Philip Morris boosts revenue guidance as tailwinds rise

Philip Morris (NYSE: PM), the giant tobacco company, published strong Q2 results that beat analysts estimates. The company’s revenue jumped by 14.9% to $9 billion, about $290 million higher than estimates. 

In its statement, Philip Morris said that its combustible tobacco revenue jumped by 6% while its HTU’s IQOS rose by 1.6%. IQOS saw the number of users jump to 27.2 million during the quarter. As a result, the management decided to hike their forward guidance. The CEO said:

“Our strong fundamentals give us further confidence as we enter the second half of the year, particularly as certain inflationary and operational pressures ease. We are raising our full-year 2023 forecast for organic net revenue growth to a range of 7.5% to 8.5%.”

Philip Morris business has been doing well in the past few years even as the number of smokers in its key markets fall. Data compiled by the CDC showed that current smoking has fallen from 20.9% in 2005 to 11.5% today. 

The same trend is has happened globally. A report published in 2022 showed that the number of global tobacco users stood at 1.3 billion in 2022 even as the world’s population surged to over 8.3 billion.

Philip Morris’s annual revenue came in at over $31.7 billion in 2022, up from $31.4 billion in the previous year. Its annual revenue bottomed at $26.7 billion in 2015.

The company has achieved this growth by boosting cigarette prices and diversifying to other areas like IQOS. 

Philip Morris stock price dropped by 0.30% in the premarket session after the company ruled out any new share repurchases this year. The stock has dropped by 3% this year.