Philip Morris Q2 2021 Earnings $PM

Philip Morris International Inc. (PM) released results for Q2 2021 this morning (conference call slides, notes).

Their cigarette volumes the first half of the year were down 2.2% compared to 2020, but heated tobacco unit (HTU) volumes were up 30%. The HTU unit growth was strongest in the EU, up 50% for 1H 2021 vs 1H 2020.

Smoke-free product is 13% of volume but 29% of revenue. More expensive than cigarettes and seemingly more profitable as we discussed last quarter. (We discussed this, which PM is secretive about, when we looked at Q1 2021 results.) Note that Altria has the exclusive license to IQOS in the U.S.

Net revenues for the first half were up 10%, cost of sales and marketing were both down, with the result that operating income was up 19%. Operating income margin was 45% versus 40%.

Net income the first half of the year was $4.6 billion. Net income over the past twelve months has been $9.5 billion and operating cash flow $14 billion.

At the current share price, the market capitalization is $147 billion and enterprise value is $177 billion.

So PM is trading at around 15 times earnings, and OCF/EV is 7.9%.

They are targeting $5 to $7 billion of share repurchases over the next three years.

Their furthest debt maturity is Nov 2044, it yields only 3%. (Equivalent treasury would yield about 1.75%.)