We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Philip Morris (PM) Q4 Earnings Top: Pricing Acts As a Driver
Read MoreHide Full Article
Philip Morris International Inc. (PM - Free Report) reported strong fourth-quarter 2021 results, wherein both the top and the bottom line improved year over year and beat the respective Zacks Consensus Estimate. The company benefited from improved IQOS user growth, a better market share for cigarettes, portfolio enhancement efforts and reduced pandemic-led curbs in several markets.
Quarter in Detail
Adjusted earnings per share (EPS) came in at $1.35, which beat the Zacks Consensus Estimate of $1.30. Further, the bottom line rallied 7.1% year over year. Excluding the currency impacts, the bottom line increased 11.9%
Net revenues of $8,104 million increased 8.9% from the figure reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $7,720 million. Net revenues, excluding currency and acquisitions, improved 8.4%. This upside can be attributed to favorable pricing variance as well as a positive volume/mix.
During the quarter, revenues from combustible products were up 1.9% to $5,612 million. Revenues in reduced risk products or RRPs increased 23.4% to $2,391 million.
Total cigarette and heated tobacco unit shipment volumes increased 4.2% to 183.8 billion units. Cigarette shipment volumes rose 2.4% to 158.4 billion units in the quarter, while heated tobacco unit shipment volumes of 25.4 billion units rose 17% year over year.
Adjusted operating income came in at $2,993 million, up 4.5% year over year. The metric rose 8.3% on an organic basis. Adjusted operating income margin of 36.9% fell 1.6 percentage points and the same fell 0.1 percentage points on an organic basis. The decline can be attributed to the increased initial cost of IQOS ILUMA devices, escalated logistics costs and increased investment in the digital platform, commercial programs, growth opportunities and R&D across geographies and products.
Image Source: Zacks Investment Research
Region-Wise Performance
Net revenues in the European Union increased 10.3% to $3,025 million. Net revenues climbed 11.3% on an organic basis due to an improved volume/mix and little favorable pricing. Total shipment volumes rose 5.5% to 45,408 million units.
In Eastern Europe, net revenues increased 0.4% to $912 million. Revenues fell 4.2% on an organic basis due to an adverse volume/mix. Pricing variance remained flat year over year. Total shipment volumes decreased 4.3% to 27,983 million units.
In the Middle East & Africa, net revenues jumped 33.4% to $987 million. The metric rose 40% on an organic basis due to a positive volume/mix and pricing. Total shipment volumes in the region rose 17.6% to 35,411 million units.
Revenues in South & Southeast Asia dipped 6.2% to $1,112 million. Revenues in the region slid 5.9% on an organic basis. This downside was a result of adverse pricing variance, partly compensated by a favorable volume/mix. Shipment volumes contracted 1.1% to 35,225 million units.
Revenues from East Asia & Australia advanced 4.3% to $1,444 million. Revenues in the region grew 7.2% organically on a positive volume/mix and pricing variance. Total shipment volumes rose 6% to 20,147 million units.
Revenues from America increased 7.8% to $523 million. The metric was up 6.2% on an organic basis on a positive volume/mix and pricing. Moreover, total shipment volumes rose 1.4% to 18,605 million units.
Other Financials
Philip Morris ended the quarter with cash and cash equivalents of $4,496 million. It had long-term debt of $24,783 million and a shareholders’ deficit of $8,208 million. Management expects operating cash flow of nearly $11 billion in 2022, with capital expenditures likely to be around $1 billion.
During the fourth quarter, the company bought back 7.6 million shares for $691 million. In full-year 2021, Philip Morris repurchased 8.5 million shares for $785 million.
Update on IQOS
On Nov 29, 2021, an importation ban and cease-and-desist order were imposed by the U.S. International Trade Commission (ITC) concerning IQOS Platform 1 products. These include consumables and infringing components. Consequently, IQOS is currently not available for sale in the United States. PM has contingency plans under action (such as domestic production) and expects to be able to restart the supply in the United States in the first half of 2023.
Guidance
Adjusted EPS for 2022 are envisioned in the $6.12-$6.30 band compared with $6.08 reported in 2021. Adjusted EPS, excluding currency impacts, are expected to grow 8-11% to the $6.57-$6.75 range. For the first quarter of 2022, Philip Morris expects reported EPS in the range of $1.50-$1.55, including adverse currency impacts of nearly 15 cents per share.
