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Opinion

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Posted: Aug 02, 2022 12:01 AM

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

On July 26 it was announced that Matthew Holman, director of the Office of Science (OS) in the U.S. Food and Drug Administration’s (FDA) Center for Tobacco Products (CTP), was leaving the agency to work for Philip Morris International (PMI).

There have been valid concerns that this is an example of a political revolving door.  But, Holman’s contributions to the tobacco and nicotine debate in exact years seems to suggest he was increasingly a square peg in a round hole at the FDA during his 20 years at the agency. 

As head of the OS, he oversaw the  authorization of PMI’s IQOS heated tobacco system and eight varieties of Swedish Match’s smokeless tobacco products as modified risk tobacco product (MRTPs). Holman had a front row seat to witness the benefits of tobacco harm reduction.

In a Q&A session at the E-cigarette Summit US in May 2021, Holman also made comments which showed his familiarity with the potential benefits of vaping products. This included recognition of the importance of flavors, on which he opined “from a public health perspective, we do need flavored products out there to see that shift down the continuum of risk of combusted cigarette smokers to less toxic products.” On youth vaping he was equally pragmatic, understanding that for many young people, vaping could be a healthier option. 

“If they were to pick up a cigarette and they’re going to continue to smoke those cigarettes throughout their life,” Holman asked, “would it be better for those kids, even underage, to switch to an e-cigarette? From an individual public health perspective, I think it is.” 

Since 2020, the FDA has been considering a massive number of premarket tobacco product applications (PMTAs) submitted by manufacturers of vaping products. These products have been assessed by the Royal College of Physicians as “unlikely to exceed 5% of the harm from smoking tobacco.” With lethal combustible cigarettes widely available in the U.S., it should have been a no-brainer to authorize a wide variety of vaping products and promote them to people who smoke to Improve American public health.

In September, 2021, amid pressure from single interest pressure groups and ill-informed members of Congress, the FDA issued denial orders for nearly 1 million flavored e-cigarette e-liquid products, sending the market into meltdown, and throwing away a huge boost to the public health of Americans, 34 million of whom still smoke.

At the 2022 E-cigarette Summit US, Holman consequently found himself fending off justified criticism of the FDA from policy experts during a Q&A session by citing “restrictions that people on the outside [of the FDA] don’t necessarily understand that we have to deal with.”

Critics of public sector regulatory barriers refer to the mess of bureaucratic red tape as “the swamp.” In the case of tobacco harm reduction, an FDA regulator who wishes to maximize the benefits of vaping products would feel like they are wading through thick glop rather than a swamp. At some point it would be reasonable for someone like Holman to climb out of the glop and walk along more solid ground to achieve the huge advance in public health that he has seen occur in other countries that have embraced these harm reduction techniques and products.

In the UK, flavored vaping products, heated tobacco and nicotine pouches are not only recognized as useful for helping smokers to quit, they are endorsed by government-funded public health organizations. More importantly, they are sold as consumer products, leading to significant declines in smoking prevalence and better public health outcomes, yet in the U.S. there is a politically led inertia which holds back progress due to the hysterical screeching of shrill, heavily funded anti-vape prohibitionists. 

It is no wonder that Holman may have felt he was unable to serve the American public with such barriers placed in his way, and that he no longer felt able to promote and defend the agency’s actions when faced with justified criticism at public health conferences. 

Further, this is a shocking indictment of the FDA that one of their top scientists feels he is better placed working to reduce the harms of smoking, which claims 480,000 lives in the U.S. each year, with a tobacco company rather than at the hopelessly incompetent and politically hogtied FDA. 

The FDA failed Holman and his scientific credentials. But, more importantly, the FDA is failing the millions of smokers who desperately need help quitting combustible cigarettes.

Martin Cullip is International Fellow at The Taxpayers Protection Alliance's Consumer Center and is based in South London, UK.

Mon, 01 Aug 2022 16:01:00 -0500 en text/html https://townhall.com/columnists/martincullip/2022/08/02/an-fda-scientist-jumps-ship-to-help-smokers-quit-n2611113
Killexams : Top FDA Tobacco Official Quits to Take Job at Philip Morris International

On July 26, Matthew Holman, the director of the Office of Science at the Food and Drug Administration’s Center for Tobacco Products (CTP), told staff that he would be leaving his role for an undisclosed position at Philip Morris International (PMI).

Brian King, who became CTP’s director in early July, wrote in a letter to colleagues that Holman would be departing “effective immediately,” revealing that the former OS head “has been on leave since before my tenure began at the Center” and saying that “he recused himself, consistent with agency ethics policies, from all CTP/FDA work while exploring career opportunities outside of government.”

“FDA thanks Dr. Holman for his federal service and wishes him well,” an agency spokesperson said in a statement to Filter. “The work of the Center for Tobacco Products’ Office of Science is essential to our mission to protect Americans from tobacco-related disease and death. We are confident in the expertise and ability of our staff to continue this critical public health work while the Center for Tobacco Products conducts a nationwide search to identify the next Director for the Office of Science.”

King added in his internal memo that Dr. Benjamin Apelberg and Dr. Todd Cecil, two OS higher-ups, would serve as acting OS directors on a rotating basis until a permanent leader is found. (Cecil will go first.)

The announcement caught much of the tobacco control world and industry by surprise, and conjecture surged about the specifics of Holman’s new role and when conversations between him and PMI started. A PMI spokesperson said that details about Holman’s job responsibilities would be shared at a later date.

“Dr. Holman is not leaving the FDA, he’s escaping.”

The timing, though, appeared serendipitous, as CTP—already a frequently maligned entity within tobacco harm reduction circles—has seemed to be running harder and harder into walls. Earlier this month, Robert Califf, the FDA commissioner, said that he was commissioning external experts to evaluate CTP, not long after the agency essentially walked back its denial of Juul’s marketing order and faced endless pleas from legislators to regulate synthetic nicotine, which only recently came under its regulatory authority.

Continuing its piecemeal attempt to institute a “comprehensive” tobacco plan for the future, the FDA is also now weighing a ban on combustible menthol cigarettes and furthering plans to lower the nicotine levels in cigarettes to essentially zero.

“Dr. Holman is not leaving the FDA, he’s escaping,” Amanda Wheeler, the president of American Vapor Manufacturers and a vape shop owner in Arizona, told Filter. “It is hard to avoid the sense that the most serious and essential work on tobacco harm reduction is being done outside of an agency that appears beyond repair.”

As accusations of quid pro quo and revolving door behavior began to circulate online, a source with inside knowledge of the development told Filter that talks with Holman, a well-liked and respected scientist, initiated talks with PMI at the beginning of July—and after he had recused himself from his FDA duties.

At least one journalist noted that Holman had signed off on one of PMI’s modified risk tobacco product application (MRTPA) for its IQOS heated tobacco product in March 2022. (The agency had granted the original MRTPA to PMI for its IQOS product in mid-2020, and issued this updated MRTPA to a revised device this past March.) It’s worth noting, though, that the MRTPA did not grant PMI a “risk modification order,” which would have permitted the company to make marketing claims that the product reduces risk of, say, certain disease, and instead received an “exposure modification” order, which allows only a handful of authorized exposure claims.

In a space riddled with bureaucracy, these distinctions are meaningful. It’s easy to draw comparisons to the departed FDA director who approved Purdue-produced OxyContin, then soon went to work for Purdue for a $400,000 salary. But Holman was not sitting at his desk, for example, whisking premarket tobacco product applications (PMTAs) through the authorization process. In fact, the opposite is true: Holman greenlit millions of marketing denial orders to countless vapor companies, and the even some of the largest players were not spared.

Holman’s departure is emblematic of a broader shift.

“Dr. Holman has spent a substantial portion of his career dedicated to scientific and policy issues that aim to Improve public health,” a PMI spokesperson said in a statement to Filter. “He is committed to helping existing adult smokers access scientifically substantiated smoke-free alternatives while protecting youth. We are looking forward to him joining our team as we continue to pursue a smoke-free future.”

Holman’s departure is emblematic of a broader shift. Scientists, engineers and policymakers are becoming more willing to jump ship to Big Tobacco, as these demonized companies, with their histories of cynical deceit around the harms of cigarettes, transition toward safer nicotine alternatives like vapes. (In May, Kegan Lenihan—a former chief of staff at the FDA—joined PMI to become the vice president of government affairs and public policy, and head of its DC office.)

Holman, who has spoken on panels at the E-Cigarette Summit, has always seemed supportive of the the FDA’s “continuum of risk” strategy, which was frequently touted, if not substantially acted upon, by the agency’s former commissioner Scott Gottlieb. It’s the notion that certain nicotine products—like e-cigarettes, heated tobacco devices and oral tobacco—are less harmful than combustible cigarettes and that adult smokers should be encouraged to switch if they’re not able or willing to quit nicotine.

“It’s extremely good news and a bold and inspired move by Holman,” Clive Bates, the former director of the United Kingdom’s Action on Smoking and Health (ASH), told Filter. “He’s always been someone trying to do the right thing and act with integrity, albeit within the confines of the FDA and the Tobacco Control Act.”

Bates and others grilled Holman at the most exact E-Cigarette Summit in May, where Holman hotly contested criticisms by citing the legal restrictions under which he and his FDA colleagues were working.

“The move sends a massive pro-harm reduction signal by recognizing that tobacco companies will be prime movers in the endgame for smoking,” Bates continued. “Holman is the highest-profile regulatory professional to understand and endorse that reality. He will not be doing anything on combustible products other than working night and day to phase them out with much safer alternatives. He is bound to be attacked by the anti-tobacco activists, but what he is doing is ethical and grounded in credible public health motives.”

Some in tobacco control and within the industry, all of whom requested anonymity so as not to affect their careers, suggested to Filter that Holman could have been gunning to be the new director of CTP, a role left vacant when Mitch Zeller retired in April. The job ultimately went to Brian King, formerly of the Office on Smoking and Health (OSH) at the Centers for Disease Control and Prevention (CDC), who has been endlessly criticized for failing to correct the record on “EVALI.”

Others wondered, too, if Holman had grown more and more disillusioned by the agency, which has had its plans blown up on countless occasions by trigger-happy legislators pounding the drum about the so-called youth vaping “epidemic.”

Holman did not respond to Filter’s request for comment. Zeller declined to comment via email.

The PMI spokesperson also told Filter in a statement that “Dr. Holman will abide by all post-employment restrictions.”

Holman’s inside knowledge of the CTP is likely to be a gold mine for PMI as it navigates regulatory challenges.

