PMI posts impressive revenue growth in second quarter, raises outlook

Philip Morris International (PMI) has reported strong second-quarter results, showcasing impressive growth in net revenues and market share on the back of buoyant demand for its smokeless Zyn and IQOS products and let-up in tobacco and labour costs.

Reported net revenues experienced an upswing of 19 per cent, excluding currency impacts. Adjusted net revenue growth, including Swedish Match in all periods, also saw a strong increase of 11.1 per cent.

Combustible tobacco segment has seen net revenue growth of 6 per cent, and 7.4 per cent on organic basis, primarily driven by strategic pricing decisions.

In the reduced-risk product category, specifically the IQOS tobacco heating units (HTUs), PMI saw its market share surge by 1.6 per cent points, reaching 9.2 per cent.

Additionally, PMI's adjusted in-market sales volume for HTUs, excluding the net favorable impact of estimated distributor and wholesaler inventory movements, saw an estimated growth of 16 per cent. The total number of IQOS users reached approximately 27.2 million by the end of the second quarter, an increase of 1.4 million users compared to March 2023.

Another notable success for PMI came from its ZYN nicotine pouch segment, primarily in the US. The shipment volume of ZYN in the US reached 89.9 million cans, showing a staggering growth rate of 53.1 per cent, compared to the second quarter of 2022.

“Our strong business momentum continued with an excellent second quarter. Total cigarette and HTU shipment volume grew by 3.3 per cent, underpinning double-digit growth in net revenues and currency-neutral adjusted diluted EPS,” said Jacek Olczak, PMI chief executive.

"The outstanding performance of Swedish Match – fueled by the growth of ZYN in the US – is accelerating our smoke-free transformation and is complementing IQOS in growing our smoke-free leadership, whilst we also deliver resilient combustibles performance with enhanced pricing."

The company has raised its our full-year 2023 forecast for organic net revenue growth to a range of 7.5 to 8.5 per cent and currency-neutral adjusted diluted EPS growth to a range of 8 to 9.5 per cent.

“As we look to the longer term, we are complementing our smoke-free transformation with the further development of our wellness and healthcare business. While we have experienced some initial headwinds, we remain committed to wellness and healthcare, with a focused strategy on several attractive growth opportunities,” Olczak added.