The World Today
Philip Morris reports remarkable growth in the third quarter
Philip Morris International (PMI), the well-known American tobacco company, has released its third-quarter financial results, revealing a 12.8% increase in attributable net profit, reaching €2.997 billion ($3.478 billion). This growth is accompanied by a significant increase in net revenue, which grew 9.4% year-over-year, reaching a total of €9.344 billion ($10.845 billion). These results underscore the company's resilience in a competitive and changing environment, where the transition to less harmful products is becoming increasingly relevant.
Total production, marketing, and other expenses reached €5.671 billion (US$6.582 billion), representing a 5.2% increase. Despite these cost increases, the company has managed to maintain solid profitability, reflecting its efficient management and strategic focus on reorienting itself toward a future less dependent on traditional tobacco.
Consolidated results until September
For the year to September, Philip Morris reported total profits of €7.933 billion (US$9.207 billion), representing a spectacular increase of 20.6% compared to the same period last year. Total revenue also increased, reaching €26.094 billion (US$30.286 billion), representing a 7.5% increase. These figures reflect the effectiveness of PMI's strategies to diversify its product offering.
The total number of cigarettes and heated tobacco units sold during these nine months was 592.7 billion, a 1.8% increase year-over-year. Meanwhile, smoke-free products, including nicotine patches and snus, grew 14.3%, reaching 134.8 billion units. This shift in demand indicates a clear trend toward a reduction in the use of traditional tobacco products.
Strategy towards a smoke-free future
Jacek Olczak, CEO of Philip Morris International, commented on the company's strategic focus, stating, "In the third quarter, we continued to invest in the growth of our increasingly profitable smoke-free business." This comment underscores PMI's commitment to providing healthier and less harmful products to consumers, seeking to meet the expectations of a society demanding alternatives.
Olczak also mentioned that the company is on track to exceed its growth targets for the 2024-2026 period, as it consolidates its position as a leader in the sector. Projections are optimistic, with the intention of revising earnings per share estimates upward for next year.
Dividend increase and future outlook
The multinational has decided to increase its quarterly dividend by 8.9%, bringing it to €1.27 ($1.47). This increase not only reflects the company's financial strength but also its commitment to shareholders in a context where profitable returns are essential to attracting and retaining long-term investors.
Looking ahead to 2025, Philip Morris has clear organic growth targets, forecasting a 6% to 8% increase in net revenue. Furthermore, adjusted diluted earnings per share, currency-neutral, are estimated to be between €6.34 and €6.43 ($7.36 to $7.46). These expectations reflect an optimistic view of the company's adaptation to changing market trends.
Impact on the tobacco sector
Philip Morris's growth not only represents a victory for the company but also a milestone for the tobacco industry as a whole. As consumers increasingly opt for products that reduce the risks associated with tobacco, other companies in the industry may be forced to reevaluate their business strategies.
With Philip Morris's firm commitment to innovation and sustainability, the company could set a precedent that influences the entire industry. This could result in a radical shift in how tobacco companies operate and position themselves in the global market.
Strategic closures and their significance for the industry
The development of smoke-free products and the inclusion of diverse, less harmful alternatives reflect a shift in consumer expectations. PMI's investments in these new technologies demonstrate not only their adaptability to current market demands, but also a projection toward a future where traditional tobacco may be relegated.
This strategic move could change the narrative of tobacco use around the world, and Philip Morris is emerging as a leader that could open entirely new avenues for growth at a time when regulatory and social pressure on smoking continues to mount.
Analyst and market reaction
Analysts have reacted positively to Philip Morris's recent results, noting that the company is well positioned to take advantage of emerging trends toward less harmful tobacco products. These figures not only reflect financial success but also align with a broader cultural shift toward healthier options.
Analysts agree that, while challenges persist, the direction Philip Morris has taken in developing its product portfolio is a promising sign in a historically critical and evolving sector. This may be an incentive for future investors looking to participate in the growing demand for less harmful products.
A hopeful future for the consumer
The growing focus of tobacco companies, and Philip Morris in particular, on creating less harmful products could transform the consumer experience in the tobacco sector. The availability of safer alternatives gives users options they previously lacked, promoting a more responsible consumer environment.
Undoubtedly, the road to a smoke-free future is still long, but with results like Philip Morris's third-quarter results, the change is palpable and offers a hopeful future for both the industry and consumers. The company is not only innovating, but also effectively positioning itself to meet the demands of an ever-changing world.
