Philip Morris lowers 2022 outlook on plans of exiting Russia


Philip Morris lowers 2022 outlook on plans of exiting Russia

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Wajeeh Khan

Apr 21, 2022

Philip Morris reports better-than-expected results for its fiscal Q1.

CEO confirms plans of exiting Russia due to its invasion of Ukraine.

He discussed results and future outlook on CNBC’s “Squawk on the Street”.

Philip Morris International Inc (NYSE: PM) reported market-beating results for its fiscal Q1 on Thursday despite a hit to its business due to the Ukraine war. Shares are up 2.0% today.

Philip Morris first quarter financial highlights

Net income printed at $2.331 billion versus the year-ago figure of $2.418 billion.Per-share earnings of $1.50 in the first quarter were below last year’s $1.55.Adjusted EPS came in at $1.56, as per the earnings press release.Revenue saw an annualised growth of 2.1% to $7.746 billion in Q1.FactSet consensus was for $1.49 of adjusted EPS on $7.585 billion in revenue.

According to Philip Morris, the Ukraine war resulted in 10 cents of hit to its earnings in Q1 ($1.46 a share on pro forma basis). It slashed its 2022 guidance announcing plans of exiting Russia altogether.

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The stock that now trades at a PE multiple of 17.99 has gained nearly 20% since March 11th.

Highlights from CEO Olczak’s interview on CNBC

For the full financial year, Philip Morris now forecasts its adjusted per-share earnings to fall between $5.45 and $5.56. Analysts had expected a higher $5.89. On CNBC’s “Squawk on the Street”, CEO Jacek Olczak said:

Russia and Ukraine contributed about 8.0% to our revenue last year. So, they have a material, significant contribution. But we’re very pleased that other parts of the business are contributing to the strong growth.

Despite geopolitical tensions, inflationary and supply pressures, Philip Morris expects a 100 bps increase in its operating margin this year. Speaking with CNBC’s Morgan Brennan, Olczak reiterated the company’s commitment to non-combustible business.

We delivered a spectacular growth on non-combustible business (double-digit growth). We’re reaching a 30% plus of our total revenue from smoke-free products, despite headwinds. We’re aim for 50% of revenue coming from these products by 2025.

Lastly, things are getting better on the pricing front, the chief executive confirmed.

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