Philip Morris International Inc · NYSE:PM
Philip Morris International — Q3 2009 Earnings Presentation
39 slides from Philip Morris International's earnings presentation, Oct 22, 2009
Slide 1: 2009 Third-Quarter Results
Exhibit 99.3 2009 Third-Quarter Results 22 October 2009
Slide 2: Introduction
Philip Morris International Introduction Unless otherwise stated, we will be talking about results in the third quarter 2009 and comparing them with the same period in 2008 References to PMI volumes refer to shipment data Industry volume and market shares are sourced from A.C. Nielsen, other third p
Slide 3: Forward-Looking and Cautionary Statements
Philip Morris International Forward-Looking and Cautionary Statements This presentation and related discussion contain statements that, to the extent they do not relate strictly to historical or current facts, constitute “forward-looking statements” within the meaning of the Private Securities Litig
Slide 4: Third-Quarter 2009 Results
Philip Morris International Third-Quarter 2009 Results Growth Q3, 2009 vs. Q3, 2008 Excluding Increase / Currency & Q3, 2009 (Decrease) Currency Acquisitions Cigarette Volume (units billion) 219.3 (2.9)% (4.0)% Net Revenues ($ billion)(a) 6.6 (5.3)% 6.9% 4.1% Adjusted OCI ($ billion)(b) 2.9 (1.5)% 1
Slide 5: 2009 Results: Cigarette Volume Growth Rates
Philip Morris International 2009 Results 2009 Growth Rates Mid to Long-Term Growth Targets YTD Sept Q1 Q2 Q3 Cigarette Volume (a) 1% (2.1)% (1.1)% (1.1)% (4.0)% (a) Excluding acquisitions Source: PMI Financials 5
Slide 6: 2009 Results: Growth Rates vs Targets
Philip Morris International 2009 Results 2009 Growth Rates Mid to Long-Term Growth Targets YTD Sept Q1 (d) Q2 (d) Q3 (d) Net Revenues (a)(b) 4–6% 4.7 % 3.9 % 6.1 % 4.1 % Adjusted OCI (b) 6–8% 8.6 % 5.3 % 9.5 % 10.6 % Adjusted Diluted EPS(c) 10 – 12 % 15.4 % 11.3 % 17.2 % 18.3 % (a) Excluding excise
Slide 7: 2009 EPS Guidance
Philip Morris International 2009 EPS Guidance Revised guidance: $3.20 - $3.25 Previous guidance: $3.10 - $3.20 Revised guidance represents both an increase and a narrowing of the range Increased guidance reflects both the strength of our underlying business and slightly more favorable exchange rates
Slide 8: Pricing
Philip Morris International Pricing In 2009, PMI implemented price increases notably in: EU EEMA Asia LA & Canada Germany Romania Australia Argentina Italy Russia Indonesia Brazil Poland South Africa Pakistan Canada Spain Turkey Philippines Dominican Rep. UK Ukraine Thailand Pricing variance was $59
Slide 9: Consumer Behavior
Philip Morris International Consumer Behavior Consumer behavior has remained resilient Consumer downtrading has remained globally manageable though the impact has been substantial in Russia, Spain and Ukraine Ukraine downturn exacerbated by very significant excise tax increases Positive trends conti
Slide 10: Excise Taxes and VAT
Philip Morris International Excise Taxes and VAT Governments treating excise taxes rationally in 2009 (key exceptions: Brazil and Ukraine) Rational approach expected to continue in 2010 Although we expect some VAT increases, as well as excise tax increases, next year, as governments seek to boost re
Slide 11: Volume Analysis
Philip Morris International Volume Analysis Organic volume decline in Q3, 2009, is not representative of expected full-year performance Nearly two thirds of Q3, 2009, organic volume decline can be attributed to: – Ukraine: market disruption resulting from massive excise tax driven price increase in
Slide 12: Russia
Philip Morris International Russia Total market trending PMI Market Share down 3-4% in 2009 (%) 30 PMI shipments in Q3, 2009, 25.0 25.6 decreased by just 0.8% PMI market share in Q3, 2009, was up 0.6 pp to 25.6%: – growth of Bond Street in the value and Optima in the low price segment – resilience o
Slide 13: Indonesia
Philip Morris International Indonesia Total industry growing by 3-4% in 2009 Timing of Ramadan resulted in PMI volume decline of 1.1% in Q3, 2009 A Mild continued to gain share, up 0.5 pp to 10.7% in July/Aug 2009 OCI increased at double-digit rate, excluding currency, in Q3, 2009 Source: AC Nielsen
Slide 14: Japan
Philip Morris International Japan Market Shares (%) Marlboro growth driven by Marlboro Lark success of Marlboro Black 10.6 10.2 Menthol and Marlboro 6.6 6.6 Filter Plus National roll-out of Lark Mint Splash, as well as Q3 Q3 Q3 Q3 2008 2009 2008 2009 Lark Classic Milds, helping to stabilize the bran
Slide 15: Korea
Philip Morris International Korea Market Shares (%) 15 14.6 PMI Total 13.8 13.6 12.2 12.3 11.8 11.0 6.0 Marlboro 5.8 5.6 4.8 4.8 5.0 4.5 4.0 4.0 4.5 Parliament 3.3 3.6 3.5 2.7 Other 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2009 Source: PMI estimates 15
Slide 16: European Union Region
Philip Morris International European Union Region Improved financial performance with adjusted OCI excluding currency and acquisitions up 5.3% in Q3, 2009 Key driver is pricing, notably in Germany and Spain Adjusted OCI margin excluding currency reached 52.2% in Q3, 2009, up 2.2 pp Market share down
