Philip Morris International (PM) Q2 2024 earnings summary

Executive summary

• Achieved record first-half organic top-line and operating income growth, driven by strong performance in smoke-free products, especially IQOS and ZYN, across multiple regions, despite supply constraints and regulatory headwinds.

• Diluted EPS increased 27.5% year-over-year to $2.92, with adjusted diluted EPS up 10.6% in Q2 excluding currency impacts, reflecting robust operating income and margin expansion.

• Smoke-free products accounted for over 38% of net revenues, with 36.5 million adult users globally, and ZYN and IQOS leading growth.

• Full-year guidance was raised for organic net revenue, operating income, and EPS, despite significant currency and regulatory headwinds.

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

Financial highlights

• Net revenues for H1 2024 rose 7.5% to $18.3 billion, with Q2 organic net revenue up 9.6% and shipment volume growth of 2.8%.

• Adjusted diluted EPS for Q2 was $1.59, up 10.6% excluding currency, and H1 adjusted diluted EPS grew 16.8% in constant currency.

• Operating income grew 22.5% to $6.5 billion in H1, with margin expansion supported by pricing, volume/mix, and lower impairment charges.

• Gross margin increased to 64.2% for six months, up 1.1 percentage points year-over-year.

• Net cash from operating activities for six months was $4.9 billion, up from $2.5 billion.

Outlook and guidance

• Raised 2024 guidance: organic net revenue growth forecast at 7.5%–9%, organic operating income growth at 11%–13%, and adjusted diluted EPS growth at 11%–13% excluding currency.

• Full-year adjusted diluted EPS expected at $6.33–$6.45, with reported diluted EPS forecasted at $5.89–$6.01.

• Q3 adjusted diluted EPS forecasted at $1.77–$1.82.

• Full-year operating cash flow expected around $11 billion, with capex of $1.3–$1.4 billion.

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