Presents the Company’s
Next Growth Phase, Including Its Ambition for Smoke-Free Products
to Account for the Majority of Its Total Net Revenues by 2025;
Reaffirms Its 2021 Full-Year Reported Diluted EPS Forecast Range of
$5.90 to $6.00
Regulatory News:
Philip Morris International Inc.’s (NYSE:PM) senior management
will present the company’s business strategies and growth outlook
today at a virtual investor meeting, broadcast from the company’s
Operations Center in Lausanne, Switzerland.
Investor Day Highlights
The company:
- Reaffirms its 2021 full-year reported diluted EPS forecast,
provided on February 4th, to be in a range of $5.90 to $6.00, at
the then prevailing exchange rates, representing a projected
increase of approximately 14% to 16% versus reported diluted EPS of
$5.16 in 2020;
- Provides 2021 to 2023 targets, including net revenue and
adjusted diluted EPS compound annual organic growth of more than 5%
and 9%, respectively, and 2023 heated tobacco unit shipment volume
of 140 to 160 billion units;
- Announces the planned launch of IQOS ILUMA, the next generation
of its IQOS heat-not-burn product featuring internal heating based
on Smartcore™ induction technology, in the second half of
2021;
- Plans to launch IQOS VEEV, its MESH technology e-vapor product,
in over 20 markets this year;
- Expects to commercialize IQOS in a total of 100 markets by the
end of 2025, from 64 markets at the end of 2020;
- Increases its 2025 ambition for the contribution of its
smoke-free products to total net revenues to more than 50%,
compared to a range of 38% to 42%, previously;
- Announces its target of at least $1 billion in net revenues
from ‘beyond nicotine’ products in 2025; and
- Believes that with the right regulatory frameworks, dialogue
and support from civil society, cigarette sales can end within 10
to 15 years in many countries.
“In just five years, we have thoroughly transformed our company,
building IQOS into a top-5 global nicotine brand— with nearly $7
billion in net revenues and over 17 million users across 64
markets—while maintaining our leadership position in the
international cigarette category," said André Calantzopoulos, Chief
Executive Officer.
“We are now embarking on our next growth phase, further shifting
to a better, more sustainable business by driving the development
of the smoke-free category and leveraging our leading commercial
model, which places the consumer at the core, to switch more adult
smokers to our smoke-free products.”
“This next growth phase is underpinned by our unmatched
portfolio of innovative products. We are very excited to announce
the planned launch of IQOS ILUMA—the next generation of our IQOS
heat-not-burn product featuring a new internal heating induction
technology—during the second half of this year.”
“As outlined today, we are well positioned to deliver excellent
top- and bottom-line growth, as well as strong shareholder returns.
We now aim to be a majority smoke-free product company by 2025, an
important milestone toward our ambition to deliver a smoke-free
future, to the benefit of adults who would otherwise continue to
smoke, society, the company and our shareholders.”
Webcast Details
The presentations and Q&A session will be webcast live from
approximately 8:30 a.m. ET to approximately 1:30 p.m. ET, and may
be accessed at www.pmi.com/2021InvestorDay. A copy of the slides,
full transcript and glossary of key terms and definitions will be
made available on the same webpage. The webcast may also be
accessed on iOS or Android devices by downloading PMI’s free
Investor Relations Mobile Application. An archive of the webcast
will be available until 5:00 p.m. ET on Thursday, March 11,
2021.
2021 Full-Year Forecast & Assumptions
PMI reaffirms its 2021 full-year reported diluted EPS forecast,
provided on February 4th, to be in a range of $5.90 to $6.00, at
the then prevailing exchange rates, representing a projected
increase of approximately 14% to 16% versus reported diluted EPS of
$5.16 in 2020. On an organic basis, this forecast represents a
projected increase of around 9% to 11% versus adjusted diluted EPS
of $5.17 in 2020.1
The assumptions underlying this forecast remain unchanged versus
those communicated by PMI in its earnings release of February
4th.
This forecast excludes the impact of any future acquisitions,
unanticipated or unquantifiable asset impairment and exit cost
charges, future changes in currency exchange rates, further
developments pertaining to the judgment in the two Québec Class
Action lawsuits and the Companies’ Creditors Arrangement Act (CCAA)
protection granted to PMI's Canadian subsidiary, Rothmans, Benson
& Hedges, Inc., any unusual events, and any COVID-19-related
developments different from the assumptions set forth in the
company's forecast.
Factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to
these projections.
__________________
1 The 2021 forecast excludes a favorable
currency impact, at the then prevailing exchange rates, of
approximately $0.25 per share provided on February 4th. 2020
adjusted diluted EPS of $5.17 reflects 2020 reported diluted EPS of
$5.16, excluding: tax items of $0.06 per share, asset impairment
and exit costs of $(0.08) per share, the Brazil indirect tax credit
of $0.05 per share and a fair value adjustment for equity security
investments of $(0.04) per share.
