Philip Morris Beat Earnings Estimates. Why Its Stock Is Dropping.

1 year ago 161

Updated July 20, 2021 12:54 p.m. ET / Original July 20, 2021 11:49 americium ET

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Philip Morris is seeing momentum prime up for its reduced hazard products.

Fabrice Coffrini/AFP via Getty Images

Philip Morris International banal was little connected Tuesday, pursuing the baccy giant’s second-quarter results arsenic the marketplace reacted to full-year guidance that was somewhat beneath expectations. Its CFO says that the institution continues “to caput successful the close direction.”

Philip Morris (ticker: PM) said it earned $2.17 billion, oregon $1.39 a share, up from $1.25 a stock successful the year-ago period. On an adjusted basis, which strips retired nonrecurring items, net were $1.57 a share. Revenue climbed 14% to $7.59 billion. Analysts were looking for EPS of $1.55 connected gross of $7.67 billion.

Smoke-free products accounted for 29% of nett gross successful the quarter, portion the company’s modified hazard product, IQOS, which heats baccy alternatively of burning it, had much than 20 cardinal users astatine the quarter’s end. Cigarette measurement climbed 3.2%, portion heated baccy shipment measurement was up much than 30%.

For the afloat year, Philip Morris said it present expects to gain betwixt $5.76 and $5.86 a share, down from a anterior scope of $5.93 to $6.03, citing plus impairments and Saudi Arabia customs assessments, which the company warned of previously. On an adjusted basis, it sees EPS betwixt $5.97 and $6.07, 2 cents higher than its aged forecast, but beneath the $6.08 a stock that statement calls for. Philip Morris predicts integrated nett gross maturation of 6% to 7%.

It besides announced that its committee of directors had authorized a caller three-year $7 cardinal stock repurchase program, opening successful the 3rd quarter.

Philip Morris Chief Financial Officer Emmanuel Babeau spoke with Barron’s following the report, saying helium is “very pleased by different precise beardown quarter.”  

Babeau notes that year-over-year comparisons were easy, fixed the interaction of Covid-19 successful 2020, but that adjacent mounting speech that vantage determination was a batch to similar successful the quarter: IQOS has continued its spot from the archetypal quarter, and that product’s outgo efficiencies besides resulted successful higher margins.

Philip Morris noted that that the marketplace stock for heated baccy successful markets wherever IQOS is available—excluding the U.S.—climbed to 7.3% successful the quarter. Babeau says that “awareness is everything” successful presumption of caller reduced-risk products, and that “in a fig of regions, we started from nothing, but are present seeing a snowball effect—the marque is getting visibility, and smokers are discovering the product.”

Although markets vary, helium is blessed with IQOS’s show successful a fig of cardinal countries from Russia to Western Europe, and determination are present 8 countries successful the European Union wherever IQOS commands much than 10% of marketplace share. The institution estimates that astir 14.7 cardinal of IQOS users person stopped smoking.

As for the pandemic, which has erstwhile again grabbed headlines astir the satellite amid the virulent Delta variant’s spread, Babeau notes that helium doesn’t expect “normalcy” to instrumentality for respective much months. However, the picture, astatine slightest successful galore developed countries, is brightening, arsenic much radical person vaccines. Traditional cigaret usage tends to emergence successful societal settings, similar bars and clubs, and he’s upbeat that arsenic consumers regain much state with inoculation, it volition beryllium a affirmative for that business.

Philip Morris shares were down 3.7% to $94.31 successful caller trading, though the shares person gained much than 15% twelvemonth to day and are up 25.5% successful the past year.

Write to Teresa Rivas at

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