Regulatory News:
Philip Morris International Inc. (PMI) (NYSE: PM) today
announces its 2023 fourth-quarter and full-year results. Further
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 February 8, 2024, and at
www.pmi.com/2023Q4earnings.
2023 FOURTH-QUARTER AND FULL-YEAR
HIGHLIGHTS
Fourth-Quarter
Full-Year
Change vs. Q4 2022
Change vs. FY 2022
Amount
Reported
Adjusted
Amount
Reported
Adjusted
Total Cig. & HTU Shipment Volume
(units bn)
185.1
(0.5)%
738.2
1.0%
HTU Shipment Volume (units bn)
34.0
6.1%
125.3
14.7%
Oral Product Shipment Volume (mn cans)
(1)
219.6
+100%
23.4%
(2)
799.3
+100%
16.8%
(2)
Net Revenues ($ bn)
$9.0
11.0%
8.3%
(3)
$35.2
10.7%
7.8%
(3)
Smoke-Free Product Net Revenues ($ bn)
$3.6
21.1%
13.6%
(3)
$12.8
26.0%
12.8%
(3)
- % of Total Net Revenues
39.3%
3.3pp
36.5%
4.4pp
Operating Income ($ bn)
$2.9
(1.2)%
8.0%
(3)
$11.6
(5.6)%
3.7%
(3)
Diluted Earnings per Share
$1.41
(8.4)%
$5.02
(13.6)%
Adjusted Diluted Earnings per Share
$1.36
12.2%
(4)
$6.01
11.0%
(4)
(1) Excludes snuff, snuff leaf and U.S.
chew
(2) On a pro forma basis (including
Swedish Match in all periods)
(3) On an organic basis
(4) Excluding currency
Fourth-Quarter
- Smoke-free products accounted for 39.3% of total net
revenues
- Adjusted in-market sales volume for HTUs, which excludes the
net unfavorable impact of estimated distributor and wholesaler
inventory movements, up by an estimated 13.9%
- Total IQOS users at quarter-end up by 1.2 million versus
September 2023
- Market share for HTUs in IQOS markets up by 1.3 points to
9.7%
- ZYN nicotine pouch shipment volume in the U.S. of 116.3 million
cans, representing growth of 78.2% versus fourth-quarter 2022
Swedish Match shipments of 65.3 million cans
- Combustible tobacco net revenue growth of 5.3% on both a
reported and organic basis, driven by pricing of 9.9%
Full-Year
- Third consecutive year of volume growth driven by HTUs
- Adjusted in-market sales volume for HTUs, which excludes the
net unfavorable impact of estimated distributor and wholesaler
inventory movements, up by an estimated 14.8%
- Total IQOS users at year-end estimated at approximately 28.6
million (up by 3.7 million versus December 2022), of which
approximately 20.8 million had switched to IQOS and stopped
smoking
- Market share for HTUs in IQOS markets up by 1.2 points to
9.1%
- ZYN nicotine pouch shipment volume in the U.S. of 384.8 million
cans, representing growth of 62.0% versus 2022 Swedish Match
shipments of 237.5 million cans
- Increased regular quarterly dividend in September by 2.4% to
$1.30 per share, or an annualized rate of $5.20 per share
- Combustible tobacco net revenue growth of 3.5%; growth of 5.5%
on an organic basis, driven by pricing of 8.9%
- Organic growth in adjusted operating income driven by the
performance of smoke-free products
"Our business delivered a strong finish to 2023 and we achieved
a number of remarkable milestones on our path to becoming a
smoke-free company," said Jacek Olczak, Chief Executive
Officer.
"We are pleased that smoke-free products reached nearly 40% of
our total net revenues and over 40% of our gross profit in the
fourth quarter. This was led by the continued growth of IQOS, which
has now surpassed Marlboro in terms of net revenues, confirming its
position as the leading premium nicotine brand less than 10 years
from launch. The fourth quarter also marked the first anniversary
of our combination with Swedish Match, which delivered very strong
results in 2023 driven by the stellar U.S. performance of ZYN."
"We are entering 2024 with strong momentum, and we expect it
will be another year of excellent performance underpinned by an
acceleration in organic smoke-free net revenue and profit
growth."
2023 FULL-YEAR SUMMARY
Adjusted net revenues increased by 7.8% on an organic basis,
driven by total cigarette and HTU shipment volume growth of 1.0%
(reflecting growth of 14.7% for HTUs and a decline of 1.4% for
cigarettes), favorable category mix of smoke-free products and
positive pricing.
Adjusted operating income increased by 3.7% on an organic basis
with a substantial acceleration in the second half of the year, as
supply chain disruptions and ILUMA-related factors continued to
dissipate, coupled with an accelerating contribution from
smoke-free products.
Adjusted diluted EPS of $6.01 increased by 11.0%, excluding
currency, driven primarily by the organic growth in adjusted
operating income, as well as the results of the Swedish Match
business and its strong performance led by ZYN in the U.S. The
$0.20 unfavorable currency variance in the fourth quarter includes
a $0.09 balance-sheet-related currency impact in Argentina. While
the company’s affiliate in Argentina remains subject to highly
inflationary accounting treatment, with the U.S. dollar treated as
the functional currency, the impact reflects the depreciation of
Argentine peso-denominated monetary net assets, which impacts
earnings on a periodic basis when translated to U.S. dollars and
are also subject to capital controls.
Full-Year
2023
2022
Currency
Var. excl. Currency
Reported Diluted EPS
$
5.02
$
5.81
$
(0.63
)
(2.8
)%
Asset impairment and exit costs
0.06
—
Termination of distribution arrangement in
the Middle East
0.04
—
Income tax impact associated with Swedish
Match AB financing
(0.11
)
(0.13
)
Swedish Match AB acquisition accounting
related item
0.01
0.06
Impairment of goodwill and other
intangibles
0.44
0.06
Amortization of intangibles
0.25
0.09
Charges related to the war in Ukraine
0.03
0.08
Costs associated with Swedish Match AB
offer
—
0.06
South Korea indirect tax charge
0.11
—
Termination of agreement with Foundation
for a Smoke-Free World
0.07
—
Fair value adjustment for equity security
investments
(0.02
)
(0.02
)
Tax items (1)
0.11
(0.03
)
Adjusted Diluted EPS
$
6.01
$
5.98
$
(0.63
)
11.0
%
(1) 2023 Tax items relate to the
unilateral suspension of certain Russian double tax treaties by the
Russian government
2024 FULL-YEAR FORECAST
Full-Year
2024
Forecast
2023
Growth
Reported Diluted EPS
$5.90
-
$6.02
$ 5.02
Adjustments:
Asset impairment and exit costs
—
0.06
Termination of distribution arrangement in
the Middle East
—
0.04
Income tax impact associated with Swedish
Match AB financing
—
(0.11)
Amortization of intangibles
0.42
0.25
Impairment of goodwill and other
intangibles
—
0.44
Charges related to the war in Ukraine
—
0.03
Swedish Match AB acquisition accounting
related item
—
0.01
Termination of agreement with Foundation
for a Smoke-Free World
—
0.07
South Korea indirect tax charge
—
0.11
Fair value adj. for equity security
investments
—
(0.02)
Tax items (1)
—
0.11
Total Adjustments
0.42
0.99
Adjusted Diluted EPS
$6.32
-
$6.44
$ 6.01
Less: Currency
(0.11)
Adjusted Diluted EPS, excluding
currency
$6.43
-
$6.55
$ 6.01
7.0%
-
9.0%
(1) 2023 Tax items relate to the
unilateral suspension of certain Russian double tax treaties by the
Russian government
Reported diluted EPS is forecast to be in a range of $5.90 to
$6.02, at prevailing exchange rates, versus reported diluted EPS of
$5.02 in 2023. Excluding a total 2024 adjustment of $0.42 per share
and an adverse currency impact of $0.11, at prevailing exchange
rates, this forecast represents a projected increase of 7.0% to
9.0% 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 from
consumer adjustment to the EU characterizing flavor ban, and
essentially no growth in Russia, resulting in HTU shipment volumes
of more than 140 billion units;
- Nicotine pouch shipment volume in the U.S. of approximately 520
million cans;
- Net revenue growth of 6.5% to 8% on an organic basis;
- Organic operating income growth of 8% to 9.5%;
- 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). The
company currently expects to have greater visibility on the outcome
in the first quarter of 2024;
- Full-year amortization of acquired intangibles of $0.42 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 incremental 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 start to 2024 with first quarter adjusted diluted EPS
of $1.37 to $1.42, including an estimated adverse currency impact
of 10 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 toward
integration of the Swedish Match business into the existing PMI
regional segment structure, PMI will update its segment reporting
by including Swedish Match results in the four existing
geographical regions. As of the first quarter of 2024, PMI will
report on this basis. The company plans to disclose select
historical financial information for the 2021 to 2023 period
reflecting the above mentioned change in the coming weeks.
