Philip Morris International Inc · NYSE:PM
Philip Morris International — Morgan Stanley Global Consumer & Retail Conference 2009
91 slides from Philip Morris International's conference presentation, Nov 19, 2009
Slide 1: Morgan Stanley Global Consumer & Retail Conference
Louis C. Camilleri Chairman and Chief Executive Officer Morgan Stanley Global Consumer & Retail Conference New York, 19 November 2009
Slide 2: Forward-Looking, Cautionary Statements and Use of Non-GAAP Measures
Forward-Looking, Cautionary Statements and Use of Non-GAAP Measures 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 3: Agenda
Agenda Performance against our growth targets Why we believe these growth targets remain realistic Key strategies and growth opportunities, and the strong cash flow that underpins our ability to enhance shareholder returns 3
Slide 4: Currency Neutral Mid to Long-Term Annual Growth Targets
Currency Neutral Mid to Long-Term Annual Growth Targets Cigarette Volume(a) 1 – 2% Net Revenues(b)(c) 4 – 6% Operating Companies Income(c) 6 – 8% EPS(d) 10 – 12% (a) Organic volume growth (that is, excluding acquisitions) target of 1% (b) Excluding excise taxes (c) Excluding currency and acq
Slide 5: 2008 PMI Results
2008 PMI Results Mid to Long-Term Full (% growth) Target Q1 Q2 Q3 Q4 Year Organic Cigarette 1 (0.2) 0.3 3.2 0.6 1.0 Volume(a) (a) Excluding acquisitions Source: PMI Financials 5
Slide 6: 2008 PMI Results
2008 PMI Results Mid to Long-Term Full (f) (f) (f) (f) (% growth) Target Q1 Q2 Q3 Q4 Year (f) Organic Cigarette 1 (0.2) 0.3 3.2 0.6 1.0 Volume(a) Net Revenues(b)(c) 4-6 5.5 4.0 7.2 5.6 5.6 Adjusted OCI(c) 6-8 19.4 9.2 7.1 5.5 9.8 Adjusted Diluted 10-12 23.7 10.0 9.0 12.5 12.9 EPS(d)(e) (a) Excluding
Slide 7: 2009 PMI Results
2009 PMI Results Mid to Long-Term YTD (% growth) Target Q1 Q2 Q3 Sept Organic Cigarette 1 (1.1) (1.1) (4.0) (2.1) Volume(a) (a) Excluding acquisitions Source: PMI Financials 7
Slide 8: Pricing Variance
Pricing Variance ($ million) 590 600 549 393 358 305 277 248 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2009 Source: PMI Financials 8
Slide 9: 2009 PMI Results
2009 PMI Results Mid to Long-Term YTD (e) (e) (e) (% growth) Target Q1 Q2 Q3 Sept (e) Organic Cigarette 1 (1.1) (1.1) (4.0) (2.1) Volume(a) Net Revenues(b)(c) 4-6 3.9 6.1 4.1 4.7 Adjusted OCI(c) 6-8 5.3 9.5 10.6 8.6 Adjusted Diluted 10-12 11.3 17.2 18.3 15.4 EPS(d) (a) Excluding acquisitions (b) Exc
Slide 10: PMI Adjusted OCI Margins
PMI Adjusted OCI Margins(a) YTD Sept YTD Sept (%) 2008 2009 Variance EU 50.9% 51.7% 0.8pp EEMA 42.8 44.8 2.0 Asia 34.9 37.3 2.4 LA & Canada 25.5 32.7 7.2 PMI 42.6 44.2 1.6 (a) Excluding currency. Please see relevant reconciliations to most comparable GAAP measures posted on our web site Source: PMI
Slide 11: 2009 Reported Diluted EPS Guidance
2009 Reported Diluted EPS Guidance 2009 reported diluted EPS guidance: $3.20 - $3.25 Based on October results and current business and currency outlook for the remainder of the year, we expect reported diluted EPS for 2009 to be at the upper end of this range Source: PMI Financials 11
Slide 12: Future Prospects
