Philip Morris International Inc · NYSE:PM
Philip Morris International — FY2011 Earnings Presentation
34 slides from Philip Morris International's earnings presentation, Feb 9, 2012
Slide 1: Full-Year and Fourth-Quarter Results
Full-Year and Fourth-Quarter Results February 9, 2012 Exhibit 99.3
Slide 2: Introduction
Introduction Unless otherwise stated, we will be talking about results for the full- year or fourth-quarter 2011 and comparing them with the same period in 2010 References to PMI volumes refer to PMI shipment data, unless otherwise stated Industry volume and market shares are the latest data availab
Slide 3: 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. Su
Slide 4: Outstanding 2011 Results
Outstanding 2011 Results Organic cigarette volume growth of 0.5%, thanks notably to Indonesia and Japan Fourth consecutive year of global share growth driven by our superior brand portfolio Solid volume performance, strong pricing, and significant productivity savings led to record profitability Str
Slide 5: Outstanding 2011 Results
Outstanding 2011 Results (a) Excluding currency and acquisitions (b) Excluding currency Source: PMI Financials
Slide 6: Reversal of Currency Favorability in 2012
Reversal of Currency Favorability in 2012 Recent unfavorable currency movements: Weaker Euro, due to debt issues in Europe Depreciation of certain emerging market currencies At prevailing exchange rates, forecast currency headwind of approximately 10 cents per share in 2012 This would amount to a re
Slide 7: 2012 EPS Guidance
2012 EPS Guidance Excellent business momentum We will fully compensate the EPS hurdle of 10 cents related to the exceptional circumstances in Japan in 2011 Reported diluted EPS guidance for 2012, at prevailing exchange rates, is $5.25 to $5.35 versus $4.85 in 2011 This corresponds to a growth rate o
Slide 8: Growing Free Cash Flow
Growing Free Cash Flow (a) at Double-Digit Rate (a) Free cash flow equals net cash provided by operating activities less capital expenditures Source: PMI Financials ($ billion)
Slide 9: Accelerated Share Repurchases
Accelerated Share Repurchases $12 billion three-year share repurchase program initiated in May 2010 $3.6 billion available under this program at the end of Current program expected to be completed well ahead of schedule Plan to spend $6 billion on share repurchases in 2012 Source: PMI Financials and
Slide 10: 2011 Key Drivers and 2012 Business Outlook
2011 Key Drivers and 2012 Business Outlook Manageable excise tax environment Stable industry volume trends Superior brand portfolio Market share growth Favorable pricing environment Limited input cost increases and strong productivity gains
Slide 11: Manageable Excise Tax Environment
Manageable Excise Tax Environment Most governments appear to have understood that large disruptive excise tax increases usually do not generate targeted increases in revenues, nor are sustainable No excessive excise tax increases implemented or announced so far in 2011 Reasonable approach in terms o
Slide 12: Outlook for Industry Volume Trends
Outlook for Industry Volume Trends Cigarette industry volume trends anticipated to be similar to those prevalent in 2011 Potential for growth in non-OECD markets where adult smoking population expanding and economy vibrant (Asia, Middle East) Moderate decline expected in OECD markets and Eastern Eur
Slide 13: PMI Market Share Growth Momentum
PMI Market Share Growth Momentum (a) (a) Excluding USA and China. Historical data adjusted for pro-forma inclusion of 2010 business combination with FTC in the Philippines and the 2011 acquisition in Jordan (b) Also excluding duty-free (c) Organisation for Economic Co-operation and Development (OECD
Slide 14: Top Ten PMI Brands Grew in 2011
Top Ten PMI Brands Grew in 2011 % Volume Growth vs. Prior Year Q4, 2011 FY 2011 Marlboro 2.3% 0.9% L&M (1.9) 1.7 Fortune 6.4 8.2 (a) Bond Street 1.5 2.0 Parliament 18.7 12.1 Philip Morris 2.4 1.4 Chesterfield 1.4 0.6 Sampoerna A 12.0 11.8 Lark 25.8 17.5 Dji Sam Soe 10.1 10.3 (a) March through Decemb
Slide 15: Market Shares
Market Shares Asia (a) 5.8% 6.1% 6.4% EEMA 6.4 6.5 6.8 EU 18.4 18.1 17.9 LA&C 13.8 14.1 13.8 (c) Total (a)(b) 9.0 9.1 9.2 Marlboro Gaining Market Share (a) Excluding China (b) Also excluding the USA (c) Marlboro share up in all major markets in the Latin America & Canada Region. However, the regiona
Slide 16: Tremendous Performance of Parliament
Tremendous Performance of Parliament Luxury positioning Above premium price Volume in 2011 grew by 12.1% to 39 billion units PMI Market Shares (%) Note: Kaz. is Kazakhstan Source: PMI Financials, PMI estimates, Hankook Research and A.C. Nielsen
Slide 17: Increased Volume of L&M
Increased Volume of L&M Leading international low- price brand Volume in 2011 grew by 1.7% to 90 billion units Innovative line extensions (%) PMI Market Shares Source: PMI Financials and PMI estimates
Slide 18: Favorable OCI Volume/Mix Variance in 2011
Favorable OCI Volume/Mix Variance in 2011 Source: PMI Financials
Slide 19: Pricing Variance of $1.9 Billion in 2011
Pricing Variance of $1.9 Billion in 2011 ($ million) Source: PMI Financials 2008-10 average: $1,623 mio.