Slide 17: Italy
Philip Morris International Italy Market Shares (%) PMI 60 54.5 54.5 Marlboro 22.6 23.1 0 1.4% market share Q3 Q3 Q3 Q3 in Q3, 2009 2008 2009 2008 2009 Source: PMI estimates 17
Slide 18: Brand Portfolio
Philip Morris International Brand Portfolio International Local Heritage Premium & Above Mid Price Low Price 18
Slide 19: Marlboro Architecture
Philip Morris International Marlboro Architecture Red Gold Fresh “Flavor “Smooth taste “Fresh taste enjoyment” and style” sensations” 19
Slide 20: Marlboro Architecture
Philip Morris International Marlboro Architecture Red Gold Fresh “Flavor “Smooth taste “Fresh taste enjoyment” and style” sensations” Line extensions Line extensions Line extensions in 34 markets in 17 markets in 33 markets 20
Slide 21: Red Line: Marlboro Filter / Flavor Plus
Philip Morris International Red Line: Marlboro Filter / Flavor Plus Tobacco included in filter to enhance flavor Innovative sliding pack Market shares (July/Aug): – Romania 2.4% – Kuwait 2.3% – Paraguay 1.8% – Kazakhstan 1.3% Source: AC Nielsen, PMI estimates and Business Analytica 21
Slide 22: Marlboro Gold
Philip Morris International Marlboro Gold 22
Slide 23: Fresh Line: Marlboro Black Menthol
Philip Morris International Fresh Line: Marlboro Black Menthol Available at different tar levels Refreshing high menthol content Attractive pack Market shares in Q3, 2009: – Hong Kong 3.3% – Japan 1.4% Launched this year also in Indonesia, Malaysia and Philippines Source: A.C. Nielsen and Tobacco In
Slide 24: Marlboro Superpremium
Philip Morris International Marlboro Superpremium 24
Slide 25: Cash Flow
Philip Morris International Cash Flow Free cash flow in the third quarter totaled $1.7 billion and reached $5.9 billion year-to-date (a) Excluding the impact of currency on net earnings, free cash flow was 17.0% higher in the quarter and 12.4% higher in 2009 through the end of September (a) Free cas
Slide 26: Shareholder Returns
Philip Morris International Shareholder Returns Quarterly dividend increased in September by 7.4% to $0.58 per share A further $1.5 billion in share repurchases in Q3, 2009 This year so far, $7.4 billion returned to shareholders through dividends and share repurchases Since March 2008 spin-off, $15.
Slide 27: Conclusions
Philip Morris International Conclusions Financial strength is a key component of our success Excellent business momentum Consistently delivering against our constant currency financial targets Higher pricing, good business performance in most key markets and cost savings driving our profitability gr
Slide 28: Questions & Answers
PHILIP MORRIS INTERNATIONAL Questions & Answers
Slide 29: Reconciliation of Non-GAAP Measures
Philip Morris International PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For the Quarters Ended September 30, (in millions) (Unaudited) % Change in Reported Net Revenues 2009 2008 excluding Excise Taxes
Slide 30: Reconciliation of Non-GAAP Measures
Philip Morris International 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 For the Qu
Slide 31: Reconciliation of Non-GAAP Measures
Philip Morris International 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 September 30, (Unaudited) 2009 2008 % Change Reported D
Slide 32: Reconciliation of Non-GAAP Measures
Philip Morris International 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 September 30, (Unaudited) 2009 2008 % Change Reported Diluted EPS $ 0.93 $ 1.01
Slide 33: Reconciliation of Non-GAAP Measures
Philip Morris International PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For the Nine Months Ended September 30, (in millions) (Unaudited) (1) % Change in Reported Net Revenues 2009 2008 excluding Excise
Slide 34: Reconciliation of Non-GAAP Measures
Philip Morris International 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 For the Ni
Slide 35: Reconciliation of Non-GAAP Measures
Philip Morris International 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 Nine Months Ended September 30, (Unaudited) 2009 2008 % Change Reporte
Slide 36: Reconciliation of Non-GAAP Measures
Philip Morris International PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, Excluding Currency For the Nine Months Ended September 30, (Unaudited) 2009 2008 % Change Reported Diluted EPS $ 2.44 $ 2.
Slide 37: Reconciliation of Non-GAAP Measures
Philip Morris International PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow & Free Cash Flow, excluding Currency For the Quarters and Nine Months Ended September 30, (in millions) (Una
Slide 38: Reconciliation of Non-GAAP Measures
Philip Morris International PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Calculation of Total Debt to EBITDA and Net Debt to EBITDA Ratios (in millions, except ratios) (Unaudited) For the Year Ended September 30, December 31, 2009 2008 October~December Januar
Slide 39: 2009 Third-Quarter Results
2009 Third-Quarter Results 22 October 2009
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