PMI Expects Vaping Business to Contribute Half of Revenue by 2025
Philip Morris International (PMI) wants smoke-free products to account for more than half of its revenue by 2025, up from an earlier target range of 38-42%. The new target was announced at PMI's 2021 Investor Day on February 10 at the company's operations
Philip Morris International (PMI) aims for smoke-free products to account for more than half of its revenue by 2025, up from the previously set target range of 38-42%. This new goal was announced on February 10 during PMI's 2021 Investor Day, where senior management presented the company's business strategy and growth prospects from its operational center in Lausanne, Switzerland.
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The company has set targets for 2021 to 2023, including growth rates for net revenue and adjusted earnings (EPS) of over 5% and 9%, respectively, and a shipment volume of 140 to 160 billion units for heated tobacco products by 2023.<\/span><\/div>
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PMI plans to launch IQOS ILUMA in the second half of 2021, which is its next-generation IQOS smoke-free product featuring internal heating technology based on Smartcore induction technology.<\/span><\/div>
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Additionally, the company plans to introduce its vaping product IQOS MESH in over 20 markets this year. PMI aims to sell IQOS in 100 countries by the end of 2025, having already launched in 64 countries by the end of 2020.<\/span><\/div>
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The company stated that with the right regulatory framework, dialogue, and support from civil society, cigarette sales may end in many countries within 10 to 15 years.
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"In just five years, we have transformed the company, establishing IQOS as one of the top five vaping brands globally, with nearly $7 billion in net revenue and over 17 million users across 64 countries, while maintaining our leadership in the international cigarette category," said PMI CEO Andre Calantzopoulos in a statement.<\/span><\/div>
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"We are now entering the next phase of growth by advancing smoke-free products and leveraging our leading business model (placing consumers at the core) to convert more adult smokers to us, further transforming into a better, more sustainable smoke-free business."<\/span><\/div>
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"The next phase of growth will be supported by our unparalleled innovative product portfolio. We are excited to announce the planned launch of IQOS ILUMA in the second half of this year, which features new internal heating induction technology for the next generation of IQOS smoke-free products."<\/span><\/div>
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"As outlined today, we have the capability to achieve outstanding revenue and profit growth along with strong shareholder returns. Our current goal is to become a smoke-free product-focused company by 2025, which is an ambitious milestone towards realizing our smoke-free future for the benefit of adults who would otherwise continue to smoke, society, the company, and our shareholders."<\/span><\/div>
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Philip Morris reiterated its full-year 2021 EPS guidance in the range of $5.90 to $6.00. For the three-year period from 2021 to 2023, Philip Morris guided net revenue and adjusted growth rates of 5% to 9%. Cigarette volumes are expected to decline during this period. Philip Morris's stock fell 3.5% last year, while the S&P 500 index SPX rose 16.7% during the same period.<\/span><\/div>
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