Philip Morris International, Inc. (PM) dbAccess Global Consumer Conference Call Transcript

During the dbAccess Global Consumer Conference Call, Philip Morris International's CFO Emmanuel Babeau stated the company is on track for another year of strong growth in revenue, operating income, and adjusted EPS, primarily driven by the strong performance of its smoke-free portfolio, with all brands performing well. IQOS adjusted in-market sales grew close to 10% in Q1, with Japan near 10% growth and Europe slightly above 7%, despite a flavor ban expected to impact sales by around 1 billion sticks in 2025; Europe is expected to gradually recover throughout the year.

Analysis

Philip Morris International (PM) is demonstrating a robust growth trajectory, as articulated by CFO Emmanuel Babeau at the dbAccess Global Consumer Conference. The company is on track for another year of strong expansion in revenue, operating income, and adjusted EPS, primarily propelled by the vigorous performance of its smoke-free product portfolio, with all brands reportedly performing strongly. Notably, IQOS adjusted in-market sales saw a progression close to 10% in Q1 2025, with Japan achieving nearly 10% growth and Europe recording growth slightly above 7%. This European performance is particularly significant as it occurs despite an anticipated impact from a flavor ban, estimated to reduce volumes by approximately 1 billion sticks in 2025. Management, however, projects a gradual recovery in the European market throughout 2025, signaling underlying confidence in the continued adoption and resilience of its smoke-free alternatives.

Key Decisions for Investors

• Investors should acknowledge Philip Morris International's strong guidance for revenue, operating income, and adjusted EPS growth, predominantly driven by its smoke-free category.
• The reported Q1 IQOS adjusted in-market sales growth of nearly 10%, with robust performance in Japan and continued growth in Europe despite regulatory headwinds, reinforces the positive momentum in this key segment.
• Monitor the European market's adaptation to the flavor ban, which is expected to impact volumes by approximately 1 billion sticks in 2025, against the company's expectation of a gradual recovery throughout the year.