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Philip Morris Releases Strong Q1 Results; Warns That Worse Is To Come

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April 21, 2020

Philip Morris International (PM) has released strong first-quarter results with revenue of $7.15B (+5.9% year-over-year) beating the Street consensus by $280M.

For the first quarter, non-GAAP EPS of $1.21 came in $0.08 above the Street’s forecast and GAAP EPS of $1.17 beat by $0.04. Cigarette and heated tobacco unit shipment volume fell by 1.2%; down by 0.6% on a like-for-like basis, states the press release.

PM also withdrew its 2020 reported diluted EPS guidance of at least $5.50, originally provided on February 6, and instead provided a forecast for the second quarter, for which it has ‘relatively better visibility.’

According to the press release, the company now forecasts second-quarter reported diluted EPS to be in a range of $1.00 to $1.10, including an unfavorable currency impact of $0.12 per share. That’s with capital expenditures of approximately $0.8 billion versus the previous $1 billion guidance.

“We started the year with a very strong first quarter, reflecting continued structural growth momentum driven by our smoke-free portfolio and favorable combustible tobacco pricing” said CEO André Calantzopoulos, referring to the fact that government restrictions were generally only implemented in March.

However looking ahead he struck a cautious tone, saying “We expect that the pandemic will have adverse impacts on our full-year 2020 business results.”

According to Calantzopoulos, the impacts already observable relate to a severe reduction of duty-free sales, slower IQOS user acquisition and delayed minimum price enforcement in Indonesia.

“We also have to assume that, in certain markets, unemployment and related reductions in disposable income will have a temporary impact on market dynamics or the ability of certain small retailers to operate” he added.

Nonetheless, analysts continue to display a bullish sentiment on PM stock. It shows a Strong Buy analyst consensus on TipRanks, with only 1 analyst choosing to remain on the sidelines.

Meanwhile the average analyst price target of $90 indicates 17% upside potential from the current share price. The stock is trading down 10% year-to-date, and is down 1.4% in Tuesday’s pre-market trading. (See PM stock analysis on TipRanks).

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