“We expect strong organic operating income growth in the remainder of the year to support H2 margin expansion despite the headwinds previously mentioned and certain technical impacts.”

In context

“we are on track to achieve our 2021-23 $2 billion target ahead of plan. Turning now to the 2023 outlook, we are raising our currency-neutral top and bottom-line growth forecasts. We aim to be a growth company starting with volumes. In 2023, we expect to grow total volumes for the third year in a row, even before factoring in the excellent progress of Swedish Match’s portfolio. As part of this growth, we are reiterating our targeted HTU shipment range of $125 billion to $132 billion, while we expect a cigarette volume decline of 1.5% to 2.5%. We are increasing our organic net revenue growth forecast to 7.5% to 8.5%, reflecting the continued momentum of IQOS, the resilience of our combustible business, and the ongoing excellent growth of ZYN, which we expect to contribute positively in Q4. We expect strong organic operating income growth in the remainder of the year to support H2 margin expansion despite the headwinds previously mentioned and certain technical impacts. These relate to the increased use of third-party manufacturing in a few markets, such as Indonesia and Ukraine, and the related growth of the below Tier 1 segment in Indonesia I already mentioned. The full year estimated impact of these factors is around 40 basis points on our adjusted OI margin, and without this impact, we would expect to be broadly in the middle of our forecast organic margin range. On top of this organic evolution, we expect Swedish Match to add around 50 basis points of accretion. Our strong topline and OI outlook allows us to raise our forecast for currency-neutral adjusted diluted EPS growth to 8% to 9.5%. This translates to a revised range of $6.13 to $6.22, including $0.33 from unfavorable currency at prevailing exchange rates, notably due to the Japanese yen and”