Company Update (NYSE:PM): Philip Morris International Inc. Reports 2015 Results; Provides 2016 Earnings Per Share Forecast


Philip Morris International Inc. (NYSE:PM) announced its 2015 full-year and fourth-quarter results.

“PMI had an excellent year in 2015. Against a backdrop of improving industry volume trends in many key geographies, our cigarette brand portfolio performed superbly, driven by solid market share gains – underpinned by the successful roll-out of the Marlboro 2.0 Architecture – our enhanced commercial approach, and investments made in both 2014 and 2015 to support our business. Furthermore, our underlying financial results, underpinned by robust pricing, and our strong free cash flow, were equally impressive,” said André Calantzopoulos, Chief Executive Officer.

“We continued to make exciting progress on the development, assessment and commercialization of our Reduced-Risk Products. We significantly expanded the roll-out ofiQOS in Japan and introduced it into several new markets. We are well positioned to accelerate deployment in additional geographies this year.

“We enter 2016 with enhanced business fundamentals and ongoing strategic initiatives that will strengthen them further. While currency headwinds endure, we fully expect to continue to grow our business and generously reward our shareholders.”

2015 Full-Year

  • Reported diluted earnings per share of $4.42, down by $0.34 or 7.1% versus $4.76 in 2014
    • Excluding unfavorable currency of $1.20, reported diluted earnings per share up by $0.86 or 18.1% versus $4.76 in 2014 as detailed in the attached Schedule 17
  • Adjusted diluted earnings per share of $4.42, down by $0.60 or 12.0% versus $5.02 in 2014
    • Excluding unfavorable currency of $1.20, adjusted diluted earnings per share up by $0.60 or 12.0% versus $5.02 in 2014 as detailed in the attached Schedule 16
  • Cigarette shipment volume of 847.3 billion units, down by 1.0% excluding acquisitions
  • Reported net revenues, excluding excise taxes, of $26.8 billion, down by 10.0%
    • Excluding unfavorable currency of $4.7 billion and the impact of acquisitions, reported net revenues, excluding excise taxes, up by 5.8% as detailed in the attached Schedule 14
  • Reported operating companies income of $11.0 billion, down by 9.1%
    • Excluding unfavorable currency of $2.4 billion and the impact of acquisitions, reported operating companies income up by 10.8% as detailed in the attached Schedule 14
  • Adjusted operating companies income, reflecting the items detailed in the attached Schedule 15, of $11.0 billion, down by 12.4%
    • Excluding unfavorable currency and the impact of acquisitions, adjusted operating companies income up by 6.6% as detailed in the attached Schedule 15
  • Reported operating income of $10.6 billion, down by 9.2%
  • Increased the regular quarterly dividend by 2.0% to an annualized rate of $4.08 per common share

2015 Fourth-Quarter

  • Reported diluted earnings per share of $0.80, down by $0.23 or 22.3% versus $1.03 in 2014
    • Excluding unfavorable currency of $0.18, reported diluted earnings per share down by $0.05 or 4.9% versus $1.03 in 2014 as detailed in the attached Schedule 13
  • Adjusted diluted earnings per share of $0.81, down by $0.22 or 21.4% versus $1.03 in 2014
    • Excluding unfavorable currency of $0.18, adjusted diluted earnings per share down by $0.04 or 3.9% versus $1.03 in 2014 as detailed in the attached Schedule 12
  • Cigarette shipment volume of 209.8 billion units, down by 2.4% excluding acquisitions
  • Reported net revenues, excluding excise taxes, of $6.4 billion, down by 11.2%
    • Excluding unfavorable currency of $1.1 billion and the impact of acquisitions, reported net revenues, excluding excise taxes, up by 4.0% as detailed in the attached Schedule 10
  • Reported operating companies income of $2.0 billion, down by 23.6%
    • Excluding unfavorable currency of $393 million and the impact of acquisitions, reported operating companies income down by 8.7% as detailed in the attached Schedule 10
  • Adjusted operating companies income, reflecting the items detailed in the attached Schedule 11, of $2.1 billion, down by 22.0%
    • Excluding unfavorable currency and the impact of acquisitions, adjusted operating companies income down by 7.2% as detailed in the attached Schedule 11
  • Reported operating income of $1.9 billion, down by 24.9%

2016

  • Forecasts 2016 full-year reported diluted earnings per share to be in a range of $4.25 to $4.35, at prevailing exchange rates, versus $4.42 in 2015. Excluding an unfavorable currency impact, at prevailing exchange rates, of approximately $0.60 for the full-year 2016, the reported diluted earnings per share range represents a projected increase of approximately 10% to 12% versus adjusted diluted earnings per share of $4.42 in 2015 as detailed in the attached Schedule 16
  • This forecast does not include any share repurchases in 2016. The company will revisit the potential for repurchases as the year unfolds, depending on the currency environment
  • Estimates 2016 international cigarette volume, excluding the People’s Republic of China and the U.S., to decline by approximately 2.0%-2.5%, in line with the estimated decline of 2.4% in 2015
  • This forecast excludes the impact of any future acquisitions, unanticipated asset impairment and exit cost charges, future changes in currency exchange rates, and any unusual events. Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections  (Original Source)

Shares of Philip Morris are down nearly 3% in pre-market trading. PM has a 1-year high of $90.31 and a 1-year low of $75.27. The stock’s 50-day moving average is $87.98 and its 200-day moving average is $84.12.

On the ratings front, Philip Morris has been the subject of a number of recent research reports. In a report issued on November 30, Nomura analyst Stuart Jeffrey upgraded PM to Hold, with a price target of $88, which represents a slight downside potential from current levels. Separately, on November 18, Cowen’s Vivien Azer maintained a Buy rating on the stock and has a price target of $92.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Stuart Jeffrey and Vivien Azer have a total average return of 14.2% and 13.7% respectively. Jeffrey has a success rate of 76.2% and is ranked #212 out of 3612 analysts, while Azer has a success rate of 85.2% and is ranked #314.