Philip Morris International Inc · NYSE:PM
Philip Morris International — Q1 2009 Earnings Presentation
33 slides from Philip Morris International's earnings presentation, Apr 23, 2009
Slide 1: 2009 First-Quarter Results
2009 First-Quarter Results 23 April 2009 Exhibit 99.3
Slide 2: Introduction
Introduction Introduction Unless otherwise stated, we will be talking about results in the first quarter 2009 and comparing them with the same period in 2008 References to volumes are for PMI shipment data Industry volume and market shares are sourced from A.C. Nielsen, other third party sources and
Slide 3: 2009 First-Quarter Results
2009 First-Quarter Results 2009 First-Quarter Results Strong business momentum continues Net revenues up 3.9% excluding acquisitions and currency: – driven by pricing Source: PMI Financials
Slide 4: 2009 First-Quarter Results
2009 First-Quarter Results 2009 First-Quarter Results Strong business momentum continues Net revenues up 3.9% excluding acquisitions and currency OCI up 6.2% excluding acquisitions and currency: – strong performances in EEMA and Asia Regions – 2.3% decrease in EU Region, driven by Poland and Germany
Slide 5: 2009 First-Quarter Results
2009 First-Quarter Results 2009 First-Quarter Results Strong business momentum continues Net revenues up 3.9% excluding acquisitions and currency OCI up 6.2% excluding acquisitions and currency Reported diluted EPS down 6.3% to 74 cents Diluted EPS up 10 cents, or 12.7%, excluding currency Source: P
Slide 6: Focus Topics
Focus Topics Focus Topics Consumer trends in emerging markets Pricing Currency
Slide 7: Russia
Russia Russia Signs of consumer down-trading due to economic situation and price increases Weak oil and metal prices hurting the economy PMI volume stable and share up in Q1, 2009 Pricing driving double digit increase in local currency profitability Source: PMI Financials and A.C. Nielsen
Slide 8: Ukraine
Ukraine Ukraine Significant economic upheaval PMI volume up 0.7% in the first quarter PMI share up 1.1pp to 35.8% in Q1, 2009, driven by Parliament and Chesterfield Significant increase in excise taxes in May could lead to consumer down-trading PMI has excellent momentum and broad portfolio Source:
Slide 9: Indonesia
Indonesia Indonesia No consumer down-trading PMI volume up 2.8% in Q1, 2009 Improved consumer confidence and stable unemployment Fastest growing segment is machine-made lighter- tasting kreteks, led by PMI’s A Mild Pricing boosting profitability Source: PMI Financials and A.C. Nielsen
Slide 10: Argentina
Argentina Argentina Continued consumer uptrading PMI volume increased by 1.2% in Q1, 2009 PMI share up 2.7pp to 72.2% on a 3 month moving average basis through the end of January (latest available) Pricing helping to improve profitability Minimum Excise Tax introduced in February Source: PMI Financi
Slide 11: Pricing
Pricing Pricing Since October 2008, PMI has increased prices notably in: PMI has announced to the trade plans to increase prices in Germany in June by €0.20 across the board Argentina Canada Colombia Mexico Australia Indonesia Pakistan Philippines Romania Russia Serbia Turkey Ukraine Czech Rep. Gree
Slide 12: Pricing
Pricing Pricing Pricing variance in Q1, 2009, was $358 million Largest quarterly pricing variance ever Pricing variance in Q1, 2009, higher than for the full year 2006 Source: PMI Financials
Slide 13: Currency and Guidance
Currency and Guidance Currency and Guidance First-quarter results adversely impacted by currency: – net revenues $700 million – OCI $400 million – EPS 15 cents Currency environment slightly more favorable at present but remains very volatile If current exchange rates prevail, we anticipate to be at
Slide 14: 2009 First-Quarter Volume: EU
2009 First-Quarter Volume: EU 2009 First-Quarter Volume: EU Volume down 3.7% driven primarily by: – a sharp contraction of the Polish market – slight share erosion in Italy, compounded by trade inventory distortions PMI market share in EU Region of 38.4%, down 0.3pp Stable share trend in France, Ger
Slide 15: 2009 First-Quarter Volume: EEMA
2009 First-Quarter Volume: EEMA 2009 First-Quarter Volume: EEMA Volume was down 0.3% vs. 2008, but up 0.8% on a per selling day basis: – 10.5% decline in duty-free volume reflecting reduced travel Volume and share gains notably in Algeria, Egypt and Turkey Market share gains also in Bulgaria, Croati
Slide 16: 2009 First-Quarter Volume: Asia
2009 First-Quarter Volume: Asia 2009 First-Quarter Volume: Asia Volume up 2.2%, driven by: – record market share of 13.8% in Korea – continued volume growth in Indonesia – a favorable distributor inventory movement in Japan due to the resourcing of production from the USA to Europe PMI share of 23.9