Global Patent Settlement
On February 2, 2024 PMI announced that it has reached a global
settlement with British American Tobacco p.l.c. that resolves all
ongoing patent infringement litigation between the parties related
to heated tobacco and vapor products. Please see the Form 8-K dated
February 2, 2024 for additional detail.
Conference Call
A conference call hosted by Jacek Olczak, Chief Executive
Officer, and Emmanuel Babeau, Chief Financial Officer, will be
webcast at 9:00 a.m., Eastern Time, on February 8, 2024. Access the
call at www.pmi.com/2023Q4earnings.
TOTAL MARKET, CONSOLIDATED SHIPMENT VOLUME
& MARKET SHARE
Total Market Volume
Full-Year
Estimated international industry volume (excluding China and the
U.S.) for cigarettes and HTUs of 2.6 trillion, decreased by 1.6%,
reflecting declines in the SSEA, CIS & MEA Region, the Europe
Region and the Americas Region, partly offset by an increase in the
EA, AU & PMI DF Region, as described in the Regional
sections.
Consolidated Shipment Volume
PMI Cigarettes and HTUs
Fourth-Quarter
Full-Year
(million units)
2023
2022
Change
2023
2022
Change
Cigarettes
151,094
154,026
(1.9)%
612,949
621,908
(1.4)%
Heated Tobacco Units
33,972
32,021
6.1%
125,263
109,169
14.7%
Total Cigarettes and HTUs
185,066
186,047
(0.5)%
738,212
731,077
1.0%
PMI Oral Products (1)
Fourth-Quarter
Full-Year
(million cans)
2023
2022
Change
2023
2022
Change
Nicotine Pouches
125.7
39.8
+100%
421.1
42.5
+100%
Snus
61.8
42.8
44.4%
240.4
54.8
+100%
Moist Snuff
31.2
16.0
95.5%
133.7
16.0
+100%
Other
0.8
—
—%
4.2
—
—%
Total Oral Products
219.6
98.6
+100%
799.3
113.2
+100%
(1) Excluding snuff, snuff leaf and U.S.
chew
Note: Sum may not foot due to
roundings.
Fourth-Quarter
PMI's total cigarette and HTU shipment volume decreased by 0.5%,
reflecting an 6.1% increase in HTU shipments across all regions
except EA, AU & PMI DF Region, partly offset by a 1.9% decline
in cigarette shipments with declines in the EA, AU & PMI DF
Region, the Americas Region, as well as the SSEA, CIS & MEA
Region, and broadly stable cigarette shipments in the Europe
Region. Cigarette shipment volume for Marlboro decreased by 0.8% to
60.2 billion units, due primarily to the Philippines.
PMI’s total oral product shipment volume increased by over 100%,
driven by the Swedish Match acquisition. On a pro forma basis
(including Swedish Match in all periods), it increased by 23.4%,
primarily reflecting growth in nicotine pouches (particularly in
the U.S.), partly offset by a decline for snus (mainly in
Scandinavia). Swedish Match's total oral product shipment volume
increased by 21.9% versus its corresponding shipments in 2022.
Adjusted in-market sales for HTUs increased by 13.9%, including
growth in Europe of 13.1%, Japan of 13.4%. Excluding Russia and
Ukraine, adjusted in-market sales for HTUs increased by 15.0%. The
net unfavorable impact of estimated distributor inventory movements
for HTUs was driven primarily by Japan.
Full-Year
PMI's total cigarette and HTU shipment volume increased by 1.0%,
reflecting an 14.7% increase in HTU shipments across all regions,
partly offset by a 1.4% decline in cigarette shipments due to
declines in the Europe, EA, AU & PMI DF, and Americas Regions,
partly offset by the SSEA, CIS & MEA Region. Cigarette shipment
volume for Marlboro decreased by 1.9% to 240.0 billion units, due
primarily to the Philippines.
PMI’s total oral product shipment volume increased by over 100%,
driven by the Swedish Match acquisition. On a pro forma basis
(including Swedish Match in all periods), it increased by 16.8%,
primarily reflecting the same factors as in the quarter. Swedish
Match's total oral product shipment volume increased by 17.1%
versus its corresponding shipments in 2022.
Adjusted in-market sales for HTUs increased by 14.8% (in line
with full-year HTUs shipment volume growth of 14.7%), including
growth in Europe of 17.6% and Japan of 14.5%. Excluding Russia and
Ukraine, adjusted in market sales for HTUs increased by 17.1%.
International Share of Market - Cigarettes and HTUs
Fourth-Quarter
Full Year
2023
2022
Change (pp)
2023
2022
Change (pp)
Total International Market Share
(1)
28.6%
28.1%
0.5
28.3%
27.7%
0.6
Cigarettes
23.7%
23.7%
—
23.7%
23.6%
0.1
HTU
4.9%
4.3%
0.6
4.7%
4.1%
0.6
Cigarette over Cigarette Market Share
(2)
25.3%
25.2%
0.1
25.2%
25.0%
0.2
(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
Note: Sum of share of market by product
categories might not foot to total due to roundings.
CONSOLIDATED FINANCIAL SUMMARY
Fourth-Quarter
Financial Summary
- Quarters Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
9,047
$
8,152
11.0
%
8.3
%
895
(78
)
299
631
50
(7
)
Cost of Sales (1)
(3,462
)
(3,211
)
(7.8
)%
(3.8
)%
(251
)
(39
)
(90
)
—
(103
)
(19
)
Marketing, Administration and Research
Costs (2)
(2,696
)
(2,017
)
(33.7
)%
(19.0
)%
(679
)
(184
)
(112
)
—
—
(383
)
Operating Income
$
2,889
$
2,924
(1.2
)%
5.8
%
(35
)
(301
)
97
631
(53
)
(409
)
Amortization of Intangibles
(129
)
(58
)
-(100
)%
(51.7
)%
(71
)
—
(41
)
—
—
(30
)
Charges related to the war in Ukraine
(34
)
(23
)
(47.8
)%
(47.8
)%
(11
)
—
—
—
—
(11
)
Costs associated with Swedish Match AB
offer
—
154
-(100
)%
-(100
)%
(154
)
—
—
—
—
(154
)
Swedish Match AB acquisition accounting
related items
—
(125
)
+100
%
+100
%
125
—
—
—
—
125
Adjusted Operating Income
$
3,052
$
2,976
2.6
%
8.0
%
76
(301
)
138
631
(53
)
(339
)
Adjusted Operating Income
Margin
33.7
%
36.5
%
(2.8
)pp
(0.1
)pp
(1) Includes $18 million in 2023 and $157
million in 2022 related to the special items below.
