Regulatory News:
2015 First-Quarter
- Reported diluted earnings per share of
$1.16, down by $0.02 or 1.7% versus $1.18 in 2014
- Excluding unfavorable currency of
$0.31, reported diluted earnings per share up by $0.29 or 24.6%
versus $1.18 in 2014 as detailed in the attached Schedule 9
- Adjusted diluted earnings per share of
$1.16, down by $0.03 or 2.5% versus $1.19 in 2014
- Excluding unfavorable currency of
$0.31, adjusted diluted earnings per share up by $0.28 or 23.5%
versus $1.19 in 2014 as detailed in the attached Schedule 8
- Cigarette shipment volume of 198.8
billion units, up by 1.4% excluding acquisitions
- Reported net revenues, excluding excise
taxes, of $6.6 billion, down by 4.4%
- Excluding unfavorable currency of $939
million and the impact of acquisitions, reported net revenues,
excluding excise taxes, up by 9.1% as detailed in the attached
Schedule 6
- Reported operating companies income of
$3.0 billion, down by 2.2%
- Excluding unfavorable currency of $585
million and the impact of acquisitions, reported operating
companies income up by 17.2%
- Adjusted operating companies income,
reflecting the items detailed in the attached Schedule 7, of $3.0
billion, down by 2.9%
- Excluding unfavorable currency and the
impact of acquisitions, adjusted operating companies income up by
16.3%
- Reported operating income of $2.9
billion, down by 2.7%
2015 Full-Year
Forecast
- PMI increases its 2015 full-year
reported diluted earnings per share forecast to be in a range of
$4.32 to $4.42, at prevailing exchange rates, versus $4.76 in 2014.
Excluding an unfavorable currency impact, at prevailing exchange
rates, of approximately $1.15 for the full-year 2015, the reported
diluted earnings per share range represents a projected increase of
9% to 11% versus adjusted diluted earnings per share of $5.02 in
2014, as detailed in the attached Schedule 12, compared to 8% to
10% as communicated in PMI's previous forecast of February
2015
- This forecast includes incremental
spending versus 2014 for the deployment of PMI's Reduced-Risk
Product, iQOS. The spending, which is skewed towards the second
half of the year, will support plans for national expansion in
Japan and Italy, as well as pilot or national launches in
additional markets, later in 2015
- This forecast does not include any
share repurchases in 2015
- This forecast excludes the impact of
any future acquisitions, unanticipated asset impairment and exit
cost charges, future changes in currency exchange rates and any
unusual events. Factors described in the Forward-Looking and
Cautionary Statements section of this release represent continuing
risks to these projections
Philip Morris International Inc. (NYSE / Euronext Paris: PM)
today announced its 2015 first-quarter results.
“Our strong first-quarter results are an excellent start to the
year," said André Calantzopoulos, Chief Executive Officer.
“Our organic volume and market share performance was better than
we originally forecast, underpinned by the investments we made in
2014 and an improving operating environment this year.
Our robust business momentum is such that we are raising our
guidance for the year and now forecast, at prevailing exchange
rates, constant-currency adjusted diluted EPS growth of 9%-11%.
While currency volatility persists, we remain focused on
managing our cash flow prudently and are steadfast in our aim to
return around 100% of our free cash flow to our shareholders."
Conference Call
A conference call, hosted by Jacek Olczak, Chief Financial
Officer, with members of the investor community and news media,
will be webcast at 9:00 a.m., Eastern Time, on April 16, 2015.
Access is at www.pmi.com/webcasts.
The audio webcast may also be accessed on iOS or Android devices
by downloading PMI’s free Investor Relations Mobile Application at
www.pmi.com/irapp.
Dividends and Share Repurchase
Program
During the quarter, PMI declared a regular quarterly dividend of
$1.00, representing an annualized rate of $4.00 per common share.
Since its spin-off in March 2008, PMI has increased its regular
quarterly dividend by 117.4% from the initial annualized rate of
$1.84 per common share. PMI did not make any share repurchases in
the first quarter of 2015.
Productivity and Cost Savings
Program
In 2015, PMI's productivity and cost savings initiatives will
include, but are not limited to, the continued enhancement of
production processes, the harmonization of tobacco blends, the
streamlining of product specifications and number of brand
variants, supply chain improvements and overall spending efficiency
across the company. PMI anticipates that these initiatives,
combined with savings associated with the manufacturing footprint
restructuring implemented in 2014, notably in Australia and the
Netherlands, should result in a total company cost base increase,
excluding RRPs and currency, of approximately 1%.
2015 FIRST-QUARTER
CONSOLIDATED RESULTS
In this press release, “PMI” refers to Philip Morris
International Inc. and its subsidiaries. References to total
international cigarette market, defined as worldwide cigarette
volume excluding the United States, total cigarette market, total
market and market shares are PMI estimates based on the latest
available data from a number of internal and external sources and
may, in defined instances, exclude the People's Republic of China
and/or PMI's duty-free business. North Africa is defined as
Algeria, Egypt, Libya, Morocco and Tunisia. The term “net
revenues” refers to operating revenues from the sale of our
products, excluding excise taxes and net of sales and promotion
incentives. Operating companies income, or “OCI,” is
defined as operating income, excluding general corporate expenses
and the amortization of intangibles, plus equity (income)/loss in
unconsolidated subsidiaries, net. PMI's management evaluates
business segment performance and allocates resources based on OCI.
“Adjusted EBITDA” is defined as earnings before interest,
taxes, depreciation and amortization, excluding asset impairment
and exit costs, discrete tax items and unusual items. Management
also reviews OCI, OCI margins and earnings per share, or “EPS,” on
an adjusted basis (which may exclude the impact of currency and
other items such as acquisitions, asset impairment and exit costs,
discrete tax items and unusual items), as well as free cash
flow, defined as net cash provided by operating activities less
capital expenditures, and net debt. PMI believes it is appropriate
to disclose these measures as they improve comparability and help
investors analyze business performance and trends. Non-GAAP
measures used in this release should be neither considered in
isolation nor as a substitute for the financial measures prepared
in accordance with U.S. GAAP. Comparisons are to the same
prior-year period unless otherwise stated. For a reconciliation of
non-GAAP measures to corresponding GAAP measures, see the relevant
schedules provided with this press release. Reduced-Risk
Products (“RRPs”) is the term the company uses to refer to
products with the potential to reduce individual risk and
population harm in comparison to smoking combustible cigarettes.
PMI’s RRPs are in various stages of development, and we are
conducting extensive and rigorous scientific studies to determine
whether we can support claims for such products of reduced exposure
to harmful and potentially harmful constituents in smoke, and
ultimately claims of reduced disease risk, when compared to smoking
combustible cigarettes. Before making any such claims, we will need
to evaluate rigorously the full set of data from the relevant
scientific studies to determine whether they substantiate reduced
exposure or risk. Any such claims may also be subject to government
review and approval, as is the case in the United States today.
Trademarks and service marks in this press release that are the
registered property of, or licensed by, the subsidiaries of PMI,
are italicized.
NET
REVENUES
PMI Net Revenues
($ Millions)
First-Quarter
Excl.
2015
2014
Change
Curr.
