Philip Morris International Inc · NYSE:PM
Philip Morris International — Q1 2016 Earnings Presentation
36 slides from Philip Morris International's earnings presentation, Apr 19, 2016
Slide 1: 2016 First-Quarter Results
2016 First-Quarter Results April 19, 2016 Exhibit 99.3
Slide 2: Introduction
2 Introduction ● Unless otherwise stated, we will be talking about results for the first quarter of 2016 and comparing them to the same period in 2015 ● 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 2016 EPS Guidance for Currency Only
4 Raising 2016 EPS Guidance for Currency Only ● Raising 2016 reported diluted EPS guidance to $4.40 to $4.50, at prevailing exchange rates, compared to $4.42 in 2015; revision driven solely by currency ● Guidance now includes 45 cents of unfavorable currency at prevailing exchange rates (vs. 60 cent
Slide 5: Currency Impact on PMI EPS Guidance
5 Source: PMI Financials or estimates Currency Impact on PMI EPS Guidance ($ per share) Currency Variance Impact on PMI EPS Guidance (vs. PY) February 2016 Guidance April 2016 Guidance April vs. February Guidance Argentine Peso (0.08) (0.07) 0.01 Egyptian Pound (0.03) (0.04) (0.01) Euro (0.02) (0.01
Slide 6: Q1 2016: Strong Organic Volume Performance From Top-Seven International Brands
6 (a) Excluding China and the U.S. Source: PMI Financials or estimates Q1, 2016: Strong Organic Volume Performance From Our Top-Seven International Cigarette Brands ● Difficult comparison vs. exceptionally strong results in Q1, 2015 ● Organic cigarette volume down by 1.4%, due mainly to the Asia Reg
Slide 7: Q1 2016: Financial Results Impacted by Difficult Comparisons
7 Q1, 2016: Financial Results Impacted by Difficult Comparisons (a) Excluding currency and acquisitions (b) Excluding currency Source: PMI Financials or estimates Q1, 2016 Q1, 2015 EU 3.6 % 12.9 % EEMA (6.5) 24.3 Asia (10.0) 8.0 LA&C 38.3 35.1 Adjusted OCI Variance vs. PY(a) 2.4% (0.9)% 0.9% Net Rev
Slide 8: Favorable Pricing Variance in Q1 2016
8 Favorable Pricing Variance in Q1, 2016 ● Pricing variance of $272 million, driven by: - EU, EEMA and LA&C Regions - Slightly positive variance in the Asia Region, despite unfavorable comparison for Korea ● In Q1, 2016, we announced or implemented price increases in a wide range of markets, notably
Slide 9: PMI and Marlboro Cigarette Market Shares in Q1 2016
9 (a) Excluding China (b) Also excluding the U.S. Source: PMI Financials or estimates PMI and Marlboro Cigarette Market Shares in Q1, 2016 PMI Marlboro Q1, 2016 Var. vs. PY Q1, 2016 Var. vs. PY EU 38.7% 0.6 pp 19.1% 0.4 pp EEMA 25.0 (0.1) 6.6 (1.1) Asia(a) 23.8 (1.0) 6.6 0.5 LA&C 39.3 1.1 15.9 1.2 T
Slide 10: EU Region: Strong Performance Continued in Q1 2016
10 38.1 38.7 Q1, 2015 Q1, 2016 Source: PMI Financials or estimates EU Region: Strong Performance Continued in Q1, 2016 ● Cigarette industry volume up by 0.6% ● Continued cigarette share growth from the top-three selling industry brands in the Region: - Marlboro (+0.4pp to 19.1%) - L&M (+0.2pp to 7.0
Slide 11: EU Region: Commercialization of iQOS is Progressing Well
11 EU Region: Commercialization of iQOS is Progressing Well 0.6 0.8 1.3 1.9 Note: Reduced-Risk Products ("RRPs") is the term the company uses to refer to products with the potential to reduce individual risk and population harm in comparison to smoking cigarettes. Offtake share represents HeatStick
Slide 12: EEMA Region: Confident in the Full-Year 2016 Outlook
12 EEMA Region: Confident in the Full-Year 2016 Outlook Source: PMI Financials or estimates ● Difficult Q1 comparison vs. exceptionally strong financial results in Q1, 2015 ● Ukraine: very competitive pricing environment, though starting to improve ● Algeria: sizable excise tax-driven retail price i
Slide 13: Russia: Resilient Cigarette Industry Volume
13 Russia: Resilient Cigarette Industry Volume ● Resilient cigarette industry volume, down by 6.0% in Q1, 2016 ● Forecast 2016 cigarette industry volume decline of around 9% ● PMI share impacted mainly by timing of competitor price increases ● Solid double-digit OCI growth in Q1, 2016, ex-currency,
Slide 14: Turkey: Cigarette Industry Growth Supporting Strong Performance
14 Turkey: Cigarette Industry Growth Supporting Strong Performance ● Cigarette industry volume up by 11.7% in Q1, 2016, driven mainly by a significant reduction in illicit trade ● Share growth driven by Marlboro ● Exceptional adjusted OCI growth in Q1, 2016, ex-currency, driven by: - January price i
Slide 15: Asia Region: Q1 2016 Performance Impacted by Korea