Future Prospects Beyond 2009, we believe we can continue to deliver against our mid to long-term annual growth targets Difficult to predict shape and timing of employment- led economic recovery Confident we can meet EPS and free cash flow targets, which we believe are the two most important me
Slide 13: PMI Organic Volume Drivers
PMI Organic Volume Drivers Total consumption trends Geographic mix PMI market share growth Other factors 13
Slide 14: Total Cigarette Industry Volume
Total Cigarette Industry Volume(a) 0.2% (billion units) 3,314 CAGR 3,342 1.9% CAGR 2,017 2,172 Non-OECD (2.5)% CAGR 1,297 1,170 OECD 2004 2008 (a) Excluding China, USA and duty-free Note: Organization for Economic Co-operation and Development (OECD) Source: PMI estimates 14
Slide 15: Total Cigarette Industry Volume
Total Cigarette Industry Volume(a) 0.2% (2.4)% (billion units) 3,314 CAGR 3,342 Var. 3,261 1.9% (1.9)% CAGR Var. 2,017 2,172 2,131 Non-OECD (2.5)% (3.4)% CAGR Var. 1,297 1,170 1,130 OECD 2004 2008 2009 (a) Excluding China, USA and duty-free Forecast Note: Organization for Economic Co-operation and D
Slide 16: Key Industry Volume Drivers
Key Industry Volume Drivers Demographics Consumer purchasing power 16
Slide 17: Key Industry Volume Drivers
Key Industry Volume Drivers Demographics Consumer purchasing power Excise taxation 17
Slide 18: Key Industry Volume Drivers
Key Industry Volume Drivers Demographics Consumer purchasing power Excise taxation Regulatory environment Social trends 18
Slide 19: Key Industry Volume Drivers
Key Industry Volume Drivers Demographics Consumer purchasing power Excise taxation Regulatory environment Social trends Expected industry volume trend post economic crisis: annual range of +/- 0.5% Source: PMI estimates 19
Slide 20: PMI Share Growth Targets
PMI Share Growth Targets To achieve 1% organic volume growth within this industry volume range, PMI needs to gain between 0.1 and 0.4 share points Organic share gain of 0.2 points in 2008 (with 0.2% industry volume growth) PMI should be able to do at least as well going forward benefiting from
Slide 21: PMI Regional Volume Mix
PMI Regional Volume Mix LA & LA & Canada Canada 10% EU EU 11% Asia 28% 19% 36% Asia 26% 35% 35% EEMA EEMA 2004 Volumes: 2008 Volumes: 762 billion units 870 billion units Source: PMI Financials 21
Slide 22: PMI Asia Region Volume Mix
PMI Asia Region Volume Mix Other Other Japan Asia Asia 26% 42% 41% 52% Japan 33% 6% Indonesia Indonesia 2004 Volumes: 2008 Volumes: 142 billion units 224 billion units Source: PMI Financials 22
Slide 23: PMI Market Share Growth
PMI Market Share Growth Avg. Annual YTD Sept Share Growth 2004 2006 2009 2004-09 YTD Egypt 6.4% 10.2% 15.9% 1.9pp Russia N/A(a) 22.2 25.3 1.0(b) Turkey 36.9 43.6 42.8 1.2 Ukraine 31.0 33.1 35.8 1.0 Indonesia 23.5 28.3 29.0 1.1 Korea 7.4 8.6 14.0 1.3 Argentina 65.1 66.3 73.3 1.6 Mexico 60.1 63.5 69.2
Slide 24: PMI Market Share Development
PMI Market Share Development(a) (%) 40 OECD Non-OECD 34.6 34.8 34.2 33.6 24.6 25.0 24.4 23.4 20 2007 2008 12mm 3mm 2007 2008 12mm 3mm Sept 2009 Sept 2009 (a) YTD Sept 2009 data based on 94 key markets in which PMI operates Note: Organization for Economic Co-operation and Development (OECD) Source: P
Slide 25: PMI Net Revenue Growth