European Union $ 1,892 $ 2,013 (6.0 )% 7.8
%
Eastern Europe, Middle East & Africa 1,843 2,009 (8.3 )%
13.9 %
Asia 2,155 2,182 (1.2 )% 4.6
%
Latin America & Canada 726 713 1.8 % 14.2
%
Total PMI $ 6,616 $ 6,917
(4.4 )% 9.2
%
Net revenues of $6.6 billion were down by 4.4%. Excluding
unfavorable currency of $939 million, net revenues increased by
9.2%, or by 9.1% excluding currency and the impact of acquisitions,
driven by favorable pricing of $552 million from across all
Regions, led: in the EU, by Germany, largely driven by the
annualization of pricing in 2014, and Poland, mainly reflecting
price increases in the first quarter of 2015; in EEMA, by Egypt,
mainly driven by the impact of the change to PMI's new business
structure implemented in February 2014, and Russia, primarily
reflecting the annualization of May 2014 pricing, the favorable
impact of inventory movements, and pricing taken in the fourth
quarter of 2014, ahead of the announced excise tax increase
effective January 2015; in Asia, by Indonesia, reflecting the
annualization of 2014 pricing, and Korea, principally driven by a
gain from inventories built ahead of the announced excise tax
increase effective January, 2015; and in Latin America &
Canada, by Argentina and Canada, reflecting the annualization of
2014 pricing and pricing in the first quarter of 2015. The
favorable pricing was accompanied by favorable volume/mix of $78
million, driven by the EU and EEMA Regions, partly offset by Japan
and Korea, mainly due to the lower total markets.
OPERATING
COMPANIES INCOME
PMI Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2015
2014
Change
Curr.
European Union $ 913 $ 978 (6.6 )% 12.9 %
Eastern Europe,
Middle East & Africa 880 927 (5.1 )% 24.2 %
Asia 934
915 2.1 % 10.7 %
Latin America & Canada 230 202 13.9 %
35.6 %
Total PMI $ 2,957 $ 3,022
(2.2 )% 17.2 %
Reported operating companies income of $3.0 billion was down by
2.2%. Excluding unfavorable currency of $585 million and the impact
of acquisitions, operating companies income increased by 17.2%,
reflecting favorable pricing and favorable volume/mix of $33
million, partly offset by: higher manufacturing costs in Egypt,
mainly due to the impact of the change to PMI's new business
structure; higher distribution and marketing investments in
Indonesia, marketing support behind Marlboro in Japan, primarily
related to the roll-out of the new 2.0 Architecture; and
investments related to the commercialization of the company's
Reduced-Risk Product, iQOS.
Adjusted operating companies income decreased by 2.9% as shown
in the table below and detailed in Schedule 7. Adjusted operating
companies income, excluding unfavorable currency and the impact of
acquisitions, increased by 16.3%. Adjusted operating companies
income margin, excluding currency and acquisitions, increased by
2.9 points to 46.9%, as detailed in Schedule 7.
PMI Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2015
2014
Change
Curr.
Reported OCI $ 2,957 $ 3,022 (2.2 )% 17.2 % Asset impairment
& exit costs — (23 )
Adjusted OCI $
2,957 $ 3,045 (2.9 )%
16.3 % Adjusted OCI Margin* 44.7 % 44.0 % 0.7
2.9
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
SHIPMENT VOLUME
& MARKET SHARE
PMI Cigarette
Shipment Volume (Million Units)
First-Quarter
2015
2014
Change
European Union 42,721 41,705 2.4 %
Eastern Europe, Middle
East & Africa 64,721 62,006 4.4 %
Asia 70,125 70,801
(1.0 )%
Latin America & Canada 21,190 21,449 (1.2 )%
Total PMI 198,757 195,961 1.4 %
PMI's cigarette shipment volume of 198.8 billion units increased
by 1.4% excluding acquisitions, or by 2.7 billion units. Excluding
acquisitions and inventory movements, notably in Italy, Spain and
other markets, principally in EEMA, supplied by manufacturing
facilities in the EU Region, PMI's cigarette shipment volume
decreased by 0.5%, due to: Asia, mainly Japan, principally
reflecting an unfavorable comparison with the first quarter of
2014, and Korea, resulting from the disruptive excise tax increase
in January 2015, partially offset by Indonesia; and Latin America
& Canada, mainly Argentina and Canada, partially offset by
Brazil and Mexico.
Total cigarette shipments of Marlboro of 67.2 billion units
increased by 2.1%, driven by: the EU, notably France, Italy and
Spain; and EEMA, notably Algeria, Saudi Arabia and Turkey, partly
offset by Egypt and Ukraine. Total shipments of Marlboro decreased
in Asia, predominantly due to Japan and Korea, partially offset by
the Philippines, and declined slightly in Latin America &
Canada, mainly due to Argentina, partially offset by Brazil and
Mexico.
Total cigarette shipments of L&M of 22.7 billion units
increased by 8.2%, driven by growth in EEMA, notably Egypt, Turkey
and Ukraine, and in Asia, mainly Thailand. Total cigarette
shipments of L&M in the EU were essentially flat, with growth
in the Czech Republic, Germany and Spain offset by declines in
other markets, mainly France. Total cigarette shipments of
Parliament of 9.6 billion units decreased by 3.5%, primarily due to
Korea and Ukraine, partially offset by growth in Russia and Turkey.
Total cigarette shipments of Chesterfield of 9.5 billion units
increased by 8.6%, driven primarily by Italy, partly offset by
Russia and Ukraine. Total cigarette shipments of Bond Street of 9.2
billion units decreased by 1.1%, predominantly due to Kazakhstan
and Ukraine, partly offset by Australia and Russia. Total cigarette
shipments of Philip Morris of 7.8 billion units decreased by 3.3%,
principally reflecting the morphing to Lark in Japan. Total
cigarette shipments of Lark of 6.4 billion units decreased by 5.6%,
predominantly due to Korea and Turkey.
Total shipment volume of OTP, in cigarette equivalent units,
increased by 2.1%, mainly reflecting growth in the fine cut
category, notably in the Czech Republic and Italy, partly offset by
Germany and Portugal. Total shipment volume for cigarettes and OTP,
in cigarette equivalent units, increased by 1.4%, excluding
acquisitions.
PMI's cigarette market share increased in a number of key
markets, including Algeria, Argentina, Australia, Austria, Belgium,
the Czech Republic, Egypt, France, Germany, Hong Kong, Indonesia,
Italy, Japan, Korea, the Netherlands, Poland, Russia, Saudi Arabia,
Spain and Switzerland.
EUROPEAN UNION REGION
(EU)
2015 First-Quarter
Reported net revenues of $1.9 billion decreased by 6.0%.
Excluding unfavorable currency of $278 million, net revenues
increased by 7.8%, or by 7.5% excluding currency and the impact of
acquisitions, reflecting: favorable pricing of $108 million across
the Region, notably in Germany, largely driven by the annualization
of pricing in 2014, and Poland, mainly reflecting price increases
in the first quarter of 2015; and favorable volume and mix of $42
million, combined, driven by Italy and Spain.
Reported operating companies income of $913 million decreased by
6.6%. Excluding unfavorable currency of $191 million and the impact
of acquisitions, operating companies income increased by 12.9%,
reflecting higher pricing and favorable volume/mix of $29 million,
partly offset by increased marketing support, notably in
Switzerland behind the launch of Marlboro Gold 2.0 and in Spain
behind the launch of the e-vapor brand Solaris, business building
initiatives in the United Kingdom, and investments related to the
commercialization of the company's Reduced-Risk Product, iQOS, in
Italy.
