Philip Morris International Inc · NYSE:PM
Philip Morris International — Q3 2016 Earnings Presentation
27 slides from Philip Morris International's earnings presentation, Oct 18, 2016
Slide 1: 2016 Third-Quarter Results
2016 Third-Quarter Results October 18, 2016
Slide 2: Introduction
2 Introduction ● Unless otherwise stated, we will be talking about results for the third quarter of 2016 and comparing them to the same period in 2015 ● A glossary of terms, adjustments and other calculations, as well as reconciliations to the most directly comparable U.S. GAAP measures, are at the
Slide 3: Forward-Looking and Cautionary Statements
3 Forward-Looking and Cautionary Statements ● This presentation and related discussion contain forward-looking statements. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions, and PMI is identifying important factors that, individually or in the aggregate, cou
Slide 4: 2016 EPS Guidance Reaffirmed
4 Source: PMI Financials or estimates 2016 EPS Guidance Reaffirmed ● Reaffirming 2016 reported diluted EPS guidance of $4.53 to $4.58, at prevailing exchange rates ● Guidance includes 35 cents of unfavorable currency at prevailing exchange rates ● Excluding currency, guidance continues to represents
Slide 5: Q3, 2016: Financial Results Growth
5 Q3, 2016: Financial Results Growth (Q3, 2016 vs. PY)(a) (a) Excluding currency Source: PMI Financials or estimates 3.6% 4.3% 4.0% Net Revenues Adjusted OCI Adjusted Diluted EPS
Slide 6: Q3, 2016: Favorable Pricing in All Regions
6 Q3, 2016: Favorable Pricing in All Regions Source: PMI Financials or estimates ● Favorable pricing variance of $440 million, reflecting positive contributions from all Regions, notably EEMA ● Announced or implemented price increases in a number of markets, including Argentina, Canada, Indonesia, M
Slide 7: Q3, 2016: PMI Organic Volume
7 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 Source: PMI Financials or estimates Q3, 2016: PMI Organic Volume ● Q3, 2016 organic cigarette volume down by 5
Slide 8: Marlboro: Cigarette Market Share Growth
8 Note: Excluding China and the U.S. Pack visual is for illustrative purposes only Source: PMI Financials or estimates Marlboro: Cigarette Market Share Growth 0.1pp ̶ pp 0.2pp ̶ pp 9.8 10.1 Q3, 2015 EU EEMA Asia LA&C Q3, 2016 Marlboro International Cigarette Market Share (%)
Slide 9: EU Region: Strong Cigarette Market Share Performance
9 Source: PMI Financials or estimates ● Cigarette industry volume down by 1.4% in Q3, 2016. Expect full-year decline of around 1% ● Marlboro cigarette share was up in four of the top six largest EU Region markets by industry volume in Q3, 2016, with particularly strong growth in Germany and Spain EU
Slide 10: Indonesia: Sequential Market Share Growth in Q3, 2016
10 Indonesia: Sequential Market Share Growth in Q3, 2016 ● Sequential market share growth in Q3, 2016, driven by our strong performance in the full-flavor machine-made kretek segment ● Launched Marlboro Filter Black (full-flavor machine-made kretek) in 25 cities in September 2016 ● In 2017, excise t
Slide 11: Japan: Stabilizing Cigarette Share; HeatSticks Share Growth Continues
11 (a) H1, 2016 period used due to significant trade inventory movements in Q1 and Q2 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. HeatSticks market share r
Slide 12: North Africa: Sequential Market Share Improvement in Q3, 2016
12 North Africa: Sequential Market Share Improvement in Q3, 2016 PMI Cigarette Market Share (%) Note: Pack design is for illustrative purposes only Source: PMI Financials or estimates 14.1 12.4 7.3 6.9 10.3 30.6 27.8 24.5 21.9 24.6 Q3 Q4 Q1 Q2 Q3 2016 2015
Slide 13: Russia: 2017 Excise Tax Increase Proposal
13 Russia: 2017 Excise Tax Increase Proposal ● On October 1st, Ministry of Finance submitted a proposal to raise the specific and minimum excise tax levels for 2017 by approximately 10% above what is currently in the tax code ● If approved by the Duma and signed into law, it will result in a total t
Slide 14: Argentina: Cigarette Industry Adjusting to Excise-Tax Driven Price Increases
14 Argentina: Cigarette Industry Showing Signs of Adjustment to Significant Excise-Tax Driven Price Increases in 2016 ● Cigarette industry volume declined by 14.1% in Q3, due mainly to the impact of significant excise-tax driven price increases in May ● Early signs that adult smokers are adjusting t
Slide 15: Conclusion: Full-Year 2016 Outlook Remains Strong
15 Source: PMI Financials or estimates Conclusion: Full-Year 2016 Outlook Remains Strong ● Q3, 2016 results in line with of our expectations ● Reaffirming 2016 reported diluted EPS guidance. Ex-currency, our guidance continues to represent a growth rate of approximately 10.5% to 11.5% compared to ad
Slide 16: 2016 Third-Quarter Results Questions & Answers
2016 Third-Quarter Results Questions & Answers Download PMI’s Investor Relations App iOS Android
Slide 17: Glossary and Reconciliation of Non-GAAP Measures
Glossary and Reconciliation of Non-GAAP Measures
Slide 18: Glossary: General Terms
18 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 19: Glossary: Financial Terms
19 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 20: Glossary: Industry/Market Terms
20 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 ● North Africa: Algeria, Egypt, Libya, Morocco and Tunisia
Slide 21: Glossary: Reduced-Risk Products
21 Glossary: Reduced-Risk Products ● HeatSticks and HEETS tobacco sticks are novel patented tobacco products specifically designed by PMI for use with PMI’s iQOS system. The tobacco in HeatSticks / HEETS is heated by our iQOS technology to provide adult smokers with real tobacco taste and satisfacti
Slide 22: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS
22 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 23: Adjustments for the Impact of Currency and Acquisitions
23 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For the Quarters Ended September 30, ($ in millions) (Unaudited) Net Revenues Less Excise Taxes Net Revenues excluding Excise Taxes Less Currency Net Reven
Slide 24: Reconciliation of Operating Companies Income to Adjusted OCI
24 (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 Operating Companies Income to Adjusted Operating Companies Income & Reconcilia
Slide 25: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency
25 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 September 30, (Unaudited) 2016 2015 % Change Reported Diluted EPS 1.25$ 1.25$ -
Slide 26: Reconciliation of Reported Diluted EPS, excluding Currency
26 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 September 30, (Unaudited) 2016 2015 % Change Reported Diluted EPS 1.25$ 1.25$ - % Less: Currency impact (
Slide 27: 2016 Third-Quarter Results
2016 Third-Quarter Results October 18, 2016
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