Philip Morris International Inc. (NYSE:PM) Q4 2023 Earnings Conference Call February 8, 2024 9:00 AM ET

Company Participants

James Bushnell - VP, IR, and Financial Communications

Jacek Olczak - Chief Executive Officer

Emmanuel Babeau - Chief Financial Officer

Conference Call Participants

Bonnie Herzog - Goldman Sachs

Gaurav Jain - Barclays

Pamela Kaufman - Morgan Stanley

Mirza Faham Ali Baig - UBS

Callum Elliott - Bernstein

Matthew Smith - Stifel

Operator

Good day, everyone and welcome to the Philip Morris International Fourth Quarter 2024 and Full Year Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Philip Morris International Management and the question-and-answer session. [Operator Instructions] As a reminder today's call is being recorded.

I will now turn the call over to James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead, sir.

James Bushnell

Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2023 fourth quarter and full year results. The press release is available on our website at www.pmi.com.

A glossary of terms, including the definition for smoke-free products as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures for non-GAAP financial measures cited in this presentation, and additional net revenue data are available in Exhibit 99.2 to the company's Form 8-K dated February 8, 2024, and on our Investor Relations website.

Today’s remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today’s presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements.

I’m joined today by Jacek Olczak, Chief Executive Officer, and Emmanuel Babeau, Chief Financial Officer.

Over to you, Jacek.

Jacek Olczak

Thank you, James, and welcome everyone. PMI delivered another strong operating performance in 2023. We achieved our third consecutive year of positive volumes and high single-digit organic top line growth, driven by smoke-free products.

Smoke-free products delivered accelerated accretion to profitability in the fourth quarter, as our IQOS business delivered meaningful 2023 operating leverage, mitigating a significant drag from combustibles. I am also very pleased to report the continued outstanding growth of ZYN, which was not included in organic metrics until mid-November.

Importantly, smoke-free products reached nearly 40% of total PMI net revenues in the fourth quarter and over 40% of gross profit. For the year, smoke-free gross profit increased by 19% organically and we expect smoke-free organic growth to accelerate for both net revenues and gross profit in 2024.