“These restrictions prohibit Dr. Holman from appearing before or communicating with the FDA on behalf of PMI regarding any matter for a period of one year,” the statement continued. “In addition, Dr. Holman is prohibited for a period of two years from appearing before or communicating with the FDA on behalf of PMI regarding any matter that was pending under his official responsibility during his last year of government service. Finally, Dr. Holman is permanently prohibited from appearing before or communicating with the FDA on behalf of PMI regarding any particular matter in which he was personally and substantially involved during the entirety of his government service.”

However, speculation has swirled that PMI will at some point soon file a number of PMTAs and try to make a substantial splash in the United States: Recently, PMI and Kavial Brands agreed to an international licensing agreement that will allow PMI to “manufacture, sell and distribute the Bidi Stick”—a disposable vaping product—in markets outside of the US, and another PMI-owned e-cigarette, Veev, has already launched in select markets across the globe. PMI is also closing in on a deal to purchase Swedish Match as well.

Holman’s inside knowledge of the CTP is likely to be a gold mine for the company as it navigates these regulatory challenges.

“PMI claims it is in the process of a fundamental transformation to far less hazardous products,” David Sweanor, a tobacco industry expert and chair of the Advisory Board for the Centre for Health, Law, Policy, and Ethics at the University of Ottawa, told Filter. “If this is a sincere effort, Holman can facilitate a change that has huge public health benefits. If insincere, people like Holman are very well positioned to realize that and potentially call out the company on its irresponsibility. Either way, public health objectives can be advanced.”


Screenshot from the E-Cigarette Summit stream showing, from left to right, Matthew Holman, Clive Bates, Marc Slis and Professor Kathleen Hoke

The Influence Foundation, which operates Filter, has received grants from PMI and Juul Labs, Inc. Filter’s Editorial Independence Policy applies.

Wed, 27 Jul 2022 06:18:00 -0500 en-US text/html https://filtermag.org/fda-official-philip-morris/
Killexams : 20+ Effective Project Management Methodologies Explained

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Tue, 19 Jul 2022 00:34:00 -0500 en-US text/html https://www.business2community.com/strategy/20-effective-project-management-methodologies-explained-02166494
Killexams : PMI Applauds Approval of CHIPS and Science Act of 2022

WASHINGTON, DC — Plumbing Manufacturers International (PMI) applauds congressional approval of the bipartisan CHIPS and Science Act of 2022.

The legislation, expected to be signed by President Joe Biden, was developed to strengthen our nation’s competitiveness with China through increased investments in scientific research and development, federal STEM education programs, cybersecurity, innovation programs, and semiconductor manufacturing.

Reauthorization for NIST

The bill provides a comprehensive reauthorization of the National Institute of Standards and Technology (NIST), which plays a pivotal role in America’s science and technology advancement by determining industry standards critical to fair competition and supporting U.S. manufacturing. 

The bill makes crucial investments in research, including re-establishing a laboratory to promote the development of innovative technologies that will modernize our nation’s aging water infrastructure and Improve water efficiency in homes, schools, hospitals and businesses.

Companies, academic institutions and other federal agencies rely on NIST's laboratory programs to provide foundational research. PMI has actively advocated for NIST having the authority and resources it needs to carry out its mission. “Ultimately, NIST’s research will inform a comprehensive upgrade of U.S. plumbing structure, design and construction standards and will help the plumbing manufacturing industry develop safe and reliable plumbing systems to achieve trustworthy water quality and better water efficiency,” said PMI CEO and Executive Director Kerry Stackpole.  

Key Legislators

PMI thanks House Science and Technology Committee Chairwoman Eddie Bernice Johnson (D-TX)ranking member Frank Lucas (R-OK), and committee members Paul Tonko (D-NY), Anthony Gonzalez (R-OH), and Haley Stevens (D-MI) for leading efforts on the NIST reauthorization package and attaching it to the CHIPS Act.  Over the years, PMI and key stakeholders have worked with Congress and NIST to address and prioritize research needs on plumbing. The research initiative included in the CHIPS bill is based on legislation developed by Rep. Matt Cartwright (D-PA) and Sen. Tammy Duckworth (D-IL), who have both previously introduced measures to expand NIST’s efforts on drinking water.

Fri, 29 Jul 2022 03:14:00 -0500 text/html https://www.contractormag.com/around-the-web/article/21247676/pmi-applauds-approval-of-chips-and-science-act-of-2022
Killexams : Asociación Mojo de Caña

cur síos ar an eagraíocht

Association Mojo de Caña has been founded in 2001, in Santa Brigida municipality (Gran Canaria Island,Spain). Currently, we have several offices in Spain, with the plans of going international (Italy and Serbia). Our offices are divided in Las Palmas de Gran Canaria HQ, Santa Cruz de Tenerife (Tenerife Island),Breña Alta ( La Palma Island ) Madrid and Cordoba. Association is made up of a multidisciplinary team of almost 50 workers that has Directors from different areas, Community Educators, Social Workers, Psychologists, Administrators, Architects, Computer Scientists, Graduates in Labor Relations, Economists, Lawyers, Technicians in project management with the main objective of generating projects that contribute to improving the quality of life of people in general. The Board of Directors in charge of establishing the lines of action and the bureaucratic work of the entity is made up of 9 people, President, Vice President, Secretary, Treasurer and 5 members, who altruistically and voluntarily take charge of this complicated work, dedicating their free time and a lot of sacrifice for the entity to consolidate and all thanks to the firm commitment that unites them to the entity.We are committed to the society in which we live and to transform it, we dedicate all our time, knowledge and experience to materialize that change and provide the necessary resources to all those who want to actively contribute to society. All the benefits that we obtain from the services provided are re-invested in new projects and in consolidating the workforce, generating stable employment and the continuity of our programs and projects.

Mission
Provide services through activities, initiatives, projects and programs in the field of childhood and youth, social services, human rights, education in values, environmental education, socioeconomic integration, socio-sanitary intervention, performing arts, interculturality, citizen participation, training and exchanges national and international, and cultural heritage.We are consolidated as an entity that provides services to Youth, an entity of Volunteering, and a collaborating entity. In the provision of Social Services of the Government of the Canary Islands. Currently, Mojo de Caña manages, organizes, produces and promotes countless activities of all kinds: artistic and socio-cultural shows, circus, performing arts and street festivals, leisure and free time workshops, activities and projects with schoolchildren, education camps. environmental, seminars, training sessions and coexistence, and social programs and projects aimed at families, children, and youth at risk of social exclusion. With our projects you collaborate with a non-profit organization, which promotes employment, entrepreneurship, equality, human rights, education in values ​​and provides services in the field of youth, culture, leisure and free time and social services to help to Improve the quality of life of people in general.

When it comes to our participation in Youth in Action/Erasmus +, we have started in 2011, and since then it has become one of our main priorities, since it reflects and summons up are goals, objectives and aims that are coinciding with the goals of Erasmus + program/ESC volunteering. Since 2011, we have had more than 60 host volunteers, 110 coordinating volunteers, and more than 150 sending volunteers. When it comes to youth exchanges and national and international TC, we have participated and coordinated more than 45 exchanges and more than 40 TC ( till spring 2021). Our social project Embarriate provides us an opportunity to be in daily contact with more than 250 youngsters, in collaborations with Social Services in several islands. Besides, we work with outdoor education and community development via several socio-environmental projects, fostering participation in more than 10 municipalities in 4 different islands. Using art, theatre, digital media and arts we have implemented festivals and conferences on a regional level focused on equity, feminism and gender equality, gender violence etc.

The Canary Islands have the highest rate of youth unemployment in the UE more than ( around 50% are unemployed and/or out of the educational system. That´s why we provide such high importance to these kinds of projects since we aspire to provide our youth with experiential learning for soft skills in order to convert them into active and responsible citizens, open to diversity with own initiatives.

https://www.xn--mojodecaa-s6a.org/portaldetransparencia

Mon, 08 Aug 2022 17:52:00 -0500 ga text/html https://europa.eu/youth/volunteering/organisation/51854_ga
Killexams : International Licensing Agreement between Kaival Brands & Philip Morris International Moves into Next Phase

Bidi Vapor IP, patents, and development methods used to launch VEEBA outside of the U.S.

GRANT, Fla., July 25, 2022 /PRNewswire/ -- Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) (“Kaival Brands,” the “Company,” or “we”), today reported on the launch of PMI’ s custom-branded self-contained e-vapor product, VEEBA, in Canada. This follows a recently announced international licensing agreement with Philip Morris Products S.A. Kaival Brands is the U.S. distributor of all products manufactured by Bidi Vapor, LLC (“Bidi Vapor”), which are intended for legal-age nicotine users.

The product, a self-contained e-vapor device, VEEBA, has been custom developed and is now being distributed in Canada, pursuant to the licensing agreement. The agreement covers the development, licensing, and distribution of ENDS products in certain markets outside of the United States, pending further regulatory assessments.

“The Agreement with Philip Morris Products was a remarkable accomplishment for the company and now we have advanced to the next phase of international distribution with the genuine launch of their custom branded product, VEEBA. We are excited to support PMI’s efforts to provide a range of alternatives compared to cigarettes. The commercialization of VEEBA complements PMI’s already strong smoke-free portfolio, providing adult smokers with an even broader range of usage, taste, price, and technology options,” said Eric Mosser, President and Chief Operating Officer of Kaival Brands.

The International Agreement grants to PMPSA a license of certain intellectual property rights relating to KBI’s premium ENDS device, known as the BIDI® Stick in the U.S., as well as potentially newly developed devices, to permit PMPSA to manufacture, promote, sell, and distribute such ENDS device and newly developed devices, in certain international markets, outside of the United States, with potential royalties owed to KBI as per the terms of the Agreement.

ABOUT BIDI VAPOR

Based in Melbourne, Florida, Bidi Vapor maintains a commitment to responsible adult-focused marketing, strict youth access prevention measures, and age-verification standards, as well as sustainability through its BIDI® Cares recycling program. Bidi Vapor’s device, the BIDI® Stick, is a premium product made with high-quality components, a UL-certified battery, and technology designed to deliver a consistent vaping experience for adult smokers 21 and over. Bidi Vapor is also adamant about strict compliance with all federal, state, and local guidelines and regulations. At Bidi Vapor, innovation is key to its mission, with the BIDI® Stick promoting environmental sustainability, while providing a unique vaping experience to adult smokers.

Mr. Patel, the Company’s Chief Science and Regulatory Officer, owns and controls Bidi Vapor. As a result, Bidi Vapor and the Company are considered under common control and Bidi Vapor is considered a related party.

