5.82, at prevailing exchange rates, versus reported diluted EPS of $5.02 in 2023. Excluding a total 2024 adjustment of $0.49 per share and an adverse currency impact of $0.36, at prevailing exchange rates, this forecast represents a projected increase of 9.0% to 11.0% versus adjusted diluted EPS of $6.01 in 2023, as outlined in the above table.
2024 Full-Year Forecast Assumptions
This forecast assumes:
An estimated total international industry volume decline for cigarettes and HTUs, excluding China and the U.S., of -2% to flat; Total cigarette, HTU and oral smoke-free product shipment volume growth for PMI of flat to +1% driven by smoke-free products; 14% to 16% adjusted in-market sales volume growth for HTUs, including an approximate 2 billion units adverse impact for the full year from consumer adjustment to the EU characterizing flavor ban, resulting in HTU shipment volumes of more than 140 billion units; Nicotine pouch shipment volume in the U.S. of approximately 560 million cans; Net revenue growth of 7% to 8.5% on an organic basis; Organic operating income growth of 10% to 12%; An acceleration in organic smoke-free net revenue and gross profit growth compared to 2023; Broadly unchanged net revenue and adjusted operating loss in Wellness and Healthcare segment; No earnings impact from any potential favorable court ruling related to the legality of a supplemental tax surcharge on HTUs in Germany, which went into effect in 2022 (see PMI's first-quarter 2023 press release from April 20, 2023, for additional detail). Full-year amortization of acquired intangibles of $0.43 per share, which includes an estimate of amortization of IQOS commercialization rights in the U.S. following the closing of the agreement to end our commercial relationship with Altria Group, Inc. covering IQOS in the U.S. effective May 1, 2024. We currently estimate that the increase in amortization expense in 2024, as a result of this transaction, will be approximately $370 million on a pre-tax basis for the remaining 8 months of the year. For full year 2025 through 2028, we currently estimate an annual impact of approximately $555 million on a pre-tax basis; Net financing costs of approximately $1.3 to $1.4 billion; An effective tax rate, excluding discrete tax events, of approximately 21% to 22%; Operating cash flow of $10 to $11 billion at prevailing exchange rates, subject to year-end working capital requirements; Capital expenditures of approximately $1.2 billion, partly reflecting investments in ZYN capacity in the U.S.; Net debt to adjusted EBITDA ratio improvement of 0.3x to 0.5x at prevailing exchange rates as we continue to target a ratio of around 2x by the end of 2026; No share repurchases in 2024; and A strong first-half performance, with second quarter adjusted diluted EPS of $1.50 to $1.55, including an estimated adverse currency impact of 14 cents at prevailing exchange rates.
Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.
New Segment Structure ---------------------
Following the combination and the progress in 2023 to integrate the Swedish Match business into the existing PMI regional segment structure, PMI updated its segment reporting to include Swedish Match results in the four existing geographical regions. PMI's 2024 first-quarter financial results reflect the new segment structure. Historical financial information for the 2021 to 2023 period reflecting the above mentioned change was provided in a Form 8-K dated February 27, 2024.
Impairment and Exit Costs -------------------------
On February 2, 2024, PMI announced that it reached a global settlement with British American Tobacco p.l.c. The settlement led to the rescission of International Trade Commission orders prohibiting the importation of IQOS products to the U.S. As a result, PMI has restructured the sourcing of IQOS products to be commercialized in the U.S., and recorded pre-tax asset impairment and exit costs of $121 million related to this restructuring during the first quarter of 2024.
In the first quarter of 2024, PMI ceased its operations in Venezuela and as a result, recorded pre-tax asset impairment and exit costs of $47 million.
Conference Call ---------------
A conference call hosted by Emmanuel Babeau, Chief Financial Officer and Jennifer Motles, Chief Sustainability Officer, will be webcast at 9:00 a.m., Eastern Time, on April 23, 2024. Access the webcast at www.pmi.com/2024Q1earnings.
