Philip Morris International Inc · NYSE:PM
Philip Morris International — Shareholder Meeting (May 2009)
68 slides from Philip Morris International's shareholder meeting presentation, May 5, 2009
Slide 1: Annual Meeting of Stockholders
Annual Meeting of Stockholders May 5, 2009
Slide 2: 2008 Highlights
2008 Highlights ! Spin-off from Altria Group, Inc. in March ! Flawless transition ! PMI is the largest publicly traded tobacco company ! Strong business results in 2008 ! Stage set for further growth in the years to come 2
Slide 3: 2008 Full-Year Results
2008 Full-Year Results % Growth 2008 vs. 2007 Full-Year Excl. (Units billion) 2008 Reported Acquisitions Cigarette Volume 869.8 + 2.5 % + 1.0 % (a) Excluding excise taxes. Source: PMI Financials 3
Slide 4: Share Trends
Share Trends Overall PMI Share(a) (%) 27 25.8 25.9 25.2 23 2007 2008 2008 3MM (c) OECD/Non-OECD Share(a)(b) (%) OECD (%) Non-OECD 36 22 21.1 34.6 34.8 20.8 20.0 33.5 32 18 (c) (c) 2007 2008 2008 3MM 2007 2008 2008 3MM (a) Excluding PRC and USA. (b) Also excluding Duty-Free. (c) 3MM refers to 3 month
Slide 5: 2008 Full-Year Results
2008 Full-Year Results Growth 2008 vs. 2007 Full-Year Excl. ($ billion) 2008 Reported Currency Net Revenues(a) $ 25.7 + 12.7 % + 6.6 % (a) Excluding excise taxes. Source: PMI Financials 5
Slide 6: 2008 Full-Year Results
2008 Full-Year Results Growth 2008 vs. 2007 Full-Year Excl. ($ billion) 2008 Reported Currency Net Revenues(a) $ 25.7 + 12.7 % + 6.6 % (b) Operating Companies Income $ 10.4 + 16.7 % + 11.3 % (a) Excluding excise taxes. (b) OCI is defined as Operating income before general corporate expenses and amor
Slide 7: 2008 Full-Year Results
2008 Full-Year Results Growth 2008 vs. 2007 Full-Year Increase ($ / share) 2008 Increase Excl. Curr. Reported Diluted EPS $ 3.32 + 16.1 % + 10.8 % Adjusted Diluted EPS $ 3.32 + 18.6 % + 13.2 % Source: PMI Financials 7
Slide 8: 2009 First-Quarter Results
2009 First-Quarter Results Growth 2009 vs. 2008 First-Quarter Excl. (Units billion) 2009 Reported Acquisitions Cigarette Volume 203.4 - (a) (1.1) %(b) (a) An increase of 1.1% on a per selling day basis. (b) At 2008 level on a per selling day basis. Source: PMI Financials 8
Slide 9: 2009 First-Quarter Results
2009 First-Quarter Results Growth 2009 vs. 2008 First-Quarter Excl. ($ billion) 2009 Reported Currency Net Revenues(a) $ 5.6 (5.5) % + 6.3 % (a) Excluding excise taxes. Source: PMI Financials 9
Slide 10: 2009 First-Quarter Results
2009 First-Quarter Results Growth 2009 vs. 2008 First-Quarter Excl. ($ billion) 2009 Reported Currency Net Revenues(a) $ 5.6 (5.5) % + 6.3 % Operating Companies Income $ 2.4 (7.0) % + 8.8 % (a) Excluding excise taxes. Source: PMI Financials 10
Slide 11: 2009 First-Quarter Results
2009 First-Quarter Results Growth 2009 vs. 2008 First-Quarter Increase ($ / share) 2009 Decrease Excl. Curr. Reported Diluted EPS $ 0.74 (6.3) % + 12.7 % Adjusted Diluted EPS $ 0.74 (7.5) % + 11.3 % Source: PMI Financials 11
Slide 12: Currency
Currency ! First quarter results adversely impacted by currency: ! $700 million on net revenues(a) ! $400 million on OCI ! $0.15 on EPS (a) Excluding excise taxes. Source: PMI Financials 12
Slide 13: Currency
Currency ! First quarter results adversely impacted by currency: ! $700 million on net revenues(a) ! $400 million on OCI ! $0.15 on EPS ! Currency environment more favorable recently but remains very volatile (a) Excluding excise taxes. Source: PMI Financials 13
Slide 14: Currency Neutral Mid to Long-Term Targets
Currency Neutral Mid to Long-Term Targets Full-Year Growth Full-Year Forecast Rate 2008 2009 Net Revenues(a) 4 – 6% " " Operating Income 6 – 8% " " EPS 10 – 12% " " (a) Excluding excise taxes. Source: PMI Financials 14