For more information, visit www.bidivapor.com

ABOUT KAIVAL BRANDS

Based in Grant, Florida, Kaival Brands Innovations Group, Inc., is a company focused on growing and incubating innovative and profitable products into mature and dominant brands in their respective markets. Our vision is to develop internally, acquire, own, or exclusively distribute these innovative products and grow each into dominant market-share brands with superior quality and recognizable innovation. Kaival Brands and Philip Morris International Inc. are the exclusive global distributors of products manufactured by Bidi Vapor.

Learn more about Kaival Brands at www.ir.kaivalbrands.com

Forward-Looking Statements

This press release includes statements that constitute “forward-looking statements” within the meaning of federal securities laws, which are statements other than historical facts that frequently use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “position,” “should,” “strategy,” “target,” “will,” and similar words. All forward-looking statements speak only as of the date of this press release. Although we believe that the plans, intentions, and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions, or expectations will be achieved. Therefore, genuine outcomes and results could materially differ from what is expressed, implied, or forecasted in such statements. Our business may be influenced by many factors that are difficult to predict, involve uncertainties that may materially affect results, and are often beyond our control. Factors that could cause or contribute to such differences include, but are not limited to, the success of our agreement with PMI, how quickly international markets adopt our product, the timing and results of Bidi Vapor’s appeal of the FDA’s PMTA denials for its non-tobacco flavored ENDS products; the scope of future FDA enforcement of regulations in the ENDS industry; the FDA’s approach to the regulation of synthetic nicotine and its impact on our business; potential federal and state flavor bans and other restrictions on ENDS products; the duration and scope of the COVID-19 pandemic and impact on the demand for the products we distribute; the actions governments, businesses, and individuals take in response to the pandemic, including mandatory business closures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that we could take to reduce operating costs; our inability to generate and sustain profitable sales growth, including sales growth in the international markets; circumstances or developments that may make us unable to implement or realize anticipated benefits, or that may increase the costs, of our current and planned business initiatives; changes in government regulation or laws that affect our business; significant changes in our relationships with our distributors or sub-distributors; and those factors detailed by us in our public filings with the Securities and Exchange Commission. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. Except as required under the federal securities laws and the Securities and Exchange Commission’s rules and regulations, we do not have any intention or obligation to update any forward-looking statements publicly, whether as a result of new information, future events, or otherwise.

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SOURCE Kaival Brands

Mon, 25 Jul 2022 00:16:00 -0500 en text/html https://apnews.com/press-release/pr-newswire/covid-technology-health-licensing-agreements-40f42632bd73ceb69a2dbd4c57df3505
Killexams : Philip Morris International Inc. (PM) Management on Q2 2022 Results - Earnings Call Transcript

Philip Morris International Inc. (NYSE:PM) Q2 2022 Results Conference Call July 21, 2022 9:00 AM ET

Company Participants

James Bushnell - Vice President of Investor Relations and Financial Communications

Emmanuel Babeau - Chief Financial Officer

Conference Call Participants

Pamela Kaufman - Morgan Stanley

Bonnie Herzog - Goldman Sachs

Chris Growe - Stifel

Vivien Azer - Cowen

Gaurav Jain - Barclays

Operator

Good day, and welcome to the Philip Morris International Second Quarter 2022 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Philip Morris International management sessions, and the question and answer session. [Operator Instructions] Media representatives on the call will also be invited to ask questions at the conclusion of the question-and-answer from the investment community.

I would now like to turn the call over to Mr. James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead, sir.

James Bushnell

Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2022 second quarter results. You may access the release on pmi.com. A glossary of terms, including the definition for reduced risk products or RRPs as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures and additional heated tobacco unit market data are at the end of today's webcast slides, which are posted on our website.

Unless otherwise stated, all references to IQOS are to our IQOS heat-not-burn products and all references to smoke-free products are to our RRPs. Growth rates presented on an organic basis reflect currency-neutral adjusted results, excluding acquisitions and disposals. Consistent with last quarter, figures and comparisons presented on a pro forma basis entirely exclude PMI’s operations in Russia and Ukraine.

As mentioned previously, starting in the second quarter of 2022, and on a comparative basis, PMI will exclude amortization and impairment of acquired intangibles from its adjusted results. Today’s remarks contain forward-looking statements and projections of future results. I direct your attention to the Forward-Looking and Cautionary Statements disclosure in today’s presentation and press release for a review of the various factors that could cause genuine results to differ materially from projections or forward-looking statements.

It’s now my pleasure to introduce Emmanuel Babeau, Chief Financial Officer. Over to you, Emmanuel.

Emmanuel Babeau

Thank you, James. Welcome to you in your new role, and welcome, everyone. Before I begin, I want to reiterate our focus on supporting our employees and their families affected by the war in Ukraine and above all on the safety of our people. We continue to deploy pledge humanitarian support and additional benefits for our Ukraine employees.

As previously announced, we intend to exit the Russian market in an orderly manner, as the complexities of continuing to operate in Russia increase such as supply chain challenges and financial and banking sector restriction. We continue to actively work on options for doing so in the context of an increasingly complex and rapidly changing regulatory and operating environment, including the requirement to obtain certain governmental approval for any transaction.

Turning to our business. We demonstrated strong underlying momentum in the second quarter of 2022 with another quarter of positive volume supporting better-than-expected top and bottom line growth. Most impressive was the continued excellent IQOS performance and strong Q2 pro forma user growth of more than 1.1 million, demonstrating further sequential acceleration compared to Q1 as device limitation and COVID restrictions continue to ease. This reflects strong momentum in the EU region, Japan and developing market.

Q2 RP pro forma net revenues grew by plus 11% despite the adverse shipment timing impact due to supply chain constraints highlighted last quarter, while HTU IMS volumes grew by plus 20%. IQOS ILUMA delivered further impressive results in its first three markets of Japan, Switzerland and Spain. The acceleration in category growth in these diverse geographies highlight the exciting future growth opportunity across the world, including in the latest launch market of Greece.

In combustible, robust Q2 pro forma volume growth of plus 2.4% and organic net revenue growth of plus 4.2% were driven by Marlboro share gains stronger pricing and the continued recovery of the market. Maintaining leadership of the cigarette category allows us to maximize the switching of adult smokers to smoke-free alternatives and accelerate our transformation into a predominantly smoke-free business by 2025.

We expect the strong underlying momentum of our business in H1 to continue, and we are from an organic growth outlook for the year. We are now well on track to deliver two consecutive years of volume growth, confirming our status as a growth company in terms of volumes, organic net revenues and margins. Despite a substantial currency headwind in 2022, we expect to deliver full year adjusted diluted EPS of around $6, including Russia and Ukraine.

The proposed addition of Swedish Match would further boost our future financial profile. This is a value-creating offer for both set of shareholders with a compelling strategic and cultural fit, providing an additional opportunity to accelerate our smoke-free future.

Turning to the headline numbers. Our Q2 volumes grew by plus 3% on a pro forma basis and by plus 1.1% in total, including Russia and Ukraine. Pro forma net revenues grew organically by plus 6.2% and by plus 5.3% for total PMI, reflecting both the continued strong growth of IQOS and the ongoing recovery of the combustible business in many markets against a pandemic affected comparison.

As we anticipated and indicated previously, less unfavorable timing of cigarette shipment also played a role, notably due to replenishment of duty-free inventories. Our total organic net revenue per unit grew by plus 3% on a pro forma basis and by plus 4.1% in total despite the expected delay of HTU shipments to Japan as we manage through global supply chain disruption. This incorporates combustible pricing of plus 3.5% on a pro forma basis or almost plus 5% excluding Indonesia.

Our Q2 adjusted operating income margin declined organically by 190 basis points on a pro forma basis and by 150 basis points in total. As expected and communicated in our Q1 quarterly results, this reflects four main factors: first, investment to further expand and match the speed of growth in our smoke-free portfolio. This includes the initial higher cost of ILUMA devices and HTUs and the transitory dilutive margin impact of higher device sales as we roll out ILUMA and replenish distribution channel as device constraint ease to support reaccelerating IQOS user growth. Second, the impact of supply chain disruption, notably due to the war in Ukraine, including around $80 million in additional air freight expenses. Third, inflation of around 4% in our cost of goods driven by the global pandemic recovery and exacerbated by the war, notably for certain direct materials, wages, energy and transportation costs. And last, a challenging prior year margin comparison, which included substantial cost of goods sold productivity savings.

Despite these typical margin challenges, our robust top line growth and ongoing cost efficiency enable us to deliver plus 5.6% growth in pro forma currency-neutral adjusted diluted EPS ahead of expectation to $1.32 and plus 3.8% growth for total PMI to $1.48, including Russia and Ukraine. Looking at the first half of the year now, our volumes grew by plus 4% on a pro forma basis and by plus 2.2% for total PMI. Pro forma revenues grew by plus 8.1% and by plus 7.1% in total, also driven by strong IQOS performance and the recovery of the cigarette category.

We delivered organic net revenue per unit growth of plus 4% on a pro forma basis and plus 4.7% in total, again, reflecting the positive impact of growing HT volumes and pricing. Our H1 adjusted operating income margin contracted organically by 110 basis points on a pro forma basis and 90 basis points in total, driven by the factors mentioned previously. We expect better margin performance in H2, a syllabu I will review it shortly. Currency-neutral adjusted diluted EPS grew by plus 10.4% to $2.79 on a pro forma basis and plus 9.2% in total to $3.06, an excellent performance given the circumstances.

Reflecting this strong momentum, we are raising our guidance for 2022. With strong IQOS growth and robust trends in combustible, we foresee an acceleration in our currency-neutral growth expectation relative to our previous forecast. First, we now expect to grow our total pro forma shipment volume by plus 1.5% to plus 2.5% for 2022, achieving another year of volume growth.

For pro forma net revenue, we expect to deliver between plus 6% and plus 8% organic growth as compared to the plus 4.5% to plus 6.5% announced previously, despite a greater-than-anticipated drag from hyperinflationary accounting in Turkey. With a strong recovery in device volume, the increasing contribution of ILUMA with initially higher unit cost and ongoing global inflation, we are narrowing our forecast for pro forma adjusted organic OI margin expansion to between zero and plus 50 basis points.

We are also raising our growth outlook for pro forma currency-neutral adjusted diluted EPS to between plus 10% and plus 12%. This reflects a range of $5.23 to $5.34, including an estimated unfavorable currency impact of $0.80 at prevailing rates notably due to the euro and Japanese yen. We'll include a slide in the appendix with further detail on this estimated impact. For total PMI, which assumes a full year contribution from Russia and Ukraine, we expect adjusted diluted EPS of $5.90 to $6.05, reflecting similar dynamic to the pro forma basis and including an estimated $0.69 unfavorable currency impact.

