What to expect when Philip Morris (PM) reports Q1 2024 earnings

Shares of Philip Morris International Inc. (NYSE: PM) stayed red on Monday. The stock has dropped over 6% year-to-date. The tobacco giant is scheduled to report its first quarter 2024 earnings results on Tuesday, April 23, before markets open. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $8.46 billion for PMI in the first quarter of 2024. This compares to revenue of $8 billion reported in the same period last year. In the fourth quarter of 2023, revenues increased 11% year-over-year to $9 billion.

Earnings

Philip Morris has guided for adjusted EPS of $1.37-1.42 for Q1 2024. Analysts are predicting EPS of $1.41 for the first quarter. This compares to adjusted EPS of $1.38 reported in Q1 2023. In Q4 2023, adjusted EPS increased 12% to $1.36.

Points to note

Philip Morris’ smoke-free transformation is moving ahead well. Smoke-free products made up around 40% of total revenues and over 40% of gross profit in the fourth quarter of 2023. The company expects smoke-free organic growth to accelerate for both revenues and gross profit in 2024. This bodes well for the first quarter.

The smoke-free momentum is mainly driven by IQOS, whose net revenues surpassed Marlboro in Q4. At the end of 2023, IQOS users were estimated at 28.6 million. Of this IQOS ILUMA was estimated to have over 17 million adult users. IQOS ILUMA is expected to see strong user growth in 2024 and beyond, which is again a positive for Q1.

Another growth driver is ZYN nicotine pouches, which recorded volume growth of 78% in the US during Q4. PMI expects continued volume growth for ZYN in the US and has forecast it to reach around 520 million cans in 2024.

At the same time, declining cigarette volumes have been a cause for concern. Total cigarette and HTU shipment volume dropped by 0.5% in Q4. Total international industry volume decline for cigarettes and HTUs, excluding China and the US, is expected to be down 2% to flat in 2024.