For the next four quarters, analysts expect Philip Morris International (PM) to post revenues of ~$30.3 billion, which represents growth of 12.7% from its revenues of ~$26.9 billion in the corresponding quarters of the previous year.
This revenue growth is expected to be driven by growth in IQOS sales, favorable pricing, and the below-par performance in select geographical areas such as Argentina, the European Union, and Turkey in 2016.
Until the announcement of its 2Q17 earnings, Philip Morris had introduced IQOS in key cities in 27 markets globally, and the company’s management expects to expand the introduction to 30–35 markets by the end of 2017. The company is also focusing on increasing the market share of HeatSticks in markets where the product has been introduced already.
The market share of HeatSticks in Italy, Portugal, and Romania increased more than 0.6% in 2Q17. The expansion of availability of two new HeatStick variants is also expected to contribute to Philip Morris’s revenue growth. Also, the company’s other three RRP (reduced-risk product) platforms are in various stages of testing, which could also boost Philip Morris’s revenues.
However, some of this revenue growth is expected to be offset by the decline in cigarette shipment volume due to excise tax–driven price increases and a smaller smoking population.
Next, we’ll look at Philip Morris’s 2Q17 margins.