Philip Morris International Inc · NYSE:PM
Philip Morris International — Q1 2012 Earnings Presentation
35 slides from Philip Morris International's earnings presentation, Apr 19, 2012
Slide 1: First-Quarter Results
First-Quarter Results April 19, 2012 Exhibit 99.3
Slide 2: Introduction
Introduction Unless otherwise stated, we will be talking about results for the first- quarter 2012 and comparing them with the same period in 2011 References to PMI volumes refer to PMI shipment data, unless otherwise stated Industry volume and market shares are the latest data available from a numb
Slide 3: Forward-Looking and Cautionary Statements
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, coul
Slide 4: Excellent First-Quarter 2012 Results
Excellent First-Quarter 2012 Results (a) Excluding currency and acquisitions (b) Excluding currency Source: PMI Financials (a) (a) (%) Growth Q1, 2012 vs. Q1, 2011 (b) 5.3 10.9 14.2 19.8 Organic Cigarette Volume Net Revenues Adjusted OCI Adjusted Diluted EPS
Slide 5: 2012 EPS Guidance
2012 EPS Guidance Q1 results confirm our very strong business momentum Difficult comparison in Q2, 2012, due to the exceptional circumstances in Japan in 2011 Forecast currency headwind of 15 cents at prevailing exchange rates Revised reported diluted EPS guidance for 2012 is $5.20 to $5.30, compare
Slide 6: Excise Tax Environment Remains Reasonable
Excise Tax Environment Remains Reasonable No disruptively large excise tax increases in any key markets Structural improvements continue with increase in the relative importance of the specific element
Slide 7: Favorable Pricing and Volume/Mix Variances in Q1, 2012
Favorable Pricing and Volume/Mix Variances in Q1, 2012 Note: Variances at OCI level Source: PMI Financials ($ million) Price Volume/Mix
Slide 8: Strong First-Quarter 2012 Organic Volume
Strong First-Quarter 2012 Organic Volume (%) Source: PMI Financials Organic Cigarette Volume Growth Q1, 2012 vs. Q1, 2011 EU 12.4 3.4 (1.5) 2.9 5.3 (5) Asia EEMA LA&C Total PMI
Slide 9: All Top Ten PMI Brands Grew Volume in Q1, 2012
Source: PMI Financials All Top Ten PMI Brands Grew Volume in Q1, 2012 Volume Growth (Q1, 2012 vs. Q1, 2011) (units billion)
Slide 10: Growing Market Share in Key Markets
Growing Market Share in Key Markets Note: Historical data adjusted for pro forma inclusion of business combination with Fortune Tobacco Corporation in the Philippines Source: PMI Financials and PMI estimates Top 30 PMI OCI Markets (%) 35.5 36.6 37.3 Q1, 2012
Slide 11: Asia: Our Principal Growth Engine
Growth Q1, 2012 vs. Q1, 2011 (a) Excluding currency and acquisitions Source: PMI Financials Asia: Our Principal Growth Engine Solid economic environment Growing adult population Increasing consumer purchasing power (a) (a) (%) Organic Cigarette Volume 12.4 16.3 23.7 Revenues Adjusted OCI Net
Slide 12: Indonesia: Premium Brands Lead the Way
PMI Market Share Variance Q1, 2012 vs. Q1, 2011 Source: PMI estimates and PMI Financials Indonesia: Premium Brands Lead the Way Total industry volume up at double-digit rate in Q1, Full-year industry volume growth forecast in 6% to 8% range PMI volume increased 24.9% in Q1, 2012 Tremendous market sh
Slide 13: Japan: Building off a Higher Base
PMI Market Share Japan: Building off a Higher Base Industry volume underlying trend: more moderate decline of approximately 2% forecast in PMI Q1, 2012 market share of 28.0% impacted by significant trade purchases of new JT products in March Lark Hybrid One 100’s reached 0.4% market share in March M
Slide 14: Korea: Pricing to Boost Profitability
Source: Hankook Research Korea: Pricing to Boost Profitability Price increase on Marlboro , Parliament and Lark from 2,500 Won to 2,700 Won per pack in February Preliminary indications that we have given back, as expected, a large part of our share gain from previous temporary price advantage PMI Ma
Slide 15: EEMA: Strong Contribution from Volume, Mix and Pricing
Growth Q1, 2012 vs. Q1, 2011 (a) Excluding currency and acquisitions Source: PMI Financials EEMA: Strong Contribution from Volume, Mix and Pricing Strong volume growth led by Algeria, Saudi Arabia and Turkey, partly offset by Egypt Favorable mix as consumers trade up to premium and mid-price brands
Slide 16: Turkey: PMI Momentum Continues
Source: PMI Financials and Nielsen Turkey: PMI Momentum Continues Strong economy has enabled market to absorb Q4, 2011, tax-driven price increases Our volume increased nearly 10% in Q1, 2012 We continued our strong share performance and mix has improved behind Parliament and Muratti Premium Mid Low
Slide 17: Russia: Share Gains, Investment Continues
35.2 31.8 23.2 25.7 25.1 25.9 16.5 16.6 Price Segments (%) Russia: Share Gains, Investment Continues Source: Nielsen PMI Market Share (%) Consumer up-trading continuing despite price increases PMI gaining share thanks to strength of: - Parliament - Bond Street - Next Continued investment in Marlboro
Slide 18: EU: An Improved Overall Performance