Adjusted operating companies income decreased by 6.6%, as shown
in the table below and detailed on Schedule 7. Adjusted operating
companies income, excluding unfavorable currency and the impact of
acquisitions, increased by 12.9%.
EU Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2015
2014
Change
Curr.
Reported OCI $ 913 $ 978 (6.6 )% 12.9 % Asset impairment
& exit costs — —
Adjusted OCI $
913 $ 978 (6.6 )% 12.9
% Adjusted OCI Margin* 48.3 % 48.6 % (0.3 ) 2.3
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency and the impact of acquisitions, increased by
2.4 points to 51.0%, as detailed in Schedule 7, reflecting the
factors mentioned above.
The total cigarette market in the EU of 104.6 billion units
decreased by 1.6%. Excluding the impact of estimated trade
inventory movements, the total cigarette market declined by 2.7%,
reflecting a favorable comparison with the first quarter of 2014 in
which the total cigarette market declined by 5.7% and, in certain
key geographies, improving economies, a moderation in the level of
illicit trade, lower out-switching to the fine cut category and a
lower prevalence of e-vapor products. In 2015, the total cigarette
market in the EU is forecast to decrease by approximately 4%,
reflecting the anticipated impact of recently implemented price
increases on adult smoker demand over the balance of the year.
The total OTP market in the EU in the quarter of 37.7 billion
cigarette equivalent units decreased by 1.8%, reflecting a lower
total fine cut market, down by 2.0% to 32.9 billion cigarette
equivalent units.
EU Region &
Key Market Cigarette Shares
First-Quarter
Change
2015
2014
p.p.
Total EU 39.6 % 39.2 %
0.4 France 41.2 % 41.0 % 0.2 Germany 37.1 % 36.9 % 0.2 Italy
54.1 % 53.0 % 1.1 Poland 38.5 % 37.2 % 1.3 Spain 32.7 % 31.2 % 1.5
PMI's cigarette shipment volume of 42.7 billion units increased
by 2.4%, or by 0.2% excluding inventory movements, notably in Italy
and Spain. Market share increased by 0.4 points to 39.6% as shown
in the table above. Shipment volume of Marlboro increased by 2.8%
to 20.8 billion units, driven by France, Italy and Spain, and
market share increased by 0.1 point to 19.2%. While shipment volume
of L&M decreased slightly by 0.1% to 7.4 billion units, market
share increased by 0.1 point to 7.0%. Shipment volume of
Chesterfield of 6.3 billion units increased by 16.6%, driven by
Italy, and market share increased by 0.9 points to 5.8%. Shipment
volume of Philip Morris of 2.4 billion units increased by 1.3%,
driven by Spain, partly offset by France, and market share
increased by 0.1 point to 2.2%.
PMI's shipments of OTP of 5.5 billion cigarette equivalent units
increased by 3.7%, driven principally by higher market share. PMI's
total OTP market share increased by 0.1 point to 14.3%, reflecting
gains in the fine cut category.
EU Key Market
Commentaries
In France, the total cigarette market increased by 0.5%
to 10.6 billion units. Excluding the impact of estimated trade
inventory movements, the total cigarette market declined by 0.5%,
mainly reflecting a favorable comparison with the first quarter of
2014 in which the total cigarette market declined by 8.9%, and a
lower prevalence of e-vapor products. PMI's shipments of 4.6
billion units increased by 0.4%. Market share performance is shown
in the table below.
France Market
Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 25.4 % 25.0 % 0.4 Philip Morris 9.6 % 9.4 % 0.2 L&M
2.5 % 2.6 % (0.1 ) Others 3.7 % 4.0 % (0.3 )
TOTAL
41.2 % 41.0 % 0.2
The total industry fine cut category of 3.3 billion cigarette
equivalent units increased by 5.0%. PMI's market share of the
category decreased by 0.9 points to 25.1%.
In Germany, the total cigarette market was flat at 18.2
billion units. Excluding the impact of estimated trade inventory
movements, the total cigarette market declined by 1.6%, mainly
reflecting the impact of price increases in August and September of
2014, partially offset by a lower prevalence of illicit trade.
PMI's shipments of 6.7 billion units increased by 0.5%. Market
share performance is shown in the table below.
Germany Market
Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 21.8 % 22.0 % (0.2 ) L&M 12.1 % 11.7 % 0.4
Chesterfield 1.7 % 1.7 % — Others 1.5 % 1.5 % —
TOTAL
37.1 % 36.9 % 0.2
The total industry fine cut category of 9.5 billion cigarette
equivalent units decreased by 3.6%. PMI's market share of the
category decreased by 0.6 points to 12.5%.
In Italy, the total cigarette market decreased by 1.8% to
16.5 billion units, mainly reflecting the impact of price increases
in January 2015, partly offset by a lower prevalence of e-vapor
products. PMI's shipments of 9.6 billion units increased by 6.4%,
or by 0.2% excluding inventory movements. Market share performance
is shown in the table below.
Italy Market
Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 24.4 % 25.6 % (1.2 ) Diana 7.7 % 9.9 % (2.2 ) Chesterfield
10.5 % 5.1 % 5.4 Others 11.5 % 12.4 % (0.9 )
TOTAL
54.1 % 53.0 % 1.1
The share decline of Marlboro was largely driven by its price
increase in the first quarter of 2015 to €5.20 per pack from its
round retail price point of €5.00 per pack. The share of low-price
Diana was impacted by the growth of the super-low price segment.
The share decline of "Others" was mainly due to Merit, down by 0.5
points to 6.1%. The total industry fine cut category of 1.4 billion
cigarette equivalent units increased by 3.9%. PMI's market share of
the category increased by 0.4 points to 41.5%.
In Poland, the total cigarette market decreased by 6.8%
to 9.8 billion units, reflecting the prevalence of e-cigarettes,
illicit trade and non-duty paid OTP products. PMI's shipments of
3.8 billion units increased by 2.4%. Market share performance is
shown in the table below.
Poland Market
Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 10.6 % 10.2 % 0.4 L&M 17.6 % 16.4 % 1.2 Chesterfield
8.0 % 6.9 % 1.1 Others 2.3 % 3.7 % (1.4 )
TOTAL 38.5
% 37.2 % 1.3
The share growth of L&M was driven by its king-size and
super-slims variants, including the capsule product L&M Link
Forward. The share growth of Chesterfield was driven by its round
corner box super-slims variants introduced in the first quarter of
2014. The share decline of "Others" was due to super low-price
brands, notably RGD and Red & White. The total industry fine
cut category of 1.0 billion cigarette equivalent units decreased by
1.2%. PMI's market share of the category decreased by 1.4 points to
33.6%.
In Spain, the total cigarette market decreased by 0.7% to
10.5 billion units. Excluding the impact of estimated trade
inventory movements, the total cigarette market declined by 1.7%,
reflecting the impact of price increases in the second quarter of
2014 and the first quarter of 2015, partially offset by an
improving economic environment. PMI's shipments of 3.6 billion
units increased by 11.9%, or by 4.2% excluding inventory movements.
Market share performance is shown in the table below.