Please note our 2022 forecast assumes no contribution from the proposed combination with Swedish Match, which is expected to close in the fourth quarter of this year, subject to Swedish Match shareholder acceptance and the necessary regulatory approvals. The outlook for IQOS growth is excellent, and we now expect to deliver full year pro forma HTU shipment volume of 90 billion to 92 billion units, representing the upper half of our previous forecast range.

With growth momentum very strong, the main constraint for not further raising our HTU volume target is our production capacity, notably for ILUMA HTUs due to their outstanding initial success and the cancellation of production in Russia as we convert existing production line for induction consumable. We continue to expect excellent HTU growth in the coming quarters with a progressive improvement in ILUMA HTU capacity through the first half of 2023. We are prioritizing ILUMA launch market accordingly with further launches plan in Q4 as communicated previously.

A notable further update to our outlook is an increase in our operating cash flow forecast to around $10.5 billion as compared to around $10 billion previously despite notable currency headwinds. This includes our accelerated pro forma earnings growth forecast and an assumed full year contribution from Russia and Ukraine. We delivered robust operating cash flow growth in H1 of plus 14%. And as shown through the challenges of exact years, the cash generation capacity of our business remains exceptional.

While flatted somewhat in 2021 by favorable timing and one-off impact, our revised full year forecast demonstrates underlying growth against this exceptional year after also accounting for higher inflation driven working capital requirements and currency. This underlines our ability to maintain a strong balance sheet, pay down debt and invest in the growth of our business.

Our net debt of $23 billion at June 30, 2022, decreased compared to both June and December 2021, despite H1 capital expenditure of $0.5 billion and ongoing dividend payment. Our commitment to our progressive dividend policy is unwavering and we look forward to the additional cash flow, the proposed combination with Swedish Match would bring. We also continue to expect around $1 billion in full year capital expenditure.

Moving now to the pro forma outlook for the second half. We expect to deliver strong top line growth, organic adjusted OI margin expansion and further acceleration in bottom line growth. For Q3, we expect mid-single-digit organic top line growth driven by IQOS with around $22 billion in pro forma HTU shipment volumes. While there is a tougher comparison for cigarette and a modest negative impact expected from shipment timing, we expect combustible volume trends to remain resilient by historical standards. Net revenue growth will also continue to be impacted in both Q3 and Q4 by the shift to hyperinflationary accounting in Turkey.

While the temporary cost headwinds in Q2 are expected to ease somewhat in the third quarter, we expect this to be broadly offset by a step-up in smoke-free commercial and R&D investment as compared to a device constraint in Q3 2021. This results in an expected Q3 pro forma adjusted diluted EPS range of $1.23 to $1.28, including an estimated adverse currency impact of $0.24 at prevailing rates. We expect a strong Q4 with a rebound in HTU shipment volume due to phasing to the most pronounced as HT capacity constraint improve. The H2 recovery in our pro forma adjusted OI margin is also expected to be Q4 weighted.

Turning back to our results. Pro forma HTU in-market sales volume grew strongly by plus 20% for both the second quarter and the first half, notably driven by strong performance in the EU region. As expected, Q2 IMS pro forma growth was significantly ahead of shipment volume growth reflecting the later timing of shipments I mentioned earlier. Our total pro forma shipment volume increased by plus 3% for Q2 and plus 4% for H1. As I touched on earlier, this put us well on track to deliver total volume growth for the second consecutive year on both a pro forma and total PMI basis.

With the impressive performance of IQOS, heated tobacco units comprised 12.6% of our pro forma shipment volume in H1 or 14% in total despite the anticipated HTU shipment timing impact in Q2. Our sales mix is also changing rapidly as we aim to become a majority smoke-free company by 2025. Smoke-free net revenues made up almost 30% of our pro forma total and exceeded 30% for total PMI in the first half of the year.

IQOS devices accounted for approximately 5% of the $4.2 billion of pro forma H1 RRP net revenues. This reflects higher device volume at a lower average price than last year as we expand our device portfolio with VEEV and ILUMA and price ladder, our blade device portfolio in preparation for the launch of premium position in ILUMA. The positive momentum of IQOS continues and is further accelerating in many geographies, providing a powerful driver of revenue and margin growth.

We delivered organic growth of plus 8.1% in H1 pro forma net revenues and shipment on growth of plus 4%. This reflects the twin engines driving our top line in addition to volume. The first is pricing led by combustible. The second is the increasing mix of RRPs in our business at higher net revenue per unit, which continued to deliver substantial growth. This is an increasingly powerful driver as our transformation accelerate.

Let's now turn to the drivers of our H1 pro forma adjusted OI margin which contracted organically by 110 basis points. Pro forma gross margin decreased by 280 basis points organically, reflecting the factors I mentioned previously, as we invest in our smoke-free business and manage temporary supply chain disruption and cost inflation.

This margin headwind was partially offset by better pro forma adjusted marketing administration and reserve costs, which improved by 160 basis points organically. This was driven by the positive operating leverage of RRP growth and successful cost efficiency program where we generated around $420 million in gross cost savings, of which approximately $170 million came from COGS productivity and over $250 million from SG&A.

With more than $1.2 billion of savings realized by this halfway point, we are well on track to deliver cost savings of $2 billion for 2021, 2023. This allows us to reinvest in top line growth and mitigate inflationary pressures while continuing to deliver margin expansion. We continue to accelerate investment in our commercial programs digital engine and R&D for long-term growth as well as a number of growth opportunities across categories and geographies. As reflected in our full year outlook, we expect our operating margin trajectory to Improve in the second half of the year as temporary headwind and tough comparison in.

Focusing now on combustible, our portfolio again delivered growth in pro forma volume and organic net revenue in Q2. Our pro forma shipment volume grew by plus 2.4% against a pandemic affected comparison notably driven by Indonesia, Poland and Turkey. In addition, we saw a continued recovery in international duty-free outside Asia as passenger traffic increases. Pro forma combustible pricing of plus 3.5% was slightly ahead of our expectations. And while we remain cautious on the economic outlook, the pricing environment has been gradually improving. We expect to deliver a similar level of pricing for the full year.

Our leadership in combustibles helps to maximize switching to smoke-free product and both the positive Q2 and H1 segment share demonstrates the strength of our portfolio. We continue to target a stable category share over time despite the impact of IQOS cannibalization. This year marks the 50th anniversary of Marlboro becoming the world's leading cigarette brand. With the return of social consumption occasion, Marlboro volumes grew plus 7% year-over-year in H1, with category share again surpassing 10% on a pro forma 12-month rolling basis.

Of course, our long-standing success in building Marlboro's brand equity is the strength we are now -- smoke-free product as we make excellent progress with IQOS as the undisputed global smoke-free leader. The positive combination of a stable share in combustible and the continued growth of IQOS position us to deliver total market share growth over time. We capture plus 40 basis points of pro forma share gain in Q2 including gains in duty-free, Italy, Japan and Turkey. Moreover, PMI HTU strengthened their position as the second largest nicotine brand in markets where IQOS is present with a 7.5% share, excluding Russia and Ukraine.

Moving now to IQOS performance. We estimate there were approximately 19 million IQOS users as of June 30 on a pro forma basis. This reflects very strong growth of over plus 1.1 million users in Q2 and plus 2.2 million in H1, a record first half high on this basis. The acceleration of IQOS user growth compared to both Q1 and last year was driven by the reactivation of acquisition and retention program in many markets as device supply constraint receded as well as the impressive start of IQOS ILUMA. While device supply constrained has eased in exact quarter, this is largely due to the success of our own proactive effort. The global supply of semiconductors remain tight, and we continue to closely monitor and manage the situation.

In the EU region, we are now approaching the milestone of 9 million IQOS users, reflecting stepped-up commercial activities to drive acquisition and retention, along with the launch of ILUMA in Switzerland and Spain. Our second quarter HTU share increased by plus 1.6 points to 7.1% of total cigarette and HTU industry volume.

As noted in prior years, sequential share compared to Q1 was affected by the usual seasonality of the combustible market with the additional element of a strong year-over-year combustible recovery this quarter. Most importantly, IMS volume continued to exhibit robust sequential growth, and we expect this to continue in the second half. The strong performance includes excellent user and volume growth across the region with notable contribution from Italy and Poland.

Now to provide some further color on our progress in the region. This slide shows a selection of the latest key city of Texas in Q2. Despite the denominator effect of the combustible category I just mentioned, share results remain very strong. Most impressive is Venus, the first city in the world to surpass 40% share while Athens, Budapest and Rome are in the mid- to high 20s. Elsewhere, we are especially pleased by the results in London, Vienna and Zurich.

In Japan, IQOS ILUMA is driving -- and our share of market continues to increase in key cities such as Tokyo. Most importantly, our IMS volume trends remained strong with continued sequential growth. As indicated last quarter, Q2 shipments were lower due to timing factors and should recover in the second half with a weighting towards Q4. The adjusted share for our H2 brands increased by plus 1.9 points to a record 22.9% in Q2 despite seasonality.

While we are very pleased with these results, our share performance could have accelerated even further. The combustible category was notably resilient in the quarter and our rollout of mainline price entire HTUs for use with ILUMA was slightly slower than initially planned. However, early results were encouraging is designed to cater to its consumers switching to ILUMA and more price-conscious legal-age smokers.

We also observed an increase in legal-age users switching from low price competitive product. We estimate users of competitive offering to have less average daily consumption due to lower full conversion, which we believe ILUMA should Improve over time. The heat-not-burn category now represents around 1/3 of total tobacco in Japan with IQOS increasingly driving this year's growth.

In addition to strong progress in developed countries, we continue to see very promising IQOS growth in low and medium income market. The pro forma share of our HTU brands in the 28 such markets launched by December 31, 2021, continued to grow and reach 2.9% in Q2, reflecting sustained growth in IMS volume. Given the large size of this market, the premium positioning of the existing IQOS portfolio and the relatively early stage of commercialization, this represents outstanding progress.

A prime example of this are Lebanon where Q2 of take share in Beirut increased by plus 8.1 points to 17.4%, and Egypt where off-take share in Cairo reached around 5% after launching less than one year ago. Other notable successes include the recently launched market of Morocco and Tunisia, as well as Georgia, Jordan, North Macedonia and the Philippine despite pandemic restriction in Manila.