Financial Review ----------------
TOTAL MARKET, CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE
Total Market Volume
First-quarter estimated international industry volume (excluding China and the U.S.) for cigarettes and HTUs increased by 0.3%, reflecting increases in the SSEA, CIS & MEA Region and the EA, AU & PMI DF Region, partly offset by a decrease in the Americas Region and the Europe Region, as described in the Regional sections.
Consolidated Shipment Volume
PMI Cigarettes and HTUs First-Quarter
------------------------------------------------------------
(million units) 2024 2023 Change
------- -------------------- ------- -------------------- ------
Cigarettes 143,191 143,708 (0.4)%
Heated Tobacco Units 33,134 27,396 20.9%
------- -------------------- ------- -------------------- ------
PMI Oral SFP(1) First-Quarter
-----------------------------------------------------------
(million cans) 2024 2023 Change
------ -------------------- ------ -------------------- -------
Nicotine Pouches 145.7 81.3 79.3%
Snus 61.4 55.6 10.5%
Moist Snuff 34.4 35.2 (2.3)%
Other Oral SFP 1.0 1.3 (16.6)%
------ -------------------- ------ -------------------- -------
Total Oral SFP 242.6 173.3 40.0%
(1) Excluding snuff, snuff leaf and U.S. chew
PMI's total cigarette and HTU shipment volume increased by 3.1%, reflecting a 20.9% increase in HTU shipments across all regions, partly offset by a 0.4% decline in cigarette shipments, with declines across all regions except the SSEA, CIS & MEA Region. Cigarette shipment volume for Marlboro increased by 1.7% to 56.9 billion units.
PMI's total oral product shipment volume in cans increased by 40.0%, primarily reflecting growth in nicotine pouches (primarily in the U.S.) and snus (mainly in Scandinavia).
Adjusted in-market sales for HTUs increased by 12.5%, including growth in Japan of 13.3% and Europe of 9.4%. A net favorable impact of estimated distributor inventory movements for HTUs shipments was driven most significantly by additional shipments to Japan in light of disruption to Red Sea shipping routes.
International Share of Market - Cigarettes and HTUs
First-Quarter
---------------------------------------------------------------------------------------------------------------------------------
2024 2023 Change
(pp)
------------------------------------------- ------------------------------------------- -------------------------------------------
Total International Market Share(1) 28.0% 27.2% 0.8
22.9% 22.7% 0.2
Cigarettes
5.2% 4.5% 0.7
HTU
------------------------------------------- ------------------------------------------- ------------------------------------------- -------------------------------------------
Cigarette over Cigarette Market Share(2) 24.5% 24.2% 0.3
(1) Defined as PMI's cigarette and heated tobacco unit in-market sales volume as a percentage of total industry cigarette and heated tobacco unit sales volume, excluding China and the U.S., including cigarillos in Japan
(2) Defined as PMI's cigarette in-market sales volume as a percentage of total industry cigarette sales volume, excluding China and the U.S., including cigarillos in Japan
CONSOLIDATED FINANCIAL SUMMARY
Financial Summary - Change Variance
Quarters Ended March 31, Fav./(Unfav.) Fav./(Unfav.)
------------------------------------------------------------ -------------------- ------------------------------------------------------------ ---------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 Total Excl. Total Cur- Acqui- Price Vol/ Cost/
Curr. & rency sitions Mix Other
Acquis.