Spain Market
Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 16.1 % 15.1 % 1.0 L&M 6.0 % 6.2 % (0.2 ) Chesterfield
9.4 % 9.3 % 0.1 Others 1.2 % 0.6 % 0.6
TOTAL
32.7 % 31.2 % 1.5
The share growth of Marlboro benefited notably from a round
price point in the vending channel, the roll-out of the 2.0
Architecture and an improving economy. The share growth of "Others"
was mainly driven by Philip Morris, up by 0.6 points to 1.1%. The
total industry fine cut category of 2.2 billion cigarette
equivalent units decreased by 0.7%. PMI's market share of the fine
cut category decreased by 1.3 points to 14.4%.
EASTERN EUROPE, MIDDLE
EAST & AFRICA REGION (EEMA)
2015 First-Quarter
Reported net revenues of $1.8 billion decreased by 8.3%.
Excluding unfavorable currency of $445 million and the impact of
acquisitions, net revenues increased by 13.9%, reflecting favorable
pricing of $169 million, driven principally by: Russia, primarily
reflecting the annualization of May 2014 pricing, the favorable
impact of inventory movements, and pricing taken in the fourth
quarter of 2014, ahead of the announced excise tax increase
effective January 2015; the favorable impact of the change to PMI's
new business structure in Egypt; and favorable volume/mix of $110
million across the Region, partly offset by Kazakhstan and
Ukraine.
Reported operating companies income of $880 million decreased by
5.1%. Excluding unfavorable currency of $271 million and the impact
of acquisitions, operating companies income increased by 24.2%,
driven primarily by higher pricing and favorable volume/mix of $74
million, partly offset by higher costs in Egypt related to the
implementation of the new business model.
Adjusted operating companies income decreased by 5.1%, as shown
in the table below and detailed on Schedule 7. Adjusted operating
companies income, excluding unfavorable currency and the impact of
acquisitions, increased by 24.2%.
EEMA Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2015
2014
Change
Curr.
Reported OCI $ 880 $ 927 (5.1 )% 24.2 % Asset impairment
& exit costs — —
Adjusted OCI $
880 $ 927 (5.1 )% 24.2
% Adjusted OCI Margin* 47.7
%
46.1
%
1.6 4.2
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency and the impact of acquisitions, increased by
4.2 points to 50.3%, as detailed on Schedule 7, reflecting the
factors mentioned above.
PMI's cigarette shipment volume of 64.7 billion units increased
by 4.4%, or by 0.1% excluding inventory movements.
PMI's cigarette shipment volume of premium brands increased by
6.9%, driven principally by: Marlboro, up by 9.8% to 20.3 billion
units, driven notably by Algeria, Saudi Arabia and Turkey,
partially offset by Egypt and Ukraine; and Parliament, up by 3.1%
to 7.4 billion units, driven by Russia and Turkey, partly offset by
Ukraine.
EEMA Key Market
Commentaries
In North Africa, the estimated total cigarette market
decreased by 4.5% to 32.6 billion units, due to Algeria, Egypt,
Libya and Morocco, partly offset by Tunisia. PMI’s shipment volume
of 9.2 billion units increased by 7.6%, mainly driven by Marlboro
in Algeria and L&M in Egypt. Market share performance is shown
in the table below.
North Africa
Market Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 14.7 % 15.3 % (0.6 ) L&M 10.7 % 8.1 % 2.6 Others 2.0 %
1.9 % 0.1
TOTAL 27.4 % 25.3
% 2.1
In Russia, the estimated total cigarette market decreased
by 9.3% to 61.5 billion units, mainly due to the unfavorable impact
of tax-driven price increases and a weak economy. In 2015, the
total market is forecast to decrease by an estimated 8% to 10%.
PMI's shipment volume in the quarter of 19.0 billion units
increased by 2.3%. February quarter-to-date market share
performance, as measured by Nielsen, is shown in the table
below.
Russia Market
Share
First-Quarter
Change
2015
2014
p.p.
Parliament 4.0 % 3.5 % 0.5 Marlboro 1.4 % 1.7 % (0.3 ) Bond Street
7.9 % 7.0 % 0.9 Others 14.4 % 14.6 % (0.2 )
TOTAL
27.7 % 26.8 % 0.9
The share growth of Bond Street was driven by its Compact
variant, partly offset by its mainline variants.
In Turkey, the estimated total cigarette market increased
by 7.0% to 19.4 billion units. Excluding the impact of estimated
trade inventory movements, the total cigarette market increased by
3.9%, mainly reflecting an increase in the adult population and a
lower prevalence of illicit trade. PMI's shipment volume of 9.3
billion units increased by 3.5%. February quarter-to-date market
share performance, as measured by Nielsen, is shown in the table
below.
Turkey Market
Share
First-Quarter
Change
2015
2014
p.p.
Parliament 11.5 % 10.4 % 1.1 Marlboro 8.9 % 8.6 % 0.3 Lark 7.3 %
10.3 % (3.0 ) Others 15.6 % 15.0 % 0.6
TOTAL
43.3 % 44.3 % (1.0 )
The share growth of Parliament was driven by strong brand
equity, especially its king-size variant, Night Blue, up by 0.8
points to 6.1%, and by up-trading from the mid-price segment. The
share decline of Lark reflects the impact of price repositioning by
PMI's principal competitor in May 2014. The share increase of
"Others" was driven by L&M, up by 0.6 points to 7.2%, and
Chesterfield, up by 1.4 points to 3.3%.
In Ukraine, the estimated total cigarette market
increased by 3.2% to 14.8 billion units, mainly reflecting a
favorable comparison with the first quarter of 2014 in which the
estimated total cigarette market declined by 6.6%, and a lower
prevalence of illicit trade, partly offset by continued business
disruption due to the political instability in the east of the
country. PMI's shipment volume of 4.6 billion units decreased by
9.8%. February quarter-to-date market share performance, as
measured by Nielsen, is shown in the table below.
Ukraine Market
Share
First-Quarter
Change
2015
2014
p.p.
Parliament 2.9 % 3.0 % (0.1 ) Marlboro 4.6 % 5.1 % (0.5 )
Chesterfield 4.4 % 5.3 % (0.9 ) Others 19.8 % 19.8 % —
TOTAL 31.7 % 33.2 % (1.5
)
ASIA
REGION
2015 First-Quarter
Reported net revenues of $2.2 billion decreased by 1.2%.
Excluding unfavorable currency of $128 million and the impact of
acquisitions, net revenues increased by 4.6%, driven by favorable
pricing of $151 million, mainly in Indonesia, reflecting the
annualization of 2014 pricing, and Korea, mainly driven by a gain
from inventories built ahead of the announced excise tax increase
effective January 2015, partly offset by Japan and the Philippines.
The favorable pricing was partially offset by unfavorable
volume/mix of $50 million, mainly due to a lower total market in
Japan and Korea, partly offset by: a favorable total market
comparison, and higher market share, in Australia; a higher total
market and share in Indonesia; and a higher estimated total
tax-paid market and improved mix in the Philippines.
Reported operating companies income of $934 million increased by
2.1%. Excluding unfavorable currency of $79 million and the impact
of acquisitions, operating companies income increased by 10.7%,
reflecting favorable pricing, and favorable asset and impairment
and exit costs compared to the first quarter of 2014 related to the
factory closure in Australia, partly offset by: unfavorable
volume/mix of $44 million; higher distribution and marketing
investments in Indonesia; increased marketing support behind
Marlboro in Japan, primarily related to the roll-out of the new 2.0
Architecture; and investments related to the commercialization of
the company's Reduced-Risk Product, iQOS, in Japan.
