Tag: Philip Morris International

  • Poland: PMI Invests in HnB Stick Production

    Poland: PMI Invests in HnB Stick Production

    Photo: Hamik

    Philip Morris International will invest PLN1 billion ($229.81 million) in the production of heated tobacco sticks at its factory in Krakow, Poland, reports PAP.

    “Today, Philip Morris International has decided on a new investment. We want the production of a new generation of heated tobacco sticks to take place in our factory in Krakow,” Michal Mierzejewski, president of PMI for northeast Europe, told journalists on Sept. 12.

    “We estimate that this investment… will create many jobs,” he added.

    According to Mierzejewski, the tobacco sticks produced at the Krakow plant will be distributed both in Poland and on the international market.

    Since 1996, PMI has invested nearly PLN25.5 billion in Poland, Mierzejewski added.

  • Korean Court Overturns PM Tax Refund

    Korean Court Overturns PM Tax Refund

    Photo: mnimage

    The Supreme Court of Korea has overturned a ruling that awarded Philip Morris Korea a tax refund, reports Business Korea. The case has now been sent back to the Suwon High Court.

    The dispute stems from 2014, when fiscal authorities announced new cigarette taxes that caused the price of pack of cigarettes to increase from KRW2,500 ($1.95) to KRW4,500 in January 2015.

    The National Tax Service (NTS) argued that Philip Morris Korea had sold cigarettes stored in purpose-build warehouses to wholesalers at an inflated price after January 2015, but had manipulated the sale to appear earlier in order to evade the additional special consumption tax that followed the price increase.

    When the NTS demanded tax payments of KRW99.7 billion, Philip Morris Korea challenged the decision, first the Tax Tribunal and then in court.

    The lower court accepted the company’s claim that the cigarettes in question were shipped to wholesalers in 2014, before the special consumption tax was applied.

    However, the Supreme Court viewed Philip Morris Korea’s temporary warehouses as a stopgap measure intended to accumulate as much inventory as possible before the price increase, in order to profit from the price differential later on.

    “Even if the computer system shows that the cigarettes were sold in advance before the tax increase, the special consumption tax should be levied based on Jan. 1, 2015, when the cigarettes actually moved from the temporary warehouses to the wholesalers,” the court said in its ruling.

  • Philippines: Partnership Against Illicit Trade

    Philippines: Partnership Against Illicit Trade

    Photo: sebra

    The Philippines Bureau of Customs (BOC) has partnered with tobacco companies to help combat illicit trade in the country, reports the Philippine News Agency

    “These groups [smugglers and illicit traders] have been very creative and aggressive in entering our markets,” said Bienvenido Rubio, BOC commissioner. “Accordingly, close cooperation with tobacco companies is aimed at addressing their various modus (operandi) with even more comprehensive methods.”

    The BOC met with Philip Morris International and Philip Morris Fortune Tobacco Corp. executives. Rubio said they will work together to ensure public health safety and fair tobacco trade.

    “That has always been our goal and our mandate—to put these smugglers away and make them accountable, answerable and ultimately face the consequences of their nefarious activities,” he said.

    “It is important for us to recognize that these (schemes) are not only very real threats but well-orchestrated plans aimed at circumventing our laws,” said Verne Enciso, customs intelligence and investigation service director.

  • PMI Takes Charge on Healthcare Business

    PMI Takes Charge on Healthcare Business

    Photo: PMI

    Philip Morris International’s foray into pharmaceuticals is proving more challenging than expected, according to The Wall Street Journal.

    The tobacco multinational took a $680 million charge in the latest quarter on its wellness and healthcare business, two years after agreeing to buy inhaled-medicine maker Vectura Group for £1 billion ($1.31 billion).

    After an unsuccessful clinical trial, Vectura won’t be submitting its inhalable aspiring product to the U.S. Food and Drug Administration this year.

    PMI is postponing its 2025 goal to exceed $1 billion in net revenues from health and wellness products. The company still sees growth potential in products such as smoking-cessation treatments and medicinal cannabis.

    The setbacks have been compounded by the recent departures of several top Vectura executives.

    According to a report in The Times, Vectura CEO Michael Austwick is stepping down having been in the role only since he joined from Novartis in June last year.

    Thomas Gibbs, Vectura’s chief executive in the United States, also left in 2023 after just over a year at the company to join Lundbeck, a drugs company based in Denmark, and there is uncertainty over the future of Lizzie Knowles as Vectura Group’s chief financial officer.

    Austwick’s predecessor, Will Downie, and Chief Financial Officer Paul Fry stepped down shortly after PMI’s takeover of Vectura.

    The tobacco group’s acquisition of Vectura caused a backlash among public health professionals, with pharmaceutical conferences banning Vectura representatives from their events.

  • Governments Urged to Hasten End of Smoking

    Governments Urged to Hasten End of Smoking

    Jacek Olczak | Photo: PMI

    Current tobacco control policies are not working fast enough to reduce the prevalence of smoking and may be prolonging cigarette use, according to Philip Morris International CEO Jacek Olczak.

