Philip Morris International Inc · NYSE:PM
Philip Morris International — Q2 2015 Earnings Presentation
36 slides from Philip Morris International's earnings presentation, Jul 16, 2015
Slide 1: 2015 Second-Quarter Results
2015 Second-Quarter Results July 16, 2015 Exhibit 99.3
Slide 2: Introduction
2 Introduction ● Unless otherwise stated, we will be talking about results for the second quarter of 2015 and comparing them to the same period in 2014 ● 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: Q2, 2015: Strong PMI Volume Performance
4 Q2, 2015: Strong PMI Volume Performance ● Organic cigarette volume down by a modest 1.4%, due to: - Lower cigarette industry volume across all Regions - Partly offset by market share gains in the Asia, EEMA and LA&C Regions ● Organic cigarette volume essentially flat in H1, 2015, or down by approx
Slide 5: Q2, 2015: Strong Currency-Neutral Financial Results
5 (a) Excluding currency and acquisitions (b) Excluding currency Source: PMI Financials or estimates 4.5% 6.1% 9.2% Net Revenues Adjusted OCI Adjusted Diluted EPS Q2, 2015: Strong Currency-Neutral Financial Results Growth (Q2, 2015 vs. PY) (a) (a) (b)
Slide 6: 2015 EPS Guidance Reaffirmed
6 2015 EPS Guidance Reaffirmed ● Reaffirming 2015 reported diluted EPS guidance of $4.32 to $4.42, at prevailing exchange rates ● Guidance includes approximately $1.15 of unfavorable currency at prevailing exchange rates ● Excluding currency, guidance represents a growth rate of 9% to 11% compared t
Slide 7: Currency: Impact on PMI EPS Guidance
7 (a) Australian Dollar, British Pound, Canadian Dollar, Danish Krone, Hong Kong Dollar, Israeli Shekel, New Zealand Dollar, Norwegian Krone, Singapore Dollar, South Korean Won, Swedish Krona, Swiss Franc and U.S. Dollar (b) Includes notably the Argentine Peso, Brazilian Real, Kazakhstan Tenge, Mexi
Slide 8: Strong Pricing: The Key Driver of Our Financial Performance
8 Strong Pricing: The Key Driver of Our Financial Performance ● Pricing variance of $514 million in Q2, 2015, reflecting higher pricing across all four Regions ● Q2, 2015 retail price increases in key markets such as Argentina, Germany, Indonesia and Russia ● Cumulative pricing variance of $1.1 bill
Slide 9: Top-30 OCI Markets: Continued Market Share Gains
9 Top-30 OCI Markets: Continued Market Share Gains Note: Excluding duty free Source: PMI Financials or estimates 37.4% 37.5% Q2, 2014 Q2, 2015 +0.1pp PMI Market Share in Top-30 OCI Markets
Slide 10: Marlboro: Key Contributor to Market Share Growth
10 Marlboro: Key Contributor to Market Share Growth ● Marlboro gained share in all four Regions in Q2, 2015 ● In Q2, 2015, introduced Marlboro 2.0 in some 20 additional markets, predominantly in the EEMA Region ● By year-end 2015, expect to have rolled out Marlboro 2.0 in approximately 100 markets 9
Slide 11: EU Region: Improving Cigarette Industry Volume Trend
11Source: PMI Financials or estimates EU Region: Improving Cigarette Industry Volume Trend ● Cigarette industry volume down by an estimated 2.3% in Q2, 2015, excluding trade inventory movements ● Expect 2015 cigarette industry volume decline of 3.0% to 3.5% (vs. previous forecast of approximately 4%
Slide 12: EU Region: Strong Brands Driving OCI Growth, Ex-Currency
12 Q2, 2015 Source: PMI Financials or estimates EU Region: Strong Brands Driving OCI Growth, Ex-Currency ● Regional cigarette share stable at 40.4% in Q2, 2015 ● Marlboro cigarette share was up in four of the top six largest EU Region markets by industry volume in Q2, 2015, with particularly strong
Slide 13: Russia: Excellent Performance
13 Note: Next market share includes Next by Dubliss Source: PMI Financials or estimates and Nielsen ● Cigarette industry volume decreased by 6.5% in H1, 2015 ● Forecast 2015 cigarette industry volume decline towards the lower end of our 8% to 10% range ● Economic environment remains fragile with som
Slide 14: Indonesia: Growing Share Driven by Machine-Made Kretek Brands
14 Notre: FF stands for Full Flavor. LTLN stands for Low Tar/Low Nicotine Source: PMI Financials or estimates Indonesia: Growing Share Driven by Machine-Made Kretek Brands ● Cigarette industry volume increased by 0.4% in H1, 2015 ● Market share grew by 0.5 points to 35.2% in Q2, 2015, led by Dji Sam
Slide 15: Japan: Investing in Our Brands
15 (a) Adjusted for inventory movements Source: PMI Financials or estimates and Tobacco Institute of Japan Japan: Investing in Our Brands ● Cigarette industry volume decreased by 2.6%(a) in H1, 2015 ● Forecast 2015 cigarette industry volume decline of 2.5% to 3.0% ● Expect full-year 2015 share to be