15 (a) Excluding China Source: PMI Financials or estimates, and InfoView Technologies Pty Ltd. Asia Region: Q1, 2016 Performance Impacted by Korea ● Financial results impacted by Q1, 2015 gain in Korea ● Marlboro share up by 0.5 points(a) ● Australia: - Super-low price segment showing signs of stabi
Slide 16: Indonesia: Target Double-Digit OCI Growth, Ex-Currency, for Full Year
16 Source: PMI Financials or estimates Indonesia: Despite Challenging Quarter, Target Double-Digit OCI Growth, Ex-Currency, for the Full-Year ● Cigarette industry volume declined by 5.9% in Q1, 2016 ● PMI share under pressure in Q1, 2016: - Share loss in the machine-made kretek segment due to the gr
Slide 17: Japan: Cigarette Market Share Under Pressure in Q1 2016
17 11.5 10.6 9.9 9.3 2.3 2.4 25.6 24.0 Q1, 2015 Q1, 2016 (a) Mainly related to estimated retail trade inventory movements and adult smoker purchases in Q1, 2016, ahead of price increases for select competitor brands effective April 1st Note: Reduced-Risk Products ("RRPs") is the term the company use
Slide 18: Japan: HeatStick Offtake Share Growth Continues
18 0.4 3.4 0.3 2.4 Note: Reduced-Risk Products ("RRPs") is the term the company uses to refer to products with the potential to reduce individual risk and population harm in comparison to smoking cigarettes. Offtake share represents select C-Store sales volume for HeatSticks as a percentage of the t
Slide 19: LA&C Region: Strong Overall Performance in Q1 2016
19 LA&C Region: Strong Overall Performance in Q1, 2016 Source: PMI Financials or estimates ● PMI cigarette volume up by 2.4%, driven by Mexico, partially offset by Argentina ● Strong performance of Marlboro: - Share growth of 1.2 points to 15.9% - Volume up by 8.5% ● Impressive growth rates in net r
Slide 20: Conclusion: Outlook for 2016 Remains Strong
20 Conclusion: Outlook for 2016 Remains Strong ● Q1, 2016 results in line with our expectations, reflecting a difficult comparison ● Underlying business fundamentals continue to be strong ● Exciting progress with iQOS commercialization, as demonstrated by the continued HeatStick offtake share growth
Slide 21: Questions & Answers
2016 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 ● 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 subsidiaries, net ● Adjusted OCI is define
Slide 25: Glossary: Industry/Market Terms
25 Glossary: Industry/Market Terms ● EEMA refers to the Eastern Europe, Middle East & Africa Region and includes our international duty free business ● EU refers to the European Union Region ● LA&C refers to the Latin America & Canada Region ● SoM stands for Share of Market
Slide 26: Glossary: Reduced-Risk Products
26 Glossary: Reduced-Risk Products ● An e-vapor product is an electrical product that generates an aerosol by heating a nicotine or non-nicotine containing liquid, such as electronic cigarettes (or "e-cigarettes") ● HeatStick tobacco sticks are novel patented tobacco products specifically designed b
Slide 27: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS
27 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) 2015 Reported Diluted EPS 4.42$ Adjustments: Asset impairment and exit costs 0.03 Tax items (0.03) Adjus
Slide 28: Adjustments for the Impact of Currency and Acquisitions
28 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 29: Reconciliation of Reported OCI to Adjusted OCI
29 (a) For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to previous slide PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income & R
Slide 30: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency
30 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) 2016 2015 % Change Reported Diluted EPS 0.98$ 1.16$ (15.5)
Slide 31: Reconciliation of Reported Diluted EPS, excluding Currency
31 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) 2016 2015 % Change Reported Diluted EPS 0.98$ 1.16$ (15.5)% Less: Currency impact (
Slide 32: Adjustments for the Impact of Currency and Acquisitions
32 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 33: Reconciliation of Reported OCI to Adjusted OCI
33 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 34: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency
34 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 35: Reconciliation of Operating Cash Flow to Free Cash Flow
35 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 36: 2016 First-Quarter Results
2016 First-Quarter Results April 19, 2016
Philip Morris International — Q1 2016 Earnings Presentation on 6ix