------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------- ---------------------------------- ------------------------------ ---------------------------------- -------------------- -------------------- ---------------------------------- ------------------------------
(in millions)
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net Revenues $ 8,793 $ 8,019 9.7 % 12.1 % 774 (194 ) -- 449 464 55
Termination of distribution arrangement in the Middle East -- (80 ) +100 % +100 % 80 -- -- -- -- 80
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
Adjusted Net Revenues $ 8,793 $ 8,099 8.6 % 11.0 % 694 (194 ) -- 449 464 (25 )
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
------------------------------------------------------------- ------------------------------------------------------------ -------------------- ------------------------------------------------------------ ---------------------------------------- -------------------- ---------------------------------- ------------------------------ -------------------- ---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------------------------------- -------------------- ------------------------------
Net Revenues $ 8,793 $ 8,019 9.7 % 12.1 % 774 (194 ) -- 449 464 55
Cost of Sales(1) (3,195 ) (3,038 ) (5.2 )% (5.4 )% (157 ) 8 -- -- (169 ) 4
Marketing, Administration and Research Costs(2) (2,553 ) (2,250 ) (13.5 )% (7.2 )% (303 ) (142 ) -- -- -- (161 )
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
Operating Income $ 3,045 $ 2,731 11.5 % 23.5 % 314 (328 ) -- 449 295 (102 )
Asset Impairment & Exit Costs (168 ) (109 ) (54.1 )% (54.1 )% (59 ) -- -- -- -- (59 )
Termination of distribution arrangement in the Middle East(3) -- (80 ) +100 % +100 % 80 -- -- -- -- 80
Impairment of Other Intangibles (27 ) -- -- % -- % (27 ) -- -- -- -- (27 )
Amortization of Intangibles (120 ) (81 ) (48.1 )% (48.1 )% (39 ) -- -- -- -- (39 )
Swedish Match AB acquisition accounting related items -- (18 ) +100 % +100 % 18 -- -- -- -- 18
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
Adjusted Operating Income $ 3,360 $ 3,019 11.3 % 22.2 % 341 (328 ) -- 449 295 (75 )
Adjusted Operating Income Margin 38.2 % 37.3 % 0.9 pp 3.7 pp
(1) Includes $16 million in 2024 and $40 million in 2023 related to the special items below.
(2) Includes $299 million in 2024 and $168 million in 2023 related to the special items below.
Adjusted net revenues increased by 11.0% on an organic basis, mainly reflecting: a favorable pricing variance, primarily driven by higher combustible tobacco pricing; and favorable volume/mix, mainly driven by higher HTU and ZYN volume, partially offset by lower cigarette volume.
Adjusted operating income increased by 22.2% on an organic basis, mainly reflecting: the favorable pricing variance; and favorable volume/mix, mainly driven by higher HTU and ZYN volume, partly offset by lower cigarette volume and unfavorable cigarette mix; partially offset by higher marketing, administration and research costs (primarily due to inflationary impacts, notably related to wages) as well as higher manufacturing costs.
First-Quarter
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 % Change
------------------------------------------------------ -------------------- ------------------------------------------------------ -------------------- -------------------
Reported Diluted EPS $ 1.38 $ 1.28 7.8 %
0.09 0.06
Asset impairment and exit costs
-- 0.04
Termination of distribution arrangement in the Middle East
0.01 --
Impairment of other intangibles
0.06 0.04
Amortization of intangibles
-- 0.01
Swedish Match AB acquisition accounting related items
0.07 (0.05 )
Income tax impact associated with Swedish Match AB financing
(0.08 ) --
Fair value adjustment for equity security investments
(0.03 ) --
Tax items
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------
Adjusted Diluted EPS $ 1.50 $ 1.38 8.7 %
(0.20 )
Less: Currency
-------------------- -------------- -------------------- -------------------- ------------------------------------------------------ -------------------- -------------------
EUROPE REGION
Total Market, PMI Shipment & Market Share Commentaries
The estimated total market for cigarettes and HTUs in the Region decreased by 0.4% to 124.5 billion units, reflecting a 2.1% decline for cigarettes, largely offset by an increase for HTUs. The decrease in the estimated total market was predominantly due to France (down by 16.1%) and the UK (down by 11.1%), largely offset by Poland (up by 4.7%) and Bulgaria (up by 9.7%).
