PMI(US:PM)2024-06-04 20:17Financial Data and Key Metrics Changes - The company expects strong performance for 2024, confirming solid growth in Q2 and strong organic performance for H1 in terms of revenue and adjusted EPS evolution [3][8] - The adjusted EPS growth guidance has been revised upward to between 9% and 11% before ForEx impact, with reported growth expected to be between 4.2% and 6.2% [8][9] - The company is targeting a volume of around 560 million cans for ZYN in the US in 2024, with plans for a new production location in 2025 [6] Business Line Data and Key Metrics Changes - The smokefree portfolio, particularly IQOS, continues to show strong momentum, with over 10% growth in Japan and emerging growth in markets like Germany, Spain, and Mexico [4][5] - ZYN has experienced significant growth in the US, with Q1 growth close to 80%, although supply tensions are being addressed to improve availability [6][7] - The combustible business remains resilient, with Q1 volume almost flat and strong pricing power, targeting a price increase of 6% to 7% for 2024 [7][8] Market Data and Key Metrics Changes - The heat-not-burn category, particularly in Japan, has gained over 50% market share when combined with combustibles, indicating strong market potential [14][15] - Emerging markets such as Indonesia and Egypt are showing promising traction for IQOS, while ZYN is also gaining traction in various countries [5][21] Company Strategy and Development Direction - The company aims to leverage its combustible business to maximize the impact on smoke-free product growth, maintaining leadership in combustibles to facilitate this transition [31][42] - The focus is on organic growth, with no immediate plans for significant M&A following the Swedish Match acquisition, emphasizing the optimization of existing portfolios [49][50] - The company has been recognized as a leader in reducing greenhouse gas emissions, highlighting its commitment to sustainability [11] Management's Comments on Operating Environment and Future Outlook - Management believes the nicotine market is evolving, with a shift towards less risky products, and sees potential for growth in the smoke-free category [36][38] - The company acknowledges the challenges posed by currency fluctuations but is focused on delivering performance in dollar terms through pricing and cost management [9][56] - There is confidence in the long-term growth trajectory of the smoke-free category, with expectations of continued expansion despite the decline of combustibles [38][64] Other Important Information - The company is actively engaging with lenders to support its transformation towards smoke-free products, indicating a positive outlook for raising capital [44][45] - Share buybacks are under consideration, contingent on maintaining a healthy net debt to EBITDA ratio and reflecting the company's value [47] Q&A Session All Questions and Answers Question: Can you talk about ILUMA and its impact on market share in Japan? - ILUMA has provided a boost to market share and growth in Japan due to its superior quality and user experience, contributing to the heat-not-burn category's success [12][13] Question: How does the company view competition in the heat-not-burn category? - The heat-not-burn category is distinct from vaping, requiring significant R&D investment and technology, making it difficult for new entrants to penetrate [18][20] Question: What is the potential size of the nicotine pouch category? - The nicotine pouch category currently represents 3% to 4% of the nicotine market in the US, with potential to grow to 10%, 15%, or even 20% in the future [25] Question: How does the company plan to manage its combustible business? - The strategy is to leverage the combustible business to support the growth of smoke-free products while maximizing pricing capacity [31][32] Question: What is the company's stance on share buybacks? - Share buybacks are considered when within the established financial framework, with a focus on organic growth and maintaining financial health [47][49] Question: How does the company view the impact of the dollar on its operations? - The company is focused on growing its US dollar business to mitigate currency volatility while also exploring growth opportunities in other markets [53][56]