Philip Morris International (PM) Q2 2024 earnings summary

Executive summary

• Achieved record H1 organic top-line and operating income growth, led by strong performance in smoke-free products, especially IQOS and ZYN, despite supply constraints and regulatory headwinds.

• Smoke-free products reached 36.5 million adult users, accounting for 38.3% of net revenues, and are now available in 90 markets worldwide.

• Diluted EPS increased 27.5% year-over-year to $2.92, with adjusted diluted EPS up 10.6% ex-currency; strong operating income and margin expansion supported by pricing and volume/mix.

• Multi-category momentum driven by IQOS, ZYN, and VEEV, with robust user growth and international expansion.

• Full-year guidance raised due to robust underlying performance, overcoming significant currency headwinds.

Financial highlights

• Net revenues for H1 2024 rose 7.5% to $18.3 billion; Q2 organic net revenue grew 9.6% (5.6% in USD), driven by 2.8% shipment volume growth.

• Adjusted diluted EPS reached $1.59 in Q2, up 10.6% ex-currency; H1 adjusted diluted EPS grew 16.8% in constant currency and 4% in USD.

• H1 operating income up 22.5% to $6.5 billion, with margin expansion and strong cash generation.

• H1 volumes grew 3.2%; smoke-free net revenue up 18%, gross profit up 22%, and gross margin expanded by 220 bps organically.

• Net cash from operating activities more than doubled to $4.9 billion, aided by improved working capital and higher earnings.

Outlook and guidance

• Raised 2024 full-year organic net revenue growth forecast to 7.5%–9% and organic operating income growth to 11%–13%.

• Currency-neutral adjusted diluted EPS growth forecast raised to 11%–13% ($6.33–$6.45), with USD EPS growth of 5%–7%.

• Q3 adjusted diluted EPS forecasted at $1.77–$1.82; operating cash flow for 2024 expected at ~$11 billion.

• HTU shipment volumes expected around 140 billion units for 2024; U.S. nicotine pouch shipments of 560–580 million cans.

• No share repurchases planned for 2024; net debt/EBITDA target improvement of 0.3–0.5x in 2024.