Philip Morris International Inc · NYSE:PM

Philip Morris International — Philip Morris ČR a.s. — Shareholder Meeting (April 2018)

28 slides from Philip Morris International's shareholder meeting presentation, Apr 27, 2018

  1. Slide 1: Annual General Meeting of Shareholders of Philip Morris ČR a.s.

    Annual General Meeting of Shareholders of Philip Morris ČR a.s. Kutná Hora April 27, 2018 Árpád Könye Chairman of the Board of Directors

  2. Slide 2: Total Cigarette Market - Czech Republic

    Total Cigarette Market Czech Republic Total cigarette market down by 0.6% predominantly due to: • Decrease of cigarette consumption Source: Philip Morris ČR a.s. internal estimates © 2018 Philip Morris ČR a.s. 2

  3. Slide 3: Price Increases 2015 – 2017 (CZK/pack)

    Price Increases 2015 – 2017 (CZK/pack) Czech Republic Dec'15 Dec'16 Dec'17 Premium 96 100 102 Medium 84 89 91 Low 79 84 86 SuperLow 77 82 84 • Excise tax increase January 1, 2016 • Excise tax increase January 1, 2017 Source: Price Gazettes of the Ministry of Finance © 2018 Philip Morris ČR a.s. 3

  4. Slide 4: PMCR Cigarette Market Share and Shipments

    PMCR Cigarette Market Share and Shipments Czech Republic Market share decline to 45.2% (-0.9pp) • The good performance of Chesterfield was fully offset by the decline of local brands Domestic cigarette shipments down by 3.5% • Due to lower cigarette market share Source: Nielsen Company (Europe) Sárl

  5. Slide 5: Fine Cut Tobacco

    Fine Cut Tobacco Czech Republic Note: Fine Cut Tobacco refers to tobacco products such as tobacco for make-your-own cigarettes (0.73 g is equivalent to 1 cigarette), roll-your-own cigarettes (0.60 g is equivalent to 1 cigarette) and volume tobacco for make-your-own cigarettes (0.60 g is equivalent t

  6. Slide 6: Total Cigarette Market - Slovakia

    Total Cigarette Market Slovakia Total cigarette market up by 1.9% reflecting mainly • Solid economic conditions Source: Philip Morris Slovakia s.r.o. internal estimates © 2018 Philip Morris ČR a.s. 6

  7. Slide 7: Price Increases 2015 – 2017 (EUR/pack)

    Price Increases 2015 – 2017 (EUR/pack) Slovakia Dec '15 Dec '16 Dec '17 Premium 3.50 3.70 3.80 Medium 3.10 3.30 3.50 Super Low 2.90 3.10 3.20 2.80 3.00 3.10 • Price increases in Q1 2016 in conjunction with the stick count change from 19s to 20s • Price increases in Q1 2017 in conjunction with excise

  8. Slide 8: Cigarette Market Share and Shipments - Slovakia

    Cigarette Market Share and Shipments Slovakia Market share decline to 57.0% (-0.1pp) • Share decline of local brands • Almost fully offset by strong performance of L&M and Marlboro Cigarette shipments up 1.6% • Higher total cigarette market • Partially offset by lower market share Source: Nielsen Co

  9. Slide 9: Net Revenues

    Net Revenues Consolidated Financial Results YTD Dec YTD Dec Var. Fav./(Unfav.) % Change vs. YTD Dec 2016 (CZK million) 2017 2016 Amt Actual Excl. Currency Net Revenues 12 200 11 453 747 6.5 % 7.2 % Real variance of CZK 823 million Source: Philip Morris ČR a.s. financials © 2018 Philip Morris ČR a.s.

  10. Slide 10: Operating Income

    Operating Income Consolidated Financial Results YTD Dec YTD Dec Var. Fav./(Unfav.) % Change vs. YTD Dec 2016 (CZK million) 2017 2016 Amt Actual Excl. Curr. Net Revenues 12 200 11 453 747 6.5 % 7.2 % Operating Income 4 342 3 473 869 25.0 % 24.6 % Real variance of CZK 854 million Source: Philip Morris

  11. Slide 11: Fiscal Outlook - Czech Republic

    Fiscal Outlook Czech Republic MET per 1000 cig. 2,700 EU MET 2,600 requirement of 90 EUR 2,500 2,400 2,300 2,630 2,570 2,520 2,200 2,370 2,100 2,250 2,000 JAN 2014 DEC 2014 2016 2017 2018 • Adopted three-year excise tax roadmap for 2016 - 2018 meeting minimum EU requirements • Excise tax increase as

  12. Slide 12: Fiscal Outlook - Slovakia

    Fiscal Outlook Slovakia Minimum Excise Tax for Cigarettes (EUR/’000) EU MET requirement of 90 EUR • 3 year fiscal plan adopted in fall 2016 – Euro 0.08/20s increases in February 1, ‘17 & ‘19 • new excise category for smoke-less tobacco products as of May 1, 2017 • anti-forestalling measures for ciga

  13. Slide 13: Anti-smoking Act

    Anti-smoking Act Czech Republic Entered into effect New Act no. 65/2017 Coll. includes: • Full HORECA (restaurants + bars) smoking ban (outside terraces exempted) • E-cigs vaping and IQOS use allowed in HORECA May 31, • Vending machines allowed 2017 © 2018 Philip Morris ČR a.s. 15