(2) Includes $145 million in 2023 and
$(105) million in 2022 related to the special items below.
Net revenues increased by 8.3% 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 volume, partially offset by lower
cigarette volume.
Adjusted operating income increased by 8.0% on an organic basis,
mainly reflecting: the favorable pricing variance; partially offset
by higher marketing, administration and research costs (primarily
due to inflationary impacts, notably related to wages) as well as
higher manufacturing costs. Slightly unfavorable volume/mix, mainly
driven by lower cigarette volume, was partly offset by higher HTU
volume.
Full-Year
Financial Summary
- Years Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
35,174
$
31,762
10.7
%
7.6
%
3,412
(1,112
)
2,113
1,940
664
(193
)
Termination of distribution arrangement in
the Middle East
(80
)
—
—
%
—
%
(80
)
—
—
—
—
(80
)
Adjusted Net Revenues
$
35,254
$
31,762
11.0
%
7.8
%
3,492
(1,112
)
2,113
1,940
664
(113
)
Net Revenues
$
35,174
$
31,762
10.7
%
7.6
%
3,412
(1,112
)
2,113
1,940
664
(193
)
Cost of Sales (1)
(12,893
)
(11,402
)
(13.1
)%
(8.4
)%
(1,491
)
167
(695
)
—
(755
)
(208
)
Marketing, Administration and Research
Costs (2)
(10,060
)
(8,114
)
(24.0
)%
(13.5
)%
(1,946
)
(128
)
(724
)
—
—
(1,094
)
Impairment of Goodwill
(665
)
—
—
%
—
%
(665
)
—
—
—
—
(665
)
Operating Income
$
11,556
$
12,246
(5.6
)%
(2.5
)%
(690
)
(1,073
)
694
1,940
(91
)
(2,160
)
Asset Impairment & Exit Costs
(109
)
—
—
%
—
%
(109
)
—
—
—
—
(109
)
Termination of distribution arrangement in
the Middle East (3)
(80
)
—
—
%
—
%
(80
)
—
—
—
—
(80
)
Impairment of Goodwill and Other
Intangibles (4)
(680
)
(112
)
-(100
)%
-(100
)%
(568
)
—
—
—
—
(568
)
Amortization of Intangibles
(497
)
(159
)
-(100
)%
(14.5
)%
(338
)
—
(315
)
—
—
(23
)
Charges related to the war in Ukraine
(53
)
(151
)
64.9
%
64.9
%
98
—
—
—
—
98
Costs associated with Swedish Match AB
offer
—
(115
)
+100
%
+100
%
115
—
—
—
—
115
Swedish Match AB acquisition accounting
related items
(18
)
(125
)
85.6
%
+100
%
107
—
(18
)
—
—
125
South Korea Indirect Tax Charge
(204
)
—
—
%
—
%
(204
)
—
—
—
—
(204
)
Termination of agreement with Foundation
for a Smoke-Free World
(140
)
—
—
%
—
%
(140
)
—
—
—
—
(140
)
Adjusted Operating Income
$
13,337
$
12,908
3.3
%
3.7
%
429
(1,073
)
1,027
1,940
(91
)
(1,374
)
Adjusted Operating Income
Margin
37.8
%
40.6
%
(2.8
)pp
(1.5
)pp
(1) Includes $90 million in 2023 and $356
million in 2022 related to the special items below.
(2) Includes $946 million in 2023 and $306
million in 2022 related to the special items below.
(3) Included in Net Revenues above.
(4) Includes $665 million impairment of
goodwill.
Adjusted net revenues increased by 7.8% 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 volume, partially offset by lower
cigarette volume and lower fees for certain distribution rights
billed to customers in certain markets.
Cost of sales, excluding currency and acquisitions, increased by
8.4%, driven by higher manufacturing costs (primarily due to
inflationary impacts, notably related to direct materials, tobacco
leaf and energy, partly offset by productivity) and unfavorable
volume/mix, mainly reflecting unfavorable category mix (notably due
to lower cigarette volume and higher HTU volume), as well as the
technical impact of third-party manufacturing in Indonesia. This
increase was partially offset by the Swedish Match AB acquisition
accounting related item in 2022, the impairment charge of other
intangible assets in 2022 and lower charges related to the War in
Ukraine.
Adjusted operating income increased by 3.7% on an organic basis,
mainly reflecting: the favorable pricing variance; partly offset by
higher marketing, administration and research costs (primarily due
to inflationary impacts, notably related to wages, and lower
commercial investments in the prior year period); higher
manufacturing costs (as explained for cost of sales); and the
impact of lower fees for certain distribution rights, as noted for
net revenues.
EUROPE REGION
Total Market, PMI Shipment & Market Share
Commentaries
Europe Key Data
Fourth-Quarter
Full-Year
Change
Change
2023
2022
% / pp
2023
2022
% / pp
PMI Shipment Volume (million
units)
Cigarettes
39,330
39,339
—
%
165,593
170,658
(3.0
)%
Heated Tobacco Units
14,310
12,921
10.7
%
49,269
45,417
8.5
%
Total Europe
53,640
52,260
2.6
%
214,862
216,075
(0.6
)%
PMI Market Share
Cigarettes
30.3
%
30.6
%
(0.3
)
30.3
%
31.1
%
(0.8
)
Heated Tobacco Units
10.0
%
8.9
%
1.1
9.1
%
7.8
%
1.3
Total Europe
40.3
%
39.5
%
0.8
39.4
%
39.0
%
0.4
Note: Sum may not foot due to
roundings.
Fourth-Quarter
The estimated total market for cigarettes and HTUs in the Region
decreased by 0.9% to 130.8 billion units, reflecting a 2.6% decline
for cigarettes, partly offset by a 13.2% increase for HTUs. The
decrease in the estimated total market was predominantly due to the
UK (down by 16.7%), the Czech Republic (down by 14.7%) and France
(down by 7.3%), partly offset by Italy (up by 2.5%).
PMI's total cigarette and HTU shipment volume in the Region
increased by 2.6% to 53.6 billion units, mainly due to Poland (up
by 10.6%), Italy (up by 4.0%) and Ukraine (up by 14.9%), partly
offset by France (down by 13.7%; or by 8.3% excluding the net
unfavorable impact of estimated distributor inventory movements)
and Germany (down by 6.2%).
PMI's estimated HTU adjusted in-market sales volume in the
Region increased by 13.1% in the quarter, reflecting the strong
continued growth momentum for IQOS (including in Germany, where
adjusted in-market sales volume for HTUs increased by 19.5%).
PMI's HTU share of the total cigarette and HTU market in the
Region increased by 1.1 points, or by 1.2 points on an adjusted
basis.
