Philip Morris International Inc · NYSE:PM
Philip Morris International — Q1 2013 Earnings Presentation
31 slides from Philip Morris International's earnings presentation, Apr 18, 2013
Slide 1: 2013 First-Quarter Results
2013 First-Quarter Results April 18, 2013 Exhibit 99.3
Slide 2: Introduction
2 Introduction ● Unless otherwise stated, we will be talking about results for the first-quarter of 2013 and comparing them to the same period in 2012 ● References to PMI volumes refer to PMI shipments ● Industry volume and market shares are the latest data available from a number of internal and ex
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: 2013 EPS Guidance
4 2013 EPS Guidance ● Business fundamentals continue to be solid ● Good momentum in key markets and segments ● Increased currency volatility: at prevailing exchange rates, we now forecast approximately 19 cents per share unfavorability for the full year ● New reported diluted EPS guidance for 2013 i
Slide 5: Difficult Volume Comparison in Q1, 2013
5 Difficult Volume Comparison in Q1, 2013 ● Organic cigarette volume declined by 2.1%, excluding the Philippines: - Difficult comparison with prior year’s 5.3% organic volume increase - Reversal of trade inventory build-ups that occurred in Q4, 2012 - Continued economic crisis in the EU ● PMI achiev
Slide 6: Solid First-Quarter 2013 Financial Results
3.2 2.9 8.8 0 10 Net Revenues Adjusted OCI Adjusted Diluted EPS Growth (Q1, 2013 vs. Q1, 2012) Solid First-Quarter 2013 Financial Results 6 (%) (a) (a) (b) (a) Excluding currency and acquisitions (b) Excluding currency Source: PMI Financials
Slide 7: Pricing Remains Key Driver of Income Performance
Pricing Remains Key Driver of Income Performance 7 ● Since October 2012, PMI has increased prices across a wide range of markets ● New prices announced in Germany ● Favorable pricing environment is backed by our strong, broad brand portfolio and a generally rational tax environment 369 531 0 600 Q1,
Slide 8: Continued Market Share Growth Momentum
Continued Market Share Growth Momentum 8 (a) Excluding China and the Philippines Source: PMI estimates 37.4 38.1 Regional PMI Market Shares (%) 21.1 21.0 23.6 23.8 35.7 37.6 Q1 2012 Q1 2013 +0.7pp +0.2pp +1.9pp EU Asia(a) EEMA LA&C Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 (0.1)pp
Slide 9: Marlboro: Solid Share Performance in Q1, 2013
Marlboro: Solid Share Performance in Q1, 2013 9 (a) Excluding China and the Philippines Source: PMI estimates 18.0 18.7 Marlboro Market Shares (%) 5.2 5.1 7.0 7.0 14.3 15.1 Q1 2012 Q1 2013 +0.7pp (0.1)pp +0.8pp Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 +0.0pp ─ EU Asia(a) EEMA LA&C
Slide 10: Parliament: Continued Growth in Q1, 2013
9.3 9.8 Q1, 2012 Q1, 2013 (a) YTD February Note: Kaz. is Kazakhstan, Turk. is Turkey, Ukr. is Ukraine and Saudi is Saudi Arabia Source: PMI Financials, PMI estimates and Nielsen Parliament: Continued Growth in Q1, 2013 10 6.6 3.1 8.3 3.1 0.9 8.0 3.3 9.3 3.4 1.4 Kaz. Russia Turk. Ukr. Saudi Total Vol
Slide 11: L&M: EEMA Region Driving Growth in Q1, 2013
21.3 22.2 Q1, 2012 Q1, 2013 L&M: EEMA Region Driving Growth in Q1, 2013 11 (a) YTD February Source: PMI Financials, PMI estimates and Nielsen 7.1 2.5 20.0 14.8 2.6 22.1 Egypt Russia Saudi Arabia Market Shares (%) +4.3% Q1, 2012 Q1, 2013 (a) Total Volume (units billion)
Slide 12: EU Region: Volume Impacted by the Economic Crisis
EU Region: Volume Impacted by the Economic Crisis 12 ● Cigarette industry volume declined by 10.5% in Q1, 2013, driven by increased unemployment and weak consumer purchasing power ● Q1, 2013 cigarette volume decline exacerbated by: - Unfavorable trade inventory movements - Fewer selling days (no lea
Slide 13: EU Region: PMI Gained Cigarette Share in Q1, 2013
Source: PMI estimates 37.4 38.1 Q1, 2012 Q1, 2013 EU Region: PMI Gained Cigarette Share in Q1, 2013 13 +0.7pp PMI Cigarette Share (%) PMI Cigarette Share Variance (pp) (Q1, 2013 vs. Q1, 2012) (3.2) (1.6) (1.2) (0.9) 0.2 0.2 0.4 0.5 0.6 1.9 2.8 2.8 Hungary Netherlands Finland Portugal Denmark Baltics
Slide 14: EU Region: Strong PMI Brand Performance
(0.0)pp Source: PMI estimates EU Region: Strong PMI Brand Performance 14 18.0 18.7 EU Region Cigarette Shares (%) 6.6 6.6 3.5 3.7 1.6 1.9 Q1 2012 Q1 2013 +0.7pp +0.2pp +0.3pp Marlboro L&M Chesterfield Philip Morris Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 #1 #1 #2 #2 #7 #6 #16 #11 Ranking ─
Slide 15: EU Region: Further PMI Gains in Fine Cut Category
