Increases Full Year
Currency-Neutral Adjusted Diluted EPS Growth Rate to a Range of
11%-12%
Regulatory News:
2015 Third-Quarter
- Reported diluted earnings per share of
$1.25, down by $0.13 or 9.4% versus $1.38 in 2014
- Excluding unfavorable currency of
$0.37, reported diluted earnings per share up by $0.24 or 17.4%
versus $1.38 in 2014 as detailed in the attached Schedule 13
- Adjusted diluted earnings per share of
$1.24, down by $0.15 or 10.8% versus $1.39 in 2014
- Excluding unfavorable currency of
$0.37, adjusted diluted earnings per share up by $0.22 or 15.8%
versus $1.39 in 2014 as detailed in the attached Schedule 12
- Cigarette shipment volume of 218.9
billion units, down by 1.5% excluding acquisitions
- Reported net revenues, excluding excise
taxes, of $6.9 billion, down by 11.8%
- Excluding unfavorable currency of $1.4
billion, reported net revenues, excluding excise taxes, up by 5.9%
as detailed in the attached Schedule 10
- Reported operating companies income of
$3.0 billion, down by 12.3%
- Excluding unfavorable currency of $735
million, reported operating companies income up by 9.0%
- Adjusted operating companies income,
reflecting the items detailed in the attached Schedule 11, of $3.0
billion, down by 12.1%
- Excluding unfavorable currency and the
impact of acquisitions, adjusted operating companies income up by
9.3%
- Reported operating income of $3.0
billion, down by 11.5%
- Increased the regular quarterly
dividend by 2.0% to an annualized rate of $4.08 per common
share
2015 Nine Months
Year-to-Date
- Reported diluted earnings per share of
$3.62, down by $0.11 or 2.9% versus $3.73 in 2014
- Excluding unfavorable currency of
$1.01, reported diluted earnings per share up by $0.90 or 24.1%
versus $3.73 in 2014 as detailed in the attached Schedule 17
- Adjusted diluted earnings per share of
$3.61, down by $0.38 or 9.5% versus $3.99 in 2014
- Excluding unfavorable currency of
$1.01, adjusted diluted earnings per share up by $0.63 or 15.8%
versus $3.99 in 2014 as detailed in the attached Schedule 16
- Cigarette shipment volume of 637.5
billion units, down by 0.6% excluding acquisitions
- Reported net revenues, excluding excise
taxes, of $20.4 billion, down by 9.6%
- Excluding unfavorable currency of $3.6
billion and the impact of acquisitions, reported net revenues,
excluding excise taxes, up by 6.4% as detailed in the attached
Schedule 14
- Reported operating companies income of
$9.0 billion, down by 5.0%
- Excluding unfavorable currency of $2.0
billion and the impact of acquisitions, reported operating
companies income up by 16.2%
- Adjusted operating companies income,
reflecting the items detailed in the attached Schedule 15, of $9.0
billion, down by 9.8%
- Excluding unfavorable currency and the
impact of acquisitions, adjusted operating companies income up by
10.3%
- Reported operating income of $8.7
billion, down by 4.9%
2015 Full-Year
Forecast
- PMI revises and narrows, for currency
and an improved business outlook, its 2015 full-year reported
diluted earnings per share (“EPS”) forecast to be in a range of
$4.35 to $4.40, at prevailing exchange rates, versus $4.76 in
2014.
- On an adjusted basis, diluted EPS are
projected to increase in the range of 11% to 12% versus adjusted
diluted EPS of $5.02 in 2014, as detailed in the attached Schedule
20, excluding an unfavorable currency impact, at prevailing
exchange rates, of approximately $1.22 per share for the full-year
2015
- This forecast includes incremental
spending in 2015 versus 2014 in support of PMI's Reduced-Risk
Product, iQOS, including accelerated spending behind planned
national expansions and city launches in 2015 and 2016, and to
further reinforce the favorable momentum of PMI's cigarette brand
portfolio
- This forecast does not include any
share repurchases in 2015
- This forecast excludes the impact of
any future acquisitions, unanticipated asset impairment and exit
cost charges, future changes in currency exchange rates, and any
unusual events. Factors described in the Forward-Looking and
Cautionary Statements section of this release represent continuing
risks to these projections
Philip Morris International Inc. (NYSE / Euronext Paris: PM)
today announced its 2015 third-quarter results.
"Our strong performance in the first half of the year continued
in the third quarter," said André Calantzopoulos, Chief Executive
Officer.
"Organic volume, market share and pricing trends remain very
robust against the backdrop of an improved macroeconomic
environment, particularly in our EU and EEMA Regions."
"We continue to progress with the commercialization and clinical
assessment of our Reduced-Risk Product, iQOS, and, as previously
announced, are accelerating our spending to support additional city
launches and national expansions this year and next."
"Although currency headwinds have again stiffened slightly, our
business momentum is such that we are today revising and narrowing
our full-year guidance, and increasing the projection of our
constant-currency adjusted diluted EPS growth rate range to 11% to
12%."
Conference Call
A conference call, hosted by Jacek Olczak, Chief Financial
Officer, with members of the investor community and news media,
will be webcast at 9:00 a.m., Eastern Time, on October 15, 2015.
Access is at www.pmi.com/webcasts.
The audio webcast may also be accessed on iOS or Android devices
by downloading PMI’s free Investor Relations Mobile Application at
www.pmi.com/irapp.
