Philip Morris International (PMI) has reported a “near doubling of global in-market sales” of heated tobacco units as it posted a 3.1% increase in 2018 net revenues, to US$29.6 billion.

As reported, the company has detailed plans to “build its future without cigarettes” and go smoke-free. It unveiled the “next generation” of its IQOS range of smoke-free tobacco products towards the end of 2018, with IQOS a big seller in duty free stores.

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Click on chart to enlarge.

Philip Morris saw its shipment volume of heated tobacco units rise 14.2% to 41.4 billion last year, as traditional cigarette sales waned (with a 2.8% decrease in shipment volume to 740.3 billion).

The company particularly noted a higher heated tobacco unit shipment volume in Middle East & Africa duty free, and also said Europe was a strong growth area.

PMI Chief Executive Officer André Calantzopoulos: “Our reduced-risk products are the catalysts to accelerate our business growth and secure the long term future of our company.”

“We closed out a challenging year with a robust financial and strategic performance across the business,” commented Philip Morris International Chief Executive Officer André Calantzopoulos. “Excluding inventory movements largely associated with heated tobacco unit volume in Japan, our total volume variance was flat – our best annual performance since 2012 – underpinned by a near doubling of global in-market sales of heated tobacco units.

“We grew our international market share by 0.5 points to reach 28.4%, and maintained a stable share of the cigarette category, highlighting our ability to successfully manage our transition to reduced-risk products.

“Our total net revenues were driven by an exceptional cigarette pricing variance of 7.6% and a strong contribution of more than US$4 billion from our smoke-free products, despite the impact of the inventory adjustments. Our operating income was essentially flat, excluding currency, primarily reflecting increased investment behind our reduced-risk product portfolio. Our robust, currency-neutral double-digit adjusted EPS performance was assisted by a lower effective tax rate and interest expense.”

Calantzopoulos also highlighted that the “underlying strength” of the company’s combustible tobacco business remains intact and said its reduced-risk products were the catalysts to accelerate business growth and “secure the long term future of our company and the sustainability of our earnings and dividend growth”.

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