  14. Slide 14: RRP - Distribution agreement

    RRP - Distribution agreement Czech Republic and Slovakia Effective as of July 1, 2017 for PMČR and as of July 20, 2017 for PMSK Signed between: Philip Morris Products S.A. (Seller) Philip Morris ČR a.s. (Distributor) Philip Morris Slovakia s.r.o. (Distributor) Pricing method: ROS – Return on Sales E

  15. Slide 15: IQOS Growing Focus Area Offtake Shares (%)

    IQOS Growing Focus Area Offtake Shares (%) Czech Republic and Slovakia 2017 2017 9 cities: 9 cities: Praha, Ceske Budejovice, Bratislava, Trnava, Trencin, Nitra, Usti nad Labem, Plzen, Banska Bystrica, Zilina, Hradec Kralove, Jihlava, Brno, Poprad, Presov, Kosice Olomouc a Ostrava Source: Philip Mor

  16. Slide 16: IQOS Device Economics

    IQOS Device Economics Czech Republic and Slovakia Czech Republic • Recommended retail selling price CZK 2 690 • Recommended registration discounts (CZK 1 800) Slovakia • Recommended retail selling price EUR 99 • Recommended registration discounts (EUR 68) Source: Philip Morris ČR a.s., Philip Morris

  17. Slide 17: IQOS Heated Tobacco Units Economics

    IQOS Heated Tobacco Units Economics Czech Republic and Slovakia Czech Republic • Recommended retail selling price bundle CZK 900 pack CZK 100 Slovakia • Recommended retail selling price bundle EUR 35 pack EUR 3.50 Source: Philip Morris ČR a.s., Philip Morris Slovakia s.r.o. © 2018 Philip Morris ČR a

  18. Slide 18: IQOS approach to Commercialization

    IQOS approach to Commercialization Heated Tobacco Share Switched User Referral Customer Care Service Switched Users IQOS Kit Purchases IQOS Kit Lending Quality Guided Trials IQOS Coaches Adult Smokers © 2018 Philip Morris ČR a.s. 18

  19. Slide 19: IQOS Boutique Kutná Hora

    IQOS Boutique Kutná Hora Czech Republic First IQOS store opened June 26th, 2017 Objective to make Kutna Hora 1st Smoke-Free City in Czech Republic Source: Philip Morris ČR a.s. © 2018 Philip Morris ČR a.s. 19

  20. Slide 20: IQOS Store Praha

    IQOS Store Praha Czech Republic opened March, 2018 located in Slovanský dům, Na Příkopě street 22, Prague Source: Philip Morris ČR a.s. © 2018 Philip Morris ČR a.s. 20

  21. Slide 21: IQOS Mobile Unit

    IQOS Mobile Unit Czech Republic and Slovakia Arkády Praha, Bratislava, Festival Pohoda October – November 2017 August 2017 Source: Philip Morris ČR a.s., Philip Morris Slovakia s.r.o. © 2018 Philip Morris ČR a.s. 21

  22. Slide 22: IQOS POP-UP stands

    IQOS POP-UP stands Czech Republic and Slovakia IQOS devices, HEETS or full accessories portfolio can be purchased at several commercial centers. Source: Philip Morris ČR a.s., Philip Morris Slovakia s.r.o. © 2018 Philip Morris ČR a.s. 22

  23. Slide 23: IQOS Media overall coverage 2017

    IQOS Media overall coverage 2017 © 2018 Philip Morris ČR a.s. 23

  24. Slide 24: Conversion Rates

    Conversion Rates Czech Republic and Slovakia December 2017 Adult Smoker Conversion Rates (%) Converted Predominant Situational Abandoned (>95% THS) (≥70 to ≤95% THS) (≥5 to <70% THS) (<5% THS) 64 73 18 12 13 12 5 3 Czech Republic Slovak Republic Source: Ipsos Mori UK Ltd © 2018 Philip Morris ČR a.s.

  25. Slide 25: Assets & Liabilities

    Assets & Liabilities Consolidated Financial Results (CZK million) Assets Dec 2017 Dec 2016 Incr./(Decr.) Cash & Equivalents 7 312 8 164 (852) Inventories 630 343 287 Receivables 835 435 400 Prepaid Income Tax - 14 (14) Other Non-Financial Assets 2 365 2 220 145 Non-Current Assets 4 415 4 394 21 Tota

  26. Slide 26: Cash and Cash Equivalents

    Cash and Cash Equivalents Consolidated Financial Results Dec'17 vs. Dec'16 (CZK million) Dec 2017 Dec 2016 Incr./(Decr.) % Cash & Equivalents 7 286 8 108 (822) (10.1) % Source: Philip Morris ČR a.s. financials © 2018 Philip Morris ČR a.s. 26

  27. Slide 27: Dividend proposal

    Dividend proposal Philip Morris ČR a.s. 2017 2016 2015 2014 2013 (CZK / share) Earnings per Share 1 286 1 007 925 825 819 Earnings Current Year 1 286 1 007 925 825 819 Retained Earnings Prior Year - 206 - 7 - 5 + 55 + 1 Dividend Paid / Proposed 1 080 1 000 920 880 820 Reserve Fund Release + 60 Total

  28. Slide 28: Thank you

    Thank you © 2018 Philip Morris ČR a.s. 32

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