Dividends and Share Repurchase
Program
During the quarter, PMI increased its regular quarterly dividend
by 2.0% from $1.00 to $1.02, representing an annualized rate of
$4.08 per common share. Since its spin-off in March 2008, PMI has
increased its regular quarterly dividend by 121.7% from the initial
annualized rate of $1.84 per common share. PMI did not make any
share repurchases in the first nine months of 2015.
Sampoerna Rights Issue
On October 9, 2015, PT HM Sampoerna Tbk. (Sampoerna) (IDX:
HMSP), an affiliate of Philip Morris International Inc. (PMI) in
Indonesia, announced the approval by shareholders of Sampoerna’s
plan for a Rights Issue at an Exercise Price of IDR 77,000 per
share.
The purpose of the Rights Issue is to comply with the Indonesian
Stock Exchange’s requirement for all publicly listed companies to
have at least 7.5% of their paid-up capital publicly owned by no
later than January 30, 2016. Through the Rights Issue, Sampoerna is
offering 269,723,076 new shares, of which 264,209,711, in the form
of rights to subscribe to new shares, will be sold by PT Philip
Morris Indonesia (PMID) to institutional investors. To date, PMI
has held a 98.18% interest of Sampoerna’s shares through PMID.
The total net proceeds to Sampoerna from the Rights Issue amount
to approximately IDR 20,495.3 billion (approximately $1.4 billion).
After completion of the transaction, PMID will own 92.5% of the
issued and outstanding shares of Sampoerna and 7.5% will be
publicly owned.
Sampoerna expects to complete and close the transaction by
November 6, 2015.
2015 THIRD-QUARTER CONSOLIDATED
RESULTS
In this press release, “PMI” refers to Philip Morris
International Inc. and its subsidiaries. References to total
international cigarette market, defined as worldwide cigarette
volume excluding the United States, total cigarette market, total
market and market shares are PMI tax-paid estimates based on the
latest available data from a number of internal and external
sources and may, in defined instances, exclude the People's
Republic of China and/or PMI's duty free business. North Africa is
defined as Algeria, Egypt, Libya, Morocco and Tunisia. "OTP"
is defined as other tobacco products. "EEMA" is defined as
Eastern Europe, Middle East and Africa and includes PMI's
international duty free business. The term “net revenues”
refers to operating revenues from the sale of our products,
excluding excise taxes and net of sales and promotion incentives.
Operating companies income, or “OCI,” is defined as
operating income, excluding general corporate expenses and the
amortization of intangibles, plus equity (income)/loss in
unconsolidated subsidiaries, net. PMI's management evaluates
business segment performance and allocates resources based on OCI.
“Adjusted EBITDA” is defined as earnings before interest,
taxes, depreciation and amortization, excluding asset impairment
and exit costs, discrete tax items and unusual items. Management
also reviews OCI, OCI margins and earnings per share, or “EPS,” on
an adjusted basis (which may exclude the impact of currency and
other items such as acquisitions, asset impairment and exit costs,
discrete tax items and unusual items), as well as free cash
flow, defined as net cash provided by operating activities less
capital expenditures, and net debt. PMI believes it is appropriate
to disclose these measures as they improve comparability and help
investors analyze business performance and trends. Non-GAAP
measures used in this release should be neither considered in
isolation nor as a substitute for the financial measures prepared
in accordance with U.S. GAAP. Comparisons are to the same
prior-year period unless otherwise stated. For a reconciliation of
non-GAAP measures to corresponding GAAP measures, see the relevant
schedules provided with this press release. 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 combustible cigarettes.
PMI’s RRPs are in various stages of development and
commercialization, and we are conducting extensive and rigorous
scientific studies to determine whether we can support claims for
such products of reduced exposure to harmful and potentially
harmful constituents in smoke, and ultimately claims of reduced
disease risk, when compared to smoking combustible cigarettes.
Before making any such claims, we will rigorously evaluate the full
set of data from the relevant scientific studies to determine
whether they substantiate reduced exposure or risk. Any such claims
may also be subject to government review and approval, as is the
case in the United States today. Trademarks and service marks in
this press release that are the registered property of, or licensed
by, the subsidiaries of PMI, are italicized.
NET
REVENUES
PMI Net
Revenues
Third-Quarter
Nine Months
Year-to-Date
(in millions) Excl.
Excl.
2015
2014
Change
Curr.
2015
2014
Change
Curr.
European Union $ 2,041 $ 2,357 (13.4 )% 4.5 % $ 5,921 $
6,763 (12.5 )% 5.1 %
EEMA 2,098 2,434 (13.8 )% 9.0 % 5,860
6,726 (12.9 )% 8.9 %
Asia 1,984 2,232 (11.1 )% 0.9 % 6,284
6,725 (6.6 )% 2.7 %
Latin America & Canada 804 833 (3.5
)% 13.9 % 2,337 2,356 (0.8 )% 13.8 %
Total PMI $
6,927 $ 7,856 (11.8 )%
5.9 % $ 20,402 $ 22,570
(9.6 )% 6.4 %
In the quarter, net revenues of $6.9 billion were down by 11.8%.
