PMI(US:PM)2025-09-02 16:15Financial Data and Key Metrics Changes - The company reaffirmed guidance for a 13% to 15% growth in EPS for the year, marking the strongest growth since 2011, excluding post-pandemic recovery [1][2] - The company reported continuous positive volume growth for five consecutive years, indicating strong revenue quality supported by robust pricing in combustible cigarettes [2][3] Business Line Data and Key Metrics Changes - Smoke-free products, including heat-not-burn and oral nicotine pouches, are contributing positively to both top-line growth and gross margins, with significant growth in IQOS and ZYN volumes [3][4] - ZYN is now available in 47 markets, with ongoing geographical expansion and strong international volume growth [3][4] Market Data and Key Metrics Changes - The company noted intensified competition in the U.S. market for ZYN, with a price premium of over 65% compared to competitors, indicating strong brand positioning [6][7] - The company is observing a normalization of inventory levels after a period of supply constraints, which is expected to stabilize in Q3 [5][6] Company Strategy and Development Direction - The company is focused on a smoke-free transformation, aiming to leverage its strong brand presence in the nicotine pouch market while addressing competitive pricing dynamics [6][39] - The company is committed to multi-category strategies, recognizing the importance of maintaining a presence across various product categories, including heat-not-burn, e-vapor, and oral nicotine pouches [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the smoke-free product category's growth potential, emphasizing the need to follow consumer trends and preferences [34][39] - The company anticipates that regulatory developments in markets like Taiwan and the EU will create opportunities for smoke-free products, although challenges remain [10][50] Other Important Information - The company is preparing for potential share repurchases once leverage is below 2X, supported by favorable currency trends and strong cash flow generation [68][69] - The company is not currently seeking M&A opportunities, feeling self-sufficient in product development capabilities [70][71] Q&A Session Summary Question: How should investors think about ZYN shipment numbers for 2H 2025? - Management indicated that shipment numbers should be calculated based on current inventory levels and expected marketing activities, with a focus on retail off-take [12][15] Question: What is the pricing strategy for ZYN compared to competitors? - Management confirmed that ZYN maintains a significant price premium over competitors, which reflects strong brand equity and market positioning [17][19] Question: What is the outlook for IQOS growth in light of the flavor ban in Europe? - Management noted that while the flavor ban has impacted growth, IQOS is expected to return to its growth trajectory as markets adjust [43][44] Question: How does the company view the competitive landscape for smoke-free products? - Management acknowledged the competitive dynamics but expressed confidence in ZYN's first-mover advantage and the company's ability to navigate challenges [39][40] Question: What are the implications of the EU Tobacco Excise Directive? - Management highlighted that while the directive may increase taxation on cigarettes, it also recognizes smoke-free products, which could be beneficial in the long term [49][50] Question: What is the timeline for the PMTA for IQOS in the U.S.? - Management indicated that the timeline for the PMTA remains uncertain, with expectations leaning towards a 2026 event rather than 2025 [52][53]