Philip Morris sets ambitious growth targets for smoke-free products; raises EPS outlook

Philip Morris Worldwide (NYSE:PM) introduced its enterprise methods and progress outlook for the following three years at its Investor Day in Lausanne, Switzerland.

The corporate outlined sturdy targets for its compound annual progress from 2024 to 2026:

• Web income compound annual progress of 6% to eight% on an natural foundation.
• Adjusted working earnings compound annual progress of 8% to 10% on an natural foundation.
• Adjusted diluted EPS compound annual progress of 9% to 11%, excluding foreign money.
• Gross manufacturing productivities of $1B and SG&A efficiencies of $1B.
• $36B to $39B in whole working money circulate over the three-year interval at prevailing trade charges.
• Adjusted internet debt to EBITDA of round 2 occasions by the top of 2026 at prevailing trade charges.
• $3.5B to $3.7B in whole capital expenditures over the three-year interval, with ~75% associated to smoke-free merchandise.
• No share repurchases mirrored within the progress targets for the interval.

Philip Morris offered 2026 heated tobacco unit cargo quantity targets of 180B to 200B models and nicotine pouch cargo quantity targets of 800M to 1Bn cans.

The corporate expects ZYN to drive double-digit internet income and adjusted OI compound annual progress for its U.S. operations from 2024–2026, together with IQOS investments.

PMI additionally introduced its ambition to have greater than two-thirds of its whole internet revenues come from smoke-free merchandise in 2030. It is a important enhance from the corporate’s earlier goal of fifty% by 2025.

Along with its progress plans, PMI revised its FY2023 adjusted EPS progress to $6.46–$6.55 above the prior outlook of $6.13–$6.22 and the consensus of $6.22.

Regarding capital allocation, PMI is dedicated to sustaining its progressive dividend coverage whereas focusing on a long-term dividend payout ratio of round 75% of adjusted diluted EPS and considering share repurchases as soon as it’s confirmed that it’s absolutely on observe for a 2-times internet debt to adjusted EBITDA leverage goal.

For Q3, the corporate anticipates HTU cargo quantity across the center of the corporate’s 31B-to-33B-unit vary, together with typical seasonality in IQOS person and market share progress traits, with an adjusted OI margin that’s broadly secure organically versus the prior 12 months interval and up sequentially versus the second quarter.

“Our wonderful momentum continues, with additional robust IQOS efficiency, resilient flamable traits, and better-than-expected progress for ZYN,” mentioned Jacek Olczak, Chief Govt Officer. “We now count on third-quarter currency-neutral bottom-line progress to exceed our July forecast—a powerful efficiency that nearly absolutely offsets the elevated foreign money headwind, permitting us to focus on the decrease finish of our $1.60 to $1.65 prior forecast vary for adjusted diluted EPS.”