Smokefree to Contribute Most of PMI Revenue
Philip Morris International (PMI) wants smokefree products to account for more than half of its revenues by 2025, up from its earlier target range of 38 percent to 42 percent. The new goal was announced during PMI’s 2021 investor day on Feb. 10., a virtual event broadcast from the company’s operation’s center in Lausanne, Switzerland, during which senior management presented PMI’s business strategies and growth outlook.
The company shared its 2021 to 2023 targets, including net revenue and adjusted diluted earnings per share (EPS) compound annual organic growth of more than 5 percent and 9 percent, respectively, and 2023 heated-tobacco unit shipment volume of 140 billion units to 160 billion units.
PMI plans to launch IQOS ILUMA, the next generation of its IQOS heat-not-burn product featuring internal heating based on Smartcore induction technology, in the second half of 2021.
In addition, the company intends to launch IQOS VEEV, its MESH technology vapor product, in more than 20 markets this year. PMI expects to commercialize IQOS in a total of 100 markets by the end of 2025, up from 64 markets at the end of 2020.
Also at the investor day, PMI announced its target of at least $1 billion in net revenues from “beyond nicotine” products in 2025.
With the right regulatory frameworks, dialogue and support from civil society, the company said cigarette sales can end within 10 years to 15 years in many countries.
“In just five years, we have thoroughly transformed our company, building IQOS into a top-5 global nicotine brand—with nearly $7 billion in net revenues and over 17 million users across 64 markets—while maintaining our leadership position in the international cigarette category,” said PMI CEO Andre Calantzopoulos in a statement.
“We are now embarking on our next growth phase, further shifting to a better, more sustainable business by driving the development of the smokefree category and leveraging our leading commercial model, which places the consumer at the core, to switch more adult smokers to our smokefree products.”
“This next growth phase is underpinned by our unmatched portfolio of innovative products. We are very excited to announce the planned launch of IQOS ILUMA—the next generation of our IQOS heat-not-burn product featuring a new internal heating induction technology—during the second half of this year.”
“As outlined today, we are well positioned to deliver excellent top-[line] and bottom-line growth as well as strong shareholder returns. We now aim to be a majority smokefree product company by 2025, an important milestone toward our ambition to deliver a smokefree future, to the benefit of adults who would otherwise continue to smoke, society, the company and our shareholders.”
Philip Morris reaffirmed its full-year 2021 guidance for EPS in the range of $5.90 to $6. For the three-year period between 2021 and 2023, Philip Morris is guiding for net revenue and adjusted EPS compound annual growth of 5 percent to 9 percent. Cigarette volume is expected to decline in that period. Philip Morris stock has fallen 3.5 percent over the last year while the benchmark S&P 500 index SPX, -0.03 percent, is up 16.7 percent for the period.
A transcript and slides of the Investor Day are available at www.pmi.com/2021InvestorDay. An archive of the webcast will be available until 5 pm Eastern Time on March 11, 2021.