Slide 16: Philippines: Expecting Strong OCI Growth, Ex-Currency
16 (a) Stick price points are as of May 2015 Note: Stick price points represent recommended retail selling price or estimates. Pack designs are for illustrative purposes only Source: PMI Financials or estimates Philippines: Expecting Strong OCI Growth, Ex-Currency ● Competitive environment benefitin
Slide 17: iQOS: National Expansion in Japan and Italy
17 Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products with the potential to reduce individual risk and population harm in comparison to smoking combustible cigarette. Translation from Japanese: "iQOS. Satisfying tastes that you can choose. Marlboro HeatStick series. Regular
Slide 18: iQOS: Launch in Switzerland
18 iQOS: Launch in Switzerland ● Launch: August 2015 ● Five major cities with retail distribution in approximately 250 outlets by end of October ● Marlboro HeatSticks available in regular, smooth and menthol variants Basel Bern Geneva Lausanne Zurich iQOS Kit CHF 80(a) Marlboro HeatSticks CHF 8/pack
Slide 19: Free Cash Flow: Resilient Performance in H1, 2015
19 Free Cash Flow: Resilient Performance in H1, 2015 ● H1, 2015 free cash flow in line with prior year ● Prudent cash flow management, particularly with regard to working capital and capital expenditures ● Forecast 2015 free cash flow to be broadly in line with 2014, despite significant currency hea
Slide 20: Conclusion: Strong Outlook for 2015
20 Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products with the potential to reduce individual risk and population harm in comparison to smoking combustible cigarettes. Dividend yield represents the annualized dividend on July 10, 2015, over the closing share price on that d
Slide 21: Questions & Answers
2015 Second-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 ● EU refers to the European Union Region ● FF stands for full flavor ● Fine cut includes Make Your Own (MYO), MYO volume tobacco and Roll Your Own ● Illicit trade refers to domestic non-tax paid produ
Slide 26: Glossary: Reduced-Risk Products
26 Glossary: Reduced-Risk Products ● E-vapor products are products that generate nicotine containing aerosols ● HeatStick tobacco sticks are novel patented tobacco products specifically designed by PMI for use with PMI’s iQOS system. The tobacco in the HeatStick is heated by our iQOS technology to p
Slide 27: PMI Peer Groups
27 PMI Peer Groups (a) Effective until September 30, 2012 (b) Effective as of October 1, 2012 - BAT - Bayer - Coca-Cola - Diageo - GlaxoSmithKline - Heineken - Imperial Tobacco - Johnson & Johnson - Kraft(a) - McDonald’s - Mondelēz International(b) - Nestlé - Novartis - PepsiCo - Pfizer - Roche - Un
Slide 28: Reconciliation of Non-GAAP Measures: 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 June 30, ($ in millions) (Unaudited) Reported Net Revenues Less Excise Taxes Reported Net Revenues excluding Excise Taxes Less Curre
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 & Re
Slide 30: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS
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 June 30, (Unaudited) 2015 2014 % Change Reported Diluted EPS 1.21$ 1.17$ 3.4% Ad
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 June 30, (Unaudited) 2015 2014 % Change Reported Diluted EPS 1.21$ 1.17$ 3.4% Less: Currency impact (0.33
Slide 32: Reconciliation of Diluted EPS: Six Months
32 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 Six Months Ended June 30, (Unaudited) 2015 2014 % Change Reported Diluted EPS 2.37$ 2.35$ 0.9%
Slide 33: Reconciliation of Reported Diluted EPS, excluding Currency: Six Months
33 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency For the Six Months Ended June 30, (Unaudited) 2015 2014 % Change Reported Diluted EPS 2.37$ 2.35$ 0.9% Less: Currency impact (0.
Slide 34: Reconciliation of Reported Diluted EPS to Adjusted: 2014
34 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) 2014 Reported Diluted EPS 4.76$ Adjustments: Asset impairment and exit costs 0.26 Tax items - Adjuste Di
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 For the Quarters and Six Months Ended June 30, ($ in millions) (Unaudited) (a) Operating Cash Flow For the Quarters
Slide 36: 2015 Second-Quarter Results
2015 Second-Quarter Results July 16, 2015
Philip Morris International — Q2 2015 Earnings Presentation on 6ix