Full-Year
The estimated total market for cigarettes and HTUs in the Region
decreased by 1.3% to 542.3 billion units, reflecting a 3.0% decline
for cigarettes, partly offset by a 15.6% increase for HTUs. The
decrease in the estimated total market was predominantly due to the
UK (down by 15.4%), France (down by 8.2%), Germany (down by 1.8%)
and Spain (down by 2.4%), partly offset by Poland (up by 1.8%).
PMI's total cigarette and HTU shipment volume in the Region
decreased by 0.6% to 214.9 billion units, mainly due to Germany
(down by 6.0%), Italy (down by 2.8%; or up by 0.4% excluding the
net unfavorable impact of estimated distributor inventory
movements) and France (down by 7.3%), partly offset by Poland (up
by 9.4%).
PMI's estimated HTU adjusted in-market sales volume in the
Region increased by 17.6%, including growth in Germany and Italy of
29.7% and 16.6%, respectively.
PMI's HTU share of the total cigarette and HTU market in the
Region increased by 1.3 points, or by 1.5 points on an adjusted
basis.
Financial Summary
Fourth-Quarter
Financial Summary
- Quarters Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
3,614
$
3,064
18.0
%
9.6
%
550
255
—
187
108
—
Operating Income
$
1,566
$
1,355
15.6
%
6.6
%
211
122
—
187
146
(244
)
Adjustments (1)
(44
)
38
-(100
)%
-(100
)%
(82
)
—
—
—
—
(82
)
Adjusted Operating Income
$
1,610
$
1,317
22.2
%
13.0
%
293
122
—
187
146
(162
)
Adjusted Operating Income
Margin
44.5
%
43.0
%
1.5
pp
1.3
pp
(1) See Schedule 8 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues increased by 9.6% 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 mix, partly offset by lower
cigarette volume, as well as unfavorable cigarette mix.
Adjusted operating income increased by 13.0% on an organic
basis, primarily reflecting: the favorable pricing variance;
favorable volume/mix, mainly reflecting higher HTU volume, partly
offset by lower cigarette volume, as well as unfavorable cigarette
mix; partly offset by higher marketing, administration and research
costs (primarily due to inflationary impacts) as well as higher
manufacturing costs.
Full-Year
Financial Summary
- Years Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
13,598
$
12,869
5.7
%
3.7
%
729
249
—
540
(60
)
—
Operating Income
$
6,012
$
5,802
3.6
%
0.4
%
210
186
—
540
(79
)
(437
)
Adjustments (1)
(202
)
(242
)
16.5
%
16.5
%
40
—
—
—
—
40
Adjusted Operating Income
$
6,214
$
6,044
2.8
%
(0.3
)%
170
186
—
540
(79
)
(477
)
Adjusted Operating Income
Margin
45.7
%
47.0
%
(1.3
)pp
(1.8
)pp
(1) See Schedule 9 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues increased by 3.7% on an organic basis, reflecting:
a favorable pricing variance, mainly driven by higher combustible
tobacco pricing; partially offset by unfavorable volume/mix, mainly
due to lower cigarette volume, as well as unfavorable cigarette
mix, partly offset by higher HTU volume.
Adjusted operating income decreased by 0.3% on an organic basis,
primarily reflecting: higher marketing, administration and research
costs (mainly due to inflationary impacts and lower commercial
investments in the prior year period); higher manufacturing costs
(primarily due to inflationary impacts); and unfavorable
volume/mix, mainly due to the same factors as for net revenues;
partly offset by the favorable pricing variance.
SSEA, CIS & MEA REGION
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Fourth-Quarter
Full-Year
(million units)
2023
2022
Change
2023
2022
Change
Cigarettes
83,009
83,920
(1.1)%
333,353
331,026
0.7%
Heated Tobacco Units
7,502
6,122
22.5%
24,890
22,607
10.1%
Total SSEA, CIS & MEA
90,511
90,042
0.5%
358,243
353,633
1.3%
Fourth-Quarter
The estimated total market for cigarettes and HTUs in the Region
decreased by approximately 1% to 389.2 billion units, due to a
decline for cigarettes. The decrease in the estimated total market
was mainly due to Egypt (down by 21.8%) and Pakistan (down by
25.1%), partly offset by Turkey (up by 13.3%).
PMI's total cigarette and HTU shipment volume in the Region
increased by 0.5% to 90.5 billion units, mainly driven by Turkey
(up by 19.0%), partly offset by the Philippines (down by 25.5%).
PMI's estimated HTU adjusted in-market sales volume increased by
13.0%, with 22.5% HTU shipment volume growth, primarily due to
comparison effects, notably in Russia.
Full-Year
The estimated total market for cigarettes and HTUs in the Region
decreased by approximately 2% to 1,528.6 billion units, due to a
decline for cigarettes. The decrease in the estimated total market
was predominantly due to Egypt (down by 20.9%) and Pakistan (down
by 35.1%), partly offset by Turkey (up by 16.9%).
Our Regional market share increased by 0.8 points to 23.4%.
PMI's total cigarette and HTU shipment volume in the Region
increased by 1.3% to 358.2 billion units, mainly driven by Turkey
(up by 23.0%), partly offset by the Philippines (down by 26.2%).
PMI's estimated HTU adjusted in-market sales volume increased by
8.2% including limited growth in Russia.
Financial Summary
Fourth-Quarter
Financial Summary
- Quarters Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
2,707
$
2,686
0.8
%
13.0
%
21
(327
)
—
257
97
(6
)
Operating Income
$
676
$
855
(20.9
)%
3.0
%
(179
)
(205
)
—
257
(49
)
(182
)
Adjustments (1)
(5
)
38
-(100
)%
-(100
)%
(43
)
—
—
—
—
(43
)
Adjusted Operating Income
$
681
$
817
(16.6
)%
8.4
%
(136
)
(205
)
—
257
(49
)
(139
)
Adjusted Operating Income
Margin
25.2
%
30.4
%
(5.2
)pp
(1.2
)pp
(1) See Schedule 8 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues increased by 13.0% 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 and favorable cigarette mix, partly offset by
lower cigarette volume.
Adjusted operating income increased by 8.4% on an organic basis,
primarily reflecting: the favorable pricing variance, partly offset
by higher marketing, administration and research costs; higher
manufacturing costs (primarily due to inflationary impacts); and
unfavorable volume/mix, mainly due to an unfavorable cigarette
volume impact.
Full-Year
Financial Summary
- Years Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
10,629
$
10,467
1.5
%
11.7
%
162
(1,060
)
—
1,008
400
(186
)
Adjustment (1)
(80
)
—
—
%
—
%
(80
)
—
—
—
—
(80
)
Adjusted Net Revenues
$
10,709
$
10,467
2.3
%
12.4
%
242
(1,060
)
—
1,008
400
(106
)
Net Revenues
$
10,629
$
10,467
1.5
%
11.7
%
162
(1,060
)
—
1,008
400
(186
)
Operating Income
$
3,047
$
3,864
(21.1
)%
(4.2
)%
(817
)
(653
)
—
1,008
(237
)
(935
)
Adjustments (2)
(178
)
(56
)
-(100
)%
-(100
)%
(122
)
—
—
—
—
(122
)
Adjusted Operating Income
$
3,225
$
3,920
(17.7
)%
(1.1
)%
(695
)
(653
)
—
1,008
(237
)
(813
)
Adjusted Operating Income
Margin
30.1
%
37.5
%
(7.4
)pp
(4.5
)pp
(1) Termination of distribution
arrangement in the Middle East
(2) See Schedule 9 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Adjusted net revenues increased by 12.4% on an organic basis,
primarily reflecting: a favorable pricing variance, mainly driven
by higher combustible tobacco pricing, with HTU pricing also
higher; favorable volume/mix, primarily driven by favorable
cigarette mix, as well as higher volume for HTUs, partly offset by
an unfavorable cigarette volume impact; and partially offset by
lower fees for certain distribution rights billed to customers in
certain markets, shown in "Cost/Other."