Slide 15: Innovation
PHILIP MORRIS INTERNATIONAL Innovation Palenie powaznie ‘szkodzi Tobie j osobom w Twoim ‘otoczenity
Slide 16: Key Consumer Trends
Key Consumer Trends ! Lighter-tasting, smoother products ! Technology / innovation ! Slimmer diameter products ! Menthol 16
Slide 17: Marlboro Filter Plus
Marlboro Filter Plus ! Unique multi-chambered Romania Market Share (%) filter, one of which 3 contains tobacco for 2.5 added flavor 2.3 ! Innovative sliding pack 1.9 ! Introduced initially in Korea 1.2 ! Successfully expanded to a wide range of markets 0.4 0 Q1 Q2 Q3 Q4 Q1 2008 2009 Source: A.C. Nie
Slide 18: Marlboro Black Menthol
Marlboro Black Menthol ! Launched in Japan in Japan Marlboro Share (%) August 2008 12 ! Achieved a 1.0% share 9.8 9.8 10.2 10.4 10.4 Marlboro of market in Q1, 2009 0.8 1.0 1.0 Black Menthol ! Most successful PMI launch in Japan ever ! Now introduced in Hong Kong and Indonesia 0 Q1 Q2 Q3 Q4 Q1 2008 2
Slide 19: Brand Portfolio
Brand Portfolio International Local Heritage Premium & Above Mid-Price Low-Price 19
Slide 20: Parliament
Parliament ! Prestige brand with recessed filter ! Generally above premium price with superior margins ! Parliament volume grew by 5.9% in Q1, 2009 ! Growth driven by Korea, Russia, Turkey and Ukraine ! Parliament Reserve launched to reinforce prestigious image Source: PMI Financials 20
Slide 21: L&M
L&M ! Mid-price ! L&M volume declined by 0.5% in Q1, 2009 ! Second largest brand in EU Region after Marlboro ! Fastest growing brand in Germany Source: PMI Financials and GIMS 21
Slide 22: Chesterfield
Chesterfield ! Mid-price, generally priced above L&M with higher margins ! Volume growth in EU Region in Q1, 2009, partly offset by a decline in Russia Source: PMI Financials 22
Slide 23: Regulatory and Fiscal Strategy
Regulatory and Fiscal Strategy ! Commitment to address complex issues surrounding tobacco use 23
Slide 24: Regulatory and Fiscal Strategy
Regulatory and Fiscal Strategy ! Commitment to address complex issues surrounding tobacco use ! Support many of the provisions of WHO’s FCTC ! However, we believe that: ! tobacco companies should be permitted to communicate directly with adult smokers 24
Slide 25: Regulatory and Fiscal Strategy
Regulatory and Fiscal Strategy ! Commitment to address complex issues surrounding tobacco use ! Support many of the provisions of WHO’s FCTC ! However, we believe that: ! tobacco companies should be permitted to communicate directly with adult smokers ! product standards should be reasonable 25
Slide 26: Regulatory and Fiscal Strategy
Regulatory and Fiscal Strategy ! Commitment to address complex issues surrounding tobacco use ! Support many of the provisions of WHO’s FCTC ! However, we believe that: ! tobacco companies should be permitted to communicate directly with adult smokers ! product standards should be reasonable ! point
Slide 27: Regulatory and Fiscal Strategy
Regulatory and Fiscal Strategy ! Commitment to address complex issues surrounding tobacco use ! Support many of the provisions of WHO’s FCTC ! However, we believe that: ! tobacco companies should be permitted to communicate directly with adult smokers ! product standards should be reasonable ! point
Slide 28: Regulatory and Fiscal Strategy
Regulatory and Fiscal Strategy ! Commitment to address complex issues surrounding tobacco use ! Support many of the provisions of WHO’s FCTC ! However, we believe that: ! tobacco companies should be permitted to communicate directly with adult smokers ! product standards should be reasonable ! point