Europe Key Data First-Quarter
----------------------------------------------------------------------------------------------------------------------------------
Change
2024 2023 % / pp
---------- -------------------- -------------------- ---------- -------------------- -------------------- ------------------------------
PMI Shipment Volume (million units)
Cigarettes 37,089 39,157 (5.3 )%
Heated Tobacco Units 11,340 10,099 12.3 %
---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Total Europe 48,429 49,256 (1.7 )%
PMI Market Share
Cigarettes 29.9 % 30.3 % (0.4 )
Heated Tobacco Units 10.1 % 9.0 % 1.1
---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Total Europe 40.0 % 39.3 % 0.7
PMI's total cigarette and HTU shipment volume in the Region decreased by 1.7% to 48.4 billion units. Total cigarette and HTU shipment volume decreased notably in France (down by 31.7%) and Italy (down by 10.4%) driven by cigarettes, and increased notably in Poland (up by 10.0%) and Germany (up by 4.8%).
PMI's estimated HTU adjusted in-market sales volume in the Region increased by 9.4% in the quarter, reflecting continued growth momentum for IQOS, partly offset by the impact from the EU characterizing flavor ban.
PMI's HTU share of the total cigarette and HTU market in the Region increased by 1.1 points, or by 0.9 points on an adjusted basis.
Europe Oral SFP First-Quarter
----------------------------------------------------------------------------------------------------
Change
2024 2023 %
-------------------- -------------------- -------------------- -------------------- --------------------
PMI Shipment Volume (million cans)
Nicotine Pouches 12.3 7.9 55.9%
Snus 60.7 54.4 11.6%
Other Oral SFP(1) 1.0 1.3 (16.6)%
-------------------- -------------------- -------------------- -------------------- --------------------
Total Europe 74.0 63.5 16.5%
(1) Includes chew bags and tobacco bits
Oral SFP shipments increased by 16.5% with growth of snus (up by 11.6%) and nicotine pouches (up by 55.9%), benefiting from timing of shipments and underlying category growth in the Nordics.
Financial Summary
Financial Summary - Change Variance
Quarters Ended March 31, Fav./(Unfav.) Fav./(Unfav.)
------------------------------------------------------------ -------------------- ------------------------------------------------------------ ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 Total Excl. Total Cur- Acqui- Price Vol/ Cost/
Curr. & rency sitions Mix Other
Acquis.
------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------- ------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- ----------------------------------
(in millions)
-------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net Revenues $ 3,365 $ 3,068 9.7 % 7.1 % 297 78 -- 163 56 --
Operating Income $ 1,456 $ 1,215 19.8 % 18.7 % 241 14 -- 163 64 --
Adjustments (1) (41 ) (75 ) 45.8 % 45.8 % 34 -- -- -- -- 34
-------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------- --------------------
Adjusted Operating Income $ 1,496 $ 1,290 16.0 % 14.9 % 206 14 -- 163 64 (34 )
Adjusted Operating Income Margin 44.5 % 42.0 % 2.5 pp 3.1 pp
Net revenues increased by 7.1% on an organic basis, reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, primarily driven by higher HTU volume, partly offset by lower cigarettes volume.
Adjusted operating income increased by 14.9% on an organic basis, reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, primarily driven by higher HTU volume and favorable HTU mix, partly offset by lower cigarette volume, as well as unfavorable cigarette mix; partly offset by higher manufacturing costs, including the impact of the EU single-use plastics directive.
SSEA, CIS & MEA REGION
Total Market, PMI Shipment & Market Share Commentaries
The estimated total market for cigarettes and HTUs in the Region increased by approximately 1% to 371.0 billion units. The increase in the estimated total market was mainly due to Indonesia (up by 6.4%) and Turkey (up by 14.8%), partly offset by Egypt (down by 14.2%) and Pakistan (down by 20.7%).