Adjusted operating income decreased by 1.1% on an organic basis,
primarily reflecting: higher marketing, administration and research
costs; higher manufacturing costs (primarily due to inflationary
impacts); unfavorable volume/mix, mainly due to an unfavorable
cigarette volume impact and unfavorable cigarette mix, partly
offset by higher HTU volume; and the impact of lower fees for
certain distribution rights, as noted for net revenues; partially
offset by the favorable pricing variance.
EA, AU AND PMI DF REGION
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Fourth-Quarter
Full-Year
(million units)
2023
2022
Change
2023
2022
Change
Cigarettes
11,287
12,335
(8.5)%
50,689
54,251
(6.6)%
Heated Tobacco Units
11,958
12,785
(6.5)%
50,519
40,613
24.4%
Total EA, AU & PMI DF
23,245
25,120
(7.5)%
101,208
94,864
6.7%
Fourth-Quarter
The estimated total market for cigarettes and HTUs in the
Region, excluding China, decreased by around 1% to 80.7 billion
units, with growth for HTUs more than offset by a decline for
cigarettes. The decrease in the estimated total market was driven
by Taiwan (down by 18.1%), partly offset by International Duty Free
(up by 26.3%).
PMI's total cigarette and HTU shipment volume in the Region
decreased by 7.5% to 23.2 billion units, driven by Japan (down by
13.3%).
PMI's estimated HTU adjusted in-market sales volume in the
Region increased by 15.4% in the quarter, including growth in Japan
of 13.4%, primarily due to comparison effects.
Full-Year
The estimated total market for cigarettes and HTUs in the
Region, excluding China, increased by 1% to 319.8 billion units,
reflecting 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 35.7%), partly offset by
Taiwan (down by 7.4%) and Australia (down by 19.4%).
Our Regional market share increased by 1.3 points to 30.0%.
PMI's total cigarette and HTU shipment volume in the Region
increased by 6.7% to 101.2 billion units, mainly driven by Japan
(up by 9.7%) and International Duty Free (up by 14.5%).
PMI's estimated HTU adjusted in-market sales volume in the
Region increased by 15.8%, including growth in Japan of 14.5%.
Financial Summary
Fourth-Quarter
Financial Summary
- Quarters Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
1,430
$
1,478
(3.2
)%
(0.1
)%
(48
)
(46
)
—
133
(135
)
—
Operating Income
$
561
$
678
(17.3
)%
(5.2
)%
(117
)
(82
)
—
133
(133
)
(35
)
Adjustments (1)
—
31
-(100
)%
-(100
)%
(31
)
—
—
—
—
(31
)
Adjusted Operating Income
$
561
$
647
(13.3
)%
(0.6
)%
(86
)
(82
)
—
133
(133
)
(4
)
Adjusted Operating Income
Margin
39.2
%
43.8
%
(4.6
)pp
(0.2
)pp
(1) See Schedule 8 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues decreased by 0.1% on an organic basis, reflecting:
unfavorable volume/mix, mainly driven by lower cigarette and HTU
volume; largely offset by favorable pricing variance, driven by
higher combustible tobacco pricing.
Adjusted operating income decreased by 0.6% on an organic basis
driven by the same factors as for net revenues.
Full-Year
Financial Summary
- Years Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
6,201
$
5,936
4.5
%
11.2
%
265
(400
)
—
206
459
—
Operating Income
$
2,481
$
2,424
2.4
%
18.6
%
57
(395
)
—
206
326
(80
)
Adjustments (1)
(254
)
(28
)
-(100
)%
-(100
)%
(226
)
—
—
—
—
(226
)
Adjusted Operating Income
$
2,735
$
2,452
11.5
%
27.7
%
283
(395
)
—
206
326
146
Adjusted Operating Income
Margin
44.1
%
41.3
%
2.8
pp
6.1
pp
(1) See Schedule 9 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues increased by 11.2% on an organic basis, reflecting:
favorable volume/mix, mainly driven by higher HTU volume, partly
offset by lower cigarette volume and unfavorable smoke-free product
mix (for HTUs and devices); and a favorable pricing variance,
driven by higher combustible tobacco and device pricing, partly
offset by lower HTU (net) pricing (primarily related to Japan).
Adjusted operating income increased by 27.7% on an organic
basis, mainly reflecting favorable volume/mix, primarily driven by
higher HTU volume, partly offset by lower cigarette volume and
unfavorable HTU mix; the favorable pricing variance; and lower
supply chain costs (primarily related to Japan).
AMERICAS REGION
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Fourth-Quarter
Full-Year
(million units)
2023
2022
Change
2023
2022
Change
Cigarettes
17,468
18,432
(5.2)%
63,314
65,973
(4.0)%
Heated Tobacco Units
202
193
4.7%
585
532
10.0%
Total Americas
17,670
18,625
(5.1)%
63,899
66,505
(3.9)%
Fourth-Quarter
The estimated total market for cigarettes and HTUs in the
Region, excluding the U.S., decreased by around 2% to 49.9 billion
units, primarily reflecting a decline for cigarettes. The decrease
in the estimated total market was mainly due to Mexico (down by
8.7%), Argentina (down by 8.1%) and Canada (down by 11.2%), partly
offset by Brazil (up by 11.7%).
PMI's total cigarette and HTU shipment volume in the Region
decreased by 5.1% to 17.7 billion units, mainly due to Mexico (down
by 11.6%) and Argentina (down by 10.7%), partly offset by Brazil
(up by 13.3%).
Full-Year
The estimated total market for cigarettes and HTUs in the
Region, excluding the U.S., decreased by around 1% to 189.2 billion
units, driven by a decline for cigarettes. The decrease in the
estimated total market was mainly due to Mexico (down by 6.8%),
Canada (down by 12.6%) and Argentina (down by 5.0%), partly offset
by Brazil (up by 10.1%).
Our Regional market share, excluding the U.S., decreased by 1.1
points to 33.7%.
PMI's total cigarette and HTU shipment volume in the Region
decreased by 3.9% to 63.9 billion units, mainly due to Mexico (down
by 9.8%) and Argentina (down by 7.9%), partly offset by Brazil (up
by 12.8%).
Financial Summary
Fourth-Quarter
Financial Summary
- Quarters Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
545
$
536
1.7
%
(4.9
)%
9
35
—
34
(62
)
2
Operating Income
$
(79
)
$
100
-(100
)%
(56.0
)%
(179
)
(123
)
—
34
(55
)
(35
)
Adjustments (1)
(1
)
5
-(100
)%
-(100
)%
(6
)
—
—
—
—
(6
)
Adjusted Operating Income
$
(78
)
$
95
-(100
)%
(52.6
)%
(173
)
(123
)
—
34
(55
)
(29
)
Adjusted Operating Income
Margin
(14.3
)%
17.7
%
(32.0
)pp
(8.9
)pp
(1) See Schedule 8 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues decreased by 4.9% on an organic basis, primarily
reflecting: unfavorable volume/mix, mainly due to lower cigarette
volume and unfavorable cigarette mix; partly offset by a favorable
pricing variance, driven by higher combustible tobacco pricing.
