Shares of Philip Morris International Inc. (NYSE: PM) advanced 2.6% in the pre-market trading session on Thursday after the company delivered better-than-expected results for the second quarter of 2022. The company has also increased its projections for 2022.
Earnings and revenue beat in the quarter were 18.4% and 15.8%, respectively. The last closing of the shares of this $139.2-billion tobacco company was $89.83.
Highlights of Philip Morris’ Q2 Results
In the quarter, Philip Morris’ adjusted earnings came in at $1.48 per share, above the analysts’ expectation of $1.25 per share. The bottom line expanded 6.3% year-over-year. Earnings generated from operations in Russia and Ukraine were $0.16 per share.
Revenues totaled $7.83 billion, higher than the consensus estimate of $6.76 billion. It grew 3.1% from the year-ago tally on the back of favorable pricing, volume mix, and buyouts. However, forex woes hurt revenues by $501 million.
Sales of combustible products were down 1.3% from the year-ago quarter, while sales of reduced-risk products decreased 0.4%. Revenue from wellness and healthcare products was $76 million in the quarter.
Total shipment volume was up 1.1% year-over-year in the quarter. Shipments of heated tobacco units (HTU) grew 1.9% and that of cigarettes expanded 1% on the back of increased shipments of Marlboro, Chesterfield, and Dji Sam Soe brands.
Costs of sales in the quarter increased 12.5% year-over-year. Adjusted operating income decreased 7.2% to $3,224 million, while the adjusted operating margin was 41.2% versus 44.3% in the year-ago quarter.
Its net cash provided by operating activities decreased 2.9% year-over-year to $3,524 million. Cash and cash equivalents were at $5,036 million, up 12% from the 2021-end. Long-term debt was down 9.8% to $22,345 million.
During the quarter, the company declared a quarterly dividend of $1.25 per share. The company’s dividend yield is 5.47%.
Projections for 2022
The company anticipates adjusted earnings to be within the $5.90-$6.05 per share in the year, higher than the $5.45-$5.56 per share predicted earlier. Notably, adjusted earnings in the previous year were $6.13 per share.
Earnings from business in Ukraine and Russia are forecast to be $0.67-$0.71 per share in 2022 versus $0.10 per share stated earlier. Meanwhile, forex woes are forecast to adversely impact results by $0.86 per share, higher than the $0.63 per share expected previously.
Wall Street Is Cautiously Optimistic about Philip Morris
On TipRanks, PM stock has a Moderate Buy consensus rating based on four Buys and three Holds. PM’s average price forecast of $107.86 mirrors 20.07% upside potential from current levels. Shares of Philip Morris have slipped 7% over the past year.
Investors Are Positive
According to TipRanks, investor sentiment is Positive on Philip Morris, evident from a 1.3% increase in their exposure to the stock in the last 30 days.
Key Takeaways for Philip Morris’ Investors
The second-quarter numbers suggest that Philip Morris’ operations in Ukraine and Russia are vital for the company and are presently very volatile due to the ongoing tensions in the region. Also, high costs and unfavorable movements in foreign currencies could hurt the company’s performance in the quarters ahead.
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