Adjusted operating companies income decreased by 0.4% as shown
in the table below and detailed on Schedule 7. Adjusted operating
companies income, excluding unfavorable currency and the impact of
acquisitions, increased by 8.0%.
Asia Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2015
2014
Change
Curr.
Reported OCI $ 934 $ 915 2.1 % 10.7 % Asset impairment &
exit costs — (23 )
Adjusted OCI $ 934
$ 938 (0.4 )% 8.0 %
Adjusted OCI Margin* 43.3 % 43.0 % 0.3 1.4
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency and the impact of acquisitions, increased by
1.4 points to 44.4%, as detailed on Schedule 7, reflecting the
factors mentioned above.
PMI's cigarette shipment volume of 70.1 billion units decreased
by 1.0%, primarily due to Japan, mainly reflecting an unfavorable
comparison with the first quarter of 2014, and Korea, resulting
from the disruptive excise tax increase in January 2015, partially
offset by industry and market share growth in Indonesia.
Shipment volume of Marlboro of 18.0 billion units decreased by
5.2%, predominantly due to Japan and Korea, partly offset by the
Philippines. Shipment volume of Parliament of 1.9 billion units
decreased by 23.5%, due to Korea. Shipment volume of Lark of 4.6
billion units decreased by 1.0%, due to Korea, partly offset by
Japan.
Asia Key Market
Commentaries
In Indonesia, the estimated total cigarette market
increased by 5.9% to 78.2 billion units, reflecting a favorable
comparison with the first quarter of 2014 in which the estimated
total cigarette market declined by 0.5%, and an increase in the
adult population. In 2015, the total market is forecast to increase
by approximately 2%. PMI's shipment volume in the quarter of 27.7
billion units increased by 8.4%, driven by industry growth and
market share gains, notably of PMI's machine-made brands. Market
share performance is shown in the table below.
Indonesia Market
Share
First-Quarter
Change
2015
2014
p.p.
Sampoerna A 14.9 % 14.4 % 0.5 Dji Sam Soe 7.0 % 5.6 % 1.4 U Mild
5.0 % 5.2 % (0.2 ) Others 8.5 % 9.4 % (0.9 )
TOTAL
35.4 % 34.6 % 0.8
The share decline of "Others" was mainly due to Sampoerna Hijau,
down by 0.6 points to 3.1%, largely reflecting the decline of the
total hand-rolled kretek segment. While Marlboro's market share
decreased by 0.2 points to 5.1%, its share of the “white”
cigarettes segment, which represented 6.2% of the total cigarette
market, increased by 0.9 points to 81.3%. The machine-made kretek
segment, representing 74.6% of the total cigarette market,
increased by 2.1 points and PMI's share of the segment increased by
2.0 points to 30.9%. The hand-rolled kretek segment, representing
19.2% of the total cigarette market, decreased by 1.7 points. PMI's
share of the segment decreased by 1.8 points to 37.8%.
In Japan, the total cigarette market decreased by 13.9%
to 42.5 billion units, primarily reflecting an unfavorable
comparison with the first quarter of 2014 in which the total market
increased by 9.6%, mainly driven by retail trade and consumer
purchasing ahead of the consumption tax-driven retail price
increases of April 2014. Excluding the impact of these estimated
inventory movements, the total cigarette market declined by 3.5%,
mainly reflecting the unfavorable impact of the aforementioned
price increases. In 2015, the total market is forecast to decrease
by an estimated 2.5% to 3.0%. PMI's shipment volume in the quarter
of 11.8 billion units decreased by 12.2%, principally due to the
lower total market. Market share performance is shown in the table
below.
Japan Market
Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 11.5 % 11.9 % (0.4 ) Lark 9.9 % 9.4 % 0.5 Virginia S. 1.9
% 1.9 % — Others 2.3 % 2.3 % —
TOTAL 25.6
% 25.5 % 0.1
In Korea, the total cigarette market decreased by 35.1%
to 12.6 billion units, reflecting the reversal of estimated trade
inventories built ahead of the announced excise tax increase
effective January, 2015, and the impact of the related price
increases that saw the retail price of PMI's premium brands
increase by 67%. Excluding the impact of these estimated inventory
movements, the total cigarette market declined by 22.8%, in line
with the underlying forecast decline of 20%-25% for the full year
2015. PMI's shipment volume in the quarter of 2.5 billion units
decreased by 35.8%, reflecting the lower total market. Market share
performance is shown in the table below.
Korea Market
Share
First-Quarter
Change
2015
2014
p.p.
Parliament 6.6 % 7.1 % (0.5 ) Marlboro 9.1 % 7.9 % 1.2 Virginia S.
3.8 % 4.1 % (0.3 ) Others 0.6 % 0.8 % (0.2 )
TOTAL
20.1 % 19.9 % 0.2
In the Philippines, the estimated total tax-paid industry
cigarette volume increased by 1.0% to 18.9 billion units, primarily
reflecting higher estimated duty-paid volume by PMI's principal
domestic competitor. PMI's shipment volume of 15.9 billion units
decreased by 1.6%, primarily due to declines of PMI's low and
super-low price brands, partially offset by growth of Marlboro,
reflecting the positive impact of retail price increases at the
bottom end of the market that narrowed price gaps. Market share
performance is shown in the table below.
Philippines
Market Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 21.8 % 19.4 % 2.4 Fortune 32.3 % 33.3 % (1.0 ) Jackpot
16.5 % 17.9 % (1.4 ) Others 13.3 % 15.6 % (2.3 )
TOTAL
83.9 % 86.2 % (2.3 )
The share decline of "Others" was principally due to super-low
price Champion, down by 2.3 points to 2.3%.
LATIN AMERICA &
CANADA REGION
2015 First-Quarter
Reported net revenues of $726 million increased by 1.8%.
Excluding unfavorable currency of $88 million and the impact of
acquisitions, net revenues increased by 14.0%, driven by favorable
pricing of $124 million, principally in Argentina and Canada,
reflecting the annualization of 2014 pricing and price increases in
the first quarter of 2015, partially offset by unfavorable
volume/mix of $24 million, principally due to a lower total market
and market share in Canada.
Reported operating companies income of $230 million increased by
13.9%. Excluding unfavorable currency of $44 million and the impact
of acquisitions, operating companies income increased by 35.1%,
principally reflecting favorable pricing, partly offset by
unfavorable volume/mix of $26 million.
Adjusted operating companies income increased by 13.9%, as shown
in the table below and detailed on Schedule 7. Adjusted operating
companies income, excluding unfavorable currency and the impact of
acquisitions, increased by 35.1%.
Latin America
& Canada Operating Companies Income ($ Millions)
First-Quarter
Excl.
2015
2014
Change
Curr.
Reported OCI $ 230 $ 202 13.9 % 35.6 % Asset impairment
& exit costs — —
Adjusted OCI $
230 $ 202 13.9 % 35.6
% Adjusted OCI Margin* 31.7 % 28.3 % 3.4 5.4
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency and the impact of acquisitions, increased by
5.3 points to 33.6%, as detailed on Schedule 7, reflecting the
factors mentioned above.
PMI's cigarette shipment volume of 21.2 billion units decreased
by 1.2%, largely due to Argentina and Canada, partly offset by
Brazil and Mexico. Although shipment volume of Marlboro of 8.2
billion units decreased slightly by 0.3%, its Regional market share
increased by 0.5 points to an estimated 14.6%. Market share of
Marlboro increased notably in Argentina, Brazil and Colombia, by
0.3, 1.1 and 1.3 points to 24.4%, 9.6% and 8.8%, respectively.
