Philip Morris International Inc.’s PM shares rallied 9.4% in the pre-market session today after reporting robust fourth-quarter 2024 results. Both top and bottom lines increased year over year and beat the Zacks Consensus Estimate in the quarter. Results were fueled by robust momentum across regions and product categories, including continued momentum in IQOS and ZYN, along with an impressive combustibles performance.
Fourth-quarter adjusted earnings per share (EPS) came in at $1.55, which increased 14% year over year. Excluding currency effects, the adjusted EPS jumped 9.6%. The bottom line beat the Zacks Consensus Estimate of $1.51.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net revenues of $9,706 million increased 7.3% on a reported basis and on an organic basis (excluding currency movements and acquisitions). Revenues came ahead of the Zacks Consensus Estimate of $9,362.4 million. The increase in organic revenues was backed by positive pricing variance (mainly backed by elevated combustible tobacco pricing) and favorable volume/mix (accountable to increased smoke-free product volumes).
Philip Morris International Inc. Price, Consensus and EPS Surprise
Philip Morris International Inc. Price, Consensus and EPS Surprise
Philip Morris International Inc. price-consensus-eps-surprise-chart | Philip Morris International Inc. Quote
PM’s Quarterly Performance: Key Metrics and Insights
During the fourth quarter, Philip Morris’ net revenues from combustible products increased 6% and 6.2% organically due to high single-digit pricing and robust industry volumes.
Revenues from the smoke-free business increased 9.2% (up 9% on an organic basis) and formed 40% of the company’s total revenues (up by 0.7 percentage points compared with the year-ago period). Within the smoke-free business, inhalable smoke-free products (SFP) were driven by strength in IQOS, while oral SFP was fueled by increased shipment volumes of ZYN.
Total shipment volumes (including heated tobacco units, oral SFP and cigarettes) increased 2.3% to 193.1 billion units in the fourth quarter.
The adjusted operating income ascended 15.3% (up 11.8% on an organic basis) to $3,519 million due to improved pricing variance and a positive volume/mix, somewhat negated by increased marketing, administration and research costs, despite lower manufacturing costs resulting from improved productivity.
Decoding PM’s Region-Wise Performance
Following the sale of Vectura Group Ltd. on Dec. 31, 2024, the company will update its segment reporting to include the remaining units of Vectura Fertin Pharma within the Europe segment, starting in the first quarter of 2025.
Net revenues in the European region grew 5.5% on an organic basis to $4,056 million. This was a result of positive pricing variance. Total HTU and cigarette shipment volumes in the region were almost flat at 53.6 billion units.
In the SSEA, CIS & MEA regions, net revenues increased 6.6% organically to $2,868 million on improved pricing variance and a favorable volume/mix. Total cigarette and HTU shipment volume in the region rose 4.1% to 94.2 billion units.
In the EA, AU & PMI DF regions, net revenues grew 2.2% organically to $1,434 million on favorable pricing variance. Total shipment volumes in the region inched up 0.5% to 23.4 billion units.
Revenues in the Americas surged 21% on an organic basis to $1,261 million. This was a result of the positive volume/mix and pricing. Total cigarette and HTU shipment volumes in the Americas dipped 2% to 17.3 billion units.
Philip Morris: Other Updates
Revenues from the Wellness and Healthcare unit improved 23.2% year over year on an organic basis to $87 million.
The company ended the quarter with cash and cash equivalents of $4,216 million, long-term debt of $42,166 million and a total shareholder deficit of $9,870 million.
Philip Morris announced its quarterly dividend of $1.35 per share ($5.40 per share on an annualized basis). However, the company stated that it would not make share repurchases in 2025.
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What to Expect From PM in 2025?
Adjusted EPS for 2025 is now envisioned in the $7.04-$7.17 range, suggesting 7.2-9.1% growth. Adjusted EPS, excluding currency, is likely to be in the $7.26-$7.39 band, indicating a year-over-year increase of 10.5-12.5%. For full-year 2025, PM expects reported EPS in the band of $6.55-$6.68 compared with the $4.52 reported in 2024.
The total international industry volume for cigarettes and HTUs (excluding China and the United States) is likely to decline nearly 1% in 2025. The total cigarette and smoke-free product shipment volume for Philip Morris is likely to rise up to 2%, driven by a smoke-free product volume increase of 12-14%.
Nicotine pouch shipment volumes in the United States are expected to be between 780 and 820 million cans for 2025, projecting 34-41% growth.
For 2025, PM expects net revenues to increase 6-8% on an organic basis. The operating income on an organic basis is likely to rise 10.5-12.5%.
Management expects an operating cash flow of around $11 billion in 2025. Capital expenditures are likely to be nearly $1.5 billion, including additional investments in ZYN.
For the first quarter of 2025, Philip Morris envisions adjusted EPS in the range of $1.58-$1.63, including a projected currency headwind of 4 cents.
Shares of this Zacks Rank #3 (Hold) company have gained 5.8% in the past three months compared with the industry’s growth of 6.2%.
Top-Ranked Stocks
We have highlighted some better-ranked stocks from the broader Consumer Staples space, namely United Natural Foods UNFI, Ollie's Bargain Outlet OLLI and Helen of Troy HELE.
United Natural Foods, a key distributor of natural, organic and specialty food and non-food products, presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural Foods’ current financial-year sales and EPS indicates growth of 0.3% and 442.9%, respectively, from the prior-year levels. UNFI has a trailing four-quarter average earnings surprise of 553.1%.
Ollie's is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Ollie's current financial year’s sales and EPS suggests growth of 8.3% and 13.1%, respectively, from the year-ago reported numbers. The consensus mark for OLLI’s EPS has been unchanged in the past 30 days.
Helen of Troy, a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank #2. HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and earnings suggests declines of 5.1% and 18.9%, respectively, from the year-ago quarter’s reported figures.
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