Philip Morris International Inc. (NYSE:PM) Q4 2022 Earnings Call Transcript

Then there is a big difference also on our SG&A cost evolution. In 2022, we were flat, because we’ve been generating a lot of efficiencies, inflation was not as others is going to be in ’23 with a lot of salary increase and probably on the basis of comparison were more favorable. In ’23, we expect to grow our SG&A in line with top-line, more or less which one would expect. We continue to invest a lot in order to support the growth of the business to acquire new user, digital investment. We talk about the U.S. and wellness and healthcare and there would still be efficiency, but not at the same level. Last element that I have to add, the cost of the debt, I’m not talking about the debt of acquisition of Swedish Match because for Swedish Match, we are in line with expectation i.e. low single-digit accretion on the EPS.

But clearly for the existing debt, there is also an increase in the cost and that is having an impact on the evolution of the adjusted EPS. I think with that, Chris, we are giving all the information we can on what we are facing in term of evolution on our cost.

Chris Growe: That was sure exhaustive. Thank you for that. It was very, very helpful. I had just one quick follow-up, which will be that, you have heated tobacco unit growth expectation of that 15% to 19%. I just want to get an understanding on two specs of that, is Russia, Ukraine down likely in 2023, given you’re not investing there. And then, just to what degree, its capacity limited today? If you had more ILUMA capacity, could that grow even faster? Thank you for your time.

Jacek Olczak: Okay, so actually the Russia and Ukraine and obviously, Russia due to its weight even more, there were drag on our performance both in ’22 and will be – and it’s fair to assume will be a drag in 2023. As you know is, our decision, strong decisions today investor and essentially ILUMA is for example, is the key technology advancements, which will have, which we decided not to rollout in Russia, because it has an impact right. So that, the numbers which we now just for the visibility to the investors of the business, as is today, we’re including Russia and Ukraine but above five very much Russia not contributing to the growth. So one good thing opposite excluding Russia and Ukraine, our growth rates would be at a higher level, on a comparable level, capacity, we will.

I think we have – we are guiding the market that we expect the better result in the second half of the year. And that’s partially reflects the moment when we think, we will be beyond the bottleneck with regards to the capacity around ILUMA. So we really managing the business on a very tight supply chain for still this year, sorry 2022 and for first half of ’23 and the second half of ’23, we should be okay. I could actually – again – I can bridge back to the famous air freight, et cetera, because all of these things are consequences of us riding on a very, very tight supply chain.

Chris Growe: That makes sense. Thank you.

Operator: We’ll take our next question from Bonnie Herzog with Goldman Sachs.

Bonnie Herzog: All right, thanks, hi.

Emmanuel Babeau: Good morning, Bonnie.

Jacek Olczak: Hi Bonnie.