Philip Morris Revenue Falls, But Profit Climbs in Q4 2020

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Reported Diluted EPS of $5.16 Versus $4.61 in 2019, Reflecting Adjusted Diluted EPS Growth of 7.0% on an Organic Basis; Provides 2021 EPS Forecast

Philip Morris International Inc. today announces its 2020 fourth-quarter and full-year results. Comparisons presented in this press release on a “like-for-like” basis reflect pro forma 2019 results, which have been adjusted for the deconsolidation of PMI’s Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019 (the date of deconsolidation).

In addition, PMI’s total market share has been restated for previous periods to reflect the deconsolidation. Growth rates presented in this press release on an organic basis reflect currency-neutral underlying results and “like-for-like” comparisons, where applicable.

Philip Morris ends Q3 with over 16M IQOS users

Adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures are included in the schedules to this press release.


2020 Full-Year

  • Reported diluted EPS of $5.16, up by 11.9%; up by 18.9%, excluding currency
  • Adjusted diluted EPS of $5.17, down by 0.4%; up by 7.0% on an organic basis
  • Cigarette and heated tobacco unit shipment volume down by 8.1% (reflecting cigarette shipment volume down by 11.1%, and heated tobacco unit shipment volume up by 27.6% to 76.1 billion units); down by 7.9% on a like-for-like basis
  • Market share for heated tobacco units in IQOS markets, excluding the U.S., up by 1.7 points to 6.1%
  • Net revenues down by 3.7%; down by 1.6% on an organic basis
  • Operating income up by 10.8%; up by 15.3%, excluding currency
  • Adjusted operating income up by 4.6% on an organic basis
  • Adjusted operating income margin of 40.8%, up by 2.4 points on an organic basis
  • Increased the regular quarterly dividend per share by 2.6% to an annualized rate of $4.80
  • Total IQOS users at year-end estimated at approximately 17.6 million, of which approximately 12.7 million have switched to IQOS and stopped smoking
  • On July 7, 2020, the U.S. Food and Drug Administration (FDA) authorized the marketing of a version of IQOS as a Modified Risk Tobacco Product
  • On December 7, 2020, the U.S. FDA authorized the sale of the IQOS 3 device in the U.S. through the issuance of a premarket tobacco marketing order

2020 Fourth-Quarter

  • Reported diluted EPS of $1.27, up by 22.1%; up by 26.9%, excluding currency
  • Adjusted diluted EPS of $1.26, up by 3.3%; up by 7.4% on an organic basis
  • Cigarette and heated tobacco unit shipment volume down by 8.2% (reflecting cigarette shipment volume down by 11.7%, and heated tobacco unit shipment volume up by 26.9% to 21.7 billion units)
  • Market share for heated tobacco units in IQOS markets, excluding the U.S., up by 1.8 points to 6.7%
  • Net revenues down by 3.5%; down by 3.5% on an organic basis
  • Operating income up by 15.9%; up by 17.8%, excluding currency
  • Adjusted operating income up by 1.7% on an organic basis
  • Adjusted operating income margin of 38.5%, up by 2.0 points on an organic basis

“In 2020, PMI delivered a robust business performance despite the unprecedented headwinds of the COVID-19 pandemic, with adjusted diluted EPS organic growth of 7.0%, supported by stronger-than-anticipated fourth-quarter results,” said André Calantzopoulos, Chief Executive Officer.

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“We must first and foremost salute the enormous efforts of the entire PMI organization to keep our employees and their families safe, ensure business continuity, rapidly adapt our ways of working and help our local communities.”

“IQOS continued to deliver impressive growth in 2020, driving significant increases in our total users, as well as both HTU shipment and in-market sales volumes. During the fourth quarter, we reported record HTU market shares in key IQOS geographies, and exited the year with double-digit national shares in ten markets.”

“We enter 2021 with favourable momentum, although certain headwinds remain, notably related to Duty-Free, Indonesia and the continued effects of the pandemic. For the full year, we are expecting a significant recovery, with mid-single-digit organic net revenue growth—driven by the growing contribution of IQOS—and further efforts on cost efficiencies driving an acceleration in forecasted adjusted diluted EPS growth to a range of 9% to 11% on the same basis.”


Reported diluted EPS forecast to be in a range of $5.90 to $6.00, at prevailing exchange rates, representing a projected increase of around 14% to 16% versus reported diluted EPS of $5.16 in 2020.