Adjusted operating income decreased by 52.6% on an organic
basis, mainly reflecting: unfavorable volume/mix, mainly due to the
same factors as for net revenues; higher marketing and
administration costs (including incremental investments in the U.S.
in preparation for smoke-free product commercialization); and
higher manufacturing costs; partly offset by the favorable pricing
variance.
Full-Year
Financial Summary
- Years Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
1,944
$
1,903
2.2
%
(2.9
)%
41
96
—
128
(177
)
(6
)
Operating Income
$
62
$
436
(85.8
)%
(40.6
)%
(374
)
(197
)
—
128
(139
)
(166
)
Adjustments (1)
(19
)
(14
)
(35.7
)%
(35.7
)%
(5
)
—
—
—
—
(5
)
Adjusted Operating Income
$
81
$
450
(82.0
)%
(38.2
)%
(369
)
(197
)
—
128
(139
)
(161
)
Adjusted Operating Income
Margin
4.2
%
23.6
%
(19.4
)pp
(8.6
)pp
(1) See Schedule 9 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues decreased by 2.9% on an organic basis, primarily
reflecting: unfavorable volume/mix, mainly due to lower cigarette
volume and unfavorable cigarette mix; partly offset by a favorable
pricing variance, driven by higher combustible tobacco pricing.
Adjusted operating income decreased by 38.2% on an organic
basis, mainly reflecting: higher marketing, administration and
research costs (notably reflecting the same factors as in the
quarter); unfavorable volume/mix, mainly due to the same factors as
for net revenues; partly offset by the favorable pricing
variance.
SWEDISH MATCH
PMI Shipment Commentary
Swedish Match Oral Product Shipment
Volume (1)
Fourth-Quarter
Full-Year
(million cans)
2023
2022
Change
2023
2022
Change
Nicotine Pouches
U.S.
116.3
34.5
+100%
384.8
34.5
+100%
Scandinavia
7.1
3.7
90.9%
28.7
3.7
+100%
Other
1.0
1.2
(15.1)%
4.6
1.2
+100%
Total Nicotine Pouches
124.4
39.4
+100%
418.2
39.4
+100%
Snus
Scandinavia
55.5
39.3
41.4%
218.2
39.3
+100%
Other
1.6
1.1
41.4%
6.8
1.1
+100%
Total Snus
57.1
40.4
41.4%
224.9
40.4
+100%
Moist Snuff
31.2
16.0
95.5%
133.7
16.0
+100%
Other
0.8
—
—%
4.2
—
—%
Total Oral Products
213.6
95.8
+100%
781.0
95.8
+100%
(1) Excluding U.S. chew
Volume comparisons versus Swedish Match's 2022
results reflect data sourced from its disclosures, available at
www.swedishmatch.com/investors.
Fourth-Quarter
Swedish Match's total shipment volume for oral products
increased by 21.9% versus its corresponding shipments of 175.2
million cans in the fourth quarter of 2022.
Nicotine pouch shipment volume increased by 68.6% compared to
Swedish Match's fourth-quarter 2022 shipment volume of 73.8 million
cans, mainly driven by 78.2% growth for ZYN in the U.S. -- an
outstanding performance that reflected continued broad strength
across the country. In Scandinavia, shipment volume for nicotine
pouches grew by 3.0%.
Shipment volume for snus declined by 17.6% compared to Swedish
Match's fourth-quarter 2022 shipment volume of 69.3 million cans.
The decrease was primarily due to Scandinavia, mainly reflecting
the comparison versus a strong total market in the prior year
period.
Full-Year
Swedish Match's total shipment volume for oral products
increased by 17.1% versus its corresponding shipments of 667.1
million cans in 2022.
Nicotine pouch shipment volume increased by 55.3% compared to
Swedish Match's 2022 shipment volume of 269.2 million cans,
reflecting 62.0% growth for ZYN in the U.S. In Scandinavia,
shipment volume for nicotine pouches grew by 6.1%.
Shipment volume for snus declined by 13.8% compared to Swedish
Match's 2022 shipment volume of 261.0 million cans.
Swedish Match's performance in the period primarily reflected
the same factors as in the quarter, coupled with the impact of
excise tax and price increases on snus in Scandinavia in the first
quarter (including related inventory movements).
Swedish Match Combustible Product
Shipment Volume
Fourth-Quarter
Full-Year
(million units)
2023
2022
Change
2023
2022
Change
Cigars
337.1
259.6
29.9%
1,578.6
259.6
+100%
Fourth-Quarter
Cigar shipment volume declined by 26.4% compared to Swedish
Match's fourth-quarter 2022 cigar shipment volume of 458.3 million
units, primarily due to the impact of industry pricing effects.
Full-Year
Cigar shipment volume declined by 12.2% compared to Swedish
Match's 2022 cigar shipment volume of 1,798.0 million units, mainly
due to the same factor as in the quarter.
Fourth-Quarter
Financial Summary
- Quarters Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022 (2)
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
682
$
316
+100
%
21.2
%
366
—
299
25
42
—
Operating Income / (Loss)
$
227
$
(22
)
+100
%
+100
%
249
(8
)
97
25
38
97
Adjustments (1)
(98
)
(151
)
35.1
%
62.3
%
53
—
(41
)
—
—
94
Adjusted Operating Income
$
325
$
129
+100%
51.2
%
196
(8
)
138
25
38
3
Adjusted Operating Income
Margin
47.7
%
40.8
%
6.9
pp
10.1
pp
(1) See Schedule 8 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
(2) Swedish Match's results beginning on
November 11, 2022, when PMI became the owner of a majority position
in the company, through December 31, 2022
PMI recorded net revenues of $682 million in the Swedish Match
segment for the fourth-quarter. Compared to Swedish Match's full
fourth-quarter 2022 results, net revenues increased by 25.7%,
excluding currency. This was mainly driven by the strong growth of
smoke-free products, led by nicotine pouch volume growth in the
U.S.
PMI recorded adjusted operating income of $325 million in the
segment, reflecting an adjusted operating income margin of
47.7%.
Full-Year
Financial Summary
- Years Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022 (2)
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
2,496
$
316
+100
%
21.2
%
2,180
—
2,113
25
42
—
Operating Income
$
824
$
(22
)
+100
%
+100
%
846
(8
)
694
25
38
97
Adjustments (1)
(390
)
(151
)
-(100
)%
62.3
%
(239
)
—
(333
)
—
—
94
Adjusted Operating Income
$
1,214
$
129
+100
%
51.2
%
1,085
(8
)
1,027
25
38
3
Adjusted Operating Income
Margin
48.6
%
40.8
%
7.8
pp
10.1
pp
(1) See Schedule 9 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
(2) Swedish Match's results beginning on
November 11, 2022, when PMI became the owner of a majority position
in the company, through December 31, 2022
PMI recorded net revenues of $2.5 billion in the Swedish Match
segment for the full-year period, with smoke-free products
accounting for over 80% of the segment's total net revenues.
Compared to Swedish Match's full 2022 results for the same period,
net revenues increased by 20.1%, excluding currency. This was
mainly driven by the strong growth of smoke-free products, led by
nicotine pouch volume growth in the U.S., as well as higher pricing
for cigars.