Excluding unfavorable currency of $1.4 billion, net revenues
increased by 5.9%, driven by favorable pricing of $522 million from
across all Regions, led: in the EU, by Germany and Italy; in EEMA,
by Russia and Ukraine; in Asia, mainly by Indonesia; and in Latin
America & Canada, by Argentina and Canada. The favorable
pricing was partly offset by unfavorable volume/mix of $61 million
in the EU, Asia and Latin America & Canada Regions, partly
offset by the EEMA Region.
OPERATING
COMPANIES INCOME
PMI
OCI
Third-Quarter
Nine Months
Year-to-Date
(in millions) Excl.
Excl.
2015
2014
Change
Curr.
2015
2014
Change
Curr.
European Union $ 1,014 $ 1,186 (14.5 )% 5.9 % $ 2,904 $
2,875 1.0 % 25.8 %
EEMA 1,033 1,204 (14.2 )% 12.3 % 2,794
3,218 (13.2 )% 13.0 %
Asia 690 799 (13.6 )% 1.6 % 2,421
2,614 (7.4 )% 4.0 %
Latin America & Canada 294 267 10.1
% 29.6 % 849 734 15.7 % 35.7 %
Total PMI $
3,031 $ 3,456 (12.3 )%
9.0 % $ 8,968 $ 9,441
(5.0 )% 16.2 %
In the quarter, reported operating companies income of $3.0
billion was down by 12.3%. Excluding unfavorable currency of $735
million, operating companies income increased by 9.0%, reflecting
favorable pricing, partly offset by unfavorable volume/mix of $139
million.
Adjusted operating companies income is shown in the table below
and detailed in Schedule 11. Adjusted operating companies income
margin, excluding currency and acquisitions, increased by 1.4
points to 45.3%, as detailed in Schedule 11, reflecting the factors
mentioned above.
PMI
OCI
Third-Quarter
Nine Months
Year-to-Date
(
in millions) Excl.
Excl.
2015
2014
Change
Curr.
2015
2014
Change
Curr.
Reported OCI $ 3,031 $ 3,456 (12.3 )% 9.0 % $ 8,968 $ 9,441
(5.0 )% 16.2 % Asset impairment & exit costs — 9 —
(503 )
Adjusted OCI $ 3,031 $
3,447 (12.1 )% 9.3 % $
8,968 $ 9,944 (9.8 )%
10.3 % Adjusted OCI Margin* 43.8% 43.9 % (0.1
) 1.4 44.0 % 44.1 % (0.1 ) 1.6
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
SHIPMENT VOLUME &
MARKET SHARE
PMI cigarette shipment volume by Region is shown in the table
below.
PMI Cigarette
Shipment Volume by Region
Third-Quarter
Nine Months
Year-to-Date
(million units)
2015
2014
Change
2015
2014
Change
European Union 48,824 49,209 (0.8 )% 139,704 140,827 (0.8 )%
EEMA 79,265 77,252 2.6 % 217,815 213,428 2.1 %
Asia
67,786 72,352 (6.3 )% 213,167 218,806 (2.6 )%
Latin America
& Canada 23,036 23,487 (1.9 )% 66,815 68,001 (1.7 )%
Total PMI 218,911 222,300 (1.5
)% 637,501 641,062 (0.6 )%
2015 Third-Quarter and Nine Months
Year-to-Date
In the quarter, PMI's cigarette shipment volume decreased by
1.5% excluding acquisitions. The decline was principally due to
Asia, mainly Indonesia, Japan and Pakistan. Estimated net inventory
movements in the quarter were slightly unfavorable, reflecting
unfavorable distributor inventory movements in Japan. Excluding
these inventory movements, PMI's total cigarette shipment volume
decreased by 1.1%, or by 1.2% excluding acquisitions.
PMI cigarette shipment volume by brand is shown
in the table below.
PMI Cigarette
Shipment Volume by Brand
Third-Quarter
Nine Months
Year-to-Date
(million units)
2015
2014
Change
2015
2014
Change
Marlboro 74,185 72,629 2.1 % 213,754 211,661 1.0 %
L&M 26,179 23,956 9.3 % 73,402 69,110 6.2 %
Parliament 12,289 12,859 (4.4 )% 33,372 35,166 (5.1 )%
Bond Street 12,045 11,951 0.8 % 33,003 32,365 2.0 %
Chesterfield 10,864 11,567 (6.1 )% 31,015 32,149 (3.5 )%
Philip Morris 9,390 7,961 17.9 % 25,983 23,769 9.3 %
Lark 7,320 8,956 (18.3 )% 22,034 22,662 (2.8 )%
Others 66,639 72,421 (8.0 )% 204,938 214,180 (4.3 )%
Total PMI 218,911 222,300 (1.5
)% 637,501 641,062 (0.6 )%
In the quarter, the increase in cigarette shipment volume of
Marlboro reflected growth in: the EU, notably Spain, partly offset
by Italy and the United Kingdom; EEMA, notably Saudi Arabia and
Turkey, partly offset by Algeria, Egypt and Ukraine; and Asia,
notably Japan, the Philippines and Vietnam, partly offset by
Indonesia. Cigarette shipment volume of Marlboro decreased in Latin
America & Canada, mainly due to Argentina and Brazil, partly
offset by Mexico.
