PM reports third quarter 2019 earnings | MO Message Board Posts

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Msg  12680 of 12729  at  10/17/2019 9:01:56 AM  by

Korynd


PM reports third quarter 2019 earnings

PM reported adjusted EPS of $1.43 down less than 1% from last years third quarter EPS of $1.44. Currency was neutral for the quarter. The adjusted result in 2019 excludes a 20 cent per share charge (a little over $300 million after tax) to settle a VAT and excise tax audit in Russia.
 
Overall, for the complete year 2019, PM held to their guidance of at least 9% EPS growth, excluding all special items (composed of 14 cents negative currency, 21 cents for the loss of the Canadian sub, & 20 cents for the Russia tax audit charge). So on an adjusted basis, PM predicts $5.28 in 2019 EPS, but after those 55 cents in combined charges, will report around $4.73 in actual EPS.
 
I didn't see any major new trend in the press release. IQOS continues to grow strongly in parts of the EU as well as Russia. In Japan, they inched up to 17% market share, while they lost share in Korea down to 6.2% likely due to the flavored competition. They shipped their first product to the US under the licensing agreement with MO. HEETS now hold a 2.3% market share of all sales excluding the US and China, and a 5.1% market share in markets where they are being sold.
 
They held to a 2019 total market volume decline of 2.5%, but inched up their own volume decline forecast from 1% to around 1.5%. That would obviously still result in some market share gain for them, but slightly less than before. The change is due to PM raising prices a little faster than anticipated, which will benefit operating income, but result in slightly lower volumes.
 
The Russia charge of $374 million (or 20 cents per share after tax) resulted from a VAT and excise tax audit of their Russian subsidiary. They paid it, and can appeal it up until September 2020, but it appears they are unlikely to do so. Appears to be a shakedown, but PM needs to stay in the good graces of the government, so basically a cost of doing business there.
 
PM also notes they plan to shut a major manufacturing plant in Berlin, Germany, where they employ close to 1,000 people. Assuming they receive regulatory approval to do so, they will need to take a charge for plant closure & severance to do that.  


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