Latin America & Canada Key Market
Commentaries
In Argentina, the total cigarette market decreased by
3.5% to 10.3 billion units. PMI's cigarette shipment volume in the
quarter of 8.1 billion units decreased by 1.9%. Market share
performance is shown in the table below.
Argentina Market
Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 24.4 % 24.1 % 0.3 Philip Morris 44.6 % 43.3 % 1.3 Next 1.7
% 2.2 % (0.5 ) Others 7.8 % 7.5 % 0.3
TOTAL
78.5 % 77.1 % 1.4
The share growth of Philip Morris reflects the positive impact
of its capsule variants.
In Canada, the total cigarette market decreased by 6.6%
to 5.4 billion units, mainly due to the impact of tax-driven price
increases during the first half of 2014. PMI's cigarette shipment
volume of 2.1 billion units decreased by 7.7%. Market share
performance is shown in the table below.
Canada Market
Share
First-Quarter
Change
2015
2014
p.p.
Belmont 3.1 % 2.8 % 0.3 Canadian Classics 10.9 % 11.2 % (0.3 ) Next
10.6 % 10.9 % (0.3 ) Others 13.1 % 13.7 % (0.6 )
TOTAL
37.7 % 38.6 % (0.9 )
In Mexico, the total cigarette market increased by 4.7%
to 7.5 billion units. Excluding the impact of favorable trade
inventory movements, the total cigarette market was estimated to
have declined by 0.7%. PMI's cigarette shipment volume in the
quarter of 5.0 billion units increased by 2.6%. Market share
performance is shown in the table below.
Mexico Market
Share
First-Quarter
Change
2015
2014
p.p.
Marlboro 45.4 % 47.0 % (1.6 ) Benson & Hedges 4.6 % 5.2 % (0.6
) Delicados 10.9 % 10.7 % 0.2 Others 5.4 % 4.8 % 0.6
TOTAL 66.3 % 67.7 % (1.4
)
The share decline of Marlboro was primarily due to adult smoker
down-trading and the timing of price increases by PMI's principal
competitor.
Philip Morris International Inc.
Profile
Philip Morris International Inc. (PMI) is the leading
international tobacco company, with six of the world's top 15
international brands, including Marlboro, the number one cigarette
brand worldwide. PMI's products are sold in more than 180 markets.
In 2014, the company held an estimated 15.6% share of the total
international cigarette market outside of the U.S., or 28.6%
excluding the People's Republic of China and the U.S. For more
information, see www.pmi.com.
Forward-Looking and Cautionary
Statements
This press release contains projections of future results and
other forward-looking statements. Achievement of projected results
is subject to risks, uncertainties and inaccurate assumptions. In
the event that risks or uncertainties materialize, or underlying
assumptions prove inaccurate, actual results could vary materially
from those contained in such forward-looking statements. Pursuant
to the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995, PMI is identifying important factors
that, individually or in the aggregate, could cause actual results
and outcomes to differ materially from those contained in any
forward-looking statements made by PMI.
PMI's business risks include: significant increases in
cigarette-related taxes; the imposition of discriminatory excise
tax structures; fluctuations in customer inventory levels due to
increases in product taxes and prices; increasing marketing and
regulatory restrictions, often with the goal of reducing or
preventing the use of tobacco products; health concerns relating to
the use of tobacco products and exposure to environmental tobacco
smoke; litigation related to tobacco use; intense competition; the
effects of global and individual country economic, regulatory and
political developments; changes in adult smoker behavior; lost
revenues as a result of counterfeiting, contraband and cross-border
purchases; governmental investigations; unfavorable currency
exchange rates and currency devaluations; adverse changes in
applicable corporate tax laws; adverse changes in the cost and
quality of tobacco and other agricultural products and raw
materials; and the integrity of its information systems. PMI's
future profitability may also be adversely affected should it be
unsuccessful in its attempts to produce products that have the
potential to reduce individual risk and population harm; if it is
unable to successfully introduce new products, promote brand
equity, enter new markets or improve its margins through increased
prices and productivity gains; if it is unable to expand its brand
portfolio internally or through acquisitions and the development of
strategic business relationships; or if it is unable to attract and
retain the best global talent.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including the Form 10-K for the
year ended December 31, 2014. PMI cautions that the foregoing list
of important factors is not a complete discussion of all potential
risks and uncertainties. PMI does not undertake to update any
forward-looking statement that it may make from time to time,
except in the normal course of its public disclosure
obligations.
Schedule 1 PHILIP MORRIS INTERNATIONAL
INC. and Subsidiaries Condensed Statements of Earnings
For the
Quarters Ended March 31, ($ in millions, except per share data)
(Unaudited)
2015 2014 %
Change Net revenues $ 17,352
$ 17,779 (2.4 )% Cost of sales
2,229 2,374 (6.1 )% Excise taxes on products (1) 10,736
10,862 (1.2 )% Gross profit 4,387 4,543 (3.4 )%
Marketing, administration and research costs 1,494 1,547 Asset
impairment and exit costs —
23
Amortization of intangibles 22 22
Operating
income (2) 2,871 2,951 (2.7 )%
Interest expense, net 275 268 Earnings before
income taxes 2,596 2,683 (3.2 )% Provision for income taxes 785 776
1.2 % Equity (income)/loss in unconsolidated subsidiaries, net (23
) (9 ) Net earnings 1,834 1,916 (4.3 )% Net earnings
attributable to noncontrolling interests 39 41
Net earnings attributable to PMI $
1,795 $ 1,875
(4.3 )% Per share data: (3) Basic
earnings per share $ 1.16
$ 1.18 (1.7 )% Diluted
earnings per share $ 1.16
$ 1.18 (1.7 )%
(1) The segment detail of excise taxes on
products sold for the quarters ended March 31, 2015 and 2014 is
shown onSchedule 2.
(2) PMI's management evaluates segment
performance and allocates resources based on operating companies
income,which PMI defines as operating income, excluding general
corporate expenses and amortization of intangibles, plus
equity(income)/loss in unconsolidated subsidiaries, net. The
reconciliation from operating income to operating companies income
isas follows:
2015 2014 % Change
Operating Income $ 2,871 $ 2,951
(2.7 )%
Excluding:
- Amortization of Intangibles 22 22 - General corporate expenses
(included in marketing, administration and research costs above) 41
40 Plus: Equity (income)/loss in unconsolidated subsidiaries, net
(23 ) (9 )
Operating Companies Income $
2,957 $ 3,022
(2.2 )%
(3) Net earnings and weighted-average
shares used in the basic and diluted earnings per share
computations for thequarters ended March 31, 2015 and 2014 are
shown on Schedule 4, Footnote 1.
