Analysts’ 2018 Revenue Expectations for Philip Morris and Altria


Mar. 16 2018, Updated 6:05 p.m. ET

Philip Morris’s revenue expectations

Analysts are expecting Philip Morris International (PM) to post revenue of $31.9 billion in 2018, which represents a rise of 11% from $28.8 billion in 2017. The company’s management expects currency-neutral revenue growth at approximately 8%.

Revenue growth is expected to be driven by an increase in product prices and growth in RRP (reduced risk products) sales. The company’s management expects pricing for combustible tobacco products to be favorable by 7% in 2018 compared to 2017. It expects revenue from RRPs to increase 80%–90% from $3.6 billion in 2017 as the company continues to expand product availability. By the end of 2017, there were 62 iQOS (I quit original smoking) flagship stores and boutiques and 750 third-party retail locations.

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Philip Morris’s other RRP platforms are in various stages of testing. In December 2017, the company tested its Platform 2 product, TEEPS, in the Dominican Republic. Its Platform 4 product with MESH technology, which was tested in the United Kingdom, was well received by consumers. The Platform 3 product is still in the developmental stage and is expected to be tested later this year.

However, some revenue growth is expected to be offset by a decline in total shipment volume. The implementation of the new excise tax, which increased the price of products by approximately 100%, is expected to lower the sale of combustible products in Saudi Arabia, other Gulf Cooperation Council markets, and Russia.

Altria Group’s revenue expectations

Analysts are expecting Altria Group (MO) to post revenue of $19.8 billion, which represents a growth of 1.4% from $19.5 billion in 2017.

To drive its sales, Altria is focusing on the development of innovative products, packaging innovations, enhanced trade programs, and various marketing and promotional initiatives. The company has expanded the availability in the United States of its Marlboro Ice, which comes with an innovative reseal pack. To increase its digital leadership, Altria has redesigned its website, marlboro.com, with updated digital tools, which offers a more personalized experience for customers.

Moving to the smokeless segment, USSTC (U.S. Smokeless Tobacco Company), a subsidiary of Altria, plans to expand Copenhagen’s Southern Blend across the Western United States. The company also plans to expand Skoal’s spearmint tobacco blend pouches with a refreshing mint flavor and update the packaging on its Skoal snus. USSTC is also planning to expand the sales of Verve discs to two additional markets in 2Q18.

Next, we’ll look at the 4Q17 margins for both companies.


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