Growth Q1, 2012 vs. Q1, 2011 (a) Excluding currency Source: PMI estimates and PMI Financials EU: An Improved Overall Performance Total industry volume declined by a modest 1.3% despite weak economic conditions notably in Greece and Spain Continued L&M and Chesterfield share growth Organic cigarette
Slide 19: Spain: Difficult Economic Conditions
14.1 13.9 8.1 8.9 6.7 6.5 PMI Market Share (%) Spain: Difficult Economic Conditions (a) “Youth” refers to Spain’s working population under 25 years old Note: Chest. is Chesterfield Source: Eurostat and PMI estimates Unemployment (a) (%) Unemployment continues to increase, putting pressure on total c
Slide 20: Italy: Profitability Remains Strong
3.6 3.6 3.5 3.3 3.3 1.6 Chesterfield Share of Total Tobacco Italy: Profitability Remains Strong Source: PMI estimates PMI Market Share Higher prices and a weaker economy led to a 6.1% decline in cigarette industry volume in Q1, 2012, partly offset by the growth of fine cut Some consumer down-trading
Slide 21: Germany: PMI Share Growth Continues
21.2 20.4 10.0 11.2 4.5 4.3 Germany: PMI Share Growth Continues (a) Young Adult Smokers: Legal Age (minimum 18) – years old Source: PMI estimates and PMI Market Research Total industry volume up 3.1% in Q1, 2012, helped by a decline in illicit trade Marlboro first in market with new retail prices Ne
Slide 22: Latin America & Canada: Solid Contribution to PMI Growth
Latin America & Canada: Solid Contribution to PMI Growth Volume growth, driven by: Share and market growth in Argentina Favorable timing and trade movements in Mexico Marlboro share: Argentina +1.0pp to 24.8% Brazil Colombia Mexico +4.0pp to 54.3% Growth Q1, 2012 vs. Q1, 2011 (%) (a) Excluding curre
Slide 23: PMI Intensifying Efforts to Combat Illicit Trade
PMI Intensifying Efforts to Combat Illicit Trade (a) Estimated globally at 600 billion cigarettes Significant volume and profitability opportunities for PMI from potential reduction PMI cooperating with authorities worldwide Canada, Germany and Romania are recent examples of successful reductions in
Slide 24: Free Cash Flow Impacted by Working Capital Requirements
245 (742) Free Cash Flow (a) Impacted by Working Capital Requirements (a) Free cash flow equals net cash provided by operating activities less capital expenditures Source: PMI Financials ($ million) (68) 2,236 1,671 Q1 Net Earnings Working Capital and Other Capital Expenditures Q1
Slide 25: Generous Returns to Shareholders
Generous Returns to Shareholders In the first quarter of 2012, PMI spent $1.5 billion to repurchase 18.1 million shares. Target for 2012 is $6 billion Since 2008 spin, 432.1 million shares repurchased at an average price of $52.88 Our annualized dividend of $3.08 per share generated a yield of 3.5%
Slide 26: Superior Shareholder Returns
Superior Shareholder Returns Tobacco Peer Group Company Peer Group March 28, 2008 – April 13, 2012 Note: Peer groups represent the market weighted average return of the group. PMI pro forma for additional $0.46 per share dividend paid in April 2008 impacts the period March 28, 2008 – April 13, 2012.
Slide 27: Conclusion
Conclusion Excellent results in the first quarter of 2012 Very strong organic volume and consumer up-trading in non-OECD markets Key brands performing very well, led by Marlboro and Parliament Expect to deliver against our currency-neutral long-term target of 10% to 12% growth in adjusted diluted EP
Slide 28: Questions & Answers
First-Quarter Results Questions & Answers
Slide 29: Reconciliation of Non-GAAP Measures: Currency and Acquisitions
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For the Quarters Ended March 31, ($ in millions) (Unaudited) Reported Net Revenues Less Excise Taxes Reported Net Revenues excluding Excise Taxes Less Currenc
Slide 30: Reconciliation of Reported OCI to Adjusted OCI
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 31: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS
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) % Change Reported Diluted EPS 1.25 $ 1.06 $ 17.9% Adjustments
Slide 32: Reconciliation of Reported Diluted EPS, Year Ended December 31
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) Reported Diluted EPS 4.85 $ Adjustments: Asset impairment and exit costs 0.05 Tax items (0.02) Adjusted Dil
Slide 33: 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 and Free Cash Flow, excluding Currency For the Quarters Ended March 31, ($ in millions) (Unaudited) (a) Operating Cash Flow For the Quarters Ended March 31, %
Slide 34: Peer Groups
PMI Peer Groups Bayer BAT Coca-Cola Diageo GlaxoSmithKline Heineken Imperial Tobacco Johnson & Johnson Kraft McDonald’s Nestlé Novartis PepsiCo Pfizer Roche Unilever Vodafone Altria BAT Imperial Tobacco Japan Tobacco Lorillard Reynolds American Company Peer Group Tobacco Peer Group
Slide 35: First-Quarter Results
First-Quarter Results April 19, 2012
Philip Morris International — Q1 2012 Earnings Presentation on 6ix