Moving now to IQOS ILUMA, which continued to drive increased conversion and retention rate across initial launch market. In Japan, ILUMA continued to exhibit strong growth with premium priced TEREA HTUs growing rapidly to become the second largest tobacco brand, reaching an off-take share of 14.6% within nine months of national launch. Encouragingly, SENTIA off-take share has already surpassed the level of prefectures covering around 45% of industry volume.

The expansion of our device portfolio with ILUMA 1 in Q1 has also seen robust traction with legal smokers. We exited Q2 with a record high of tech share and continue to see a long runway of growth in Japan for ILUMA over the coming quarters. ILUMA and TEREA HTUs also continue their super start in Spain and Switzerland.

We launched ILUMA in Spain in March 2022 with very positive initial results, notably in key cities such as Barcelona and Madrid. Sequential IMS volumes grew by 27% in Q2. TEREA exited the quarter, making up over 50% of HTU sales only four months after commercialization and our national HTU share has grown to plus 1.7%. This is especially encouraging as Spain has been a market where regulatory restriction had limited the speed of IQOS growth.

In Switzerland, the demand for ILUMA remains very strong. IMA's volume continued to grow sequentially, increasing plus 13% in the second quarter. A significant proportion of existing users have upgraded to ILUMA and the off-take exit volume of TEREA now exceeds 70% of our HTU sales. We continue to expand our global smoke-fee portfolio through our rich pipeline of innovation. We launched ILUMA in Greece in late June with further market launches planned for Q4.

With regard to our new heat-not-burn device tailored to low and middle income market, we continue to plan pilot launches in the fourth quarter, further expanding our portfolio to serve different consumer needs and segment the market. In e-vapor, IQOS VEEV continued to deliver encouraging results, and for example, is now the established number two closed-pod brand in Italy with off-take share growing sequentially to around 20%. This is a premium proposition with an average price premium to competitive devices of 20% to 30% as we pursue differentiated and profitable category leadership position over time.

In Q2, we expanded into three additional geographies, including France, and are now present in 10 markets. The latest addition to our e-vapor portfolio is the VEEBA disposable device. Responsibly marketed disposable e-vapor product can play an important role as a convenient hassle-free entry into the smoke-free category for legal-age smokers. VEEBA was recently launched in Canada with nine varieties. Our geographic expansion of smoke-free products also continued in Q2 with the launch of IQOS in Bahrain.

Of course, the biggest potential near-term addition to our smoke-free portfolio is the proposed combination with Swedish Match. This would deliver a major acceleration in our transformation to becoming a smoke-free company. The visions of our two companies are aligned in working towards a smoke-free future without cigarette and would create a global smoke-free champion. If completed, we would have a comprehensive global smoke-free portfolio with leadership position in heat-not-burn and the fastest growing category of oral nicotine with potential for accelerated international expansion.

Another competing rationale for this deal is a large, attractive and growing U.S. smoke-free market. Swedish Match as the leading nicotine pouch franchise, with ZYN, and a substantial U.S. operational platform, which would help us unlock the significant opportunity across other more categories over the coming years. This would be a strong strategic and cultural fit, offering significant shareholder value creation over the medium and long term.

As stated in the offer document published on June 28, the waiting period for the transaction under the U.S. antitrust process has expired, meaning that we have satisfied our requirement in the U.S. to proceed with the transaction. We expect the transaction to close in the fourth quarter of this year, subject to Swedish Match shareholders acceptance and the necessary regulatory approvals.

Moving to sustainability, I want to first draw your attention to our 2021 integrated report published in May, which outlines our new sustainability strategy and ESG performance in detail as we continue to transform for good. Included in the report is our new sustainability index comprised of 19 KPIs across our most material sustainability issues.

The index is weighted towards product transformation and now represents 30% of our long-term performance-based equity executive compensation. The definitions, methodology and scope of each of these KPIs are included in our recently published ESG KPI Protocol, providing further transparency on how we define success and major ESG performance.

With regard to tackling climate change, I am delighted to report that the science-based target initiative as today validated our 2040 net-zero target. The initiative also revalidated our near-term 2030 target for reducing greenhouse gas emission and our new 2025 target for 15% of our suppliers by spend to have their own Science-Based Target by 2025 a very positive development, given that Scope 3 remains the most challenging aspect of any company decarbonization strategy.

To support the achievement of these targets, we are accelerating progress to decarbonize our chain, and we have made eight more factory carbon neutral this year, more than doubling from last year and placing us on track to meet our goal of all factories by 2025.

Finally, product health impact remains one of our most critical ESG priorities. There is a growing body of scientific and real-world evidence of the substantial risk reduction potential of smoke-free product compared to smoking. We continue to support policy and fiscal framework that recognize a positive impact tobacco harm reduction policy can have on public health.

Recent examples include a further multiyear tax plan with differentiated treatment for smoke-free products in Romania and statement from the Belgian Superior Health Council on the whole e-vapor product can play in switching adult smokers away from cigarettes.

To conclude today's presentation, we have delivered a strong first half despite some challenging headwinds, placing us well on track to deliver robust volume growth and an accelerated currency-neutral pro forma financial performance in 2022. We remain excited by the promising results of IQOS ILUMA. Increased consumer satisfaction is driving higher retention and conversion, and we look forward to further market launches later this year.

Our combustible business continues to perform well with pro forma volume and organic net revenue growth, maintaining our share of market over time despite the impact of IQOS cannibalization allows us to accelerate further switching of smokers to better alternative and to invest for long-term growth in the development of innovative wellness and health care product will seek to deliver a net positive impact on society.

We continue to enrich our pipeline of smoke-free innovation, such as ILUMA and VEEBA to expand and grow across new and existing category and geography. We are raising our pro forma growth guidance for the full year and expect to deliver around $6 in total adjusted in total adjusted diluted EPS, including Russia and Ukraine despite currency headwinds.

Importantly, with an excellent 2021 performance and our strong 2022 outlook, we now expect to comfortably exceed our 2021-2023 minimum CAGR target on a pro forma basis of more than plus 5% in organic net revenue growth and more than plus 5% in currency-neutral adjusted diluted EPS growth. Our ambition to become a majority smoke-free business by net revenue in 2025 also remains fully intact. We are confident in the rapid pace of our transformation.

Finally, we continue to be steadfastly committed to returning cash to shareholders. Our top priority for capital allocation remain reinvestment in the business and our progressive dividend policy, underpinned by strong cash flow generation.

Thank you and we are now more than happy to answer your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Pamela Kaufman from Morgan Stanley. Your line is now open.

Pamela Kaufman

I wanted to get a sense for what's contributing to the strong IQOS new user momentum that you've experienced in the last two quarters. Is there anything that you're doing differently? And where are you adding these users geographically? How much is driven by ILUMA versus prior IQOS devices? And then related to that, what do you estimate new user growth would be if you were not constrained by production capacity?

Emmanuel Babeau

Thanks, Pamela. So we are obviously -- and I said it very pleased with the performance of IQOS, and that is certainly being reflected in the very strong user growth of more than 1.1 million in the second quarter. We said that for H1, it's a record growth. The good news is that we are really growing across geographies. So of course, we have a number of countries such as Italy, Poland, Japan, because their size, of course, they contribute more in the quarter.

But the reality is that we see very good trends across geographies. And I could mention countries such as Romania, Portugal, Hungary, I mean, these are all countries of smaller size but where the growth is really impressive. So I think it's a tribute to the fact that IQOS is making some clear customer expectation, the fact that people realize all the benefits they can get by switching from combustible cigarettes to the IQOS product.

There is certainly ILUMA contributing. But as you know, we are unfortunately today, limited in the number of geographies where we propose ILUMA. It's Japan Switzerland and Spain. We've been launching Greece. So that is certainly in this country, helping the performance. But to be very clear, the performance is across the board, as I said, and including country where we haven't launched yet ILUMA.

So certainly, we are improving the way we deliver a great customer experience, including digital customer, how we contact smokers, how we get in touch with them, how we start the dialogue, how we explain the benefit of IQOS and how we are leading them in the journey from moving away from combustible products to IQOS.

So no doubt, we continue to Improve our commercial engine, and that is helping. There is probably the impact of awareness, visibility that is growing. There are markets where when you start to reach a certain market share, IQOS become visible, more visible, you go in bars, you go in events, you go in social gathering, you see more and more people, and that triggers what we call organic growth, people who wants to discover by themselves about IQOS.

They want to learn, friends explaining how it works and why they really enjoy IQOS. We are also accelerating innovation. We have been proposing new devices. We are proposing new type of references. So, we are enlarging the choice and that make probably IQOS even more desirable and attractive. So that's really, I think, all the powerful driver behind the success of IQOS.

Now if I focus on ILUMA and what is the potential with more ILUMA capacity, we see it in the three markets where we have been launching. ILUMA is resolving the remaining pain point that was -- that are existing on the previous version of IQOS. It's certainly coming with a great customer experience. It is increasing the conversion, the loyalty.

We expect it to increase the average daily consumption as well and to significantly reduce our [indiscernible]. We see the customer Net Promoter Score improving in the countries. So that is obviously bringing more momentum in the country where we are launching ILUMA. And I think we should see it as a kind of second stage of the rocket that we are going to launch in the various countries to sell IQOS even higher, and that we expect in the various countries where we're going to launch in the coming quarters.

Pamela Kaufman

That's very helpful. I also wanted to get a sense for how you would characterize your current appetite for additional acquisitions in the near-term in light of the Swedish Match transaction. There are additional assets for sale in the U.S. market. Are you in a position to consider more acquisitions?

Emmanuel Babeau

Today, we are focusing on Swedish Match. The time line is the one we were expecting at the beginning. We continue to expect the closing of the transaction in Q4, of course, subject to Swedish Match shareholder acceptance. Nothing has changed. We are focusing on that. Am I closing the door in the future on other things that would further accelerate our journey to become a leading and successful smoke-free company? No. But clearly, the priority and the focus today is on Swedish Match.

Operator

We will take our next question from Bonnie Herzog with Goldman Sachs. Your line is open.

Bonnie Herzog

I have a question on your pro forma adjusted OP margin in Q2. It declined on an organic basis. And you did highlight that the drag on your margins, at least partly was from the higher cost of ILUMA devices and then HTUs. And then you also lowered your full-year OP margin guidance. So just hoping you could provide us a sense of how long margins could be negatively impacted, I guess, from the rollout of ILUMA. And just based on your FY '22 guidance, which does imply lower year-over-year EPS growth in the second half, I assume the drag on margins could be a key driver of this in the second half, but I just wanted to verify that? And just kind of thinking out into 2023, should the drag sort of ease? Or will that continue as you keep pushing on ILUMA?

