Philip Morris International Inc · NYSE:PM
Philip Morris International — Q1 2015 Earnings Presentation
34 slides from Philip Morris International's earnings presentation, Apr 16, 2015
Slide 1: 2015 First-Quarter Results
2015 First-Quarter Results April 16, 2015 Exhibit 99.3
Slide 2: Introduction
2 Introduction ● Unless otherwise stated, we will be talking about results for the first quarter of 2015 and comparing them to the same period in 2014 ● A glossary of terms, data tables showing adjustments to net revenues and OCI for currency and acquisitions, asset impairment, exit and other costs,
Slide 3: Forward-Looking and Cautionary Statements
3 Forward-Looking and Cautionary Statements ● This presentation and related discussion contain forward-looking statements. Achievement of projected results is subject to risks, uncertainties and inaccurate assumptions, and PMI is identifying important factors that, individually or in the aggregate,
Slide 4: Raising 2015 EPS Guidance
4 Raising 2015 EPS Guidance ● Raising 2015 reported diluted EPS guidance to a range of $4.32 to $4.42, at prevailing exchange rates ● Increase reflects a better-than-expected volume and share performance in Q1, 2015, and an improved outlook for the balance of the year ● Guidance continues to include
Slide 5: Q1, 2015: Strong Organic Volume Performance
5 Source: PMI Financials or estimates Q1, 2015: Strong Organic Volume Performance ● Organic cigarette volume grew by 1.4%, driven by: - Market share gains across all Regions - Favorable inventory movements - Partly offset by lower cigarette industry volume ● Excluding inventory movements, organic ci
Slide 6: Q1, 2015: Strong Currency-Neutral Financial Results
6 (a) Excluding currency and acquisitions (b) Excluding currency Source: PMI Financials or estimates 9.1% 16.3% 23.5% Net Revenues Adjusted OCI Adjusted Diluted EPS Q1, 2015: Strong Currency-Neutral Financial Results Growth (Q1, 2015 vs. PY) (a) (a) (b)
Slide 7: Pricing: Key Driver of Our Financial Performance
7 Pricing: Key Driver of Our Financial Performance ● Strong pricing across all four Regions ● Well-positioned to achieve a full-year pricing variance broadly in line with our historical annual average of approximately $1.8 billion ● Retail price increases in Q1, 2015, notably in Algeria, Argentina,
Slide 8: Market Share Momentum: Top-30 OCI Markets
8 Market Share Momentum: Top-30 OCI Markets Note: Excluding duty free Source: PMI Financials or estimates [VALUE] [VALUE] Q1, 2014 Q1, 2015 +1.2pp PMI Market Share in Top-30 OCI Markets (%)
Slide 9: Regional Market Share Gains Underpinned by Marlboro
9 Regional Market Share Gains Underpinned by Marlboro (a) Excluding China Source: PMI Financials or estimates [VALUE] [VALUE] [VALUE] [VALUE] LA&C Asia EEMA EU PMI Share Variance (Q1, 2015 vs. PY) Regional Marlboro [VALUE] [VALUE] [VALUE] (0.1)pp 39.6% 24.9% 24.7% 38.3% 19.2% 7.9% 6.1% 14.6% (a) Q1,
Slide 10: EEMA Region: Largest Contributor to Our Strong Q1, 2015 Results
10 EEMA Region: Largest Contributor to Our Strong Q1, 2015 Results ● Regional share increased by 0.7 points to 24.9% in Q1, 2015: - Parliament, Marlboro and L&M performing strongly - Share gains in North Africa, Russia and Saudi Arabia ● Double-digit growth in net revenues and adjusted OCI, ex-curre
Slide 11: Russia: Outstanding Performance
11 Russia: Outstanding Performance ● Double-digit OCI growth, ex-currency, despite 9.3% decline in cigarette industry volume in Q1, 2015 ● Full-year cigarette industry volume decline expected to be in a range of 8% to 10% ● Increased retail prices are driving higher local currency unit margins ● Rec
Slide 12: EU Region: Continued PMI Cigarette Market Share Momentum
12 Source: PMI Financials or estimates EU Region: Continued PMI Cigarette Market Share Momentum ● Cigarette industry volume down by an estimated 2.7% in Q1, 2015, excluding trade inventory movements ● Forecast a cigarette industry volume decline of approximately 4% in 2015 ● Regional cigarette share
Slide 13: EU Region: Returning to Currency-Neutral OCI Growth in 2015
13 EU Region: Returning to Currency-Neutral OCI Growth in 2015 ● First-quarter adjusted OCI, ex-currency and acquisitions, grew by 12.9%, driven by: - Higher pricing - Favorable volume/mix, notably in Southern Europe ● Expect the Region to be a positive contributor to PMI’s full-year adjusted OCI gr
Slide 14: Japan: Investing in Our Brands
14 Note: Translation from Japanese: "Evolved Marlboro now in your hand" Source: PMI Financials or estimates and Tobacco Institute of Japan Japan: Investing in Our Brands ● Cigarette industry volume declined by 13.9% in Q1, 2015 ● Adjusted for inventory movements, the decline was an estimated 3.5% ●
Slide 15: Philippines: Optimistic About Improving OCI Outlook
