What to look for when Philip Morris (PM) reports Q2 2024 earnings results

Shares of Philip Morris International Inc. (NYSE: PM) stayed red on Monday. The stock has gained over 12% year-to-date. The tobacco company is scheduled to report its second quarter 2024 earnings results on Tuesday, July 23, before market open. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are projecting revenues of $9.17 billion for PMI in Q2 2024. This compares to revenues of $8.96 billion reported in the same period a year ago. In the first quarter of 2024, revenues increased nearly 10% to $8.8 billion.

Earnings

Philip Morris has guided for adjusted EPS of $1.50-1.55 for Q2 2024. The consensus estimate for Q2 EPS is $1.57. This compares to adjusted EPS of $1.60 reported in Q2 2023 and $1.50 reported in Q1 2024.

Points to note

Philip Morris is seeing strong momentum in its smoke-free business, which accounted for 39% of its total revenues in the first quarter of 2024. The smoke-free business grew its revenues by 21% and gross profit by 32% last quarter. This strength is likely to continue in the second quarter as well.

Strong performances from IQOS and ZYN continue to drive growth for PMI. IQOS shipments grew 21% last quarter, driven largely by IQOS ILUMA, which is now available in 64 markets. IQOS is seeing strong growth in regions like Japan and Europe as well as rising contribution from newer markets like Indonesia. ZYN nicotine pouches saw US volumes grow by 80% last quarter.

In Q1, heated tobacco units (HTU) adjusted in-market sales (IMS) volume grew by 12.5%. Philip Morris is targeting adjusted IMS growth of around 10% in Q2 2024. The company estimates HTU shipment volumes to range from 34-35 billion in Q2.

Philip Morris saw combustibles revenue increase by 3.5% last quarter, helped by strong pricing across markets. Cigarette shipments saw a slight decline year-over-year. The decline in cigarette shipments continues to be a concern.