Philip Morris (PM.US) exceeded expectations in Q2 and raised its full-year guidance due to strong demand for Zyn nicotine pouches.
AInvestTuesday, Jul 23, 2024 9:20 am ET
1min read
PM --

Philip Morris (PM.US) released its second-quarter earnings before the market opened on Tuesday. The data showed that Q2 revenue was $9.468 billion, up 5.6% YoY, beating consensus, and Q2 adjusted EPS was $1.54, beating consensus. Moreover, due to the rising enthusiasm for tobacco alternatives, the company raised its full-year EPS growth guidance to 11% - 13% from 9% - 11%.

Philip Morris said on Tuesday that it expects Zyn's annual sales to reach 580 million cans, up from the previous 560 million cans. The company's brands include Marlboro cigarettes and IQOS heat-not-burn tobacco sticks.

Tobacco has been the core business of the company for a long time, but as the public's awareness and concerns about tobacco deepen, Philip Morris has been shifting to tobacco alternatives. Although nicotine delivery products are still addictive, they contain fewer particles and chemicals, which are associated with cancer and heart disease, etc.

The company said earlier this month that it would invest $600 million to build a new factory in the U.S. to produce Zyn nicotine pouches, in order to solve the supply shortage problem that has been hindering growth. In the second quarter, the revenue from alternative products accounted for 38% of net income, and the company has set a goal that more than half of its revenue will come from such products by 2025 or 2026, and the goal will exceed two-thirds by 2030.

In the meantime, the sales of heat-not-burn tobacco products in Japan and Greece, Hungary and Spain were strong after the expansion of IQOS product range. In Japan, Philip Morris's share of heat-not-burn tobacco products increased by more than 3 percentage points to above 29%.

As of the time of writing, the stock was up 1.75% in pre-market trading, at $109.10. The stock has risen 14% year-to-date as of Monday's close.

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