Article that I found on Reuters said that Philip Morris International (PMI) has set an ambitious goal to derive over two-thirds of its net revenues from "smoke-free" products by 2030. This move reflects PMI's ongoing transition away from traditional cigarettes and toward healthier alternatives. Currently, PMI aims for 50% of its net revenues to come from products like its heated tobacco device IQOS by 2025 and has now expanded this target to more than two-thirds by the end of the decade. PMI's CEO, Jacek Olczak, expressed confidence in achieving a smoke-free status gradually, focusing on one market at a time. Additionally, PMI has unveiled medium-term growth targets for 2024-2026, including expectations for organic net revenue growth, operating income, and adjusted diluted earnings per share, as well as targets for heated tobacco and nicotine pouch shipment volumes.[1]
It continued that the company anticipates that ZYN, its primary nicotine pouch brand acquired through the 2022 purchase of Swedish Match, will be a key driver of substantial net revenue and adjusted operating income growth for its U.S. operations during the 2024-2026 timeframe, even factoring in the impact of IQOS investments. PMI, which is gearing up to introduce IQOS as a major focus of its efforts in the realm of smoking alternatives, is planning to launch it in the critical U.S. market in the coming year. This rollout will necessitate upfront expenditures, including investments in local manufacturing. In preparation for this launch, PMI has reportedly been enlisting the services of lobbyists in various influential U.S. states.
Now, I take this as a rather positive news for Philip Morris – despite the pressure, they have a back-up plan. Meaning that even if there will be total restriction for smoking, they have a plan B. As for their stocks, for the last five years they have been moving horizontally, as the price was all the time between 90 and 100 USD per stock. But I will keep an eye on them and follow, how smoke free products will impact them.
Movement of Philip Morris stocks in the last five years. (Source: Investing) *
* Past performance is no guarantee of future results.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.