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Excluding a favourable currency impact, at prevailing exchange rates, of approximately $0.25 per share, this forecast represents a projected increase of around 9% to 11% versus adjusted diluted EPS of $5.17 in 2020, as detailed in the above table.

2021 Full-Year Forecast Assumptions

This forecast assumes:

  • A gradual improvement in the general operating environment, with potential volatility around the duration and effects of pandemic-related mobility restrictions across PMI’s key markets;
  • Lack of near-term recovery in PMI’s duty-free business given the uncertain outlook for global travel, with current dynamics persisting through year-end;
  • An estimated total international industry volume progression, excluding China and the U.S., of approximately -3% to flat;
  • A total cigarette and heated tobacco unit shipment volume progression for PMI of approximately -2% to +1%;
  • Heated tobacco unit shipment volume of 90 to 100 billion units;
  • Net revenue growth of approximately 4% to 7%, on an organic basis;
  • An increase in adjusted operating income margin of at least 150 basis points on an organic basis;
  • Operating cash flow of approximately $11 billion at prevailing exchange rates and subject to year-end working capital requirements;
  • Capital expenditures of approximately $0.8 billion;
  • An effective tax rate, excluding discrete tax events, of around 22%;
  • No share repurchases; and
  • First-quarter reported diluted EPS of around $1.40, including a favourable currency impact, at prevailing exchange rates, of around $0.09 per share, notably reflecting:
    • Net revenue that is down slightly too broadly stable on an organic basis, with an unfavourable comparison versus the first quarter of 2019; and
    • Strong operating income margin growth, primarily driven by the growing weight of IQOS in the business and continued cost efficiencies.
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The foregoing is underpinned by the assumption that, even in the event of prolonged pandemic-related restrictions, there will not be a return to the depressed consumption levels of the second quarter of 2020. This assumption is consistent with the less severe impact on consumption levels observed in the second half of 2020 as COVID-19 spread in a number of markets.

This forecast excludes the impact of any future acquisitions, unanticipated or unquantifiable asset impairment and exit cost charges, future changes in currency exchange rates, further developments pertaining to the judgment in the two Québec Class Action lawsuits and the Companies’ Creditors Arrangement Act (CCAA) protection granted to RBH, any unusual events, and any COVID-19-related developments different from the assumptions set forth in the company’s forecast.

Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.

COVID-19: Business Continuity Update

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Since the onset of the COVID-19 pandemic, PMI has undertaken a number of business continuity measures to mitigate potential disruption to its operations and route-to-market in order to preserve the availability of products to its customers and adult consumers.


  • PMI has sufficient access to the inputs for its products and is not facing any significant business continuity issues with respect to key suppliers;
  • All of PMI’s cigarette and heated tobacco unit manufacturing facilities globally are operational;
  • COVID-related restrictions do not have a significant impact on the availability of PMI’s products to its customers and adult consumers; and
  • PMI has ample liquidity through cash on hand, the ongoing cash generation of its business, and its access to the commercial paper and debt markets.

U.S. Food and Drug Administration Authorizes IQOS 3 for sale in the United States

On December 7, 2020, the U.S. Food and Drug Administration (FDA) confirmed that IQOS 3, Philip Morris International’s electrically heated tobacco system, is appropriate for the protection of public health and authorized it for sale in the U.S. The FDA’s decision followed the assessment of a premarket tobacco product application (PMTA) filed with the agency in March 2020.

The IQOS 3 device contains a number of technological advancements compared to a previously authorized IQOS device (IQOS 2.4), including longer battery life and quicker recharge between uses.

In its decision, the FDA noted that international survey data reviewed by the agency found no evidence of increased uptake of IQOS by youth or young adults, while use patterns available for the previously authorized version of IQOS within the U.S. have not raised new concerns regarding product use in youth and young adults.

The IQOS 3 PMTA authorization is independent of the modified risk tobacco product application (MRTPA) authorization for IQOS 2.4. PMI expects to file an application seeking an exposure modification order for IQOS 3.

Brazil Indirect Tax Credit

Following a final and enforceable decision by the highest court in Brazil in October 2020, PMI recorded a gain of $119 million for tax credits representing overpayments of indirect taxes for the period from March 2012 through December 2019. These tax credits will be applied to future tax liabilities in Brazil.

A decision regarding an additional amount of overpaid indirect taxes of approximately $90 million is still pending before this court.

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