PMI Net Revenue Growth We believe 1% annual organic volume growth rate remains achievable in mid to long-term Prime focus is net revenue growth excluding currency and acquisitions of 4-6%, driven by: ‐ pricing ‐ product mix ‐ geographic mix Note: Net revenues exclude excise taxes 25
Slide 26: PMI Pricing Variance by Region
PMI Pricing Variance by Region LA & LA & Canada Canada EU EU 11% 14% 31% 26% Asia 17% Asia 20% 41% 40% EEMA EEMA 2008: 2009 YTD Sept: $1.2 billion $1.5 billion Source: PMI Financials 26
Slide 27: Productivity and Cost Savings
Productivity and Cost Savings Forecast Cumulative Gross Cost Savings (2008-10) ($ million) 1,550 850 450 250 Manufacturing G&A + Other EU Program Total Productivity 27
Slide 28: Strategies for Growth
Strategies for Growth Reinforce our position in profitable consumer segments Drive growth of our leading brand portfolio through enhanced consumer understanding and innovation Expand geographically Effectively utilize our strong and growing cash flow to increase shareholder returns Pursue
Slide 29: Strategies for Growth
Strategies for Growth Reinforce our position in profitable consumer segments Drive growth of our leading brand portfolio through enhanced consumer understanding and innovation Expand geographically Effectively utilize our strong and growing cash flow to increase shareholder returns Pursue
Slide 30: Top International Brands (2008)
Top 15 International Brands (2008) Marlboro 311 Winston M ild Seven PMI L&M 92 BAT Kent JT Pall M all Camel Chesterfield 41 Bond Street 39 Viceroy Philip Morris 38 Parliament 37 Dunhill LD Lark 26 (billion) 0 50 100 150 200 250 300 350 Source: PMI data from Financials. Competitive data for BAT and J
Slide 31: Brand Portfolio
Brand Portfolio International Local Heritage Premium & Above Mid-Price Low-Price 31
Slide 32: Enhanced Consumer Understanding and Innovation
Enhanced Consumer Understanding and Innovation 32
Slide 33: Marlboro Architecture
Marlboro Architecture Red Gold Fresh “Flavor “Smooth taste “Fresh taste enjoyment” and style” sensations” 33
Slide 34: Marlboro Red Line
Marlboro Red Line wm MX4 FLAVOR
Slide 35: § . r C C q , R
§ . r C C q , R
Slide 36: New Marlboro Red Pack Perception - France
New Marlboro Red Pack Perception - France Masculine 10 That lacks character That I like 9 8 Proud to show 7 Beautiful 6 5 Lets me stand out 4 That goes well with me 3 2 1 Worth its price 0 Original Feminine In the spirit of the times Old Pack : (n=100) Refined High- end New Pack : (n=100) Elegant/ch
Slide 37: Designed for Flavor
DESIGNED FOR FLAVOR A Marlhoro Fracers ’ pinelamoundoigtargyoulinfale willvaty depending ‘on how you smoke the cigarette. =~ . “a HEALTH WARNING TO BE PLACED HERE.
Slide 38: Marlboro Red Perception - Romania
Marlboro Red Perception - Romania 2008 vs. 2007 LA - 24 2007 2008 For people like me Feminine 210 Understands and offers what I want Very masculine 160 Worth its price Would smoke on special occasions only 110 Regularly launches appealing new products 60 Classic / timeless Fun 10 Modern -40 Talks cr
Slide 39: Marlboro Gold Line
Marlboro Gold Line [GOLD] now. ~™
Slide 40: Style that fits
style that fits. GOLD now. = Ts wee
Slide 41: Marlboro Fresh Line
Marlboro Fresh Line 41
Slide 42: BL. CK
