OWENSBORO, Ky. - Philip Morris International Inc. (NYSE: NYSE:PM) is set to expand its Owensboro, Kentucky, manufacturing facility with a $232 million investment through its affiliate Swedish Match. The expansion aims to increase production capacity for ZYN nicotine pouches, responding to a growing demand from adult consumers seeking smoke-free alternatives.
The investment is expected to generate 450 direct new jobs and approximately $277 million in annual regional economic impact. An additional 410 indirect jobs are also anticipated for Kentucky. The facility's workforce will see an increase of about 40 percent.
Kentucky Governor Andy Beshear welcomed the investment, highlighting the job opportunities it will create for families in the region and its alignment with the state's economic growth records.
The expansion, already in progress, includes additional production space and is projected to be completed by the second quarter of 2025. The construction phase alone is estimated to create nearly 2,800 jobs and a $414 million economic impact. Job openings will span various skill levels, from engineers to production staff.
To further support increased production, the facility will transition to a continuous operation schedule by the fourth quarter of this year. The plant, which currently employs around 1,100 workers, is expected to reach a capacity of around 900 million cans by 2025.
This announcement follows a July statement where PMI disclosed a $600 million investment to open a new nicotine pouch manufacturing facility in Aurora, Colorado. Both the Aurora facility and the Owensboro expansion are part of PMI's strategy to meet the demand for ZYN products among adult nicotine consumers in the U.S.
PMI entered the U.S. market with the acquisition of Swedish Match AB in late 2022. The company has been focusing on offering smoke-free products as better alternatives for adult smokers and has invested $12.5 billion globally since 2008 in the development of such products.
The company's U.S. marketing practices promote responsible access to adults over 21 years of age, with no use of social media influencers or individuals under 35 in their marketing materials.
The expansion is part of PMI's broader mission to move towards a smoke-free future, which includes a range of smoke-free options and targeted consumer activations of its IQOS heat-not-burn device in select U.S. markets.
The information in this article is based on a press release statement from Philip Morris International.
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Meanwhile, Goldman Sachs (NYSE:GS) has updated its US Conviction List, adding Dollar General (NYSE:DG), Philip Morris International, S&P Global, and Woodward (NASDAQ:WWD). This update signals the investment bank's belief in these companies' potential market performance.
In the same vein, Deutsche Bank (ETR:DBKGn) and BofA Securities have maintained a Buy rating on shares of Philip Morris International and increased their price targets, following the company's strong second-quarter performance. The company reported a gross profit of $6,139 million and an adjusted operating income rise of 12.5% to $3,656 million.
Finally, Philip Morris International reported significant organic top-line and operating income growth for the second quarter of 2024, with strong performance from its smoke-free products. The company has raised its full-year growth forecast for 2024 and continues to focus on sustainability and cost savings.
InvestingPro Insights
As Philip Morris International (NYSE: PM) continues to invest heavily in expanding its smoke-free product portfolio, the company's financial health is a critical factor for investors monitoring its capacity to sustain growth and deliver returns. According to recent InvestingPro data, PMI boasts a robust market capitalization of $188.52 billion, reflecting its significant presence in the market. This is complemented by impressive gross profit margins of 63.87% over the last twelve months as of Q2 2024, indicating efficient management and a strong pricing power.
One of the InvestingPro Tips highlights that PMI has raised its dividend for 16 consecutive years, showcasing a commitment to providing consistent shareholder returns. This dedication is further underscored by a healthy dividend yield of 4.29% as of the second quarter of 2024. Additionally, the stock's recent performance has been strong, with a price total return of 22.91% over the last three months, signaling robust investor confidence in the company's direction.
Investors considering PMI as part of their portfolio can find further insights and tips on InvestingPro, where 14 additional InvestingPro Tips related to the company are available. These tips provide a deeper understanding of PMI's financial metrics and market position, allowing for a more informed investment decision.
For those seeking to delve into the details of PMI's financials and market performance, InvestingPro offers a comprehensive analysis, including additional metrics such as the P/E ratio, which currently stands at 21.46, and the PEG ratio of 2.31, reflecting the company's earnings growth potential. With the upcoming expansion in Owensboro and the strategic focus on smoke-free products, PMI is poised to continue its trajectory in the evolving tobacco industry landscape.
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