In 2022, the company expects continued uncertainty with regard to the recovery pace from the pandemic-led operating landscape. Management expects continued gradual recovery in the duty-free business outside Asia and no meaningful recovery in Asia. It expects an improving IQOS situation. Total international industry volume is estimated to decline nearly 1-2%, excluding China and the United States. Total cigarette and heated tobacco unit shipment volume growth in 2022 is likely to come in the range of decline 1% to increase 1%. Heated tobacco shipment volumes are envisioned between 113 and 118 billion units.
For 2022, Phillip Morris expects adjusted net revenues to increase nearly 4-6% on an organic basis. Adjusted operating margin on an organic basis is likely to expand 50-150 basis points in 2022. This is likely to be backed by a continued favorable product mix shift from cigarettes to smoke-free products, along with increased operating efficacy. The gross margin is expected to be moderately low due to the increased initial cost of IQOS ILUMA, elevated logistic costs, growth-oriented investments in the smoke-free space and inflation related to supply-chain elements.
Shares of this Zacks Rank #3 (Hold) company have rallied 4.3% in the past six months compared with the industry’s rise of 6.9%.
Looking for Solid Consumer Staple Stocks? Check These
Helen of Troy, a designer, developer, marketer, importer and distributor, carries a Zacks Rank #1 (Strong Buy) at present. Shares of Helen of Troy have dipped 12.4% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Helen of Troy’s current financial-year sales and EPS suggests growth of 0.8% and 0.6%, respectively, from the year-ago reported number. HELE has a trailing four-quarter earnings surprise of 19.1%, on average.
Flowers Foods, which produces and markets packaged bakery products, carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have moved up 23.5% in the past six months.
The Zacks Consensus Estimate for Flowers Foods' current financial-year sales and EPS suggests growth of 5.1% and 8.8%, respectively, from the year-ago reported number. FLO has a trailing four-quarter earnings surprise of 35.4%, on average.
Medifast, the manufacturer and distributor of weight loss, weight management, healthy living products, and other consumable health and nutritional products, currently carries a Zacks Rank #2. Shares of Medifast have dropped 19.6% in the past six months.
The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of about 63% and 49.3%, respectively, from the year-ago reported figure. MED has a trailing four-quarter earnings surprise of 17.3%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Philip Morris (PM) Q4 Earnings Top: Pricing Acts As a Driver
Philip Morris International Inc. (PM - Free Report) reported strong fourth-quarter 2021 results, wherein both the top and the bottom line improved year over year and beat the respective Zacks Consensus Estimate. The company benefited from improved IQOS user growth, a better market share for cigarettes, portfolio enhancement efforts and reduced pandemic-led curbs in several markets.
Quarter in Detail
Adjusted earnings per share (EPS) came in at $1.35, which beat the Zacks Consensus Estimate of $1.30. Further, the bottom line rallied 7.1% year over year. Excluding the currency impacts, the bottom line increased 11.9%
Net revenues of $8,104 million increased 8.9% from the figure reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $7,720 million. Net revenues, excluding currency and acquisitions, improved 8.4%. This upside can be attributed to favorable pricing variance as well as a positive volume/mix.
During the quarter, revenues from combustible products were up 1.9% to $5,612 million. Revenues in reduced risk products or RRPs increased 23.4% to $2,391 million.
Total cigarette and heated tobacco unit shipment volumes increased 4.2% to 183.8 billion units. Cigarette shipment volumes rose 2.4% to 158.4 billion units in the quarter, while heated tobacco unit shipment volumes of 25.4 billion units rose 17% year over year.
Adjusted operating income came in at $2,993 million, up 4.5% year over year. The metric rose 8.3% on an organic basis. Adjusted operating income margin of 36.9% fell 1.6 percentage points and the same fell 0.1 percentage points on an organic basis. The decline can be attributed to the increased initial cost of IQOS ILUMA devices, escalated logistics costs and increased investment in the digital platform, commercial programs, growth opportunities and R&D across geographies and products.
Region-Wise Performance
Net revenues in the European Union increased 10.3% to $3,025 million. Net revenues climbed 11.3% on an organic basis due to an improved volume/mix and little favorable pricing. Total shipment volumes rose 5.5% to 45,408 million units.
In Eastern Europe, net revenues increased 0.4% to $912 million. Revenues fell 4.2% on an organic basis due to an adverse volume/mix. Pricing variance remained flat year over year. Total shipment volumes decreased 4.3% to 27,983 million units.
