What Drove Philip Morris’s Revenue in 4Q17
In 4Q17, Philip Morris International (PM) posted net revenue, excluding excise taxes, of $8.29 billion, which represents growth of 19.0% from $6.97 billion in 4Q16. The revenue growth was driven by an increase in total shipment volume and favorable pricing. In 4Q17, the European Union generated 27.3% of the total revenue, while EEMA (Eastern Europe, Middle East & Africa), Asia, and Latin America have generated 21.3%, 41.4%, and 10.0% of the total revenue.
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Performance across segments
European Union: This segment posted revenue of $2.26 billion in 4Q17, which represents growth of 16.5% from $1.94 billion in 4Q16. However, removing the favorable currency of $139 million, the segment’s revenue growth stood at 9.3%. The revenue growth was driven by favorable pricing, which contributed $34 million, and a favorable volume/mix, which contributed $147 million. The segment’s total shipment volume increased 3.1% due to strong performance in Germany and Italy.
EMEA: This segment’s revenue declined 1.9% to $1.76 billion from $1.80 billion in 4Q16. However, removing unfavorable currency of $23 million, the segment’s revenue declined 0.6%. The decline was due to a fall of 10% in shipment volume. The implementation of a new excise tax in Russia and Saudi Arabia led to a decline in the segment’s shipment volume, which was partially offset by an increase in shipment volume in Turkey and North Africa. However, some of the revenue declines were partially offset by favorable pricing, mainly in North Africa and Ukraine.
Asia: The segment posted revenue of $3.44 billion in 4Q17, which represents growth of 40.5% from $2.44 in 4Q16. Also, excluding unfavorable currency of $104 million, the segment’s net revenues grew 44.8%. The revenue growth was driven by favorable pricing, which contributed $166 million, and favorable volume/mix, which contributed $929 million. During the quarter, the total shipment volume increased 11.8% due to strong growth in heated tobacco unit shipment volume in Japan and Korea and cigarette shipment volume in Indonesia and the Philippines.
Latin America & Canada: The segment posted revenue of $831.0 million, which represents growth of 5.9% from $785.0 million in 4Q16. Excluding the favorable currency of $2 million, the segment’s revenue rose 5.6%. The revenue growth was driven by favorable pricing, which contributed $83 million, while unfavorable volume/mix lowered the revenue by $39 million.
During the same period, Philip Morris’s peer Altria Group (MO) posted revenue of $4.7 billion, which represents a fall of 0.4% from $4.73 billion in 4Q16.
For 2018, analysts are expecting Philip Morris to post revenue of $31.51 billion, which represents growth of 9.6% from $28.75 billion in 2017. The company’s management expects revenue to rise 8.0%, excluding currency, in 2018.
Next, we’ll look at Philip Morris’s 4Q17 EPS.