PMI Shipment Volume First-Quarter
----------------------------------------------------------
(million units) 2024 2023 Change
------ -------------------- ------ -------------------- ------
Cigarettes 80,191 76,531 4.8%
Heated Tobacco Units 6,078 5,447 11.6%
------ -------------------- ------ -------------------- ------
PMI's total cigarette and HTU shipment volume in the Region increased by 5.2% to 86.3 billion units, mainly driven by Turkey (up by 25.0%), partly offset by the Philippines (down by 18.1%). PMI's estimated HTU adjusted in-market sales volume increased by 14.6%, with 11.6% HTU shipment volume growth.
Financial Summary
Financial Summary - Change Variance
Quarters Ended March 31, Fav./(Unfav.) Fav./(Unfav.)
------------------------------------------------------------ -------------------- ------------------------------------------------------------ ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 Total Excl. Total Cur- Acqui- Price Vol/ Cost/
Curr. & rency sitions Mix Other
Acquis.
------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------- ------------------------------ ------------------------------ ---------------------------------- -------------------- -------------------- -------------------- ------------------------------
(in millions)
-------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net Revenues $ 2,658 $ 2,477 7.3 % 15.1 % 181 (194 ) -- 155 144 76
Adjustment (1) -- (80 ) +100 % +100 % 80 -- -- -- -- 80
-------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Adjusted Net Revenues $ 2,658 $ 2,557 3.9 % 11.5 % 101 (194 ) -- 155 144 (4 )
-------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
-------------------------------- ------------------------------------------------------------ -------------------- ------------------------------------------------------------ ---------------------------------------- -------------------- ------------------------------ ------------------------------ -------------------- ---------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------------------
Net Revenues $ 2,658 $ 2,477 7.3 % 15.1 % 181 (194 ) -- 155 144 76
Operating Income $ 772 $ 734 5.2 % 38.0 % 38 (241 ) -- 155 46 78
Adjustments (2) (5 ) (117 ) 95.7 % 95.7 % 112 -- -- -- -- 112
-------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Adjusted Operating Income $ 777 $ 851 (8.7 )% 19.6 % (74 ) (241 ) -- 155 46 (34 )
Adjusted Operating Income Margin 29.2 % 33.3 % (4.1 )pp 2.4 pp
(1) Distribution arrangement termination (Middle East).
Adjusted net revenues increased by 11.5% on an organic basis, primarily reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, driven by higher HTU and cigarettes volume as well as favorable HTU and cigarettes mix.
Adjusted operating income increased by 19.6% on an organic basis, primarily reflecting: a favorable pricing variance, mainly driven by higher combustible tobacco pricing; and favorable volume/mix, driven by higher HTU volume, favorable HTU mix and higher cigarette volume, partly offset by unfavorable cigarette mix; partly offset by higher manufacturing costs (primarily due to inflationary impacts).
EA, AU AND PMI DF REGION
Total Market, PMI Shipment & Market Share Commentaries
The estimated total market for cigarettes and HTUs in the Region, excluding China, increased by around 1% to 75.9 billion units, with growth for HTUs partly offset by a decline for cigarettes. The increase in the estimated total market was mainly driven by International Duty Free (up by 17.6%) and Taiwan (up by 15.0%).
PMI Shipment Volume First-Quarter
-----------------------------------------------------------
(million units) 2024 2023 Change
------ -------------------- ------ -------------------- -------
Cigarettes 11,568 13,110 (11.8)%
Heated Tobacco Units 15,599 11,748 32.8%
------ -------------------- ------ -------------------- -------
PMI's total cigarette and HTU shipment volume in the Region increased by 9.3% to 27.2 billion units, driven by Japan (up by 21.1%).
PMI's estimated HTU adjusted in-market sales volume in the Region increased by 14.6% in the quarter, including growth in Japan of 13.3%.
Financial Summary
Financial Summary - Change Variance
Quarters Ended March 31, Fav./(Unfav.) Fav./(Unfav.)
------------------------------------------------------------ -------------------- ------------------------------------------------------------ ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 Total Excl. Total Cur- Acqui- Price Vol/ Cost/
Curr. &