Philip Morris International
stock (PM) is trading down on Thursday after the tobacco giant lowered its full-year earnings guidance, as concerns about potential legislation overshadowed its better-than-expected first-quarter results. Yet the company’s chief financial officer tells Barron’s that Philip Morris is “off to a really good start for 2019.”
The back story. While Philip Morris is trading down today, it’s up 27.1% in 2019, outpacing the broader market and rival
(MO). The stock is up a mere 0.7% in the trailing 12 months, largely due to its difficult 2018.
This year, Philip Morris started the year with a strong earnings report, and it’s since gotten a boost from analyst enthusiasm, its generous dividend payouts, and hopes that the Food and Drug Administration may finally approve its iQOS vaping device, which has seen some success overseas but has gone years without U.S. clearance.
What’s new. Philip Morris said it earned $1.09 a share on revenue of $6.75 billion, while analysts were looking for EPS of $1.01 on revenue of $6.76 billion. Cigarette shipment volume was flat, but overall shipments for the company, including heated tobacco products, grew 1.1%. In the quarter, it also surpassed 10 million iQOS users worldwide.
For the full year, the company expects EPS of $5.09, down from its previous guidance of $5.28 and below the $5.17 consensus estimate.
Looking ahead. Philip Morris CFO Martin King spoke with Barron’s following the company’s results Thursday morning. He characterizes the quarter as a strong one, noting that the company’s base business is doing well, with robust volumes and market sales up 1.7%—an “unusually good number of the tobacco business and for us, even though we usually outperform the industry.”
King also highlighted Philip Morris’s expanding margins and the success that the company is seeing overseas with iQOS, which grew its market share 1.1 percentage points from the fourth quarter in Japan, and now has a 3.1% market share in Russia. “The plan we put in place is working, our devices are doing well, and what we’ve learned on how to convert smokers to new reduced risk products is paying off,” he says. “We’re seeing very good momentum in the business.”
The only reason for the guidance change was the previously announced deconsolidation of its Canadian unit’s results and the closure of a factory in Pakistan, King says, rather than any fundamental change in the underlying business. Philip Morris is still aiming to deliver 8% EPS growth, “and we hope to beat that,” he says.
As for FDA approval of iQOS, King doesn’t have any insight beyond the FDA’s public statement that it expects to make a ruling on the product this year, but says that Philip Morris is “ready to go: We have our plans together with PM USA and Altria to launch as soon as we get approval. We’re very anxious to get started, as this product is a custom fit to address the issue of converting adult smokers to reduced-risk products without attracting underage or non-smokers.” He adds the company has data from 44 markets showing that there’s “no issue with underage use [as iQOS was] carefully designed to focus on adults.”
Underage smoking has long been a hot-button issue, but is front of mind today, as Altria stock is trading lower following news that Senate Majority Leader Mitch McConnell (R., Ky.) plans to propose legislation to raise the legal age to purchase tobacco products to 21 from 18 in the U.S. Although Philip Morris doesn’t have U.S. operations, that news is likely weighing a bit on investor sentiment today as well. Nevertheless, King says he welcomes the move, as it dovetails with Philip Morris’s mission to keep young people from smoking, and highlights the attractiveness of iQOS, which he says doesn’t appeal to teens the way other e-cigarettes do.
Philip Morris is down 1.1% to $84.53 in recent trading.
Philip Morris International
这家烟草巨头下调了全年盈利预期，周四该公司股价下跌，原因是对潜在立法的担忧掩盖了该公司好于预期的第一季度业绩。然而，该公司的首席财务官告诉 Barron ，菲利普莫里斯“将在2019年迎来一个真正良好的开端”。这是一个很好的例子
（ MO ）。在过去的12个月里，该股仅上涨了0.7%，主要是由于2018年的困难。
今年，菲利普莫里斯公司( Philip Morris )发布了一份强劲的盈利报告，从那以后，该公司得益于分析师的热情、丰厚的股息支付，并希望美国食品和药物管理局( FDA )最终可能批准其 iQOS 操作系统的推广设备。 iQOS 在海外取得了一些成功，但在没有获得美国批准的情况下，该设备已过去几年。
什么是新的。菲利普莫里斯公司表示，其每股收益为17.5亿美元，每股收益为1.09美元，而分析师预计每股收益为17.6亿美元。卷烟出货量持平，但包括加热烟草产品在内的公司整体出货量增长了1.1%。在本季度，它还超过了全球1000万 iQOS 用户。
King 还强调了菲利普莫里斯不断扩大的利润率，以及该公司通过 iQOS 在海外取得的成功。 iQOS 在日本的市场份额较去年第四季度增长了1.1个百分点，目前在俄罗斯的市场份额为3.1%。“我们实施的计划正在奏效，我们的设备运转良好，我们在如何将吸烟者转化为新的低风险产品方面所学到的知识正在得到回报，”他说。“我们看到了该业务的良好势头。”
金表示，此次调整的唯一原因是，此前宣布的将加拿大子公司的业绩脱钩，并关闭了巴基斯坦的一家工厂，而不是基础业务的任何根本性变化。菲利普莫里斯仍然致力于实现8%的 EPS 增长，“我们希望超过这个目标，”他说。
至于 FDA 对 iQOS 的批准，除了 FDA 公开声明， King 公司预计今年将对该产品做出裁决外，没有其他任何见解，但他说 Philip Morris “准备好了：我们有计划与美国 PM 和奥驰亚一起在获得批准后尽快推出。我们非常渴望起步，因为这种产品是一种定制，适合解决将成年吸烟者转化为低风险产品而不吸引未成年人或非吸烟者的问题。”他补充说，该公司拥有44个市场的数据，这些数据表明，“不存在年龄偏低的问题（因为 iQOS 是精心设计的，专注于成年人）。”
长期以来，吸烟不足一直是一个热门话题，但今天却是个未知数，因为在参议院多数党领袖麦康奈尔( Mitch McConnell )计划提出立法，将购买烟草产品的法定年龄从美国的18岁提高到21岁。尽管菲利普莫里斯没有美国业务，这一消息可能也会给今天的投资者情绪带来一些压力。尽管如此，金说他欢迎这一举措，因为它与菲利普莫里斯的使命相吻合，以防止年轻人吸烟，并强调 iQOS 的吸引力，他说，这并不像其他电子香烟那样吸引青少年。