15 (a) 3 months-moving February Note: Stick price points represent recommended retail selling price or estimates. Pack designs are for illustrative purposes only Source: PMI Financials or estimates and Nielsen Philippines: Optimistic About Improving OCI Outlook ● Price increases at low end of the ma
Slide 16: Indonesia: Continued Share Growth in Q1, 2015
16 5.3 5.2 5.1 5.0 5.1 21.0 21.7 22.4 22.7 23.1 8.3 7.8 7.7 7.6 7.2 34.6 34.7 35.2 35.3 35.4 Q1 Q2 Q3 Q4 Q1 Note: Whites stands for non-kretek cigarettes Source: PMI Financials or estimates Indonesia: Continued Share Growth in Q1, 2015 ● Cigarette industry volume grew by 5.9% in Q1, 2015 ● Forecast
Slide 17: LA&C Region: Impressive Currency-Neutral OCI and Share Growth
17 Source: PMI Financials or estimates LA&C Region: Impressive Currency-Neutral OCI and Share Growth ● Impressive 35.1% growth in adjusted OCI in Q1, 2015, ex-currency and acquisitions: - Driven mainly by pricing - Important contributor to overall PMI performance ● Regional share grew by 0.9 points
Slide 18: iQOS: On Track
18 Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products with the potential to reduce individual risk and population harm in comparison to smoking combustible cigarettes Source: PMI Financials or estimates iQOS: On Track ● Performance is in line with, or exceeds, our expectati
Slide 19: Attractive Dividend Yield
19 Attractive Dividend Yield 2.0% 3.1% 5.1% 10-Year U.S. Treasury Proxy Peer Group PMI PMI vs. Benchmarks (April 10, 2015) 2.7% 3.9% 4.0% 5.1% Japan Tobacco Imperial Tobacco BAT PMI PMI vs. Main International Tobacco Competitors (April 10, 2015) Note: Dividend yield represents the annualized dividen
Slide 20: Conclusion: An Excellent Start to the Year
20 Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products with the potential to reduce individual risk and population harm in comparison to smoking combustible cigarettes Source: PMI Financials or estimates Conclusion: An Excellent Start to the Year ● Strong currency-neutral re
Slide 21: Questions & Answers
2015 First-Quarter Results Questions & Answers Download PMI’s Investor Relations App iOS Android
Slide 22: Glossary and Reconciliation of Non-GAAP Measures
Glossary and Reconciliation of Non-GAAP Measures
Slide 23: Glossary: General Terms
23 Glossary: General Terms ● PMI stands for Philip Morris International Inc. and its subsidiaries ● Until March 28, 2008, PMI was a wholly owned subsidiary of Altria Group, Inc. ("Altria"). Since that time the company has been independent and is listed on the New York Stock Exchange (ticker symbol "
Slide 24: Glossary: Financial Terms
24 Glossary: Financial Terms ● Net revenues exclude excise taxes ● EPS stands for Earnings per Share ● Operating Companies Income, or "OCI", is defined as operating income, excluding general corporate expenses and the amortization of intangibles, plus equity (income) or loss in unconsolidated subsid
Slide 25: Glossary: Industry/Market Terms
25 Glossary: Industry/Market Terms ● EEMA refers to the Eastern Europe, Middle East & Africa Region ● EU refers to the European Union Region ● LA&C refers to the Latin America & Canada Region ● North Africa: Algeria, Egypt, Libya, Morocco and Tunisia ● Southern Europe: Andorra, Azores, Canary Island
Slide 26: Glossary: Reduced-Risk Products
26 Glossary: Reduced-Risk Products ● HeatStick tobacco sticks are novel patented tobacco products specifically designed by PMI for use with PMI’s iQOS system. The tobacco in the HeatStick is heated by our iQOS technology to provide adult smokers with real tobacco taste and satisfaction without combu
Slide 27: PMI Peer Groups
27 PMI Peer Groups (a) Effective until September 30, 2012 (b) Effective as of October 1, 2012 - BAT - Bayer - Coca-Cola - Diageo - GlaxoSmithKline - Heineken - Imperial Tobacco - Johnson & Johnson - Kraft(a) - McDonald’s - Mondelēz International(b) - Nestlé - Novartis - PepsiCo - Pfizer - Roche - Un
Slide 28: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS (2014)
28 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 - Adjuste Di
Slide 29: Adjustments for the Impact of Currency and Acquisitions
29 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) Reported Net Revenues Less Excise Taxes Reported Net Revenues excluding Excise Taxes Less Curr
Slide 30: Reconciliation of Reported OCI to Adjusted OCI
30 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 E
Slide 31: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency
31 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)%
Slide 32: Reconciliation of Reported Diluted EPS, excluding Currency
32 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
Slide 33: Reconciliation of Operating Cash Flow to Free Cash Flow
33 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, ($
Slide 34: 2015 First-Quarter Results
2015 First-Quarter Results April 16, 2015
Philip Morris International — Q1 2015 Earnings Presentation on 6ix