PMI(US:PM)2025-02-06 18:34Financial Data and Key Metrics Changes - The company reported an organic net revenue growth of 9.8% and adjusted diluted EPS growth of 15.6% in currency neutral terms, reflecting strong performance despite currency headwinds [19][20][24] - Adjusted diluted EPS grew by 9.3% in dollar terms, achieving record operating cash flow of $12.2 billion, significantly above forecasts [20][21] - The total smoke-free net revenues reached almost $15 billion in 2024, accounting for 40% of total net revenues in Q4 [12][18] Business Line Data and Key Metrics Changes - The smoke-free business saw a 17% net revenue growth and a 23% gross profit growth, reaching close to $10 billion in gross profit [25] - The combustible business experienced a 6% net revenue growth and a 7% gross profit growth, contributing positively despite significant input cost headwinds [25][26] - IQOS shipments grew by 13% in adjusted IMS, with total smoke-free volume growth of 13.5% [28][34] Market Data and Key Metrics Changes - In the US, ZYN's growth was notable, with a 51% increase in shipment volumes, while international nicotine pouch shipments grew by 75% [9][57] - The company expanded its smoke-free product presence to 37 markets, with a significant increase in adult users [12][57] - The combustible market showed a 0.6% growth, primarily driven by markets where smoke-free products are not permitted [30] Company Strategy and Development Direction - The company aims to continue its transformation towards smoke-free products, with a focus on brand building and innovation [11][15] - The management emphasized the importance of regulatory support for smoke-free products and the need for continued education on tobacco harm reduction [15][54] - The company is confident in achieving its 2025 growth targets, expecting strong growth in smoke-free products [61][80] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing transformation and the potential for sustainable growth and returns in 2025 and beyond [11][24] - The company acknowledged challenges from regulatory environments but remains committed to driving growth through innovation and market expansion [15][54] - The outlook for 2025 includes expectations for continued strong growth across all categories, particularly in smoke-free products [61][80] Other Important Information - The company achieved significant cost efficiencies, delivering over $750 million in gross cost savings for the year [33] - The FDA's recent authorization for nicotine pouches was highlighted as a significant milestone for the industry [54] - The company plans to invest in its successful smoke-free product lines while returning cash to shareholders through dividends [80] Q&A Session Summary Question: Can you discuss the composition of growth in 2025 and any progress in new markets? - Management indicated that growth will primarily be organic, with strong performance expected in Japan and parts of Europe, despite challenges in Italy and the Czech Republic due to regulatory issues [87][89] Question: What are the key drivers behind margin improvements? - Management highlighted pricing contributions, positive mix effects from smoke-free products, and easing cost headwinds as key drivers for margin expansion [92][95] Question: How does the company plan to manage retail prices amid supply constraints? - Management acknowledged that managing retail prices is challenging during supply shortages but expects normalization as supply improves [132][135]