Source: PMI estimates (in-market sales) 2.1% 7.6% Industry PMI EU Region: Further PMI Gains in Fine Cut Category 15 48% Incremental Fine Cut Industry Volume (Q1, 2013 vs. Q1, 2012) PMI Fine Cut Volume Growth (Q1, 2013 vs. Q1, 2012)
Slide 16: Italy: Robust PMI Performance Despite Economic Downturn
Note: VAT stands for value added tax Source: PMI estimates ● Q1, 2013 cigarette industry volume declined by 9.5%: - Lower consumer purchasing power - Incidence of illicit trade has doubled ● Cigarette volume decline rate should moderate if no VAT increase in July ● PMI business fundamentals are stro
Slide 17: Germany: Strong Marlboro Performance
Germany: Strong Marlboro Performance 17 ● Cigarette industry volume declined by 6.6% in Q1, 2013, though underlying decline was 2.8% ● Fine cut industry volume increased by 1.2% in Q1, 2013 ● Strong performance of Marlboro in cigarette and fine cut categories ● We have announced a €0.20 per 19 cigar
Slide 18: Asia Region: PMI Volume Growth Outside the Philippines
57.5 59.1 Q1, 2012 Q1, 2013 18 Asia Region: PMI Volume Growth Outside the Philippines PMI Organic Volume Growth (%)(a) (a) Excluding the Philippines Source: PMI Financials +2.8%
Slide 19: Indonesia: Continued PMI Volume and Share Expansion
Source: PMI Financials and PMI estimates 4.9 5.0 13.6 14.4 7.6 7.2 2.9 4.1 4.3 4.5 34.9 36.3 Q1 2012 Q1 2013 Indonesia: Continued PMI Volume and Share Expansion 19 +1.4pp Marlboro Sampoerna A Dji Sam Soe Sampoerna Kretek U Mild Other Total PMI ● PMI volume grew by 4.9% in Q1, 2013 ● PMI share growth
Slide 20: Japan: Solid Marlboro Performance
Source: Tobacco Institute of Japan and PMI Financials Japan: Solid Marlboro Performance 20 ● Industry volume declined by 3.2% in Q1, 2013. We forecast a full-year underlying decline of around 2% ● PMI volume increased by 6.9% in Q1, 2013, reflecting favorable distributor inventory movements ● Solid
Slide 21: Philippines: Disruptive Excise Tax Increase
● New tax law as of January 2013: ● We increased recommended retail prices of key brands by 60-70% ● PMI volume down by 42.5% in Q1, 2013, reflecting consumer and trade reactions, as well as a surge in illicit sales ● Industry volume forecast to decline by 20-25% in full-year 2013 Source: The Philip
Slide 22: EEMA Region: Continued Robust PMI Volume Growth
Note: North Africa includes Algeria, Egypt, Libya, Morocco and Tunisia. Levant includes Jordan, Lebanon and the Palestine Authority Area (PAA). The Middle East includes Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates (UAE) and Yemen Source: PMI Financials EEMA Region: Continue
Slide 23: Russia: Higher Margins Through Pricing
Note: Exchange rate as of January 1, 2013. 1 USD = 30.56 RUB Source: PMI estimates, PMI Financials, Nielsen and Bloomberg Russia: Higher Margins Through Pricing 23 ● Estimated industry volume decline of 5.5% in Q1, 2013 should moderate to around 3% for full-year ● PMI volume increased by 1.8% in Q1,
Slide 24: Turkey: Major Distortions in Q1, 2013
Source: PMI estimates, PMI Financials, PMI forecasts and Nielsen Turkey: Major Distortions in Q1, 2013 24 20.7 19.7 6.5 6.8 17.4 18.2 44.6 44.7 YTD February 2012 YTD February 2013 PMI Market Share (%) Premium Low Mid ● Reversal of Q4, 2012 trade inventory build-up distorted industry and PMI volumes
Slide 25: We Expect to Deliver Strong Results in 2013
25 We Expect to Deliver Strong Results in 2013 ● We believe we should be able to generate organic cigarette volume growth, excluding the Philippines ● We expect to again achieve the financial targets in our annual growth algorithm ● Our new reported diluted EPS guidance of $5.55 to $5.65 continues t
Slide 26: Questions & Answers
Questions & Answers 2013 First-Quarter Results
Slide 27: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS (FY2012)
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS For the Year Ended December 31, (Unaudited) 27 2012 Reported Diluted EPS 5.17$ Adjustments: Asset impairment and exit costs 0.03 Tax item 0.02 Adjust i
Slide 28: Adjustments for the Impact of 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) 28 Reported Net Revenues Less Excise Taxes Reported Net Revenues excluding Excise Taxes Less Curr
Slide 29: 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 30: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency
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) 30 2013 2012 % Change Reported Diluted EPS 1.28$ 1.25$ 2.4% A
Slide 31: 2013 First-Quarter Results
April 18, 2013 2013 First-Quarter Results
Philip Morris International — Q1 2013 Earnings Presentation on 6ix