Slide 17: 2009 First-Quarter Volume: LA & Canada
2009 First-Quarter Volume: LA & Canada 2009 First-Quarter Volume: LA & Canada Volume up 4.4%, boosted by acquisition of Rothmans Inc. in Canada Excluding acquisitions, volume down 4.7% due to: – targeted inventory reductions and reduced consumer demand in Colombia – impact of price increases on indu
Slide 18: PMI Brand Performance
PMI Brand Performance PMI Brand Performance Parliament volume up 5.9% Marlboro volume down 2.4%: – lower industry volume in EU Region – 0.4 share point decline in EU Region – reduced duty-free sales – softening of premium segment in Russia Source: PMI Financials, A.C. Nielsen and GIMS
Slide 19: Marlboro
Marlboro Marlboro Gold Gold
Slide 20: Marlboro
Marlboro Marlboro Black Menthol Black Menthol Source: PMI Financials and Tobacco Institute of Japan In Q1, Marlboro achieved a 10.4% market share in Japan, up 0.5pp Marlboro Black Menthol achieved a 1.0% market share in Japan in Q1 PMI has stabilized its share of the growing menthol segment in Japan
Slide 21: PMI Brand Performance
PMI Brand Performance PMI Brand Performance Parliament volume up 5.9% Marlboro volume down 2.4% Chesterfield volume up 0.4%: – strong performance in EU Region Source: PMI Financials
Slide 22: PMI Brand Performance
PMI Brand Performance PMI Brand Performance Parliament volume up 5.9% Marlboro volume down 2.4% Chesterfield volume up 0.4% L&M volume down 0.5%: – improved performance outside Russia – fastest growing brand in Germany – # 2 brand in the EU Region behind Marlboro Source: PMI Financials and GIMS
Slide 23: PMI Brand Performance
PMI Brand Performance PMI Brand Performance Parliament volume up 5.9% Marlboro volume down 2.4% Chesterfield volume up 0.4% L&M volume down 0.5% Combined volume of Bond Street , Next , and Red & White up 1.5% Source: PMI Financials
Slide 24: PMI Volume by Price Segment
2008, Q1, Volume 49% 29% 22% PMI Volume by Price Segment PMI Volume by Price Segment Premium Low Mid Note: Price segmentation by brand on a global basis; excludes Rothmans Inc. brands. Source: PMI Financials 2009, Q1, Volume Low Mid Premium 49% 29% 22%
Slide 25: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Cash Flow and Balance Sheet Free cash flow in Q1, 2009, was $1.3 billion, in line with Q1, 2008: – lower capital expenditures – working capital requirements under control – unfavorable currency impact on net earnings Balance sheet and liquidity position remain very strong
Slide 26: Shareholder Returns
Shareholder Returns Shareholder Returns Willing to surpass target dividend pay-out ratio of 65% Share repurchases totaled $1.3 billion in Q1, 2009
Slide 27: Conclusions
Conclusions Conclusions Tobacco sector resilient PMI has best brand portfolio and geographic balance Innovation and new Marlboro architecture Prices increased across broad range of markets Manageable excise tax and regulatory environment Cost savings programs on track Currency headwinds in the short
Slide 28: Philip Morris International
ey PHILIP MORRIS INTERNATIONAL KN
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Non-GAAP Measures (1) As discussed in Note 1. Background and Basis of Presentation of our consolidated financial statements which appears in our Annual Report on Form 10-K, prior to 2008, certain of our subsidiaries reported their results up to t
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Non-GAAP Measures Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income For the Quarters Ended March 31, (in millions) (Unaudited) (1) As discussed in Note 1. Background and Basis of Presentation of our cons
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Non-GAAP Measures (1) As discussed in Note 1. Background and Basis of Presentation of our consolidated financial statements which appears in our Annual Report on Form 10-K, prior to 2008, certain of our subsidiaries reported their results up to t
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Non-GAAP Measures (1) As discussed in Note 1. Background and Basis of Presentation of our consolidated financial statements which appears in our Annual Report on Form 10-K, prior to 2008, certain of our subsidiaries reported their results up to t
Slide 33: Reconciliation of Operating Companies Income to Operating Income
$ 2,524 $ 2,320 Operating Income (34) (15) $ 2,369 $ First Quarter 2009 (13) General corporate expenses (9) Amortization of intangibles Latin America & Canada $ 2,546 Operating Companies Income Asia EEMA $ 1,167 EU First Quarter 2008 Reconciliation of Non-GAAP Measures Reconciliation of Non-GAAP Mea
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