PMI faces significant risks from ongoing tobacco-related litigation, potentially billions of dollars in damages. The company's Russian operations are at risk due to sanctions and forced localization. Currency fluctuations, particularly against the Egyptian pound, Japanese yen, and Russian ruble, negatively impact profitability. Inflationary pressures on materials, wages, and energy increase operating costs. Compliance with evolving regulations, including plain packaging and ingredient restrictions, could limit competitiveness and profitability. The success of smoke-free product commercialization is uncertain and subject to regulatory hurdles.
Financial Upside
PMI's net revenues increased 7.8% in the nine months ended September 30, 2024, driven by higher smoke-free product volume and favorable pricing. Operating income increased 17.0% during the same period. Favorable fair value adjustments for equity investments in India and Sri Lanka contributed to higher net earnings. The company expects continued growth from smoke-free products and robust combustible tobacco performance. Lower interest expense and a lower effective tax rate also contributed to improved earnings.
