Philip Morris International Inc

Caledonia Investments views Philip Morris as a high-quality business with significant moats and pricing power, built to compound value for the long term. The investment in Philip Morris, valued at £66.1m, has been held since 2016 and has delivered a return of 5.5%. The firm emphasizes its commitment to investing in companies that exhibit durable competitive advantages and strong market positions, which aligns with their long-term investment philosophy.

Philip Morris International Inc. (PM) has shown resilience despite a pullback in shares during the quarter. The company's smoke-free offerings, particularly IQOS and ZYN, are gaining traction, converting smokers and benefiting from increased capacity. The margins on these smoke-free products are higher, and the stable combustibles business, combined with robust smoke-free growth, is expected to generate significant and sustainable free cash flow over the long term. This positions PM favorably for continued value creation.

Philip Morris International Inc. (PM) shares outperformed due to strong execution and an improving outlook. The primary driver remains the success of its smoke-free products, with sustained momentum in IQOS and ZYN, supported by robust pricing in the combustibles portfolio. We believe the combination of smoke-free growth potential and a resilient combustibles business will generate significant and sustainable free cash flow in the years ahead.

Philip Morris continues to ride the waves of a significant product cycle in smoke-free products with shares up 54% year-to-date. The company is performing exceptionally well, and its strong performance has contributed to the portfolio's success. The investment thesis is supported by the ongoing transition to smoke-free alternatives, which positions Philip Morris favorably in the evolving market landscape.

Andvari made its first investments in tobacco companies, including Philip Morris International, due to their low valuations and high dividend yields. Despite a declining population of cigarette smokers in developed countries, Philip Morris has maintained or slowly increased revenues and profits through regular price increases. The company has also invested in reduced risk products, which are gaining traction among smokers. The nicotine pouch category, particularly the ZYN brand owned by Philip Morris, is experiencing rapid growth, indicating a positive shift in consumer preferences. With 1.1 billion nicotine users globally, there is significant potential for market share growth in reduced risk products, which could benefit shareholders.

Andvari made its first investments in tobacco companies, including Philip Morris International, due to their low valuations and high dividend yields. Despite a declining population of cigarette smokers in developed countries, Philip Morris has maintained or slowly increased revenues and profits through regular price increases. The company has also invested in reduced risk products, which are gaining traction among smokers. The nicotine pouch category, particularly the ZYN brand owned by Philip Morris, is experiencing rapid growth, indicating a positive shift in consumer preferences. With 1.1 billion nicotine users globally, there is significant potential for market share growth in reduced risk products, which could benefit shareholders.

Andvari made its first investments in tobacco companies, including Philip Morris International, due to their low valuations and high dividend yields. Despite a declining population of cigarette smokers in developed countries, Philip Morris has maintained or slowly increased revenues and profits through regular price increases. The company has also invested in reduced risk products, which are gaining traction among smokers. The nicotine pouch category, particularly the ZYN brand owned by Philip Morris, is experiencing rapid growth, indicating a positive shift in consumer preferences. With 1.1 billion nicotine users globally, there is significant potential for market share growth in reduced risk products, which could benefit shareholders.

Andvari made its first investments in tobacco companies, including Philip Morris International, due to their low valuations and high dividend yields. Despite a declining population of cigarette smokers in developed countries, Philip Morris has maintained or slowly increased revenues and profits through regular price increases. The company has also invested in reduced risk products, which are gaining traction among smokers. The nicotine pouch category, particularly the ZYN brand owned by Philip Morris, is experiencing rapid growth, indicating a positive shift in consumer preferences. With 1.1 billion nicotine users globally, there is significant potential for market share growth in reduced risk products, which could benefit shareholders.

Shares of Philip Morris tacked on an additional 33% in the first quarter after returning 34% last year. The company reported a 53% increase in US ZYN shipments as production capacity increased, fueling a 250 basis point improvement in operating margins and illustrating the positive mix shift to smoke-free products. While we have reduced the position as shares have eliminated their discount to the market over the past year, PM remains our largest investment, with momentum accelerating in its business. Simply put, it’s difficult to find another company better positioned for the current economic environment.

Shares of Philip Morris tacked on an additional 33% in the first quarter after returning 34% last year. The company reported a 53% increase in US ZYN shipments as production capacity increased, fueling a 250 basis point improvement in operating margins and illustrating the positive mix shift to smoke-free products. While we have reduced the position as shares have eliminated their discount to the market over the past year, PM remains our largest investment, with momentum accelerating in its business. Simply put, it’s difficult to find another company better positioned for the current economic environment.