Philip Morris: CFO on IQOS Chip Shortage, ILUMA, Vapor/Pouches, ITC Ruling & Buybacks

(Free on Substack) Company Update (PM US) (Buy)

A version of this has also been published on my Twitter account.

Introduction: Philip Morris’ (“PM”) CFO Emmanuel Babeau spoke at a Morgan Stanley conference today. We highlight his comments on the ongoing semiconductor shortage affecting IQOS devices, IQOS ILUMA’s progress, new products in vapor and nicotine pouches, the US ITC ruling and PM’s share buybacks.

IQOS Chip Shortage: Things Are Getting Better

PM’s IQOS device production has been negatively affected by the global semiconductor shortage, and 2021 Heated Tobacco Unit volume expectations had to be revised downwards in September. Fortunately, there have been "more positive news on (chip) availability in Q1" next year, though not "yet" for Q2; PM continues to expect “H2 is going to be back to normal”. Management has been getting better at optimizing IQOS assortment and device allocation, which helped re-accelerate growth. Q4’s user growth is now expected to be "materially better" than Q3 (0.3m, or 0.4m excluding Belarus), though …