BL. CK MENTHOL MEROKOK DAPAT MENYEBABKAN KANKER, SERANGAN JANTUNG, IMPOTENS!I DAN GANGGUAN KEHAMILAN DAN JANIN
Slide 43: Marlboro Innovation
BHEPBbIE+ "Ae @IUNbTP Banor new shape, sleeker feel, smoother taste. [GoLD] ToucH ~ Rauch the new dimension in 20's. kann to 6 _ sein YHIKASIbHbIM UIbTP VUCKNIOUTENbHbIM BKYC COBPEMEHHbIN AVSAMH COBEPLUEHHAA @OPMA YAOBONbGTBIAA. WbITbIM WETY CISAIH EHCAYIIbIFIHISFA OTE SMAHAbI. KYPEHME CEPbESHO BPEQ
Slide 44: Marlboro Market Share – Italy
Marlboro Market Share – Italy (%) 25 23.1 22.6 22.7 22.1 21.9 1.4 Gold Touch 15 Q3 Q4 Q1 Q2 Q3 2008 2009 Source: PMI estimates 44
Slide 45: Marlboro Market Share – Japan
Marlboro Market Share – Japan (%) 12 10.6 10.1 10.2 Black 0.8 1.4 Menthol 0 Q3 Q3 Q3 2007 2008 2009 Source: Tobacco Institute of Japan 45
Slide 46: Marlboro Market Share – Korea
Marlboro Market Share – Korea (%) 6.0 6 Filter / Flavor Plus 4.8 4.1 3.4 3.0 0 Q3 Q3 Q3 Q3 Q3 2005 2006 2007 2008 2009 Source: Korea Research Center 46
Slide 47: Marlboro Smoker Share – EU Region
Marlboro Smoker Share – EU Region (Difference LA-24 vs. LA-64) (pp) 10 8.5 8 6 4 2 Spain Germany 0 Italy Belgium Greece Austria Sweden Neth. Czech France UK Poland -2 -4 (3.6) Note: LA stands for Legal Age (min 18). All data are 2009 preliminary, except Italy, Poland and Spain, which are 2008 data S
Slide 48: Marlboro Smoker Share – Portugal
Marlboro Smoker Share – Portugal LA-24 LA-64 (%) 34.1 35 28.9 28.7 9.7pp 24.8 7.9pp 21.5 24.4 21.4 21.6 21.0 18.3 15 Feb-08 May-08 Oct-08 Feb-09 Sep-09 Note: LA stands for Legal Age (min 18) Source: PMI Market Research (General Consumer Tracking Survey) 48
Slide 49: Marlboro Smoker Share – Other Regions
Marlboro Smoker Share – Other Regions (Difference LA-24 vs. LA-64) 15.5 (pp) ≈ ≈ 9.8 10 8 6 4 2 Saudi Arg. 0 Korea Japan Ukraine Mexico Turkey Romania Russia Egypt Indon. -2 Note: LA stands for Legal Age (min 18). All data are 2009 preliminary, except Egypt, Romania, Russia, Saudi Arabia and Ukraine
Slide 50: 50
50
Slide 51: Parliament Share Variances
Parliament Share Variances (Q3, 2009 vs. Q3, 2007) (pp) 3 2.3 2.2 2 1.0 1 0.9 0.4 Japan 0 Korea Turkey Kazakhstan Ukraine Russia (0.2) -1 Source: Korea Research Center, A.C. Nielsen, Business Analytica and Tobacco Institute of Japan 51
Slide 52: 1mg Segment
PARLIAMENT s f), Marlhora tely Gold. ENUIVE OIE ' Soe ont gh ag ge ana gin yA ae on Sy pS pla SAS 3) Heath Warning: Smoking a a main cause of ung cancer, lung lseases and of heat and arteiencsasea. «crap 2Mly atl al ply 28 Nil ply lle paad pansy cpae SAIN pe pn VREINIASEIS SH) fe) Bae! Fue) RIEL BEA
Slide 53: PMI 1mg Segment Shares
PMI 1mg Segment Shares (%) 25 20.5 19.7 19.3 15.6 13.5 12.5 11.2 9.8 8.8 0 Q3-07 Q3-08 Q3-09 Q3-07 Q3-08 Q3-09 Q3-07 Q3-08 Q3-09 Japan Korea Saudi Arabia Source: Tobacco Institute of Japan, Korea Research Center and A.C. Nielsen 53
Slide 54: L&M Old Line-up New Line-up
L&M Old Line-up New Line-up 54
Slide 55: L&M Market Share Variances – EU Region
L&M Market Share Variances – EU Region (Q3, 2009 vs. Q3, 2007) (pp) 3.0 3 2.6 2.3 2.3 2.1 1.4 1.0 0.4 0 Germany Czech Neth. Sweden Spain Poland Belgium France Source: A.C. Nielsen and PMI estimates 55
Slide 56: Nikotiaund Kohlenmonoxid; dig.sie \ “a .