The increase in cigarette shipment volume of L&M was driven
by growth in: the EU, notably Portugal; EEMA, notably Egypt, Saudi
Arabia and Turkey, partly offset by Russia; and Asia, mainly
Thailand. The decrease in cigarette shipment volume of Parliament
was primarily due to Kazakhstan, Korea, Russia and Ukraine. The
increase in cigarette shipment volume of Bond Street was
predominantly driven by Australia and Russia, partly offset by
Kazakhstan and Ukraine. The decrease in cigarette shipment volume
of Chesterfield was primarily due to the EU, mainly Italy and
Portugal, partly offset by Poland, and EEMA, mainly Russia and
Ukraine. The increase in cigarette shipment volume of Philip Morris
primarily reflects the morphing from Diana in Italy. The decrease
in cigarette shipment volume of Lark was predominantly due to
Japan, partly offset by Turkey.
Total shipment volume of OTP, in cigarette equivalent units,
increased by 2.9%. Total shipment volume for cigarettes and OTP, in
cigarette equivalent units, decreased by 1.4% excluding
acquisitions.
PMI's cigarette market share increased in a number of key
markets, including Argentina, Austria, Belgium, Brazil, Canada,
Colombia, Egypt, France, Hungary, Korea, the Netherlands, Russia,
Saudi Arabia, Spain, Switzerland, Turkey and the United
Kingdom.
Year-to-date, PMI's cigarette shipment volume was down by 0.6%
excluding acquisitions, due to declines in: the EU, mainly Italy,
partly offset by France and Spain; Asia, largely due to Japan,
Korea, Pakistan and the Philippines; and Latin America &
Canada, mainly due to Argentina, Canada and Ecuador, partly offset
by Mexico. The decline in PMI's cigarette shipment volume was
partially offset by growth in EEMA, driven principally by Egypt,
Russia, Saudi Arabia and Turkey, partly offset by Kazakhstan and
Ukraine. Estimated net inventory movements year-to-date were
favorable, driven principally by Russia. Excluding these inventory
movements, PMI's total cigarette shipment volume decreased by 1.1%
and by the same percentage excluding acquisitions.
For the full year 2015, PMI's cigarette shipment volume,
excluding acquisitions, is forecast to decrease by 1.0% to
1.5%.
Year-to-date, the increase in cigarette shipment volume of
Marlboro reflected growth in: the EU, notably France and Spain,
partly offset by Italy and the United Kingdom; EEMA, notably Saudi
Arabia and Turkey, partly offset by Algeria, Egypt and Ukraine; and
Asia, notably the Philippines and Vietnam, partly offset by
Indonesia, Japan and Korea. Cigarette shipment volume of Marlboro
decreased in Latin America & Canada, mainly due to Argentina
and Brazil, partly offset by Colombia.
The increase in cigarette shipment volume of L&M was driven
predominantly by growth in EEMA, notably Egypt, Turkey and Ukraine,
partly offset by Russia. The decrease in cigarette shipment volume
of Parliament was primarily due to Japan, Kazakhstan, Korea and
Ukraine, partly offset by Turkey. The increase in cigarette
shipment volume of Bond Street was predominantly driven by
Australia and Russia, partly offset by Kazakhstan and Ukraine. The
decrease in cigarette shipment volume of Chesterfield was due to
EEMA, mainly Russia, Turkey and Ukraine, partly offset by the EU,
mainly Italy, and by Latin America & Canada, mainly Mexico. The
increase in cigarette shipment volume of Philip Morris primarily
reflects the morphing of Diana in Italy, partly offset by the
morphing to Lark in Japan. The decrease in cigarette shipment
volume of Lark was predominantly due to Korea and Turkey, partly
offset by Japan.
Total shipment volume of OTP, in cigarette equivalent units,
increased by 2.8%. Total shipment volume for cigarettes and OTP, in
cigarette equivalent units, decreased by 0.5% excluding
acquisitions.
PMI's cigarette market share increased in a number of key
markets, including Argentina, Austria, Belgium, Brazil, Colombia,
Egypt, France, Germany, Hungary, Indonesia, Korea, Poland, Russia,
Saudi Arabia, Spain and Switzerland.
EUROPEAN UNION REGION
(EU)
2015 Third-Quarter
Reported net revenues of $2.0 billion decreased by 13.4%.
Excluding unfavorable currency of $422 million, net revenues
increased by 4.5%, reflecting favorable pricing of $118 million,
notably in Germany and Italy, partly offset by unfavorable
volume/mix of $12 million.
Reported operating companies income of $1.0 billion decreased by
14.5%. Excluding unfavorable currency of $242 million, operating
companies income increased by 5.9%, driven primarily by higher
pricing, partly offset by unfavorable volume/mix of $19
million.
Adjusted operating companies income is shown in the table below
and detailed on Schedule 11. Adjusted operating companies income
margin, excluding unfavorable currency, increased by 1.4 points to
51.0%, as detailed in Schedule 11, reflecting the factors mentioned
above.
EU
OCI
Third-Quarter
Nine Months
Year-to-Date
(in millions) Excl.
Excl.
2015
2014
Change
Curr.
2015
2014
Change
Curr.