Slide 29: PMI Key Strengths
PMI Key Strengths ! Our constructive engagement ! Our superior brands ! Our financial capabilities ! Our talented people 29
Slide 30: Free Cash Flow
Free Cash Flow (a) ! Free cash flow reached $6.8 billion in 2008, up $2.4 billion, or 52.7% ! Free cash flow in Q1, 2009, was $1.3 billion, in line with prior year (a) Free cash flow is defined as operating cash flow less capital expenditures. In 2008, operating cash flow was $7,935 million and capi
Slide 31: Capital Structure
Capital Structure ! Net debt to EBITDA ratio of 0.94 to 1 on December 31, (a) 2008 ! Successful bond issuances: ! $10.1 billion equivalent in 2008 ! $3.0 billion equivalent in 2009 ! Attractive rates and well-laddered maturities ! Unused bank facilities of over $6 billion and access to commercial pa
Slide 32: Shareholder Returns
Shareholder Returns ! Quarterly dividend increased by 17.4% in August 2008 to an annualized rate of $2.16 per share ! At current share price, dividend yield is 5.7% ! Target dividend pay-out ratio of 65% could be exceeded in 2009 ! $13 billion two-year share repurchase program on track Source: PMI F
Slide 33: Strong Track Record
Strong Track Record Index (1998=100) 250 207 OCI CAGR = 7.6 % 121 Volume CAGR = 2.0 % 100 90 1998 2008 Source: PMI Financials 33
Slide 34: Conclusion
Conclusion ! Superior brand portfolio 34
Slide 35: Conclusion
Conclusion ! Superior brand portfolio ! Global leader and best geographical balance 35
Slide 36: Conclusion
Conclusion ! Superior brand portfolio ! Global leader and best geographical balance ! Pricing variance in first quarter 2009 highest ever 36
Slide 37: Conclusion
Conclusion ! Superior brand portfolio ! Global leader and best geographical balance ! Pricing variance in first quarter 2009 highest ever ! Ambitious productivity programs on track 37
Slide 38: Conclusion
Conclusion ! Superior brand portfolio ! Global leader and best geographical balance ! Pricing variance in first quarter 2009 highest ever ! Ambitious productivity programs on track ! Strong cash flow and balance sheet 38
Slide 39: Conclusion
Conclusion ! Superior brand portfolio ! Global leader and best geographical balance ! Pricing variance in first quarter 2009 highest ever ! Ambitious productivity programs on track ! Strong cash flow and balance sheet ! Very capable Board of Directors and talented, committed employees 39
Slide 40: Conclusion
Conclusion ! Superior brand portfolio ! Global leader and best geographical balance ! Pricing variance in first quarter 2009 highest ever ! Ambitious productivity programs on track ! Strong cash flow and balance sheet ! Very capable Board of Directors and talented, committed employees ! Strong busin
Slide 41: Conclusion
Conclusion ! Superior brand portfolio ! Global leader and best geographical balance ! Pricing variance in first quarter 2009 highest ever ! Ambitious productivity programs on track ! Strong cash flow and balance sheet ! Very capable Board of Directors and talented, committed employees ! Strong busin
Slide 42: Conclusion
Conclusion ! Superior brand portfolio ! Global leader and best geographical balance ! Pricing variance in first quarter 2009 highest ever ! Ambitious productivity programs on track ! Strong cash flow and balance sheet ! Very capable Board of Directors and talented, committed employees ! Strong busin
Slide 43: Annual Meeting of Stockholders
Annual Meeting of Stockholders May 5, 2009
Slide 44: Question and Comment Session
Annual Meeting of Stockholders May 5, 2009 Question and Comment Session
Slide 45: Annual Meeting of Stockholders
Annual Meeting of Stockholders May 5, 2009
