AURORA, Colo. – Philip Morris International Inc. (NYSE: NYSE:PM), through one of its U.S. affiliates, has announced plans to invest $600 million over two years to establish a new manufacturing site in Aurora, Colorado. The facility is set to create 500 direct jobs and is projected to have an ongoing annual economic impact of $550 million. Additionally, it is expected to generate 1,000 indirect jobs in the state.
The new plant, which will produce ZYN nicotine pouches, is part of the company's strategy to provide smoke-free alternatives to adult smokers. This initiative aligns with the company's goal of moving consumers away from cigarettes. The Aurora facility will join the existing manufacturing sites in Owensboro, Kentucky, and Wilson, North Carolina.
Construction is slated to begin later this year, with preliminary operations starting by the end of 2025 and full production anticipated in 2026. The construction phase is expected to create nearly 5,000 jobs and nearly $1 billion in economic impact. Career opportunities will span various skill levels, with an average annual salary of around $90,000.
In the U.S., Philip Morris entered the market following its acquisition of Swedish Match in late 2022. ZYN oral nicotine pouches have been available in the U.S. for over a decade and are marketed as a better option for adults who continue to use nicotine. The company emphasizes responsible marketing practices, limiting access to adults 21 years of age and older.
Philip Morris's U.S. affiliates also focus on a range of smoke-free products, including expanding production for nicotine pouches and targeted consumer activations of the IQOS heat-not-burn device in select markets. The FDA has authorized IQOS as a modified-risk tobacco product with reduced exposure claims.
Additionally, the company's U.S. affiliates have a history of supporting charitable causes, contributing approximately $25 million since 2022, with a focus on supporting military veterans, empowering women, and funding hyperlocal solutions.
This investment announcement is based on a press release statement.
In other recent news, Philip Morris International (PMI) has been in the spotlight for various reasons.
The World Health Organization (WHO) accused PMI and British American Tobacco (NYSE:BTI) of targeting youth through the promotion of vaping products, a claim both companies have refuted. In parallel, PMI is preparing for the U.S. launch of its heated tobacco device, IQOS, in the second quarter of 2024. The company aims to capture a 10% share of the total U.S. cigarette and heated tobacco volumes within approximately five years of the launch.
PMI's financial performance has displayed strong growth, with its smoke-free portfolio driving better-than-expected first-quarter results. The company's adjusted diluted earnings per share and organic net revenue saw double-digit increases, surpassing market expectations.
The expansion of IQOS ILUMA to 64 markets and the robust performance of ZYN, particularly in the U.S. where volumes soared by 80%, contributed to these figures. PMI has raised its full-year operating income growth forecast, reflecting confidence in sustained momentum throughout the year.
The company continues to navigate global market dynamics and maintains a strong balance sheet, as reflected in the raised forecasts and ongoing investments in smoke-free products.
InvestingPro Insights
Philip Morris International Inc. (NYSE: PM) is demonstrating robust financial health as it expands its smoke-free product portfolio. The company's commitment to innovation and market adaptation is underscored by its impressive gross profit margins, which stood at 63.69% over the last twelve months as of Q1 2024. This figure not only reflects efficient operations but also its strategic focus on high-margin products like ZYN nicotine pouches—the product set to be manufactured at the new Aurora site.
Investors may find reassurance in the company's track record of consistent dividend growth, with Philip Morris having raised its dividend for the past 17 consecutive years. The dividend yield as of June 2024 is attractive at 4.95%, which is particularly appealing for income-focused shareholders. Moreover, the company's stock has been a beacon of stability, generally trading with low price volatility, a characteristic that risk-averse investors tend to favor.
With a market capitalization of $163.34 billion and a forward-looking P/E ratio of 18.4, Philip Morris is trading at a high revenue valuation multiple, indicating investors' confidence in its future earnings potential. This is further supported by three analysts revising their earnings upwards for the upcoming period, an InvestingPro Tip that suggests a bullish outlook on the company's financial performance.
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