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Will Philip Morris’s 3Q17 Earnings Beat Analysts’ Estimates?

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Part 2
Will Philip Morris’s 3Q17 Earnings Beat Analysts’ Estimates? PART 2 OF 6

How Analysts View Philip Morris’s Revenues in 3Q17

Analysts’ estimates

Analysts are expecting Philip Morris International (PM) to post net revenues of ~$7.7 billion in 3Q17, which represents 10.4% growth from ~$7.0 billion in 3Q16. The revenue growth is expected to be driven by an increase in RRP (reduced-risk product) sales and increased product prices.

How Analysts View Philip Morris’s Revenues in 3Q17

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Revenue growth

By the end of 2Q17, Philip Morris had introduced its iQOS, its first heated product, in 27 global markets. The company’s management expects it to expand it to 30–35 markets by the end of 2017. The expansion of the product to more markets and increased market share are expected to increase the revenues from the reduced-risk products. 

The growth in awareness of iQOS and the introduction of two new HeatStick variants had increased the weekly offtake share for Japan to 13.5% by the end of August 2017.

However, some of the revenue growth is expected to be offset by a decline in cigarette shipments. The company’s management is expecting the cigarette shipment volume to fall 1% in 3Q17, with softer sales in Russia and Indonesia. 

The implementation of a new excise tax in June 2017 by the Gulf Cooperation Council (or GCC) had led to an increase in its products’ prices and a decline in cigarette sales.

Peer comparisons

During the same period, analysts expect Altria Group (MO) to post revenues of $5.2 billion, which represents 0.1% growth from 3Q16.

Outlook

For the next four quarters, analysts expect Philip Morris International (PM) to post net revenues of ~$30.7 billion. This estimate represents 13.8% growth from ~$26.9 billion in the corresponding four quarters in 2016.

Next, we’ll look at Philip Morris’s margins in 3Q17.

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