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Philip Morris wants 40 million customers to go smoke-free by 2025

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Philip Morris wants 40 million customers to go smoke-free by 2025

Philip Morris International Inc. outlined broad ambitions to move 30% of its customers to smoke-free products by 2025, the company said in its annual sustainability report for 2017 published May 15.

The company's sustainability report also highlights efforts on inclusion and diversity, workplace safety, responsible supply chain practices, as well as reducing the environmental impact of operations.

In projections included in the report, Philip Morris wants 40 million of its assumed 133 million customers in 2025 to use smoke-free products. The customer estimate accounts for population growth assuming Philip Morris maintains its current market share and a reduction of 19 million customers from World Health Organization target reductions in the smoking population.

The cigarette and tobacco company in 2017 shipped 36 billion smoke-free products and 791 billion cigarettes and other combustible tobacco products, reaching 150 million customers in more than 180 countries, according to the report.

"Last year, smoke-free products already represented over 4% of our shipment volume and around 13% of our net revenues, excluding excise taxes, in just two years since commercialization," Philip Morris CEO André Calantzopoulos said in a letter included in the report.

The cigarette maker estimated 4.7 million of its adult customers switched from cigarettes to its IQOS smoke-free product by the end of 2017, with 10,000 more switching each day. The IQOS device heats tobacco without igniting it.

Philip Morris shipped 9.6 billion units of its heated tobacco products for the three months ended March 31, an increase of 5.1 billion units over the year-ago period, the company reported in its fiscal first-quarter earnings release April 19. Cigarette shipments in the first fiscal quarter of 2018 dropped 5.3% over the prior year to 164.3 billion units.

CFO Martin Gray King said the company is on track for the year to double in-market sales of heated tobacco units compared to 2017.

The company reported adjusted diluted EPS of $1.00 for the fiscal first quarter of 2018, up 2% from 98 cents in the same period of 2017 and beating the mean S&P Capital IQ consensus estimate of 88 cents per share.

Smoke-free products accounted for $1.13 billion in net revenue for the quarter, up from $435 million for the same period in 2017. Total net revenue for the company rose 13.7% in the first quarter to $6.90 billion, up from $6.06 billion a year earlier.