2021-2023 Targets & Assumptions
The company communicated the following key targets related to
the three-year period from 2021 to 2023:
- Net revenue and adjusted diluted EPS compound annual organic
growth of more than 5% and 9%, respectively;
- Approximately 40% of total net revenues from smoke-free
products in 2023;
- Annual heated tobacco unit shipment volume of 140 to 160
billion units in 2023;
- Around $2 billion in annualized gross cost efficiencies by 2023
(compared to the 2020 cost base);
- An average annual increase in adjusted operating margins of at
least 150 basis points on an organic basis;
- Around $35 billion in total operating cash flow over the
three-year period at prevailing exchange rates;
- Estimated annual capital expenditures of around $0.8
billion;
The company communicated the following key assumptions related
to the three-year period from 2021 to 2023:
- An estimated total international industry compound annual
volume decline for cigarettes and heated tobacco units of 1% to 2%,
excluding China and the U.S.;
- Broadly stable total cigarette and heated tobacco unit shipment
volume for PMI over the period;
- An effective tax rate, excluding discrete tax events, of around
22% each year; and
- No share repurchases reflected in the growth targets for the
period.
Capital Allocation
Subject to the discretion of the Board of Directors:
- If the 2021 outlook is confirmed over course of the year, the
company intends to begin a three-year share repurchase program of
$5 to $7 billion in the second half of 2021; and
- The company will maintain its progressive dividend policy while
targeting a long-term dividend payout ratio of around 75% of
adjusted diluted EPS.
Forward-Looking and Cautionary Statements
This press release, the presentations and related discussion
contain projections of future results and other forward-looking
statements. 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; 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; changes in adult smoker behavior; 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 and quality of tobacco and other
agricultural products and raw materials; 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; or if it is unable to attract and retain
the best global talent. Future results are also subject to the
lower predictability of our reduced-risk product category's
performance.
The COVID-19 pandemic has created significant societal and
economic disruption, and resulted in closures of stores, factories
and offices, and restrictions on manufacturing, distribution and
travel, all of which have and will continue to adversely impact our
business, results of operations, cash flows and financial position
while the pandemic continues. Our business continuity plans and
other safeguards in place may not be effective to mitigate the
impact of the pandemic. Currently, significant risks include our
diminished ability to convert adult smokers to our RRPs,
significant volume declines in our duty-free business and certain
other key markets, disruptions or delays in our manufacturing and
supply chain, increased currency volatility, and delays in certain
cost saving, transformation and restructuring initiatives. Our
business could also be adversely impacted if key personnel or a
significant number of employees or business partners become
unavailable due to the COVID-19 outbreak. The significant adverse
impact of COVID-19 on the economic or political conditions in
markets in which we operate could result in changes to the
preferences of our adult consumers and lower demand for our
products, particularly for our mid-price or premium-price brands.
Continuation of the pandemic could disrupt our access to the credit
markets or increase our borrowing costs. Governments may
temporarily be unable to focus on the development of science-based
regulatory frameworks for the development and commercialization of
RRPs or on the enforcement or implementation of regulations that
are significant to our business. In addition, messaging about the
potential negative impacts of the use of our products on COVID-19
risks may lead to increasingly restrictive regulatory measures on
the sale and use of our products, negatively impact demand for our
products and the willingness of adult consumers to switch to our
RRPs, and adversely impact our efforts to advocate for the
development of science-based regulatory frameworks for the
development and commercialization of RRPs.
The impact of these risks also depends on factors beyond our
knowledge or control, including the duration and severity of the
COVID-19 pandemic in general and specifically in the jurisdictions
in which we operate, its recurrence in our key markets, actions
taken to contain its spread and to mitigate its public health
effects, and the ultimate economic consequences thereof.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including the Form 10-K for the
year ended December 31, 2020. 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.
Philip Morris International: Delivering a Smoke-Free
Future
Philip Morris International (PMI) is leading a transformation in
the tobacco industry to create a smoke-free future and ultimately
replace cigarettes with smoke-free products to the benefit of
adults who would otherwise continue to smoke, society, the company
and its shareholders. PMI is a leading international tobacco
company engaged in the manufacture and sale of cigarettes, as well
as smoke-free products, associated electronic devices and
accessories, and other nicotine-containing products in markets
outside the U.S. In addition, PMI ships versions of its IQOS
Platform 1 device and consumables to Altria Group, Inc. for sale
under license in the U.S., where these products have received
marketing authorizations from the U.S. Food and Drug Administration
(FDA) under the premarket tobacco product application (PMTA)
pathway; the FDA has also authorized the marketing of a version of
IQOS and its consumables as a Modified Risk Tobacco Product (MRTP),
finding that an exposure modification order for these products is
appropriate to promote the public health. PMI is building a future
on a new category of smoke-free products that, while not risk-free,
are a much better choice than continuing to smoke. Through
multidisciplinary capabilities in product development,
state-of-the-art facilities and scientific substantiation, PMI aims
to ensure that its smoke-free products meet adult consumer
preferences and rigorous regulatory requirements. PMI's smoke-free
product portfolio includes heat-not-burn and nicotine-containing
vapor products. As of December 31, 2020, IQOS is available for sale
in 64 markets in key cities or nationwide, and PMI estimates that
approximately 12.7 million adults around the world have already
switched to IQOS and stopped smoking. For more information, please
visit www.pmi.com and www.pmiscience.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210210005433/en/
Investor Relations: New York: +1 (917) 663 2233 Lausanne: +41
(0)58 242 4666 InvestorRelations@pmi.com
Media: Lausanne: +41 (0)58 242 4500 Iro.Antoniadou@pmi.com
Philip Morris (NYSE:PM)
Historical Stock Chart
From Apr 2024 to May 2024
Philip Morris (NYSE:PM)
Historical Stock Chart
From May 2023 to May 2024