Smokefree products account for 36.5 per cent of 2023 Philip Morris revenue

Philip Morris International on Thursday announced its fourth-quarter and full-year results for 2023, revealing a mix of growth and challenges.

The company reported a full-year reported diluted EPS of $5.02, a 13.6 per cent decrease from the previous year. However, the adjusted diluted EPS was $6.01, reflecting an 11.0 per cent growth on a currency-neutral basis.

The company's net revenues for 2023 reached $35.2 billion (£27.85bn), a 10.7 per cent increase from 2022, with smoke-free products contributing significantly to this growth. Smoke-free product net revenues saw a substantial 26.0 per cent year-over-year increase, accounting for approximately 36.5 per cent of total net revenues.

Despite the growth in smoke-free products, the company's operating income declined by 5.6 per cent to $11.6bn. The company attributed the decline to supply chain disruptions and the impact of the ILUMA product introduction. Total cigarette and heated tobacco unit (HTU) shipment volume grew by 1.0 per cent, with HTUs experiencing a notable 14.7 per cent increase.

“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.

“We are pleased that smoke-free products reached nearly 40 per cent of our total net revenues and over 40 per cent 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 US performance of ZYN.”

Total IQOS users at year-end estimated stood at approximately 28.6 million (up by 3.7 million versus December 2022), of which approximately 20.8 million had switched to IQOS, the company said. Market share for HTUs in IQOS markets was up by 1.2 points to 9.1 per cent.

ZYN nicotine pouch shipment volume in the US reached 384.8 million cans, representing growth of 62.0 per cent versus 2022.

“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,” Olczak said.

The company forecasts a reported diluted EPS in the range of $5.90 to $6.02 for 2024, with an expected increase of 7.0 per cent to 9.0 per cent for adjusted diluted EPS, excluding currency. The company anticipates continued growth in smoke-free product net revenues and operating income.