Emmanuel Babeau

Yes. Thanks, Bonnie for the question. So I mean, that's true that in H1, we've seen a number of headwinds on the margin. Needless to say that inflation, of course, is one. And we said that we are seeing around 4% inflation on our input cost. So I guess it's probably lower than inflation that we see in many countries, but that's significant. Obviously, we have costs that are coming from the disruption in the supply chain, notably coming from the war in Ukraine.

We have a dramatic acceleration of air freight that is, of course, temporary. We're not going to keep air shipping on the long term. But during a period of time, we need to do that, and it's very costly at the time where the cost of freight is globally, not only for air but globally going up. So we are obviously being impacted. So that is having an impact here.

And then there is a launch of ILUMA at the beginning, notably in Japan, where we had a very, very strong investment, which was really important to make on the device. And we have two devices now offering -- three device, actually, three models in Japan, and the strong volume in device has an impact on the margin level.

On top of that, we said it since the beginning, we don't start the launch of ILUMA with optimized cost and weight on TEREA and on SENTIA. And that is coming at the beginning with a negative impact on margin which something that is temporary as well. So we expect in the course of 2023 seems to gradually improve.

So inflation is not temporary. I think for the rest, a lot of the headwinds that we are seeing in H1 are temporary, and there will be a recovery in the future. I'm not able at that stage and we do that, of course, as we are gaining visibility to phase it in the coming quarter, but that's certainly what we that's what we are expecting.

And then clearly, for H2, we are expecting an improvement on the margin. Certainly, that would be skewed to a large extent to Q4, but already the deterioration in Q3 on the gross margin would be lower, but there will be more investment as we know we are just following the growth, and we are putting the right level of investment to cope with the growth. Q4, we'll be clearly seeing a better improvement with the better mix.

Remember, we've been impacted also on the margin by the fact that the volume that we should have been shipping and it should have been the P&L to Japan, and that are having a very nice margin are not in the P&L. And so of course, it's another one-off that was impacting H1, but we will have the compensation in H2. So, yes, difficult beginning of the year, it doesn't mean that everything will be back to normal in H2. That will be still with some headwind. But clearly, most of what we are facing is temporary, and they will be over time, a recovery on the margin.

Bonnie Herzog

Okay. That all makes sense. And yes, definitely a lot of moving parts. So that was helpful. And then just my second question is on your proposed acquisition of Swedish Match, I guess, could you provide us a little more color on where things are? And then maybe what you see as potential risks of this transaction not happening? I guess I'm asking, thinking about the activist involvement other words, I guess, I'd like to hear how committed are you to this transaction? And how much flexibility do you have in terms of your leverage? I don't think you have a a target leverage ratio, but you've stated in the past you want to maintain your investment-grade ratings. So just maybe wanted to get a sense from you of what the rough, I guess, threshold for that leverage would be to maintain that.

Emmanuel Babeau

Thank you, Bonnie. What I can tell you on Swedish Match is, first of all, to repeat that we have cleared the U.S. requisite in terms of regulatory approval. So that is behind us. For the rest, the processes are still ongoing in several jurisdictions according to plan. And we are confirming the fact that we expect what we said in beginning closing in Q4, of course, subject to Swedish Match shareholder acceptance.

And here, I would like to reiterate the fact that we believe that this is a very compelling offer for Swedish Match shareholder. Can I remind everybody that we offered a 40% for the premium at the time of the announcement in May, since then, the markets have been quite volatile, most of them going down, and that this offer has been approved by the Board of Swedish Match, which was confirming the fact that they thought it was compelling for their shareholders. So that's what I have to say on Swedish Match. And I have no other comment to make.

Operator

We will take our next question from Chris Growe with Stifel. Your line is now open.

Chris Growe

I just had a question for you first on the timing of shipments across the second half. You've talked about the -- just over 2 billion sticks that shifted to the second half of the year. Does that shift mostly to the fourth quarter as we're thinking about your guidance for IQOS shipments in 3Q versus what's implied for the fourth quarter?

Emmanuel Babeau

Yes, Chris, if I can try to help you, what we expect in Q3 is shipment to be much more in line with the underlying growth that we have seen on the IMS in H1, which was around 20%. So that's what we expect in shipment, but we don't expect the recovery of the shipments that have been missing in H1. We expect this recovery in Q4, where we continue to expect very strong dynamism of IQOS consumables. But then the shipment will be in Q4 above IMS to broadly align for the year, shipment and IMS. So that is the phasing that we expect for the year.

Chris Growe

Okay. And just one other question on relation to device sales. They've been a little elevated here as you had more availability. Does that remain elevated even in, say, the first half of '23 as you continue to build your availability of devices? And is that the right time line to think about the point where you'll have, let's call it, full availability of devices is in the first half of '23 based on the chip shortage?

Emmanuel Babeau

I think you have two elements, Chris, here. The first one, remember, we had some constraint on device availability that started in Q2, some impact in Q3 and last year. So of course, there is an increase in the device level this year based on low comps. So that's the first element. And I think it's really important to realize how important it is to make sure that smokers can have access to IQOS device to get converted.

So I think it's important that we make commercial effort here. And I think we're doing that well. And we see that our device versus maybe some device from the competition is clearly getting a better conversion. On top of it and then the second element, it is clear that with ILUMA, there is a wave of replacement. So, we see in the markets where we launched ILUMA, a rapid replacement of existing IQOS blade device by IQOS ILUMA.

And that -- this wave of replacement is creating a very strong one-off acceleration in the level of device. When people will be equipped when the core consumer will be equipped that will be behind us, but we have to go through that. And that is having, again, on a temporary basis, a negative impact on the margin.

Operator

We will take our next question from Vivien Azer with Cowen. Your line is now open.

Vivien Azer

So my first question has to do with the proposed elimination of menthol variants in the EU for heat-not-burn products. Could you please offer some color on your menthol mix in that geography, and then secondly, an outlook on the timing of that proposal? Thank you.

Emmanuel Babeau

Look, I'm not sure we disclosed the component of menthol. Of course, that's a minority of our business. What I can say about that is that we have to understand that this is a move in application from the TPD in Europe. So it's not a decision. It's an application based on the TPD of 2014, which in certain circumstances was planning for a kind of automatic ban to be implemented.

Now this still needs to be approved by the parliament and by the European Council that will be in front of these two bodies later on in 2022, and we'll see what is the final decision. To be very clear, it already has happened on a combustible business with almost no impact or very limited impact. So, the consumer reorganize their taste and they switch to other products, but very limited impact. And therefore, it isn't clear that this will have a meaningful impact if it happens on our heat-not-burn business.

In addition to that, we believe that we have superiority in our tobacco taste versus competition, and that's the superiority of our technology with IQOS versus the technology of the competition. So that will mean if we are left with tobacco taste that our product will look great versus competition for people who may decide to go for new product, if they have to abandon on flavor. So we are, of course, waiting to see what are the development. But as you can hear, I guess, from my comments, we have limited concern on that matter.

Vivien Azer

Certainly. And my follow-up question is on IQOS in the U.S. If we can just revisit the timing of reintroducing that product into the marketplace, please? Thank you.

Emmanuel Babeau

Yes. We expect to be in a position to introduce IQOS in H1 of 2023. I cannot be more precise at this stage. We continue to work on the plan to be able to do that. And of course, we'll keep you posted when we have more clarity and more precise reintroduction date.

Operator

And we will take our last question from Gaurav Jain with Barclays. Your line is open.

Gaurav Jain

So a couple of questions from me. One is on Russia. So, the way you're now guiding, you are including Russia for the full year and earlier, you had included Russia just for Q1. So can you still export devices into Russia, IQOS devices because you still have IQOS shipments there? And also, can you take cash out of Russia to pay the dividends, which you are paying in USD?

Emmanuel Babeau

Thank you, Gaurav. So yes, I confirm that we can still export our device, not covered by sanction. And therefore, you have many parts of the business that are disrupted on the supply chain, but that one for the time being because, of course, you never know how this can evolve, is not impacted. On the payment of the dividend, I'm not able to tell you because we did not try to pay a dividend. So I'm not able to answer. What I can tell you is that for the time being, we've been making the usual payment between our subsidiary and in terms of procurement in terms of any kind of royalties or intercompany normally. So that's what I can tell you at that stage.

Gaurav Jain

Okay. And my second question is on the Canadian market. So clearly, you do not consolidate Canada, but you provide the volume numbers. So the market is down 16% in 1H '22 and 19% in Q2. And the retail pricing, I think, is 6% to 7%, which is not out of ordinary. And then you have mentioned in the e-cigarette cannibalization and you have launched Viva, the disposable device in Canada. So what's exactly happening in Canada? Is it that e-cigarettes are now growing very fast and cannibalizing the market? Could you just help us understand that?

Emmanuel Babeau

Yes. I think that is a market where you may have some basis of comparison and some one-off element, but the trend is clearly don't take the minus 60% as a reference for the market. But clearly, the trend is for combustible business to go down and for smoke-free product, including vaping, but our ambition is also to grow fast heat-not-burn to develop nicely as a substitute to combustible. That's a market on which things are moving rapidly.

Operator

I would now like to turn the program back over to management for any additional or closing remarks.

Emmanuel Babeau

Well, thank you very much for participating to this call today. We were delighted to share the very good progress that we are making on IQOS and on becoming a smoke-free company despite of fact, of course, the challenges that you all know. And we look forward to talk to you soon. Thank you very much.

James Bushnell

That concludes our call today. Thank you again for joining us. If you have any follow-up questions, please contact the Investor Relations team.

Thank you again, and have a nice day.

Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful day.

Thu, 21 Jul 2022 05:39:00 -0500 en text/html https://seekingalpha.com/article/4524828-philip-morris-international-inc-pm-management-on-q2-2022-results-earnings-call-transcript
Killexams : Canada's Ivey PMI Shows Activity Contracting in July No result found, try new keyword!The Ivey PMI measures the month to month variation in economic activity as indicated by a panel of purchasing managers across Canada. The gauge of employment fell to an adjusted 61.4 from 67.9 in June ... Fri, 05 Aug 2022 02:22:00 -0500 text/html https://money.usnews.com/investing/news/articles/2022-08-05/canadas-ivey-pmi-shows-activity-contracting-in-july Killexams : Services PMI® at 56.7%; July 2022 Services ISM® Report On Business®

Business Activity Index at 59.9%; New Orders Index at 59.9%; Employment Index at 49.1%; provider Deliveries Index at 57.8%

TEMPE, Ariz., Aug. 3, 2022 /PRNewswire/ -- Economic activity in the services sector grew in July for the 26th month in a row — with the Services PMI® registering 56.7 percent — say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: "In July, the Services PMI® registered 56.7 percent, 1.4 percentage points higher than June's reading of 55.3 percent. The Business Activity Index registered 59.9 percent, an increase of 3.8 percentage points compared to the reading of 56.1 percent in June. The New Orders Index figure of 59.9 percent is 4.3 percentage points higher than the June reading of 55.6 percent.