Reported OCI $ 1,014 $ 1,186 (14.5 )% 5.9 % $ 2,904 $ 2,875
1.0 % 25.8 % Asset impairment & exit costs — 16 —
(472 )
Adjusted OCI $ 1,014 $
1,170 (13.3 )% 7.4 % $
2,904 $ 3,347 (13.2 )%
8.0 % Adjusted OCI Margin* 49.7 % 49.6 % 0.1
1.4 49.0 % 49.5 % (0.5 ) 1.4
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
2015 Third-Quarter and Nine Months
Year-to-Date
The estimated total cigarette market in the EU of 126.1 billion
units decreased slightly by 0.1% in the quarter and decreased by
1.5% to 347.9 billion units year-to-date. The net impact of
estimated trade inventory movements in the quarter and year-to-date
was neutral. The decline of the estimated total cigarette market in
both periods reflected, in certain key geographies, improving
economies, a moderation in the level of illicit trade, lower
out-switching to the fine cut category and a lower prevalence of
e-vapor products. For the full year 2015, the estimated total
cigarette market in the EU is forecast to decrease by approximately
2.0%.
The estimated total OTP market in the EU in the quarter of 42.9
billion cigarette equivalent units increased by 0.7%, reflecting a
larger total fine cut market, up by 1.1% to 37.5 billion cigarette
equivalent units. Year-to-date, the estimated total OTP market in
the EU of 122.1 billion cigarette equivalent units decreased by
0.5%, reflecting a lower total fine cut market, down by 0.3% to
106.6 billion cigarette equivalent units.
Cigarette shipment volume and market share performance by brand
are shown in the tables below.
EU Cigarette
Shipment Volume by Brand
Third-Quarter
Nine Months
Year-to-Date
(in millions)
2015
2014
Change
2015
2014
Change
Marlboro 23,824 23,681 0.6 % 68,170 67,825 0.5 %
L&M 8,957 8,711 2.8 % 24,883 24,833 0.2 %
Chesterfield 7,151 7,347 (2.7 )% 20,361 20,255 0.5 %
Philip Morris 4,040 2,638 53.1 % 10,056 7,579 32.7 %
Others 4,852 6,832 (29.0 )% 16,234 20,335 (20.2 )%
Total
EU 48,824 49,209 (0.8 )%
139,704 140,827 (0.8 )%
EU Cigarette
Market Shares by Brand
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
p.p.
2015
2014
p.p.
Marlboro 19.3 % 19.1 % 0.2 19.4 % 19.2 % 0.2
L&M
7.1 % 7.0 % 0.1 7.1 % 7.0 % 0.1
Chesterfield 5.8 % 5.8 % —
5.8 % 5.5 % 0.3
Philip Morris 3.5 % 3.4 % 0.1 3.5 % 3.6 %
(0.1 )
Others 3.9 % 4.4 % (0.5 ) 4.1 % 4.5 % (0.4 )
Total
EU 39.6 % 39.7 % (0.1
) 39.9 % 39.8 % 0.1
In the quarter, PMI's cigarette shipment volume of 48.8 billion
units decreased by 0.8%, or by 0.2% excluding trade inventory
movements, mainly in Italy and the United Kingdom, partly offset by
Spain. PMI's cigarette market share decreased by 0.1 point to
39.6%, with gains, notably in France and Spain, mainly offset by
Italy.
In the quarter, PMI's shipments of OTP of 6.2 billion cigarette
equivalent units increased by 3.0%. PMI's total OTP market share
increased by 0.4 points to 14.4%, reflecting a gain in the fine cut
category.
Year-to-date, PMI's cigarette shipment volume of 139.7 billion
units decreased by 0.8%, or by 1.0% excluding trade inventory
movements, notably due to Italy and the United Kingdom, partly
offset by France and Spain. Market share increased by 0.1 point to
39.9%, with gains, notably in France, Germany and Spain, partly
offset by Italy.
Year-to-date, PMI's shipments of OTP of 17.7 billion cigarette
equivalent units increased by 3.4%. PMI's total OTP market share
increased by 0.3 points to 14.4%, reflecting a gain in the fine cut
category.
EU Key Market
Commentaries
In France, estimated industry size, PMI cigarette
shipment volume and market share performance are shown in the table
below.
France Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 11.8 11.7 1.1
%
34.2 34.0 0.6 %
PMI Shipments (million units) 4,746
4,770 (0.5 )% 14,450 14,148 2.1 %
PMI Cigarette Market
Share Marlboro 25.8% 24.7% 1.1 25.7% 25.1 % 0.6 Philip Morris
9.2% 9.2% — 9.5% 9.3 % 0.2 Chesterfield 3.3% 3.4% (0.1 ) 3.3% 3.4 %
(0.1 ) Others 2.9% 3.1% (0.2 ) 2.9% 3.1 % (0.2 )
Total
41.2% 40.4% 0.8 41.4% 40.9
% 0.5
In the quarter, the increase in the estimated total cigarette
market reflected its general recovery since the second half of 2014
and a lower prevalence of e-vapor products. Excluding the net
impact of inventory movements, PMI's cigarette shipment volume
increased by 2.7%, reflecting market share growth, driven by
Marlboro, benefiting from a round retail price point of €7.00 per
pack and the launch of Marlboro 25s. The estimated total industry
fine cut category of 3.8 billion cigarette equivalent units
increased by 9.6%. PMI's market share of the category decreased by
1.1 points to 24.6%.
Year-to-date, the increase in the estimated total cigarette
market was mainly driven by the same dynamics as in the quarter.
Excluding the net impact of inventory movements, PMI's cigarette
shipment volume increased by 1.7%, reflecting market share growth,
notably of premium brands Marlboro and Philip Morris. The estimated
total industry fine cut category of 10.9 billion cigarette
equivalent units increased by 7.4%. PMI's market share of the
category decreased by 1.2 points to 24.9%.