    Speaking on May 23 at the UnHerd Club in London, Olczak said that cigarettes belong in museums and called on governments globally to accelerate the end of cigarettes, according to a company press release.

    Drawing upon a new hypothetical model based on data from the World Health Organization and other parties, Olczak explained that even if smoke-free products were assumed to be only 80 percent less risky than cigarettes, if people who currently smoke were to switch to them completely, then over their lifetime there’s a potential for a 10-fold reduction in smoking-attributable deaths compared with historical tobacco control measures alone.

    He highlighted the paradox that smoke-free products are banned in some countries while cigarettes—despite their far greater risk of harm—can still be sold. While acknowledging that the model he used has limitations and is built on assumptions, Olczak noted that the public health cost of ignoring the potential of smoke-free products could be immense.

    In 2016, PMI committed to moving away from cigarettes. As of March 31, 2023, the company had invested more than $10.5 billion since 2008 in developing and commercializing smoke-free products, which today account for nearly 35 percent of the company’s total net revenues. The mission, Olczak explained, is to reduce smoking by replacing cigarettes with less harmful alternatives and ultimately to make cigarettes obsolete.

    However, he noted, PMI’s ability to progress on this mission is being frustrated by a combination of blind opposition from anti-tobacco organizations and governments’ overreliance on the so-called precautionary principle, which some interpret as “better not to do anything until we know everything.”

    Olczak called on governments worldwide to follow the examples of countries like Sweden, Japan and the U.K., and adopt policies that give adult smokers who don’t quit a wide choice of alternatives to continuing smoking so they can make better choices and cigarettes can become a historical artifact. He also challenged anti-tobacco organizations to update their thinking, stop blocking innovation, and work toward a common goal to achieve a smoke-free future, faster.

  • PMI Mulls Reboot of Production in Ukraine

    PMI Mulls Reboot of Production in Ukraine

    Massimo Andolina | Photo: PMI

    Philip Morris International is exploring options to resume production in Ukraine. In an interview with Interfax Ukraine, PMI’s Europe Region President Massimo Andolina discussed the multinational’s operations in the country in the wake of Russia’s invasion of Ukraine.

    Due to safety concerns caused by the ongoing war, PMI has halted production at its Kharkiv factory. Some of its brands in Ukraine are currently produced by Imperial Brands under a temporary arrangement.

    However, PMI is committed to launching its own alternative production facility in Ukraine. Andolina highlighted two reasons for this: the desire to produce PMI’s own products within the country and to signal the company’s commitment to investing in Ukraine, even during the war. PMI, he said, is actively exploring various alternatives for establishing a new production facility and hopes to make an announcement in the near future.

    The interview also addressed the decline of PMI sales in Ukraine. Andolina cited two factors: the loss of consumers as some left the country or were in occupied territories, and competition from illicit products.

    PMI, he said, has engaged in discussions with the government to address this problem, acknowledging that resolving the issue will take time but expressing confidence in the government’s commitment to combat corruption and criminal activities. The company anticipates significant improvements in tackling illicit trade in the coming years.

    Andolina commented also on the government’s decision to equalize taxes on cigarettes and heat-not-burn products. PMI, he said, believes that these products should be recognized as different and taxed accordingly. They noted the success of heated tobacco products in Ukraine and highlighted the need for differentiated tax treatment.

    The interview also touched upon PMI’s position in Russia. Andolina emphasized that during the war, the company’s primary concern has been protecting the lives of its employees in Ukraine. As a result, it suspended investments and scaled down operations in Russia. While PMI had previously announced its intention to exit the Russian market, changes in the regulatory environment have made it difficult for companies with substantial presence and assets to leave.

     

  • Exports Boost KT&G Profit

    Exports Boost KT&G Profit

    Photo: KT&G

    KT&G reported a net profit of KRW274.23 billion ($206 million) for the first quarter of 2023, up 4 percent over the comparable 2022 period, reports Yonhap News Agency.

    The South Korean cigarette maker credited increased exports for its improved numbers.

    “Increased tobacco sales in emerging markets, such as Indonesia, Africa and Latin America helped the quarterly bottom line,” KT&G wrote in a statement.

    However, quarterly operating profit fell 4.9 percent year-on-year to KRW316.55 billion, due in part to higher leaf tobacco and other raw materials costs. Sales were down 0.5 percent to KRW1.4 trillion from KRW1.403 trillion during the cited period.

    In January, KT&G signed a 15-year supply contract with Philip Morris International, the allows the South Korean cigarette maker to distribute its Lil tobacco-heating products through the multinational’s extensive global sales network.

    KT&G aims to earn more than half of its sales from overseas businesses in 2027. It targets sales of KRW10 trillion won in 2027, compared with KRW5.9 trillion in 2022.

     KT&G has exported its tobacco-heating products to more than 30 countries since 2020 through the PMI’s distribution network.

    The South Korean company earns 90 percent of its overall sales from the cigarette business division and 10 percent from its tobacco-heating products division.

     KT&G has four tobacco manufacturing plants, one each in South Korea, Russia, Turkey and Indonesia, whose combined capacity amounts to 13.6 billion cigarettes a year.

