Zyn Gum Maker's Smoke-Free Business Revenue Jumps 15%, Raises Annual Profit Outlook

Philip Morris International Inc. PM, the maker of Zyn gums, marlboro and other tobacco brands, stock gained on Wednesday afte reporting first-quarter FY25 earnings.

The tobacco giant's revenue increased 5.8% year over year to $9.30 billion, beating the analyst consensus estimate of $9.12 billion.

Adjusted EPS of $1.69 beat the consensus estimate of $1.61.

The smoke-free business accounted for 42% of the company's total net revenues, up 15% from the first quarter of 2024.

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The first-quarter shipment volume of cigarettes and Heated Tobacco units (HTUs) grew by 3.9% year over year, reflecting growth of 11.9% and 1.1% for HTUs and cigarettes, respectively.

Adjusted operating margin for the quarter expanded from 38.2% to 40.7%, with $3.79 billion in adjusted operating income.

As of March 31, the company held $4.4 billion in cash and equivalents. Net debt totaled $45.13 billion, with a net debt to adjusted EBITDA ratio of 2.82.

The company declared a regular quarterly dividend of $1.35 per share or an annualized $5.40 per share.

Jacek Olczak, Chief Executive Officer, said, "We achieved exceptionally strong performance in the first quarter, with continued volume growth supporting an excellent topline performance and very strong margin expansion."

Outlook: Philip Morris raised the FY25 adjusted EPS outlook from $7.04 – $7.17 to $7.36 – $7.49 versus the $7.24 estimate.

Philip Morris sees FY25 net revenue growth of around 6% to 8% on an organic basis, organic operating income growth of 10.5% to 12.5%. The company sees FY25 capital expenditures of approximately $1.5 billion.

For the second quarter, the company expects an adjusted EPS of $1.80 – $1.85, compared to a consensus of $1.80.

Price Action: PM shares traded higher by 3.13% at $169.25 at the last check on Wednesday.

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