Summary
Philip Morris International commands the strongest portfolio of cigarette brands in the industry.
Numerous governments around the world have been taking steps to reduce the prevalence of smoking within their borders, which has had a negative impact on the company.
Russia and Saudi Arabia in particular have seen big volume declines.
The company has thus far been able to secure price hikes to continue to overcome the volume declines.
The company will need to rely more and more on its IQOS product, which has not seen the kind of adoption rates that we really want to see.
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On Thursday, September 27, 2018, international tobacco giant Philip Morris International (PM) hosted its annual Investor Day conference. As is the usual practice at events such as this, Philip Morris gave a presentation in which it discussed its recent performance and its position in the global marketplace. Interestingly, the company did not provide much discussion on the overall fundamentals in the industry. This is particularly important when we consider that the global market for cigarettes has entered into a period of almost terminal decline, which is one reason why the company has begun to develop and market alternative products.
As is always the case, I recommend that investors review this presentation for themselves, although I will naturally provide a summary of it over the remainder of the article and interject my own thoughts where appropriate. Overall, while the company's leadership in the tobacco industry is impressive, I am concerned about its ability to bring new products up to the scale needed to counteract the overall decline of the industry.
