Shares of Philip Morris surged intraday on Tuesday as the tobacco giant unveiled its third-quarter results that exceeded expectations, alongside an upward revision of its full-year earnings guidance fueled by robust demand for smoke-free alternatives. The company reported adjusted earnings per share (EPS) rising to $1.91 for the three-month period ending September 30, compared to $1.67 in the same quarter last year.
This surpassed the market consensus estimate of $1.82 as projected by analysts on Capital IQ. Moreover, total revenue for the company climbed to $9.91 billion, an increase from the prior year’s $9.14 billion, significantly outperforming the Street's forecast of $9.69 billion. Reflecting confidence in its performance, shares of Philip Morris were up 8.6% during the intraday trading. CEO Jacek Olczak commented, "In the third quarter, we delivered exceptionally strong performance, with record quarterly net revenues and earnings per share.
This reflects excellent momentum across all regions and categories, coupled with a rebound in IQOS adjusted in-market sales growth, strong ZYN volumes, and stable performance in combustibles." Chief Financial Officer Emmanuel Babeau reiterated that both organic top-line and bottom-line figures grew by double digits, as discussed during an analysts' conference call, with insights drawn according to a Capital IQ transcript. The IQOS device, designed to provide a smoke-free experience by heating rather than burning tobacco, marked substantial growth in heated tobacco units.
Despite a historically challenging quarter typically marked by seasonal impacts, Babeau highlighted the strong sales performance in Japan and the recovering momentum across Europe. Furthermore, the company reported that smoke-free net revenue and gross profit grew organically by approximately 17% and 20%, respectively, during the third quarter.
This significant growth enabled a 200 basis points increase in gross margin as stated by Babeau. The revenue and profit derived from combustible products also saw an uptick of nearly 9% organically. In a promising move, Philip Morris has revised its full-year EPS forecast to between $6.45 and $6.51, from its earlier guidance which ranged from $6.33 to $6.45.
Analysts are predicting a normalized EPS of $6.45 for the actively ongoing year, based on data collected by Capital IQ. Despite ongoing supply constraints affecting the nicotine pouch brand ZYN, which the company is addressing, the category share stabilized during the recent quarter. Babeau assured analysts that shipments were expected to align with consumer demand beginning in the fourth quarter.
Price: 128.86, Change: +9.90, Percent Change: +8.32.