“We believe this is more representative of the underlying momentum of our business, and in line with our 2024/2026 CAGR target range of plus 8% to 10%.”

In context

“usted IMS growth is therefore a more reliable measure of continued strong growth momentum. Excluding Russia and Ukraine, adjusted in-market sales grew by more than plus 17% for the year. For context, across the two years before the war began in 2022 these markets made up 23% of HTU shipment volumes and exceeded the company’s growth rate by a notable margin. These smoke-free volume growth rates exclude the excellent development of our oral nicotine portfolio driven by ZYN, with shipment volumes up by plus 23% in Q4 and plus 17% in 2023 on a pro forma basis. Cigarette shipments declined by a modest 1.4% in 2023, outperforming the international category decline of 2.4%. Turning to profits. Organic operating income growth stepped up in H2 to plus 10% following the exceptional headwinds of H1. We believe this is more representative of the underlying momentum of our business, and in line with our 2024/2026 CAGR target range of plus 8% to 10%. Focusing now on some key drivers of our full year operating income, smoke-free gross profit grew organically by an excellent plus 19%, expanding gross margins by 340 basis points. This reflects part of the operating leverage of IQOS I already mentioned, with a notable contribution from Swedish Match oral nicotine in the last 50 days of Q4 with organic operating profit growth of over 50%. With smoke-free commercial costs also increasing by less than net revenues, this clearly bodes well for 2024 as we continue to benefit from scale effects and manufacturing optimization. Despite very strong pricing there was only marginal organic growth in combustible gross profits. This partly reflects the negative geographic mix I already mentioned, with greater volume declines in higher margin markets l”