In Germany, estimated industry size, PMI cigarette
shipment volume and market share performance are shown in the table
below.
Germany Key
Market Data
Third-Quarter
Nine Months
Year-to-Date
Change Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 21.8 21.6 1.0 % 59.9
60.7 (1.4 )%
PMI Shipments (million units) 7,633
7,583 0.7 % 22,134 22,023 0.5
%
PMI Cigarette Market Share Marlboro 20.8 % 20.8 % —
21.9 % 21.5 % 0.4 L&M 11.2 % 11.2 % — 12.0 % 11.6 % 0.4
Chesterfield 1.6 % 1.6 % — 1.7 % 1.7 % — Others 1.4 % 1.5 % (0.1 )
1.4 % 1.5 % (0.1 )
Total 35.0 % 35.1
% (0.1 ) 37.0 % 36.3
% 0.7
In the quarter, the increase in the estimated total cigarette
market principally reflected a lower prevalence of illicit trade.
The estimated total industry fine cut category of 10.8 billion
cigarette equivalent units increased by 1.2%. PMI's market share of
the category decreased by 0.8 points to 12.2%.
Year-to-date, the decline of the estimated total cigarette
market was partly due to the annualized impact of price increases,
partly offset by a lower prevalence of illicit trade. The increase
in PMI's market share was driven by Marlboro, mainly reflecting the
positive impact of the new Architecture 2.0, and L&M,
benefiting from a rounded retail price point of €5.00 per pack of
19s. The estimated total industry fine cut category of 30.4 billion
cigarette equivalent units decreased by 1.5%. PMI's market share of
the category decreased by 0.3 points to 12.7%.
In Italy, estimated industry size, PMI cigarette shipment
volume and market share performance are shown in the table
below.
Italy Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 20.1 20.1 0.3
%
55.5 56.1 (1.0 )%
PMI Shipments (million units)
10,148 10,791 (6.0 )% 30,362 31,260 (2.9 )%
PMI Cigarette
Market Share Marlboro 24.3 % 25.2 % (0.9 ) 24.2 % 25.2 % (1.0 )
Chesterfield 11.2 % 10.9 % 0.3 10.8 % 8.9 % 1.9 Philip Morris 9.5 %
10.2 % (0.7 ) 9.8 % 11.1 % (1.3 ) Others 8.7 % 9.5 % (0.8 ) 9.1 %
9.6 % (0.5 )
Total 53.7 % 55.8 %
(2.1 ) 53.9 % 54.8 %
(0.9 )
In the quarter, the increase in the estimated total cigarette
market was driven by favorable trade inventory movements. Excluding
these inventory movements, the total cigarette market decreased
slightly by an estimated 0.1%, reflecting the impact of the
tax-driven price increases in January 2015 and out-switching to
less expensive OTP categories, particularly fine cut, partly offset
by a lower prevalence of illicit trade and e-vapor products.
Excluding the net impact of inventory movements, PMI's cigarette
shipment volume decreased by 3.6%, reflecting market share loss,
notably of Marlboro, largely due to its price increase in the first
quarter of 2015 to €5.20 per pack from its round retail price point
of €5.00 per pack, and Philip Morris, including the morphed Diana
that had been impacted by the growth of the super-low price
segment. The estimated total industry fine cut category of 1.7
billion cigarette equivalent units increased by 5.9%. PMI's market
share of the category decreased by 0.2 points to 41.0%.
Year-to-date, the decline of the estimated total cigarette
industry was due to the same dynamics as in the quarter. Excluding
the net impact of inventory movements, PMI's cigarette shipment
volume decreased by 2.6%, mainly reflecting market share loss,
notably of Marlboro and Philip Morris, largely due to the same
dynamics as in the quarter, partly offset by Chesterfield,
reflecting the annualized impact of the brand's repositioning into
the super-low price segment. The estimated total industry fine cut
category of 4.8 billion cigarette equivalent units increased by
5.4%. PMI's market share of the category decreased by 0.2 points to
41.3%.
In Poland, estimated industry size, PMI cigarette
shipment volume and market share performance are shown in the table
below.
Poland Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 11.6 11.3 2.5 % 31.9
32.9 (2.9 )%
PMI Shipments (million units) 4,734
4,620 2.5 % 12,757 12,780 (0.2 )%
PMI Cigarette Market
Share Marlboro 11.4 % 11.4 % — 11.2 % 10.9 % 0.3 L&M 18.0 %
18.7 % (0.7 ) 17.8 % 17.7 % 0.1 Chesterfield 8.6 % 7.9 % 0.7 8.4 %
7.6 % 0.8 Others 2.9 % 2.9 % — 2.6 % 3.4 % (0.8 )
Total 40.9 % 40.9 % —
40.0 % 39.6 % 0.4
In the quarter, the increase in the estimated total cigarette
market was driven by favorable trade inventory movements. Excluding
these inventory movements, the total cigarette market decreased by
an estimated 0.2%, reflecting the impact of price increases
partially offset by a lower prevalence of e-vapor products. The
estimated total industry fine cut category of 1.0 billion cigarette
equivalent units increased by 11.3%. PMI's market share of the
category decreased by 1.7 points to 31.6%.
Year-to-date, the decrease in the estimated total cigarette
market benefited from favorable trade inventory movements.
Excluding these inventory movements, the total cigarette market
decreased by an estimated 4.0%, reflecting the impact of price
increases and an increase in the prevalence of illicit products.