Slide 20: Adjusted OCI Margins
************************************************************************************************ Adjusted OCI Margins Full-Year (a) Variance (a) Asia 38.7% 44.7% 6.0pp EEMA 42.5 42.9 0.4 EU 49.2 49.4 0.2 LA&C 31.2 31.4 0.2 Total 42.3 44.2 1.9 Improved Margins (a) Excluding currency and acquisitions
Slide 21: $300 Million Productivity Target in 2012
$300 Million Productivity Target in 2012 Forecast moderate increases in tobacco leaf prices and direct material costs, broadly in line with inflation Increased but manageable costs, mainly in Europe, relating to the imposition of “RCIP” paper $300 million productivity pre-tax target in 2012, mainly
Slide 22: Peer Group
Peer Group Tobacco Sector Free Cash Flow as a % of Net Revenues – (YTD September, 2011) Note: Free cash flow as a percentage of net revenues is defined as total January 1, 2011 – September 30, 2011 period free cash flow over total January 1, 2011 – September 30, 2011 period net revenues. Free cash f
Slide 23: Significant Returns to Shareholders Through Dividends and Share Repurchases
Significant Returns to Shareholders Through Dividends and Share Repurchases Note: Dividends for 2008 and 2011 are annualized rates. 2008 annualized rate is based on a quarterly dividend of $0.46 per common share, declared June 18, 2008. The annualized rate for 2011 is based on a quarterly dividend o
Slide 24: PMI Outperformed All Stocks in the Dow Jones Industrial Average in 2011
PMI Outperformed All 30 Stocks in the Dow Jones Industrial Average in 2011 Source: FactSet, compiled by Centerview
Slide 25: Questions & Answers
Questions & Answers 2011 Full-Year and Fourth-Quarter Results
Slide 26: Reconciliation of Non-GAAP Measures
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For the Quarters Ended December 31, ($ in millions) (Unaudited) Reported Net Revenues Less Excise Taxes Reported Net Revenues excluding Excise Taxes Less Curr
Slide 27: Reconciliation of Non-GAAP Measures
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 Ende
Slide 28: Reconciliation of Non-GAAP Measures
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 December 31, (Unaudited) % Change Reported Diluted EPS 1.08 $ 0.96 $ 12.5% Adjustme
Slide 29: Reconciliation of Non-GAAP Measures
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For the Years Ended December 31, ($ in millions) (Unaudited) (a) Includes the business combination in the Philippines ($105) (b) Includes the business combina
Slide 30: Reconciliation of Non-GAAP Measures
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 Years Ended D
Slide 31: Reconciliation of Non-GAAP Measures
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 Years Ended December 31, (Unaudited) % Change Reported Diluted EPS 4.85 $ 3.92 $ 23.7% Adjustments
Slide 32: Reconciliation of Operating Cash Flow to Free Cash Flow
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Operating Cash Flow to Free Cash Flow ($ in millions) (Unaudited) (a) Operating Cash Flow For the Years Ended December 31, Net cash provided by operating activities (a) 7,935 $ 7,884 $ 9,437 $ 10,
Slide 33: Reconciliation of Operating Cash Flow to Free Cash Flow and Free Cash Flow as a Percent of Net Revenues
Reconciliation of Operating Cash Flow to Free Cash Flow and Free Cash Flow as a Percent of Net Revenues excluding Excise Taxes ($ in millions) (Unaudited) PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures (a) Operating Cash Flow
Slide 34: 2011 Full-Year and Fourth-Quarter Results
2011 Full-Year and Fourth-Quarter Results February 9, 2012
Philip Morris International — FY2011 Earnings Presentation on 6ix