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Investing.com -- Philip Morris International reported second-quarter adjusted earnings that beat analyst estimates, but shares fell 1.1% after revenue came in below expectations despite strong growth in its smoke-free business.
The tobacco giant posted adjusted earnings per share of $1.91, exceeding the analyst consensus of $1.86. However, revenue of $10.14 billion fell short of the $10.31 billion analysts had expected, despite growing 7.1% compared to the same quarter last year.
The company’s smoke-free business continued to show impressive momentum, accounting for 41% of total net revenues, up 2.9 percentage points from the second quarter last year. Smoke-free product shipment volumes increased 11.8%, with net revenues growing 15.2% (14.5% organically).
"Our business delivered very strong results in the second quarter, with record net revenues and exceptional growth in operating income and adjusted diluted EPS," said Jacek Olczak, Chief Executive Officer. "These results reflect excellent momentum in our multicategory smoke-free business, with a reacceleration of IQOS adjusted in-market sales growth and ZYN U.S. offtake growth, coupled with combustibles resilience."
The company’s traditional cigarette business showed resilience despite volume declines, with combustible net revenues growing 2.1% (2.0% organically) driven by strong pricing. Cigarette shipment volumes declined 1.5% YoY.
In the U.S., the company’s ZYN nicotine pouch brand reaccelerated its growth to approximately 36% in June, and 26% for the quarter overall as measured by Nielsen. The IQOS heated tobacco unit reached over 10 million legal-age consumers in Japan, with adjusted market share increasing by 2.3 percentage points to 31.7%.
Philip Morris (NYSE:PM) now expects full-year adjusted EPS of $7.43-$7.56, compared to the analyst consensus of $7.47. The company also forecasts organic net revenue growth of around 6% to 8% for the year.