While PMI's cigarette shipment volume decreased, reflecting a lower
total market, market share was up, driven by Marlboro, partly
reflecting the positive impact of the new Architecture 2.0, and
Chesterfield, benefiting from its round corner box super-slims
variants, partly offset by declines from super-low price brands.
The estimated total industry fine cut category of 3.1 billion
cigarette equivalent units increased by 7.1%. PMI's market share of
the category decreased by 1.7 points to 32.8%.
In Spain, estimated industry size, PMI cigarette shipment
volume and market share performance are shown in the table
below.
Spain Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 13.1 13.0 0.9 % 35.4
35.8 (1.2 )%
PMI Shipments (million units) 4,173
3,771 10.7 % 11,861 11,295 5.0
%
PMI Cigarette Market Share Marlboro 17.7 % 16.4 % 1.3
16.9 % 15.8 % 1.1 Chesterfield 8.8 % 9.0 % (0.2 ) 9.1 % 9.2 % (0.1
) L&M 5.7 % 6.0 % (0.3 ) 5.8 % 6.1 % (0.3 ) Others 1.8 % 1.2 %
0.6 1.5 % 0.9 % 0.6
Total 34.0 %
32.6 % 1.4 33.3 % 32.0
% 1.3
In the quarter, the increase in the estimated total cigarette
market was driven by favorable trade inventory movements. Excluding
these inventory movements, the total cigarette market was estimated
to be flat, reflecting the impact of price increases in the second
half of 2014 and the first quarter of 2015, partly offset by an
improving economy, and a lower prevalence of illicit trade and
e-vapor products. Year-to-date, excluding trade inventory
movements, the total cigarette market decreased by an estimated
0.6%, reflecting the same dynamics as in the quarter. Excluding
inventory movements, PMI's cigarette shipment volume increased by
5.9% in the quarter and by 3.0% year-to-date. The increase in PMI's
market share in the quarter and year-to-date was driven mainly by
Marlboro, benefiting from a round price point in the vending
channel, the new Architecture 2.0, and an improving economy. In the
quarter, the estimated total industry fine cut category of 2.5
billion cigarette equivalent units decreased by 2.4%. PMI's market
share of the fine cut category decreased by 1.7 points to 12.9%.
Year-to-date, the estimated total industry fine cut category of 7.2
billion cigarette equivalent units decreased by 1.8%. PMI's market
share of the fine cut category decreased by 1.3 points to
13.6%.
EASTERN EUROPE, MIDDLE
EAST & AFRICA REGION (EEMA)
2015 Third-Quarter
Reported net revenues of $2.1 billion decreased by 13.8%.
Excluding unfavorable currency of $555 million, net revenues
increased by 9.0%, reflecting favorable pricing of $190 million,
driven principally by Russia, Turkey and Ukraine, and favorable
volume/mix of $29 million.
Reported operating companies income of $1.0 billion decreased by
14.2%. Excluding unfavorable currency of $319 million, operating
companies income increased by 12.3%, driven primarily by higher
pricing, partly offset by unfavorable volume/mix of $17
million.
Adjusted operating companies income is shown in the table below
and detailed on Schedule 11. Adjusted operating companies income
margin, excluding unfavorable currency, increased by 1.5 points to
51.0%, as detailed on Schedule 11, reflecting the factors mentioned
above.
EEMA
OCI
Third-Quarter
Nine Months
Year-to-Date
(in millions) Excl.
Excl.
2015
2014
Change
Curr.
2015
2014
Change
Curr.
Reported OCI $ 1,033 $ 1,204 (14.2 )% 12.3 % $ 2,794 $ 3,218
(13.2 )% 13.0 % Asset impairment & exit costs — —
— —
Adjusted OCI $ 1,033
$ 1,204 (14.2 )% 12.3 %
$ 2,794 $ 3,218 (13.2 )%
13.0 % Adjusted OCI Margin* 49.2 % 49.5 % (0.3
) 1.5 47.7 % 47.8 % (0.1 ) 1.9
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
2015 Third-Quarter and Nine Months
Year-to-Date
In the quarter, PMI's cigarette shipment volume of 79.3 billion
units increased by 2.6%, or by 2.5% excluding acquisitions. The
increase in PMI's cigarette shipment volume in the quarter was
mainly driven by Egypt, Russia, Saudi Arabia and Turkey, partly
offset by Kazakhstan and Ukraine. PMI's cigarette shipment volume
of premium brands decreased by 0.8%, mainly due to: Parliament,
down by 3.7% to 9.4 billion units, primarily due to Kazakhstan,
Russia and Ukraine, partly offset by Marlboro, up by 1.1% to 23.1
billion units, principally driven by Saudi Arabia, and Turkey,
partly offset by Algeria, Egypt and Ukraine. PMI's cigarette
shipment volume of L&M increased by 14.4% to 14.3 billion
units, driven by Egypt, Saudi Arabia and Turkey, partially offset
by Russia.
Year-to-date, PMI's cigarette shipment volume of 217.8 billion
units increased by 2.1%, or by 2.0% excluding acquisitions, driven
by the same markets as in the quarter. PMI's cigarette shipment
volume of premium brands increased by 0.9%, mainly driven by:
Marlboro, up by 2.2% to 64.5 billion units, driven notably by Saudi
Arabia and Turkey, partly offset by Egypt and Ukraine; partly
offset by Parliament, down by 1.2% to 25.6 billion units, mainly
due to Kazakhstan and Ukraine, partly offset by Turkey. PMI's
cigarette shipment volume of L&M increased by 11.3% to 39.8
billion units, driven by Egypt, Turkey and Ukraine, partly offset
by Russia.