Nikotiaund Kohlenmonoxid; dig.sie \ “a . Jarilert, je nachdem, wie Sie Ihre Zigarette raucher rea zi o Rauchen kann tédlich sein. Der Rauch einer Zigarette enthalt: L&M Red Label 10 mg Teer, 0,8 mg Nikotin und 10 mg Kohlenmonoxid, L&M Blue Label 6 mg T, 0,5 mg N und 7 mg CO. (Durchschnittswerte nach
Slide 57: L&M Link (super-slims)
L&M Link (super-slims) Palenie powaznie szkodzi Tobie | osobom w Twoim otoczeniu
Slide 58: Super-Slims Segment – Poland
Super-Slims Segment – Poland (%) Segment Share of Market (%) PMI Share of Segment 12 50 10.3 40.3 35.8 8.2 6.5 25.7 0 0 Q3-07 Q3-08 Q3-09 Q3-07 Q3-08 Q3-09 Source: A.C. Nielsen 58
Slide 59: Strategies for Growth
Strategies for Growth Reinforce our position in profitable consumer segments Drive growth of our leading brand portfolio through enhanced consumer understanding and innovation Expand geographically Effectively utilize our strong and growing cash flow to increase shareholder returns Pursue
Slide 60: Organic Market Entry and Expansion
Organic Market Entry and Expansion (%) PMI Market Share 25 21.6 14.7 10.1 L&M 14.4 11.2 11.7 5.7 5.4 Other 3.5 5.0 6.6 3.1 Muratti 11.5 Marlboro 1.4 9.0 3.3 7.7 5.3 5.9 Marlboro 3.3 0 Q3-07 Q3-08 Q3-09 Q3-07 Q3-08 Q3-09 Algeria Bulgaria Source: A.C. Nielsen and PMI estimates 60
Slide 61: Acquisitions – Indonesia
Acquisitions – Indonesia (%) Market Shares 30 29.0 PMI 27.4 26.4 21.2 Gudang 21.2 Garam 19.6 Djarum 15 2005 2006 2007 2008 2009 Sept YTD Source: PMI estimates based on A.C. Nielsen 61
Slide 62: Acquisitions - Canada
Acquisitions - Canada Rothmans Inc. PMI purchased 60% not owned for $1.9 billion Market size: 28.6 billion in 2008 1.6% growth YTD Sept PMI market share: 33.4% in 2008 0.5 pp share growth YTD Sept Source: PMI estimates 62
Slide 63: Competitive Landscape (2008)
Competitive Landscape (2008)(a) Market Shares excl. USA and duty-free Market Shares excl. China, USA and duty-free Other PMI Other PMI 15.6% 15.6% 25.8% 25.8% BAT 12.8% 9.3% 39.3% 11.0% IMT(b) 21.0% 5.7% JT 18.1% CNTC BAT IMT(b) JT (a) Volumes are on a calendar basis, except for IMT, which reports o
Slide 64: Geographic Expansion
Geographic Expansion India: launch of locally manufactured Marlboro through a PMI controlled joint-venture South Africa: acquisition of business that has close to 30% of tobacco market 64
Slide 65: China
China Nearly 40% of the world cigarette market excluding the USA and duty-free PMI has license agreement for production and sale of Marlboro and joint-venture for international markets China National Tobacco Corporation the key partner Marlboro sales remain modest but are increasing Intern
Slide 66: Strategies for Growth
Strategies for Growth Reinforce our position in profitable consumer segments Drive growth of our leading brand portfolio through enhanced consumer understanding and innovation Expand geographically Effectively utilize our strong and growing cash flow to increase shareholder returns Pursue
Slide 67: Cumulative Operating Cash Flow
Cumulative Operating Cash Flow (2008-2010) ($ billion) 21.7 7.8 2010 7.3 2009 6.6 2008 March 2008 Source: PMI Financials 67
Slide 68: Cumulative Operating Cash Flow
Cumulative Operating Cash Flow (2008-2010) ($ billion) 21.7 7.8 2010 14.3 6.4 YTD Sept 7.3 2009 6.6 2008 7.9 March 2008 Actual Source: PMI Financials 68
Slide 69: Free Cash Flow as a % of Net Revenues – Peer Group