  • PMI Holds Virtual Annual Meeting

    PMI Holds Virtual Annual Meeting

    Image: Tobacco Reporter archive
    Jacek Olczak

     

    Andre Calantzopoulos

    Philip Morris International held its 2023 annual meeting of shareholders. Andre Calantzopoulos, executive chairman of the board, addressed shareholders and answered questions. Jacek Olczak, CEO, gave a business presentation, which included an overview of PMI’s strong performance in 2022 and encouraging start to 2023; robust business fundamentals and rapid progress on its smoke-free transformation; excellent momentum in the heat-not-burn and nicotine pouch categories; further progress on sustainability, with continued recognition by leading external stakeholders; and commitment to rewarding shareholders over time.

    “Our smoke-free transformation continued apace in 2022, with the growth of smoke-free products to nearly one-third of total net revenues for the year and the achievement of two important milestones—the acquisition of Swedish Match and the agreement to gain the full rights to commercialize IQOS in the U.S. in April 2024,” said Olczak.

    “As a global smoke-free champion with leading brands IQOS and Zyn, we are well positioned to further accelerate our transformation in the years to come to the benefit of the company, our shareholders, other stakeholders and public health,” he said.

    Approximately 81 percent of the shares entitled to vote were represented at the meeting in person or by proxy. The shareholders elected 12 nominees for director; approved, on an advisory basis, the compensation of named executive officers; approved, on an advisory basis, a one-year interval for the vote on the compensation of named executive officers; ratified the selection of PricewaterhouseCoopers SA as independent auditors; and voted against the shareholder proposal. Final voting results will be included in a Form 8-K that PMI will file with the SEC in the coming days.

    An archived copy of the webcast of the meeting will be available for approximately one year from the date of the meeting. The presentation slides and script will be available as well.

  • Philip Morris Posts First-Quarter Results

    Philip Morris Posts First-Quarter Results

    Photo: PMI

    Philip Morris International reported net revenues of $8 billion in the first quarter of 2023, up 3.5 percent over those from the comparable quarter in the previous year. Smoke-free product net revenues increased 14.5 percent to $2.8 billion. The company’s operating income was $2.7 billion during the quarter, 17.2 percent less than in the comparable 2022 quarter.

    PMI shipped 171.1 billion cigarettes and heated-tobacco units during the 2023 quarter, down 1.1. percent from the 2022 quarter. The volume of heated-tobacco units increased 10.4 percent to 27.4 billion. Shipments of oral products, boosted by the company’s acquisition of Swedish Match, rose to 173.3 million cans.

    “Our business performed strongly in the first quarter, with adjusted diluted EPS [earnings per share] of $1.38 exceeding our expectations,” said PMI CEO Jacek Olczak in a statement.

    “Net revenues increased by 3.5 percent on a reported basis and by 3.2 percent organically, reflecting accelerated combustible tobacco pricing and robust underlying heated-tobacco unit shipment volume growth before the impact of inventory movements.

    “We continue to successfully integrate Swedish Match, which delivered impressive—and accretive—results, accelerating our transition to a majority smoke-free company. The outstanding performance of Zyn in the U.S. complemented the positive momentum of IQOS, including the excellent traction of ILUMA across launch markets, and reinforces our position as a truly global smoke-free champion.

    “With our encouraging start to the year, we are reaffirming our full-year 2023 forecast for organic net revenue growth of 7 percent to 8.5 percent and currency-neutral adjusted diluted EPS growth of 7 percent to 9 percent.”

  • Court Rejects Challenge to PMI Heating Patents

    Court Rejects Challenge to PMI Heating Patents

    Image: nimalGraphic

    The High Court of Justice in London ruled April 17 that Philip Morris Products’ (PMP) patents protecting a tobacco-heating technology are valid, reports Law360. The ruling represents a defeat for BAT and its Nicoventures subsidiary, which had sought to revoke PMP’s patents.

    While considering the patent valid, the court also said that BAT’s Glo heated-tobacco products did not infringe the patents, heading off an infringement counterclaim filed by PMP.

    The April 17 ruling is the latest chapter in an ongoing intellectual property dispute between the tobacco giants.

    PMP initially sued BAT and Nicoventures, claiming they infringed several of its tobacco-heating technology patents. This prompted BAT and Nicoventures to file counterclaims seeking to invalidate the patents.

    The proceedings have now branched off into several different actions before the High Court.

    In the current case, Nicoventures argued, among other things, that the PMP technology was obvious in light of a 1998 patent application referred to as “Pienemann,” which covers a “system for providing an inhalable aerosol.”

    While Pienemann, like PMP’s technology, has multiple heating elements, Judge Michael Tappin said that a skilled team would consider the multiple heaters to “mimic” one heater. Pienemann also did not specify the inclusion of a thin-film heater as seen in the PMP patent, instead describing a “graphite loaded sheath,” according to the judgment.

    Regarding the infringement claim, Tappin said that BAT’s Glo products did not infringe the patents because they did not include a method of allowing different parts of the heating system to be heated at different times.