Schedule 2
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Selected
Financial Data by Business Segment
For the Quarters Ended March
31, ($ in millions) (Unaudited)
Net Revenues
excluding Excise Taxes
EuropeanUnion
EEMA Asia
LatinAmerica&
Canada
Total 2015 Net Revenues (1) $ 5,940 $
4,429 $ 4,764 $ 2,219 $ 17,352 Excise Taxes on
Products (4,048 ) (2,586 ) (2,609 ) (1,493 )
(10,736 )
Net Revenues excluding Excise Taxes
1,892 1,843 2,155 726 6,616
2014 Net Revenues $ 6,619 $ 4,562 $ 4,475 $ 2,123 $
17,779 Excise Taxes on Products (4,606 ) (2,553 )
(2,293 ) (1,410 ) (10,862 )
Net Revenues excluding
Excise Taxes 2,013 2,009 2,182 713
6,917 Variance Currency (278 ) (445 ) (128 )
(88 ) (939 ) Acquisitions 7 — — 1 8
Operations 150 279 101
100 630
Variance Total (121
) (166 ) (27 ) 13
(301 ) Variance Total (%) (6.0 )% (8.3 )% (1.2 )% 1.8
% (4.4 )% Variance excluding Currency 157 279 101 101 638
Variance excluding Currency (%) 7.8 % 13.9 % 4.6 % 14.2 % 9.2 %
Variance excluding Currency & Acquisitions 150 279 101
100 630 Variance excluding Currency & Acquisitions (%) 7.5 %
13.9 % 4.6 % 14.0 % 9.1 % (1) 2015 Currency
decreased net revenues as follows: European Union $ (890 ) EEMA
(1,033 ) Asia (230 ) Latin America & Canada (288 ) $ (2,441 )
Schedule 3
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Selected
Financial Data by Business Segment
For the Quarters Ended March
31, ($ in millions) (Unaudited)
Operating Companies Income
EuropeanUnion
EEMA Asia
LatinAmerica&
Canada
Total 2015 $ 913 $ 880 $ 934 $ 230 $
2,957 2014 978 927 915 202 3,022 % Change (6.6 )% (5.1 )%
2.1 % 13.9 % (2.2 )%
Reconciliation:
For the quarter ended March 31, 2014 $ 978
$ 927 $ 915 $ 202
$ 3,022 2014 Asset impairment and exit costs —
— 23 — 23 2015 Asset impairment and exit costs — — — — —
Acquired businesses — — — 1 1 Currency (191 ) (271 ) (79 ) (44 )
(585 ) Operations 126 224 75
71 496
For the quarter ended March
31, 2015 $ 913 $
880 $ 934
$ 230 $ 2,957
Schedule 4 PHILIP MORRIS
INTERNATIONAL INC. and Subsidiaries Diluted Earnings Per Share
For the Quarters Ended March 31, ($ in millions, except per
share data) (Unaudited)
Diluted E.P.S.
2015 Diluted Earnings Per Share $ 1.16
(1)
2014 Diluted Earnings Per Share $ 1.18 (1) Change $ (0.02 ) %
Change (1.7 )%
Reconciliation:
2014 Diluted Earnings Per Share $ 1.18 (1)
Special
Items:
2014 Asset impairment and exit costs 0.01 2014 Tax items — 2015
Asset impairment and exit costs — 2015 Tax items — Currency
(0.31 ) Interest (0.01 ) Change in tax rate (0.03 ) Impact of lower
shares outstanding and share-based payments 0.04 Operations 0.28
2015 Diluted Earnings Per Share $
1.16 (1) (1) Basic and diluted EPS were
calculated using the following (in millions):
Q12015
Q12014 Net earnings attributable to PMI $
1,795 $ 1,875 Less distributed and undistributed earnings
attributable to share-based payment awards 7 9 Net
earnings for basic and diluted EPS $ 1,788 $
1,866 Weighted-average shares for basic and
diluted EPS 1,548 1,583
Schedule 5 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Condensed Balance Sheets ($ in millions, except ratios)
(Unaudited)
March 31, December 31, 2015
2014
Assets
Cash and cash equivalents $ 1,524 $ 1,682 All other
current assets 12,751 13,802 Property, plant and equipment, net
5,697 6,071 Goodwill 7,920 8,388 Other intangible assets, net 2,855
2,985 Investments in unconsolidated subsidiaries 1,064 1,083 Other
assets 1,444 1,176
Total assets $
33,255 $ 35,187
Liabilities and
Stockholders' (Deficit) Equity
Short-term borrowings $ 3,384 $ 1,208 Current portion of long-term
debt 1,629 1,318 All other current liabilities 9,967 12,586
Long-term debt 25,572 26,929 Deferred income taxes 1,975 1,549
Other long-term liabilities 2,974 2,800 Total
liabilities 45,501 46,390 Total PMI stockholders' deficit
(13,616 ) (12,629 ) Noncontrolling interests 1,370 1,426
Total stockholders' deficit (12,246 ) (11,203 )
Total
liabilities and stockholders' (deficit) equity $
33,255 $ 35,187
Total debt $ 30,585 $ 29,455 Total debt to Adjusted EBITDA 2.35
(1)
2.24
(1)
Net debt to Adjusted EBITDA 2.23
(1)
2.12 (1)
(1) For the calculation of Total Debt to Adjusted EBITDA and Net
Debt to Adjusted EBITDA ratios, refer to Schedule 10.
Schedule 6 PHILIP MORRIS INTERNATIONAL
INC. and Subsidiaries Reconciliation of Non-GAAP Measures
Adjustments for the Impact of Currency and Acquisitions
For the
Quarters Ended March 31, ($ in millions) (Unaudited)
2015 2014
% Change in Reported NetRevenues
excluding Excise Taxes
Reported Net Revenues
LessExciseTaxes
Reported Net Revenues excluding Excise Taxes
LessCurrency Reported Net Revenues excluding
Excise Taxes & Currency
LessAcquisi-tions
Reported Net Revenues excluding Excise Taxes, Currency &
Acquisitions
Reported Net Revenues
LessExciseTaxes
Reported Net Revenues excluding Excise Taxes
Reported
Reported excluding Currency
Reported excluding Currency & Acquisitions
$ 5,940 $ 4,048 $ 1,892 $ (278 ) $ 2,170 $ 7 $ 2,163 European Union
$ 6,619 $ 4,606 $ 2,013 (6.0 )% 7.8 % 7.5 % 4,429 2,586 1,843 (445
) 2,288 — 2,288 EEMA 4,562 2,553 2,009 (8.3 )% 13.9 % 13.9 % 4,764
2,609 2,155 (128 ) 2,283 — 2,283 Asia 4,475 2,293 2,182 (1.2 )% 4.6
% 4.6 % 2,219 1,493 726 (88 ) 814 1 813 Latin America & Canada
2,123 1,410 713 1.8 % 14.2 % 14.0 %
$
17,352 $ 10,736 $
6,616 $ (939 ) $
7,555 $ 8 $ 7,547
PMI Total $ 17,779 $
10,862 $ 6,917 (4.4
)% 9.2 % 9.1 %
2015 2014
% Change in Reported
OperatingCompanies Income
Reported Operating Companies Income
LessCurrency Reported Operating Companies Income
excluding Currency
LessAcquisi-tions
Reported Operating Companies Income excluding Currency &
Acquisitions Reported Operating Companies Income
Reported
Reported excluding Currency Reported
excluding Currency & Acquisitions $ 913 $ (191 ) $
1,104 $ — $ 1,104 European Union $ 978 (6.6 )% 12.9 % 12.9 % 880
