PM issued two press releases this morning.
The first one, found HERE
gives more detail about PM's agreement with MO to take back IQOS. As I posted late last night, PM will pay MO $2.7 billion to end the current license agreement, with $1 billion paid now, and the remaining $1.7 billion by next July. The full rights then revert to PM on April 30, 2024. Over the next 18 months, PM expects to lay the groundwork for that takeover, which includes establishing US manufacturing & an FDA application for ILUMA in second half of 2023. PM believes IQOS can capture 10% of the US market by 2030.
The second press release was for their third quarter earnings. PM reported adjusted pro-forma EPS (which excludes Russia and Ukraine) of $1.33 per share. The amount of Russia/Ukraine earnings was $0.20 per share, which is not included in that pro-forma amount. Overall, PM largely held to the same full year 2022 forecast as they had at the end of the second quarter, with adjusted pro-forma EPS expected in the range of $5.22 to $5.33. That overall forecast is down a penny from before, with negative currency for the year now expected at 87 cents, versus 86 cents previously.
IQOS users grew to 19.5 million from 19.0 million at the end of the second quarter. Heated tobacco unit sales for the quarter grew by 21.9% year over year. While both numbers are strong, they did lower the total year forecast of heated tobacco units sold by a billion, from 90-92 billion down to 89-91 billion. The reduction is attributed to supply disruptions and constraints on the manufacture of ILUMA, whose performance remains above expectations.
PM also announced they are increasing the offer to buy Swedish Match. Based on Swedish securities law, they need to get 90% of existing Swedish Match outstanding shares to vote for the deal. There were some hedge funds that indicated they wouldn't accept the old offer of 106 Swedish crowns per share. So PM increased their offer to 116 Swedish Crowns per share, which is their last and best offer, and now cannot be increased further under Swedish law. Due to the rise of the US dollar versus the Swedish crown since the deal was announced in May, the overall purchase price in US dollars has not increased by that much. PM now expects the deal to close next month, however, if they do not get the 90% acceptance, they are prepared to pursue the US market without Swedish Match.