"The provider Deliveries Index registered 57.8 percent, 4.1 percentage points lower than the 61.9 percent reported in June. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

"The Prices Index decreased for the third consecutive month in July, down 7.8 percentage points to 72.3 percent. Services businesses continue to struggle to replenish inventories, as the Inventories Index contracted for the second consecutive month; the reading of 45 percent is down 2.5 percentage points from June's figure of 47.5 percent. The Inventory Sentiment Index (50.1 percent, up 3.9 percentage points from June's reading of 46.2 percent) moved into expansion territory in July after four consecutive months of contraction."

Nieves continues, "According to the Services PMI®, 13 industries reported growth. The composite index indicated growth for the 26th consecutive month after a two-month contraction in April and May 2020. Growth continues — at a faster rate — for the services sector, which has expanded for all but two of the last 150 months. The slight increase in services sector growth was due to an increase in business activity and new orders. The Employment Index (49.1 percent) contracted for the second consecutive month, and the Backlog of Orders Index decreased 2.2 percentage points, to 58.3 percent. Availability issues with overland trucking, a restricted labor pool, various material shortages and inflation continue to be impediments for the services sector."

INDUSTRY PERFORMANCE
The 13 services industries reporting growth in July — listed in order — are: Mining; Real Estate, Rental & Leasing; Public Administration; Management of Companies & Support Services; Construction; Educational Services; Other Services; Utilities; Professional, Scientific & Technical Services; Health Care & Social Assistance; Transportation & Warehousing; Wholesale Trade; and Information. The three industries reporting a decrease in the month of July are: Agriculture, Forestry, Fishing & Hunting; Retail Trade; and Finance & Insurance.

WHAT RESPONDENTS ARE SAYING

  • "Restaurant sales have softened the past few weeks (due to) post-holiday and seasonality factors, but we're also hearing because of consumer pressures, particularly fuel and food prices. Staffing remains a challenge in some markets. Many of our locations in (Los Angeles County) received news that there could be a return to (indoor) mask mandates." [Accommodation & Food Services]

  • "Interest rates have significantly impacted the homebuilding market. Cancellation rates have increased, as homebuyers can no longer afford the monthly payment. Traffic to our communities is down. Inflation has sidelined many would-be buyers." [Construction]

  • "Strengthening market overall and signs of improvement. Increased prices putting a strain on fixed budgets. There has been a shift from driving down costs to securing continuity of supply. Higher education is growing, with an increase in applicants." [Educational Services]

  • "Business continues to remain below pre-pandemic levels. (Patient) census and visits have increased but seem to have plateaued in the last six-month period." [Health Care & Social Assistance]

  • "Can feel the economy weakening. Clients are making appropriate moves in anticipation of a recession." [Management of Companies & Support Services]

  • "Hiring demand remains robust in most industry sectors. Tech has had a slowdown in hiring and layoffs. It's still a candidate's market, as the number of job openings across all skill levels and positions remains far greater than the number of candidates for those roles." [Professional, Scientific & Technical Services]

  • "Rising costs across the board seems to be the big focus now. Fuel and food are the most common focus but it is across the board, and there is pressure of a job market shortage for qualified workers to increase wages and other benefits." [Public Administration]

  • "(We are) in inventory reduction mode, attempting to match inventory levels to current lower sales trends." [Retail Trade]

  • "Holding steady, but some headwinds are definitely ahead on the economic front. However, supply chain issues appear to be easing, though still not great." [Utilities]

  • "Food service remains strong. Retail is softening as mass is overly concerned about inventory and consumer spending." [Wholesale Trade]

ISM® SERVICES SURVEY RESULTS AT A GLANCE

COMPARISON OF ISM® SERVICES AND ISM® MANUFACTURING SURVEYS

JULY 2022

Index

 Services PMI®

Manufacturing PMI®

Series
Index

Jul

Series
Index

Jun

Percent
Point
Change

 

 

Direction

 

Rate of
Change

 

Trend*

(Months)

Series
Index

Jul

Series
Index

Jun

Percent
Point
Change

Services PMI®

56.7

55.3

+1.4

Growing

Faster

26

52.8

53.0

-0.2

Business Activity/

Production

59.9

56.1

+3.8

Growing

Faster

26

53.5

54.9

-1.4

New Orders

59.9

55.6

+4.3

Growing

Faster

26

48.0

49.2

-1.2

Employment

49.1

47.4

+1.7

Contracting

Slower

2

49.9

47.3

+2.6

Supplier Deliveries

57.8

61.9

-4.1

Slowing

Slower

38

55.2

57.3

-2.1

Inventories

45.0

47.5

-2.5

Contracting

Faster

2

57.3

56.0

+1.3

Prices

72.3

80.1

-7.8

Increasing

Slower

62

60.0

78.5

-18.5

Backlog of Orders

58.3

60.5

-2.2

Growing

Slower

19

51.3

53.2

-1.9

New Export Orders

59.5

57.5

+2.0

Growing

Faster

6

52.6

50.7

+1.9

Imports

48.0

46.3

+1.7

Contracting

Slower

2

54.4

50.7

+3.7

Inventory Sentiment

50.1

46.2

+3.9

Too High

From

Too Low

1

N/A

N/A

N/A

Customers' Inventories

N/A

N/A

N/A

N/A

N/A

N/A

39.5

35.2

+4.3

OVERALL ECONOMY

Growing

Faster

26

Services Sector

Growing

Faster

26

Services ISM® Report On Business® data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price
Aluminum Products* (8); Chemicals (4); Coated Freesheet; Computer Accessories; Diesel Fuel (20); Eggs; Electrical Components (18); Fuel* (19); Freight Rates; Gasoline (20); Hotel Rates (3); Heating, Ventilation and Air Conditioning (HVAC) Equipment; Labor (20); Labor — Contingent; Medical Supplies; Steel Products (19); Transformers (2); Transportation Costs; Travel (3); and Utilities.

Commodities Down in Price
Aluminum Products*; Copper Wires; Fuel*; Lumber (2); Polyvinyl Chloride (PVC) Conduit; and Steel.

Commodities in Short Supply
Appliances (5); Coated Freesheet; Computer Hardware; Electrical Components (4); Food and Beverages; Labor (12); Masks; Microchips (3); Needles and Syringes (7); Paper Products (5); Resin Based Products; Transformers (3); and Vehicles.

Note: The number of consecutive months the commodity is listed is indicated after each item. *Indicates both up and down in price.

JULY 2022 SERVICES INDEX SUMMARIES

Services PMI®
In July, the Services PMI® registered 56.7 percent, a 1.4-percentage point increase compared to the June reading of 55.3 percent. The 12-month average is 60.2 percent, reflecting consistently strong growth in the services sector, which has expanded for 26 consecutive months. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates the services sector is generally contracting.

A Services PMI® above 50.1 percent, over time, generally indicates an expansion of the overall economy. Therefore, the July Services PMI® indicates the overall economy has followed the same path as the services sector: expansion for 26 straight months following two months of contraction and a preceding period of 122 months of growth. Nieves says, "The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for July (56.7 percent) corresponds to a 2.4-percent increase in real gross domestic product (GDP) on an annualized basis."

SERVICES PMI® HISTORY

Month

Services PMI®

Month

Services PMI®

Jul 2022

56.7

Jan 2022

59.9

Jun 2022

55.3

Dec 2021

62.3

May 2022

55.9

Nov 2021

68.4

Apr 2022

57.1

Oct 2021

66.7

Mar 2022

58.3

Sep 2021

62.6

Feb 2022

56.5

Aug 2021

62.2

Average for 12 months – 60.2

High – 68.4

Low – 55.3

Business Activity
ISM®'s Business Activity Index registered 59.9 percent in July, an increase of 3.8 percentage points from the reading of 56.1 percent in June, indicating growth for the 26th consecutive month. Comments from respondents include: "With a new fiscal year starting on July 1, an uptick in demand of goods and services" and "Seeing more critical material come in, which allowed us to work on more projects."

The 13 industries reporting an increase in business activity for the month of July — listed in order — are: Mining; Real Estate, Rental & Leasing; Educational Services; Public Administration; Management of Companies & Support Services; Utilities; Construction; Other Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Wholesale Trade; Transportation & Warehousing; and Information. The four industries reporting a decrease in business activity for the month of July are: Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Retail Trade; and Finance & Insurance.

Business Activity

%Higher

%Same

%Lower

Index

Jul 2022

32.9

55.7

11.4

59.9

Jun 2022

27.0

60.5

12.5

56.1

May 2022

27.1

59.6

13.3

54.5

Apr 2022

37.8

55.7

6.5

59.1

New Orders
ISM®'s New Orders Index registered 59.9 percent, up 4.3 percentage points from the June reading of 55.6 percent. New orders grew for the 26th consecutive month after two months of contraction and a preceding period of 128 months of expansion. Comments from respondents include: "Requests for new business" and "Moderate volume increases over the previous month."

Eleven industries reported growth of new orders in July, in the following order: Real Estate, Rental & Leasing; Mining; Educational Services; Public Administration; Transportation & Warehousing; Other Services; Utilities; Management of Companies & Support Services; Construction; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The five industries reporting a decrease in new orders in July are: Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Retail Trade; Information; and Wholesale Trade.

New Orders

%Higher

%Same

%Lower

Index

Jul 2022

32.8

54.4

12.8

59.9

Jun 2022

28.3

57.7

14.0

55.6

May 2022

31.2

54.7

14.1

57.6

Apr 2022

32.9

55.6

11.5

54.6

Employment
Employment activity in the services sector contracted in July for the fourth time in the last six months. ISM®'s Employment Index registered 49.1 percent, up 1.7 percentage points from the June reading of 47.4 percent. Comments from respondents include: "Employee turnover, backfills taking longer to locate and onboard" and "Difficulties hiring new candidates as we lose more people who retire or leave the company for new opportunities."

