Philip Morris sees earnings slide, beats forecasts

Net revenues fell 13.6% to $6.65bn, while operating income was off 14.3% at $2.73bn. Reported diluted earnings per share came in at $1.25, a 16.1% fall on the same period a year previously. However, most analysts had predicted EPS of around $1.10.

Cigarette and heated tobacco unit shipment volumes fell 14.5%, with cigarette shipments down 17.6% but heated tobacco ahead 24.3%.

Andre Calantzopoulos, chief executive, said: “Despite a very challenging quarter due to the pandemic, we delivered results above our previously communicated expectations for both net revenues and reported diluted EPS. This primarily reflected favourable sequential performance in June, with a strong industry volume recovery, notably in the higher margin EU region, and substantial IQOS user acquisition growth.”

IQOS is Philip Morris's heated tobacco and vaping brand. Total users at the quarter end were approximately 15.4m, while market share excluding the US was ahead 1.8 points at 6.3%. The Food and Drug Administration granted Philip Morris permission to sell IQOS in America in 2019 following a two-year review.

Philip Morris withdrew its full-year EPS forecast for at least $5.50, because of the uncertainty surrounding the Covid-19 pandemic. But Calantzopoulos said: “While further volatility and restrictions are clearly possible, and the pandemic’s economic impact is difficult to quantify, we have improving visibility on the trajectory of our business for the remainder of the year.

“We are therefore providing a full-year 2020 forecast.”

Reported EPS is forecasts to come in between $4.84 and $4.99 – below its earlier forecast but up on 2019’s $4.61 – while adjusted diluted EPS excluding currency is predicted to come in between $5.23 and $5.38, which would represent growth of between 2% and 5%.

As at 1315 BST, shares in Philip Morris were trading 3% ahead.