PMI recorded adjusted operating income of $1,214 million in the
segment, reflecting an adjusted operating income margin of
48.6%.
WELLNESS AND HEALTHCARE
The operating results of PMI’s Vectura Fertin Pharma business
are reported in the Wellness and Healthcare segment.
Financial Summary
Fourth-Quarter
Financial Summary
- Quarters Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
69
$
72
(4.2
)%
(11.1
)%
(3
)
5
—
(5
)
—
(3
)
Operating Income / (Loss)
$
(62
)
$
(42
)
(47.6
)%
(35.7
)%
(20
)
(5
)
—
(5
)
—
(10
)
Adjustments (1)
(15
)
(13
)
(15.4
)%
(15.4
)%
(2
)
—
—
—
—
(2
)
Adjusted Operating Income /
(Loss)
$
(47
)
$
(29
)
(62.1
)%
(44.8
)%
(18
)
(5
)
—
(5
)
—
(8
)
Adjusted Operating Income / (Loss)
Margin
(68.1
)%
(40.3
)%
(27.8
)pp
(25.3
)pp
(1) See Schedule 8 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues decreased by 11.1% on an organic basis. The
adjusted operating loss of $47 million was primarily due to
commercial investments and higher administration costs.
Full-Year
Financial Summary
- Years Ended December 31,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2023
2022
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/
Other
(in millions)
Net Revenues
$
306
$
271
12.9
%
11.8
%
35
3
—
33
—
(1
)
Operating Income / (Loss)
$
(870
)
$
(258
)
-(100
)%
-(100
)%
(612
)
(6
)
—
33
—
(639
)
Adjustments (1)
(738
)
(171
)
-(100
)%
-(100
)%
(567
)
—
—
—
—
(567
)
Adjusted Operating Income /
(Loss)
$
(132
)
$
(87
)
(51.7
)%
(44.8
)%
(45
)
(6
)
—
33
—
(72
)
Adjusted Operating Income / (Loss)
Margin
(43.1
)%
(32.1
)%
(11.0
)pp
(9.5
)pp
(1) See Schedule 9 in Exhibit 99.2 to the
Form 8-K dated February 8, 2024, for additional detail.
Net revenues increased by 11.8% on an organic basis, notably
reflecting the higher net revenues for smoking cessation products
and select inhalation products.
The adjusted operating loss of $132 million was primarily due to
commercial investments and higher administration costs.
Philip Morris International: Delivering a Smoke-Free
Future
Philip Morris International (PMI) is a leading international
tobacco company, actively delivering a smoke-free future and
evolving its portfolio for the long term to include products
outside of the tobacco and nicotine sector. The company’s current
product portfolio primarily consists of cigarettes and smoke-free
products. Since 2008, PMI has invested $12.5 billion to develop,
scientifically substantiate and commercialize innovative smoke-free
products for adults who would otherwise continue to smoke, with the
goal of completely ending the sale of cigarettes. This includes the
building of world-class scientific assessment capabilities, notably
in the areas of pre-clinical systems toxicology, clinical and
behavioral research, as well as post-market studies. In 2022, PMI
acquired Swedish Match – a leader in oral nicotine delivery –
creating a global smoke-free champion led by the companies’ IQOS
and ZYN brands. The U.S. Food and Drug Administration has
authorized versions of PMI’s IQOS Platform 1 devices and
consumables and Swedish Match’s General snus as Modified Risk
Tobacco Products. As of December 31, 2023, PMI's smoke-free
products were available for sale in 84 markets, and PMI estimates
that approximately 20.8 million adults around the world had already
switched to IQOS and stopped smoking. Smoke-free products accounted
for approximately 37% of PMI’s total full-year 2023 net revenues.
With a strong foundation and significant expertise in life
sciences, PMI announced in February 2021 its ambition to expand
into wellness and healthcare areas and, through its Vectura Fertin
Pharma business, aims to enhance life through the delivery of
seamless health experiences. For more information, please visit
www.pmi.com and www.pmiscience.com.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and
goals and other forward-looking statements, including statements
regarding expected financial or operational performance; capital
allocation plans; investment strategies; regulatory outcomes;
market expectations; and business plans and strategies. 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; the impact
and consequences of Russia's invasion of Ukraine; changes in adult
smoker behavior; the impact of COVID-19 on PMI's business; 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; if it is unable to attract and retain the
best global talent, including women or diverse candidates; or if it
is unable to successfully integrate and realize the expected
benefits from recent transactions and acquisitions. Future results
are also subject to the lower predictability of our reduced-risk
product category's performance.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including PMI's Annual Report on
Form 10-K for the fourth quarter and year ended December 31, 2022,
Quarterly Report on Form 10-Q for the third quarter ended September
30, 2023, and the Form 10-K for the fourth quarter and year ended
December 31, 2023, which will be filed later today. 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.
Non-GAAP Measures, Glossary and Explanatory Notes
Reconciliations of non-GAAP measures in this release to the most
directly comparable U.S. GAAP measures can be found in Exhibit 99.2
to the Form 8-K dated February 8, 2024, and at
www.pmi.com/2023Q4earnings. A glossary of key terms, definitions
and explanatory notes is available in the aforementioned Exhibit
99.2 and on the same webpage, where additional financial schedules,
as well as adjustments and other calculations have also been made
available.
Management reviews net revenues, gross profit, operating income,
operating income margin, operating cash flow and earnings per
share, or "EPS," on an adjusted basis, which may exclude the impact
of currency and other items such as acquisitions, asset impairment
and exit costs, tax items and other special items. Additionally,
starting in 2022 and on a comparative basis, for these measures
other than net revenues and operating cash flow, PMI includes
adjustments to add back amortization expense on acquisition related
intangible assets that are recorded as part of purchase accounting
and contribute to PMI’s revenue generation, as well as impairment
of intangible assets, if any. While amortization expense on
acquisition related intangible assets is excluded in these adjusted
measures, the net revenues generated from these acquired intangible
assets are included in the company's adjusted measures, unless
otherwise stated. Currency-neutral and organic growth rates reflect
the way management views underlying performance for these measures.
PMI believes that such measures provide useful insight into
underlying business trends and results. Management reviews these
measures because they exclude changes in currency exchange rates
and other factors that may distort underlying business trends,
thereby improving the comparability of PMI’s business performance
between reporting periods. Furthermore, PMI uses several of these
measures in its management compensation program to promote internal
fairness and a disciplined assessment of performance against
company targets. PMI discloses these measures to enable investors
to view the business through the eyes of management.
Non-GAAP measures used in this release should neither be
considered in isolation nor as a substitute for the financial
measures prepared in accordance with U.S. GAAP.
