On July 23rd, Philip Morris International Inc. (NYSE: PM) announced its 2024 Q2 and first-half-year results. For the Q2 quarter, net revenues were $9.5 billion, a 5.6% increase from $8.97 billion in the same quarter of 2023. Gross profit was $6.1 billion, up 6.7% from Q2 2023, and operating income rose by 34.2% to $3.44 billion. Year-to-date, net revenues reached $18.261 billion, with operating income growing by 22.5% to $6.489 billion compared to the same period in 2023.
In Q2, PMI shipped 197.3 billion units, including 157.6 billion cigarettes, 35.5 billion heated tobacco units, and 4.2 billion units of oral smokeless products (excluding nasal snuff, nasal snuff leaves, and chewing tobacco). Smoke-free products accounted for 38.1% of the company’s total quarterly revenue, an increase of 2.7% from Q2 2023. Oral smokeless products saw robust growth, exceeding 20% compared to the previous year’s second quarter. Year-to-date shipments included 686.78 billion heated tobacco units and 486 million cans of oral smokeless products, marking a 31.2% increase from the same period in 2023.
Key highlights of its performance include:
1, In the electronic cigarette category, VEEV secured the top position in the closed-system pod market segment across five European markets within 12 months of its launch.
2, Smoke-Free Products (SFB): Net revenues increased by 13.6%, gross profit grew by 15.6%, accounting for 38.1% of total net revenues, a 2.7% year-over-year increase. An estimated 36.5 million adults are expected to use these products, available in 90 markets.
3, Oral Smokeless Products (SFP2): Can shipments increased by 23.5%, primarily driven by growth in ZYN nicotine pouches in the U.S., with shipments reaching 135.1 million cans, a 50.3% increase from the previous year. Outside the U.S., nicotine pouch sales grew by over 50%, particularly strong in new markets like Pakistan.
4, Inhalable Smokeless Products (SFP): As of quarter-end, estimated total users of IQOS reached 30.8 million, benefiting from significant progress following the launch of ILUMA i in Japan, Europe (especially in Greece, Hungary, Romania, Bulgaria, and Spain), Korea, and lower-middle-income markets (particularly Indonesia).
5, Combustible Products: Net revenues increased by 1.2% (organic growth of 4.8%), driven by another quarter of high-single-digit pricing and industry volume stability.
6, Dividends: Regular quarterly dividend of $1.30 per share, annualized to $5.20 per share. Diluted earnings per share for Q2 increased by 52.5% to $1.54, adjusted diluted earnings per share decreased by 0.6% to $1.59, up 10.6% excluding exchange rate effects.
In the second quarter, PMI saw a 2.5% increase in total shipments of cigarettes and HTUs, and a 23.5% increase in can shipments of oral smokeless products, largely driven by growth in nicotine pouch products.
In Japan, IQOS performed well with a 3% increase in market share in the heated tobacco market, reaching over 29%.
In Europe, the total market volume for cigarettes and heated tobacco products decreased by an estimated 1.7% in the second quarter to 138 billion units; for the year-to-date, it decreased by 1.2% to 262.1 billion units.
In the SSEA, CIS, and MEA regions, the total market volume for cigarettes and heated tobacco products is expected to grow by 3.7% to 393.9 billion units; year-to-date, this category’s market volume is expected to grow by 2.5% to 767 billion units.
In the Americas region, organic net revenues grew by 14.2%, driven mainly by ZYN nicotine pouches. In the second quarter, shipments of oral products increased by 35.8%, with ZYN nicotine pouches growing by 50.3%; year-to-date, shipments of oral products increased by 43.4%, with ZYN nicotine pouches growing by 63.5%.
PMI forecasts that for the full year 2024, the international industry volume for tobacco and tobacco products will remain broadly stable, with a strong performance expected in the second half driven by smoke-free products. PMI anticipates a 1% to 2% growth in total shipments of cigarettes, HTUs, and oral smokeless products; nicotine pouch shipments of 560 million to 580 million cans; organic net revenue growth of 7.5% to 9%; organic operating income growth of 11% to 13%; and capital expenditures of approximately $1.3 billion to $1.4 billion, including further investment in increasing ZYN production capacity.
PMI’s CEO, Jacek Olczak, stated, “The strong momentum of our smoke-free business continued to perform well in the second quarter and first half of the year. Our outstanding foundational performance, coupled with proactive measures across categories, has once again exceeded expectations, and we are on track for a strong 2024. Therefore, despite currency headwinds, we have raised our full-year guidance.”