Slide 46: Harold Brown
Harold Brown 46
Slide 47: Mathis Cabiallavetta
Mathis Cabiallavetta 47
Slide 48: Louis C. Camilleri
Louis C. Camilleri 48
Slide 49: J. Dudley Fishburn
J. Dudley Fishburn 49
Slide 50: Graham Mackay
PHILIP MORRIS INTERNATIONAL Graham Mackay
Slide 51: Sergio Marchionne
PHILIP MORRIS INTERNATIONAL Sergio Marchionne
Slide 52: Lucio A. Noto
Lucio A. Noto 52
Slide 53: Carlos Slim Helú
Carlos Slim Helú 53
Slide 54: Stephen M. Wolf
Stephen M. Wolf 54
Slide 55: Annual Meeting of Stockholders
Annual Meeting of Stockholders May 5, 2009
Slide 56: 25 Year Anniversary Tribute to PT HM Sampoerna Employees
25 YEAR ANNIVERSARY TRIBUTE TO PT HM SAMPOERNA EMPLOYEES (5 min. video – please stand by) 56
Slide 57: Annual Meeting of Stockholders
Annual Meeting of Stockholders May 5, 2009
Slide 58: Forward-Looking and Cautionary Statements
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 Litigation Reform Act of 1995.
Slide 59: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For Quarters Ended March 31, (in millions) (Unaudited) % Change on Reported Net Revenues (1) 2009 2008 excluding Excise Taxes Reported Reported Net Reported Net Revenues Reported Net Revenues excluding Net Re
Slide 60: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income For Quarters Ended March 31, (in millions) (Unaudited) % Change on Adjusted Operating 2009 2008 (1) Companies Income Adjusted Adjusted Operating Operating Companies Report
Slide 61: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, Excluding Currency For Quarters Ended March 31, (Unaudited) 2009 2008 % Change Reported Diluted EPS(1) $ 0.74 $ 0.79 (6.3)% Adjustments: Asset impairment and exit costs - 0.01
Slide 62: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, Excluding Currency For Quarters Ended March 31, (Unaudited) 2009 2008 % Change Reported Diluted EPS(1) $ 0.74 $ 0.79 (6.3)% Add: Currency Impact 0.15 Reported Diluted EPS, Excluding Currency $ 0.89 $
Slide 63: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Operating Companies Income to Operating Income For Quarters Ended March 31, (in millions) (Unaudited) First Quarter 2009 First Quarter 2008 EU $ 967 $ 1,167 EEMA 586 680 Asia 661 550 Latin America & Canada 155 149 Operating Companies Income $ 2,3
Slide 64: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For the Years Ended December 31, (in millions) (Unaudited) % Change on Reported Net Revenues 2008 2007 excluding Excise Taxes Reported Reported Net Reported Net Revenues Reported Net Revenues excluding Net Re
Slide 65: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income For the Years Ended December 31, (in millions) (Unaudited) % Change on Adjusted Operating 2008 2007 Companies Income Adjusted Adjusted Operating Less Operating Companies L
Slide 66: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, Excluding Currency For the Years Ended December 31, (Unaudited) 2008 2007 % Change Reported Diluted EPS $ 3.32 $ 2.86 16.1% Adjustments: Asset impairment and exit costs 0.02 0
Slide 67: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, Excluding Currency For the Years Ended December 31, (Unaudited) 2008 2007 % Change Reported Diluted EPS $ 3.32 $ 2.86 16.1% Less: Currency impact (0.15) Reported Diluted EPS, Excluding Currency $ 3.17
Slide 68: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Operating Companies Income to Operating Income For the Years Ended December 31, (in millions) (Unaudited) 2008 2007 EU $ 4,738 $ 4,195 EEMA 3,119 2,431 Asia 2,057 1,803 Latin America & Canada 520 514 Operating Companies Income $ 10,434 $ 8,943 Am
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