In the Middle East & Africa, net revenues jumped 33.4% to $987 million. The metric rose 40% on an organic basis due to a positive volume/mix and pricing. Total shipment volumes in the region rose 17.6% to 35,411 million units.
Revenues in South & Southeast Asia dipped 6.2% to $1,112 million. Revenues in the region slid 5.9% on an organic basis. This downside was a result of adverse pricing variance, partly compensated by a favorable volume/mix. Shipment volumes contracted 1.1% to 35,225 million units.
Revenues from East Asia & Australia advanced 4.3% to $1,444 million. Revenues in the region grew 7.2% organically on a positive volume/mix and pricing variance. Total shipment volumes rose 6% to 20,147 million units.
Revenues from America increased 7.8% to $523 million. The metric was up 6.2% on an organic basis on a positive volume/mix and pricing. Moreover, total shipment volumes rose 1.4% to 18,605 million units.
Other Financials
Philip Morris ended the quarter with cash and cash equivalents of $4,496 million. It had long-term debt of $24,783 million and a shareholders’ deficit of $8,208 million. Management expects operating cash flow of nearly $11 billion in 2022, with capital expenditures likely to be around $1 billion.
During the fourth quarter, the company bought back 7.6 million shares for $691 million. In full-year 2021, Philip Morris repurchased 8.5 million shares for $785 million.
Update on IQOS
On Nov 29, 2021, an importation ban and cease-and-desist order were imposed by the U.S. International Trade Commission (ITC) concerning IQOS Platform 1 products. These include consumables and infringing components. Consequently, IQOS is currently not available for sale in the United States. PM has contingency plans under action (such as domestic production) and expects to be able to restart the supply in the United States in the first half of 2023.
Guidance
Adjusted EPS for 2022 are envisioned in the $6.12-$6.30 band compared with $6.08 reported in 2021. Adjusted EPS, excluding currency impacts, are expected to grow 8-11% to the $6.57-$6.75 range. For the first quarter of 2022, Philip Morris expects reported EPS in the range of $1.50-$1.55, including adverse currency impacts of nearly 15 cents per share.
In 2022, the company expects continued uncertainty with regard to the recovery pace from the pandemic-led operating landscape. Management expects continued gradual recovery in the duty-free business outside Asia and no meaningful recovery in Asia. It expects an improving IQOS situation. Total international industry volume is estimated to decline nearly 1-2%, excluding China and the United States. Total cigarette and heated tobacco unit shipment volume growth in 2022 is likely to come in the range of decline 1% to increase 1%. Heated tobacco shipment volumes are envisioned between 113 and 118 billion units.
For 2022, Phillip Morris expects adjusted net revenues to increase nearly 4-6% on an organic basis. Adjusted operating margin on an organic basis is likely to expand 50-150 basis points in 2022. This is likely to be backed by a continued favorable product mix shift from cigarettes to smoke-free products, along with increased operating efficacy. The gross margin is expected to be moderately low due to the increased initial cost of IQOS ILUMA, elevated logistic costs, growth-oriented investments in the smoke-free space and inflation related to supply-chain elements.
Shares of this Zacks Rank #3 (Hold) company have rallied 4.3% in the past six months compared with the industry’s rise of 6.9%.
Looking for Solid Consumer Staple Stocks? Check These
Some better-ranked stocks are Helen of Troy (HELE - Free Report) , Flowers Foods (FLO - Free Report) and Medifast, Inc. (MED - Free Report)
Helen of Troy, a designer, developer, marketer, importer and distributor, carries a Zacks Rank #1 (Strong Buy) at present. Shares of Helen of Troy have dipped 12.4% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Helen of Troy’s current financial-year sales and EPS suggests growth of 0.8% and 0.6%, respectively, from the year-ago reported number. HELE has a trailing four-quarter earnings surprise of 19.1%, on average.
Flowers Foods, which produces and markets packaged bakery products, carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have moved up 23.5% in the past six months.
The Zacks Consensus Estimate for Flowers Foods' current financial-year sales and EPS suggests growth of 5.1% and 8.8%, respectively, from the year-ago reported number. FLO has a trailing four-quarter earnings surprise of 35.4%, on average.
Medifast, the manufacturer and distributor of weight loss, weight management, healthy living products, and other consumable health and nutritional products, currently carries a Zacks Rank #2. Shares of Medifast have dropped 19.6% in the past six months.
The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of about 63% and 49.3%, respectively, from the year-ago reported figure. MED has a trailing four-quarter earnings surprise of 17.3%, on average.