PMI is moving closer to its goal of having more than two-thirds of its net revenue come from smoke-free products by 2030. Photo credit: Aphis Marta, CC 4.0.
Philip Morris International (PMI) revealed its IQOS products outperformed its Marlboro cigarettes in net revenue as its cigarette shipment volume dropped by 1.9% in the fourth quarter of 2023.
"We are pleased that smoke-free products reached nearly 40% of our total net revenues and over 40% of our gross profit in the fourth quarter,” said Jacek Olczak, PMI c.e.o. “This was led by the continued growth of IQOS, which has now surpassed Marlboro in terms of net revenues, confirming its position as the leading premium nicotine brand less than 10 years from launch. The fourth quarter also marked the first anniversary of our combination with Swedish Match, which delivered very strong results in 2023 driven by the stellar US performance of ZYN."
In its fourth quarter and full year results report, PMI reported US$9 billion net revenue for Q4 and US$35.2 billion for FY 2023, an 11% and 10.7% increase respectively from the same periods in 2022. Total cigarette and heated tobacco units (HTU) shipment volume stood at 185.1 billion units (a 0.5% increase) in Q4 and 738.2 billion units in FY2023 (a 1% increase). HTU shipment volume went up 6.1% to 34 billion units in Q4, and 14.7% to 125.3 billion units in FY2023.
However, this 6.1% in Q4 may indicate that IQOS sales may be slowing, compared with an 18% increase in HTU shipment volume in the third quarter. PMI stated that it anticipates additional declines in shipments in 2024 due to a flavored heated tobacco ban in the European Union.
Nevertheless, analysts are not too concerned as IQOS is expected to launch in the US this year followed by a full roll-out.
PMI shipped 116.3 million cans of its ZYN nicotine pouches in the US in Q4, representing growth of 78.2% versus Q4/2022 Swedish Match shipments of 65.3 million cans. FY 2023 ZYN shipment volume in the US reached 384.8 million cans, representing growth of 62% versus 2022 Swedish Match shipments of 237.5 million cans.