Philip Morris reports solid revenue growth as smoke-free sales jump

(Sharecast News) - The share price of Philip Morris International jumped on Wednesday after the American tobacco giant said it exceeded its own expectations in the first quarter, as its smoke-free alternatives division grew sales at a double-digit rate.

Net revenues were 9.1% higher than last year at $10.15bn over the three months to 31 March, rising 2.7% in organic terms and beating the $9.91bn consensus forecast.

The IQOS smoke-free business reported a 12.4% increase in sales and now accounts for 43% of total net revenues, up 1.3 percentage points over last year. The combustibles division also reported 6.7% growth over the year before.

"Our performance exceeded our expectations in the first quarter, with an outstanding delivery from IQOS driving very good growth for the group against a strong prior-year comparison," said chief executive Jacek Olczak.

Operating income was 9.8% higher at $3.89bn, with margins improving on the back of strong pricing, operating leverage and smoke-free product mix benefits, the company said.

Reported diluted earnings per share were down 9.3% at $1.56 due to the fair value adjustment of PMI's interests in India. However, adjusted EPS of $1.96 was comfortably ahead of the $1.83 expected by the market.

Looking ahead, PMI expects adjusted EPS of $8.36-8.51, compared with the current consensus estimate of $8.38, organic revenue growth pencilled in at 5-7%.

PMI shares were up 6.3% at $162.94 by 1521 BST.