Free Cash Flow as a % of Net Revenues – Peer Group 2008 FY – Sept 30, 2009 YTD Pfizer 33.7% PMI 29.0% GlaxoSmithKline 23.3% BAT 23.1% Roche 21.9% Johnson & Johnson 19.9% Novartis 19.4% Imperial Tobacco 19.3% Coca-Cola 18.9% Vodafone 18.2% McDonalds 17.0% Diageo 15.7% PepsiCo 10.7% Unilever 8.0% Baye
Slide 70: Free Cash Flow as a % of Net Revenues – Tobacco
Free Cash Flow as a % of Net Revenues – Tobacco 2008 FY – Sept 30, 2009 YTD PMI 29.0% Lorillard 23.7% BAT 23.1% Imperial Tobacco 19.3% Altria 16.8% Swedish Match 13.4% Reynolds American 13.3% Japan Tobacco 5.7% Note: Free Cash Flow as a % of Net Revenue, excluding excise taxes, is defined as total F
Slide 71: Working Capital
Working Capital Average quarterly working capital in 2008: $ billion ‐ Receivables 2.9 ‐ Inventories 9.1 ‐ Other 0.3 ‐ Payables (7.5) ‐ Total 4.8 Source: PMI Financials 71
Slide 72: Working Capital – Benchmarking
Working Capital – Benchmarking Objective was to determine areas where improvements could be made to generate additional cash Comparisons made with other consumer products companies and our key competitors 72
Slide 73: Working Capital – Benchmarking
Working Capital – Benchmarking Objective was to determine areas where improvements could be made to generate additional cash Comparisons made with other consumer products companies and our key competitors Opportunities identified, particularly inventories Comprehensive program initiated Ex
Slide 74: Working Capital – Benchmarking
Working Capital – Benchmarking Objective was to determine areas where improvements could be made to generate additional cash Comparisons made with other consumer products companies and our key competitors Opportunities identified, particularly inventories Comprehensive program initiated Ex
Slide 75: Available Funds: Jan 2008 – Sept 2009
Available Funds: Jan 2008 – Sept 2009 Operating $14.3 billion Cash Flow Total Funds: + $19.1 billion Incremental Financing $4.8 billion(a) (a) Net of Q1, 2008, special dividend paid by PMI to Altria Group, Inc. of $3.0 billion Source: PMI Financials 75
Slide 76: Use of Funds: Jan 2008 – Sept 2009
Use of Funds: Jan 2008 – Sept 2009 Capital $1.6 billion Operating Expenditures (8%) $14.3 billion Cash Flow $2.6 billion Acquisitions (14%) Total Funds: + $19.1 billion Incremental Financing $4.8 billion(a) (a) Net of Q1, 2008, special dividend paid by PMI to Altria Group, Inc. of $3.0 billion Sourc
Slide 77: Use of Funds: Jan 2008 – Sept 2009
Use of Funds: Jan 2008 – Sept 2009 Capital $1.6 billion Operating Expenditures (8%) $14.3 billion Cash Flow $2.6 billion Acquisitions (14%) Total Funds: + $19.1 billion $5.3 billion Dividends (28%) Incremental Financing $4.8 billion(a) Share $9.6 billion Repurchases (50%) (a) Net of Q1, 2008, specia
Slide 78: Dividends
Dividends March 2008, established at $1.84 per share on annualized basis Increased by 17.4% in August 2008 and 7.4% in September 2009 Current level of $2.32 per share on an annualized basis equates to a yield of 4.6% Source: PMI Financials 78
Slide 79: Dividend Yield
Dividend Yield March 28, 2008 November 13, 2009 Pfizer 5.7% Vodafone 5.7% GlaxoSmithKline 5.0% GlaxoSmithKline 4.8% Vodafone 4.8% PMI 4.6% PMI 3.6% BAT 4.5% Unilever 3.5% Kraft 4.3% Kraft 3.5% Imperial Tobacco 3.8% BAT 3.2% Novartis 3.7% Diageo 3.2% Unilever 3.7% Novartis 3.1% Pfizer 3.6% Imperial T
Slide 80: Share Repurchases
Share Repurchases $13 billion two-year program has been maintained throughout the economic and financial crisis $9.6 billion used to purchase 209.6 million shares at an average price of $45.81 per share $3.4 billion remaining in current program, as of September 30, 2009 Source: PMI Financials