The eight industries reporting an increase in employment in July — listed in order — are: Mining; Construction; Accommodation & Food Services; Other Services; Management of Companies & Support Services; Public Administration; Professional, Scientific & Technical Services; and Wholesale Trade. The seven industries reporting a decrease in employment in July — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Educational Services; Transportation & Warehousing; Real Estate, Rental & Leasing; Utilities; and Health Care & Social Assistance.

Employment

%Higher

%Same

%Lower

Index

Jul 2022

24.2

51.7

24.1

49.1

Jun 2022

20.4

60.1

19.5

47.4

May 2022

26.1

51.2

22.7

50.2

Apr 2022

24.6

52.3

23.1

49.5

Supplier Deliveries
The provider Deliveries Index registered 57.8 percent, down 4.1 percentage points from the 61.9 percent registered in June. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: "Lack of drivers for delivery companies due to labor shortages" and "Global supply issues are causing uncertainty on when and how many products will arrive."

The 14 industries reporting slower deliveries in July — listed in order — are: Mining; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Accommodation & Food Services; Educational Services; Construction; Utilities; Health Care & Social Assistance; Management of Companies & Support Services; Real Estate, Rental & Leasing; Public Administration; Professional, Scientific & Technical Services; Transportation & Warehousing; and Information. No industry reported faster deliveries in July.

Supplier Deliveries

%Slower

%Same

%Faster

Index

Jul 2022

25.2

65.2

9.6

57.8

Jun 2022

28.8

66.2

5.0

61.9

May 2022

27.4

67.7

4.9

61.3

Apr 2022

34.0

62.2

3.8

65.1

Inventories
The Inventories Index contracted in July for the second consecutive month after four straight months of growth preceded by an eight-month period of contraction. The reading of 45 percent was a 2.5-percentage point decrease from the 47.5 percent reported in June. Of the total respondents in July, 41 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Long lead times have consumed safety stock" and "Inventories are still lower than desired due to supply chain issues."

The seven industries reporting an increase in inventories in July — listed in order — are: Mining; Utilities; Wholesale Trade; Educational Services; Transportation & Warehousing; Public Administration; and Professional, Scientific & Technical Services. The 10 industries reporting a decrease in inventories in July — listed in order — are: Arts, Entertainment & Recreation; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Other Services; Real Estate, Rental & Leasing; Management of Companies & Support Services; Finance & Insurance; Health Care & Social Assistance; Construction; and Information.

Inventories

%Higher

%Same

%Lower

Index

Jul 2022

15.1

59.7

25.2

45.0

Jun 2022

20.2

54.7

25.1

47.5

May 2022

24.7

52.7

22.6

51.0

Apr 2022

22.4

59.7

17.9

52.3

Prices
Prices paid by services organizations for materials and services increased in July for the 62nd consecutive month, with the index registering 72.3 percent, 7.8 percentage points lower than the 80.1 percent recorded in June. This is the first Prices Index reading below 80 percent since September 2021 and its steepest month-over-month decrease since an 8.7-percentage point drop in May 2017.

Sixteen services industries reported an increase in prices paid during the month of July, in the following order: Mining; Public Administration; Information; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Educational Services; Finance & Insurance; Management of Companies & Support Services; Professional, Scientific & Technical Services; Real Estate, Rental & Leasing; Transportation & Warehousing; Construction; Health Care & Social Assistance; Other Services; Utilities; and Wholesale Trade. No industry reported a decrease in prices in July.

Prices

%Higher

%Same

%Lower

Index

Jul 2022

54.0

39.7

6.3

72.3

Jun 2022

66.1

32.2

1.7

80.1

May 2022

72.2

26.8

1.0

82.1

Apr 2022

75.4

24.4

0.2

84.6

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders
The ISM® Services Backlog of Orders Index grew in July for the 19th consecutive month. The index registered 58.3 percent, a 2.2-percentage point decrease compared to the June reading of 60.5 percent. Of the total respondents in July, 40 percent indicated they do not measure backlog of orders. Respondent comments include: "Delays caused by long lead times for components" and "Higher backlog than previous month as suppliers try to keep up with orders and slowing deliveries."

The nine industries reporting an increase in order backlogs in July — listed in order — are: Accommodation & Food Services; Real Estate, Rental & Leasing; Other Services; Public Administration; Utilities; Educational Services; Retail Trade; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The five industries reporting a decrease in order backlogs in July are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Construction; and Wholesale Trade.

Backlog of Orders

%Higher

%Same

%Lower

Index

Jul 2022

31.3

53.9

14.8

58.3

Jun 2022

32.0

57.1

10.9

60.5

May 2022

17.4

69.2

13.4

52.0

Apr 2022

26.4

66.1

7.5

59.4

New Export Orders
Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies grew in July for the sixth consecutive month. The New Export Orders Index registered 59.5 percent, a 2-percentage point increase from the 57.5 percent reported in June. Of the total respondents in July, 79 percent indicated they do not perform, or do not separately measure, orders for work outside of the U.S.

The six industries reporting an increase in new export orders in July — listed in order — are: Accommodation & Food Services; Mining; Real Estate, Rental & Leasing; Construction; Utilities; and Educational Services. Six industries reported a decrease in new export orders in July, in the following order: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Information; Transportation & Warehousing; Wholesale Trade; and Professional, Scientific & Technical Services. Six industries indicated no change in new export orders in July.

New Export Orders

%Higher

%Same

%Lower

Index

Jul 2022

24.3

70.4

5.3

59.5

Jun 2022

19.9

75.3

4.8

57.5

May 2022

27.1

67.6

5.3

60.9

Apr 2022

22.4

71.4

6.2

58.1

Imports
The Imports Index contracted in July for the second consecutive month, registering 48 percent, up 1.7 percentage points from June's reading of 46.3 percent. Eighty percent of respondents reported that they do not use, or do not track the use of, imported materials.

The seven industries reporting an increase in imports for the month of July — listed in order — are: Mining; Information; Transportation & Warehousing; Educational Services; Utilities; Wholesale Trade; and Health Care & Social Assistance. The five industries that reported a decrease in imports in July are: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Other Services; and Accommodation & Food Services. Six industries reported no change in imports in July.

Imports

%Higher

%Same

%Lower

Index

Jul 2022

8.4

79.0

12.6

48.0

Jun 2022

7.0

78.6

14.4

46.3

May 2022

14.1

77.6

8.3

52.8

Apr 2022

13.6

78.6

7.8

52.9

Inventory Sentiment
The ISM® Services Inventory Sentiment Index grew in July after four previous months of contraction, registering 50.1 percent, a 3.9-percentage point increase from June's figure of 46.2 percent. This reading indicates that respondents feel their inventories are slightly high when correlated to business activity levels.

The five industries reporting sentiment that their inventories were too high in July are: Retail Trade; Health Care & Social Assistance; Information; Wholesale Trade; and Utilities. The six industries reporting a feeling that their inventories were too low in July — listed in order — are: Accommodation & Food Services; Management of Companies & Support Services; Educational Services; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; and Construction. Six industries reported no change in July.

Inventory Sentiment

%Too

High

%About Right

%Too

Low

Index

Jul 2022

23.4

53.5

23.1

50.1

Jun 2022

19.4

53.6

27.0

46.2

May 2022

21.7

45.6

32.7

44.5

Apr 2022

21.0

51.4

27.6

46.7

About This Report
DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of July 2022.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation
The Services ISM® Report On Business® (formerly the Non-Manufacturing ISM® Report On Business®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Committee (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). The Services Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry's contribution to GDP. According to the BEA estimates for 2020 GDP (released December 22, 2021), the six largest services sectors are: Real Estate, Rental & Leasing; Government; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance. Beginning in February 2020 with January 2020 data, computation of the indexes is accomplished utilizing unrounded numbers.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and provider Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and provider Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. provider Deliveries is an exception. A provider Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI® above 50.1 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 50.1 percent, it is generally declining. The distance from 50 percent or 50.1 percent is indicative of the strength of the expansion or decline.

The Services ISM® Report On Business® survey is sent out to Services Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to provide the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

ISM ROB Content
The Institute for Supply Management® ("ISM") Report On Business® (Manufacturing, Services and Hospital reports) ("ISM ROB") contains information, text, files, images, video, sounds, musical works, works of authorship, applications, and any other materials or content (collectively, "Content") of ISM ("ISM ROB Content"). ISM ROB Content is protected by copyright, trademark, trade secret, and other laws, and as between you and ISM, ISM owns and retains all rights in the ISM ROB Content. ISM hereby grants you a limited, revocable, nonsublicensable license to access and display on your individual device the ISM ROB Content (excluding any software code) solely for your personal, non-commercial use. The ISM ROB Content shall also contain Content of users and other ISM licensors. Except as provided herein or as explicitly allowed in writing by ISM, you shall not copy, download, stream, capture, reproduce, duplicate, archive, upload, modify, translate, publish, broadcast, transmit, retransmit, distribute, perform, display, sell, or otherwise use any ISM ROB Content.

Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including, but not limited to: tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You shall not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you shall not build a business utilizing the Content, whether or not for profit.

You shall not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 W. Elliot Road, Suite 113, Tempe, AZ 85284-1556, or by emailing kcahill@ismworld.org; subject: Content Request.

ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, Manufacturing PMI®, Services PMI®, and Hospital PMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc.

About Institute for Supply Management®
Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM® Report On Business®, its highly regarded certification programs and the ISM® Advance Digital Platform. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Services ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET.

The next Services ISM® Report On Business® featuring August 2022 data will be released at 10:00 a.m. ET on Tuesday, September 6, 2022.

*Unless the New York Stock Exchange is closed.

Contact:

Kristina Cahill

Report On Business® Analyst

ISM®, ROB/Research Manager

Tempe, Arizona

+1 480.455.5910

Email: kcahill@ismworld.org

Institute for Supply Management logo. (PRNewsFoto/Institute for Supply Management)

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SOURCE Institute for Supply Management

Wed, 03 Aug 2022 02:00:00 -0500 en-US text/html https://finance.yahoo.com/news/services-pmi-56-7-july-140000696.html
Killexams : Manufacturing activity improves in July, PMI rises to 8-month high of 56.4 No result found, try new keyword!India's manufacturing activity improved in July as S&P Global's Purchasing Managers' Index (PMI) rose to an eight-month high of 56.4.In June, India's manufacturing PMI was at a nine-month low of 53.9. Sun, 31 Jul 2022 17:14:20 -0500 en-in text/html https://www.msn.com/en-in/money/topstories/manufacturing-activity-improves-in-july-pmi-rises-to-8-month-high-of-564/ar-AA10aFjx
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