(271 ) 1,151 — 1,151 EEMA 927 (5.1 )% 24.2 % 24.2 % 934 (79 ) 1,013
— 1,013 Asia 915 2.1 % 10.7 % 10.7 % 230 (44 ) 274 1 273 Latin
America & Canada 202 13.9 % 35.6 % 35.1 %
$ 2,957 $
(585 ) $ 3,542 $ 1
$ 3,541 PMI Total $
3,022 (2.2 )% 17.2 %
17.2 %
Schedule 7
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of
Non-GAAP Measures Reconciliation of Reported Operating Companies
Income to Adjusted Operating Companies Income & Reconciliation
of Adjusted Operating Companies Income Margin, excluding Currency
and Acquisitions
For the Quarters Ended March 31, ($ in
millions) (Unaudited)
2015 2014
% Change in Adjusted
OperatingCompanies Income
Reported Operating Companies
Income
LessAsset Impairment & Exit
Costs
Adjusted Operating Companies
Income
LessCurrency
Adjusted Operating Companies Income
excluding Currency
LessAcquisi-tions
Adjusted Operating Companies Income
excluding Currency & Acquisitions
Reported Operating Companies
Income
LessAsset Impairment & Exit
Costs
Adjusted Operating Companies
Income
Adjusted
Adjusted excluding Currency
Adjusted excluding Currency &
Acquisitions
$ 913 $ — $ 913 $ (191
)
$ 1,104 $ — $ 1,104
EuropeanUnion
$ 978 $ — $ 978 (6.6 )% 12.9 % 12.9 % 880 — 880 (271 ) 1,151 —
1,151 EEMA 927 — 927 (5.1 )% 24.2 % 24.2 % 934 — 934 (79 ) 1,013 —
1,013 Asia 915 (23 ) 938 (0.4 )% 8.0 % 8.0 % 230 — 230 (44 ) 274 1
273
Latin America& Canada
202 — 202 13.9 % 35.6 % 35.1 %
$ 2,957
$ — $ 2,957
$ (585 ) $ 3,542 $
1 $ 3,541 PMI Total
$ 3,022 $ (23 ) $
3,045 (2.9 )% 16.3 %
16.3 % 2015 2014
% Points Change
Adjusted Operating Companies Income
excluding Currency
NetRevenuesexcludingExcise Taxes
&Currency(1)
Adjusted Operating Companies Income
Margin excluding Currency
Adjusted Operating Companies Income
excluding Currency & Acquisitions
NetRevenuesexcludingExcise
Taxes,Currency &Acquisitions(1)
Adjusted Operating Companies Income
Margin excluding Currency & Acquisitions
Adjusted Operating Companies
Income
NetRevenuesexcludingExciseTaxes(1)
Adjusted Operating Companies Income
Margin
Adjusted Operating Companies Income
Margin excluding Currency
Adjusted Operating Companies Income
Margin excluding Currency & Acquisitions
$ 1,104 $ 2,170 50.9 % $ 1,104 $ 2,163 51.0 %
EuropeanUnion
$ 978 $ 2,013 48.6 % 2.3 2.4 1,151 2,288 50.3 % 1,151 2,288 50.3 %
EEMA 927 2,009 46.1 % 4.2 4.2 1,013 2,283 44.4 % 1,013 2,283 44.4 %
Asia 938 2,182 43.0 % 1.4 1.4 274 814 33.7 % 273 813 33.6 %
Latin America& Canada
202 713 28.3 % 5.4 5.3
$ 3,542 $ 7,555
46.9 % $ 3,541 $
7,547 46.9 % PMI Total $
3,045 $ 6,917 44.0
% 2.9 2.9
(1) For the calculation of net revenues excluding excise taxes,
currency and acquisitions, refer to Schedule 6.
Schedule 8 PHILIP MORRIS INTERNATIONAL
INC. and Subsidiaries Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and
Adjusted Diluted EPS, excluding Currency
For the Quarters Ended
March 31, (Unaudited)
2015 2014
% Change
Reported Diluted EPS $ 1.16
$ 1.18 (1.7 )%
Adjustments: Asset impairment and exit costs — 0.01 Tax items —
—
Adjusted Diluted EPS $
1.16 $ 1.19 (2.5 )% Less:
Currency impact (0.31 )
Adjusted Diluted EPS,
excluding Currency $ 1.47 $
1.19 23.5 %
Schedule 9
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of
Non-GAAP Measures Reconciliation of Reported Diluted EPS to
Reported Diluted EPS, excluding Currency
For the Quarters Ended
March 31, (Unaudited)
2015
2014 % Change Reported Diluted EPS
$ 1.16 $ 1.18 (1.7
)% Less: Currency impact (0.31 )
Reported Diluted EPS, excluding Currency $
1.47 $ 1.18 24.6
% Schedule 10
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of
Non-GAAP Measures Calculation of Total Debt to Adjusted EBITDA and
Net Debt to Adjusted EBITDA Ratios ($ in millions, except ratios)
(Unaudited)
For the Year Ended For the Year
Ended March 31, December 31,
2015 2014
April ~ December
January ~
March
12 months 2014
2015
rolling Earnings before income taxes $ 7,967 $ 2,596 $
10,563 $ 10,650 Interest expense, net 784 275 1,059 1,052
Depreciation and amortization 678 192 870 889 Extraordinary,
unusual or non-recurring expenses, net (1) 512 — 512 535
Adjusted EBITDA $ 9,941 $ 3,063
$ 13,004 $ 13,126
March
31,
December 31, 2015 2014 Short-term
borrowings $ 3,384 $ 1,208 Current portion of long-term debt 1,629
1,318 Long-term debt 25,572 26,929
Total Debt $
30,585 $ 29,455 Less: Cash and cash
equivalents 1,524 1,682
Net Debt $ 29,061
$ 27,773
Ratios
Total Debt to Adjusted EBITDA 2.35 2.24 Net
Debt to Adjusted EBITDA 2.23 2.12 (1)
Asset Impairment and Exit Costs at Operating Income level.
Schedule 11 PHILIP MORRIS INTERNATIONAL
INC. and Subsidiaries Reconciliation of Non-GAAP Measures
Reconciliation of Operating Cash Flow to Free Cash Flow and Free
Cash Flow, excluding Currency Reconciliation of Operating Cash Flow
to Operating Cash Flow, excluding Currency
For the Quarters
Ended March 31, ($ in millions) (Unaudited)
For the
Quarters Ended March 31, 2015 2014 %
Change Net cash provided by operating
activities(a) $ (375 ) $
715 >(100.0)% Less: Capital
expenditures 203 256
Free cash flow
$ (578 ) $ 459
>(100.0)% Less: Currency impact (956 )
Free cash flow, excluding currency $
378 $ 459 (17.6)%
For the Quarters Ended March 31, 2015
2014 % Change Net cash provided by
operating activities(a) $ (375 ) $
715 >(100.0)% Less: Currency impact (986 )
Net cash provided by operating
activities,excluding currency $ 611
$ 715 (14.5)% (a)
Operating cash flow.
Schedule 12 PHILIP MORRIS INTERNATIONAL INC. and
Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of
Reported Diluted EPS to Adjusted Diluted EPS
For the Year Ended
December 31, (Unaudited)
2014
Reported Diluted EPS $ 4.76
Adjustments: Asset impairment and exit costs 0.26 Tax items
—
Adjusted Diluted EPS $
5.02
Philip Morris International Inc.Investor Relations:New York: +1
(917) 663 2233Lausanne: +41 (0)58 242 4666orMedia:Lausanne: +41
(0)58 242 4500
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