Slide 81: Net Debt to EBITDA – Peer Group
Net Debt to EBITDA – Peer Group September 30, 2009 Imperial Tobacco 3.6x Heineken 2.8x Kraft 2.8x Diageo 2.7x BAT 2.0x Vodafone 1.9x Roche 1.9x Bayer 1.8x PMI 1.2x McDonalds 1.2x Unilever 1.1x GlaxoSmithKline 1.0x Nestle 0.9x PepsiCo 0.5x Coca-Cola 0.2x Novartis NM Pfizer NM Johnson & Johnson NM Not
Slide 82: Capital Structure
Capital Structure Goal is to maintain current credit ratings and flexibility to make acquisitions Intention is to maintain our leverage within the constraints of these credit ratings 82
Slide 83: Shareholder Returns
Shareholder Returns This year so far, $7.4 billion returned to shareholders through dividends and share repurchases Since March 2008 spin-off, $14.9 billion returned to shareholders, representing more than 15% of our current market capitalization Source: PMI Financials 83
Slide 84: Total Shareholder Return – Weighted Average Since Spinoff
Total Shareholder Return – Weighted Average Since Spinoff (March 28, 2008 – November 13, 2009) Total Shareholder Return – Local Currency Total Shareholder Return – USD PMI 6.4% PMI 6.4% Company Company 1.8% (3.5)% Peer Group Peer Group (0.4)% FTSE 100 (13.5)% S&P 500 Tobacco Tobacco (6.4)% (13.5)% P
Slide 85: Total Shareholder Return – Peer Group (USD)
Total Shareholder Return – Peer Group (USD) Since Spinoff (March 28, 2008 – November 13, 2009) McDonalds 20.2% Novartis 8.7% GlaxoSmithKline 6.8% PMI 6.4% Bayer 1.8% Unilever 1.3% Johnson & Johnson 0.3% Nestle 0.2% (2.7)% Coca-Cola (4.5)% BAT (4.8)% Pfizer (6.9)% Kraft (9.4)% PepsiCo (12.3)% Diageo
Slide 86: Conclusions
Conclusions Key objective is to continue to provide superior returns to our shareholders Business fundamentals in very good shape Expect to consistently meet or exceed financial mid to long-term growth targets Organic volume growth should resume following employment-led economic recovery T
Slide 87: Questions & Answers
PHILIP MORRIS INTERNATIONAL Questions & Answers
Slide 88: Adjustments for Excise Taxes, Currency and Acquisitions on Net Revenues
PHILIP MORRIS INTERNATIONAL Reconciliation of Non-GAAP Measures Adjustments for the Excises Taxes, Impact of Currency and Acquisitions on Net Revenues (in millions USD rounded) % Change on Reported Net Revenues 2008 2007 excluding Excise Taxes Reported Net Reported Reported Net Revenues Net Reported
Slide 89: Reconciliation of Reported to Adjusted Operating Companies Income
PHILIP MORRIS INTERNATIONAL Reconciliation of Non-GAAP Measures Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income & Adjustments for the Impact of Currency and Acquisitions on Operating Companies Income (in millions USD rounded) % Change on Adjusted Operatin
Slide 90: Reconciliation of Reported to Adjusted Diluted Earnings Per Share
PHILIP MORRIS INTERNATIONAL Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share & Adjustments for the Impact of Currency and 2007 Pro-Forma (in millions USD rounded) % Change on Diluted 2008 2007 Earnings Per Share Less Ass
Slide 91: Calculation of Net Debt to EBITDA Ratio
PHILIP MORRIS INTERNATIONAL Reconciliation of Non-GAAP Measures Calculation of Net Debt to EBITDA Ratio (in millions USD rounded, except ratios) March 31, September 30, 2008 2009 April~December January~March 12 months October~December January~September 12 months 2007 2008 rolling 2008 2009 rolling E
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