Appendix 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Key Market Data
Quarters Ended December
31,
Market
Total Market,
bio units
PMI Shipments, bio
units
PMI Market Share, %
(2)
Total
Cigarette
HTU
Total
HTU
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
2023
2022
pp Change
2023
2022
pp Change
Total (1) (2)
650.5
658.7
(1.2)
185.1
186.0
(0.5)
151.1
154.0
(1.9)
34.0
32.0
6.1
28.6
28.1
0.5
4.9
4.3
0.6
Europe
France
7.1
7.7
(7.3)
2.8
3.2
(13.7)
2.7
3.1
(13.1)
—
0.1
(40.7)
43.1
43.6
(0.5)
0.7
0.8
(0.1)
Germany (3)
16.0
16.0
(0.2)
6.6
7.1
(6.2)
5.7
5.8
(2.2)
1.0
1.3
(24.3)
38.9
39.7
(0.8)
5.6
4.7
0.9
Italy
18.2
17.8
2.5
10.6
10.2
4.0
6.5
6.4
2.0
4.1
3.8
7.5
54.7
54.3
0.4
19.0
15.4
3.6
Poland
13.1
12.8
2.3
5.6
5.1
10.6
4.3
4.1
6.5
1.3
1.0
27.8
42.8
39.6
3.2
9.6
7.7
1.9
Spain
10.6
10.6
(0.7)
2.9
3.0
(2.5)
2.6
2.8
(6.4)
0.3
0.2
53.2
28.8
28.9
(0.1)
2.4
1.9
0.5
SSEA, CIS & MEA
Egypt
19.3
24.6
(21.8)
6.2
5.9
5.2
5.6
5.4
3.8
0.6
0.5
21.7
31.4
22.2
9.2
2.0
0.9
1.1
Indonesia
72.5
73.4
(1.2)
20.3
21.2
(4.1)
20.3
21.2
(4.1)
—
—
—
28.0
28.9
(0.9)
—
—
—
Philippines
10.7
13.0
(17.7)
5.8
7.7
(25.5)
5.7
7.6
(25.6)
0.1
0.1
(15.0)
53.7
59.4
(5.7)
0.6
0.6
—
Russia
52.4
52.1
0.6
16.5
16.1
2.4
11.4
12.0
(4.7)
5.1
4.1
23.3
31.3
31.8
(0.5)
8.3
7.8
0.5
Turkey
35.3
31.1
13.3
18.7
15.7
19.0
18.7
15.7
19.0
—
—
—
52.9
50.4
2.5
—
—
—
EA, AU & PMI DF
Australia
1.6
2.3
(32.4)
0.5
0.8
(32.9)
0.5
0.8
(32.9)
—
—
—
32.7
32.9
(0.2)
—
—
—
Japan (2)
37.8
37.8
—
13.9
16.1
(13.3)
3.9
5.0
(21.2)
10.0
11.1
(9.7)
40.0
38.0
2.0
27.6
24.4
3.2
South Korea
17.8
17.6
1.1
3.4
3.3
2.9
2.1
2.1
(2.3)
1.3
1.2
12.2
19.3
19.1
0.2
7.5
6.7
0.8
Americas
Argentina
7.1
7.8
(8.1)
4.4
4.9
(10.7)
4.4
4.9
(10.7)
—
—
—
61.7
63.5
(1.8)
—
—
—
Mexico
8.8
9.6
(8.7)
5.7
6.5
(11.6)
5.7
6.4
(11.5)
—
—
—
65.3
67.4
(2.1)
0.5
0.5
—
(1) Market share estimates are calculated
using IMS data, unless otherwise stated
(2) Total market and market share
estimates include cigarillos in Japan
(3) PMI market share reflects estimated
adjusted in-market sales volume share. Historical HTU adjusted
in-market sales volume share: Q1, 2023 (5.4%); Q2, 2023 (5.4%); Q3
2023 (4.9%). Historical total adjusted in-market sales volume
share: Q1, 2023 (39.4%); Q2, 2023 (39.2%); Q3, 2023 (38.4%);
Note: % change for Total Market and PMI
shipments is computed based on millions of units. "-" indicates
volume below 50 million units and market share below 0.1%
Appendix 2
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Key Market Data
Years Ended December
31,
Market
Total Market,
bio units
PMI Shipments, bio
units
PMI Market Share, %(2)
Total
Cigarette
HTU
Total
HTU
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
2023
2022
pp Change
2023
2022
pp Change
Total (1) (2)
2,579.9
2,621.5
(1.6)
738.2
731.1
1.0
612.9
621.9
(1.4)
125.3
109.2
14.7
28.3
27.7
0.6
4.7
4.1
0.6
Europe
France
29.8
32.5
(8.2)
13.0
14.0
(7.3)
12.8
13.7
(7.2)
0.2
0.2
(13.1)
42.5
43.6
(1.1)
0.7
0.7
—
Germany (3)
69.0
70.3
(1.8)
26.5
28.2
(6.0)
23.3
24.8
(5.7)
3.1
3.4
(8.3)
39.0
38.9
0.1
5.3
4.0
1.3
Italy
73.3
72.8
0.7
39.7
40.8
(2.8)
27.3
28.6
(4.5)
12.4
12.3
1.1
53.9
54.1
(0.2)
17.3
14.6
2.7
Poland
56.7
55.7
1.8
23.7
21.7
9.4
18.7
17.1
9.0
5.0
4.5
10.8
41.8
38.9
2.9
8.9
8.2
0.7
Spain
43.6
44.6
(2.4)
12.9
13.6
(5.5)
11.8
12.7
(7.4)
1.1
0.9
22.6
29.3
30.0
(0.7)
2.3
1.7
0.6
SSEA, CIS & MEA
Egypt
74.0
93.6
(20.9)
24.3
21.0
15.4
23.0
20.0
14.8
1.3
1.0
26.9
32.8
22.2
10.6
1.7
0.8
0.9
Indonesia
291.6
304.0
(4.1)
83.4
86.8
(4.0)
83.4
86.8
(4.0)
—
—
—
28.6
28.6
—
—
—
—
Philippines
42.9
53.4
(19.7)
23.8
32.2
(26.2)
23.5
32.0
(26.4)
0.2
0.2
(0.9)
55.4
60.3
(4.9)
0.5
0.4
0.1
Russia
203.4
208.8
(2.6)
64.8
64.7
0.1
47.9
49.3
(2.9)
16.9
15.4
9.8
31.8
31.2
0.6
8.0
7.6
0.4
Turkey
136.5
116.8
16.9
69.0
56.1
23.0
69.0
56.1
23.0
—
—
—
50.5
48.0
2.5
—
—
—
EA, AU & PMI DF
Australia
7.2
8.9
(19.4)
2.5
3.0
(16.0)
2.5
3.0
(16.0)
—
—
—
34.8
33.4
1.4
—
—
—
Japan (2)
149.0
148.3
0.5
60.9
55.5
9.7
17.9
21.1
(15.4)
43.0
34.4
25.1
39.6
37.6
2.0
26.7
23.6
3.1
South Korea
72.0
72.6
(0.7)
14.0
13.9
0.9
8.9
9.4
(5.0)
5.1
4.5
13.1
19.5
19.2
0.3
7.1
6.2
0.9
Americas
Argentina
28.8
30.3
(5.0)
17.8
19.3
(7.9)
17.8
19.3
(7.9)
—
—
—
61.9
63.8
(1.9)
—
—
—
Mexico
30.0
32.2
(6.8)
18.9
21.0
(9.8)
18.8
20.8
(9.9)
0.1
0.1
2.4
63.1
65.2
(2.1)
0.5
0.4
0.1
(1) Market share estimates are calculated
using IMS data, unless otherwise stated
(2) Total market and market share
estimates include cigarillos in Japan
(3) PMI market share reflects estimated
adjusted in-market sales volume share
Note: % change for Total Market and PMI
shipments is computed based on millions of units. "-" indicates
volume below 50 million units and market share below 0.1%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240207811391/en/
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CT: +1 (203) 905 2413 Lausanne: +41 (0)58 242 4666
InvestorRelations@pmi.com
Media: Lausanne: +41 (0)58 242 4500 David.Fraser@pmi.com
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