EEMA Key Market
Commentaries
In North Africa, estimated industry size, PMI cigarette
shipment volume and market share performance are shown in the table
below.
North Africa Key
Market Data
Third-Quarter
Nine Months
Year-to-Date
Change Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 33.3 34.7 (3.9 )%
101.3 105.3 (3.8 )%
PMI Shipments (million units)
9,928 9,275 7.0
%
27,936 27,035 3.3
%
PMI Cigarette Market Share Marlboro 14.0 % 15.2 %
(1.2 ) 14.1 % 14.8 % (0.7 ) L&M 13.5 % 9.4 % 4.1 11.5 % 8.6 %
2.9 Others 2.8 % 1.7 % 1.1 2.2 % 1.9 % 0.3
Total 30.3 % 26.3 % 4.0
27.8 % 25.3 % 2.5
In the quarter, the decline of the estimated total market was
principally due to Egypt, reflecting the impact of excise
tax-driven price increases in July 2014 and February 2015, partly
offset by Libya, Morocco and Tunisia. Year-to-date, the estimated
total market decreased by 3.8%, due to Algeria, Egypt and Morocco,
partly offset by Libya and Tunisia. The increase in PMI's cigarette
shipment in the quarter and year-to-date was primarily driven by
Egypt, reflecting higher market share, mainly of L&M, resulting
from improved territorial coverage and brand building activities,
partly offset by lower shipments of Marlboro mainly due to lower
market share in Algeria and Egypt.
In Russia, estimated industry size, PMI cigarette
shipment volume and August quarter-to-date and year-to-date market
share performance, as measured by Nielsen, are shown in the table
below.
Russia Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 80.5 84.4 (4.6 )%
219.3 232.7 (5.7 )%
PMI Shipments (million units)
23,742 22,960 3.4
%
65,826 63,455 3.7
%
PMI Cigarette Market Share Marlboro 1.4 % 1.5 % (0.1
) 1.4 % 1.6 % (0.2 ) Parliament 3.8 % 3.8 % — 3.9 % 3.6 % 0.3 Bond
Street 8.5 % 7.7 % 0.8 8.2 % 7.3 % 0.9 Others 15.0 % 14.4 % 0.6
14.5 % 14.5 % —
Total 28.7 %
27.4 % 1.3 28.0 % 27.0
% 1.0
In the quarter and year-to-date, the decline of the estimated
total cigarette market was mainly due to the unfavorable impact of
tax-driven prices increases and lower consumer purchasing power as
a result of a weak economy. For the full year 2015, the estimated
total cigarette market in Russia is forecast to decrease by
approximately 7.0%.
The increase in PMI's cigarette shipment volume in the quarter
and year-to-date was mainly driven by market share growth,
primarily by low-price Bond Street, notably its Compact 7.0
variant, and super-low price Next.
In Turkey, estimated industry size, PMI cigarette
shipment volume and August quarter-to-date and year-to-date market
share performance, as measured by Nielsen, are shown in the table
below.
Turkey Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 29.4 26.3 11.8 % 75.1
68.5 9.6 %
PMI Shipments (million units) 14,150
12,514 13.1 % 35,433 33,719 5.1 %
PMI Cigarette Market
Share Marlboro 9.8 % 8.7 % 1.1 9.3 % 8.6 % 0.7 Parliament 11.9
% 11.5 % 0.4 11.7 % 10.9 % 0.8 Lark 7.7 % 8.6 % (0.9 ) 7.5 % 9.6 %
(2.1 ) Others 14.7 % 14.3 % 0.4 15.0 % 15.0 % —
Total 44.1 % 43.1 % 1.0
43.5 % 44.1 % (0.6 )
In the quarter and year-to-date, the increase in the estimated
total cigarette market mainly reflected a significantly lower
prevalence of illicit trade. The increase in PMI's cigarette
shipment volume in the quarter was mainly due to a higher total
market and market share, driven by Marlboro, notably its Touch 7.0
variants, and Parliament, benefiting from the growth of Parliament
Night Blue KS, the leading SKU sold on the market, and from
up-trading from the mid-price segment, partly offset by low-price
Lark, reflecting the impact of price repositioning by PMI's
principal competitor in May 2014. The decrease in PMI's market
share year-to-date was mainly due to low-price Lark, partly offset
by Marlboro and Parliament, with "Others," notably including
L&M and Muratti, flat.
In Ukraine, estimated industry size, PMI cigarette
shipment volume and August quarter-to-date and year-to-date market
share performance, as measured by Nielsen, are shown in the table
below.
Ukraine Key
Market Data
Third-Quarter
Nine Months
Year-to-Date
Change Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 18.8 18.3 2.4 % 52.4
53.0 (1.2 )%
PMI Shipments (million units) 4,704
6,484 (27.5 )% 14,382 17,772 (19.1 )%
PMI Cigarette
Market Share Marlboro 3.5 % 4.8 % (1.3 ) 4.1 % 5.0 % (0.9 )
Parliament 2.8 % 3.2 % (0.4 ) 2.9 % 3.2 % (0.3 ) Bond Street 8.4 %
9.0 % (0.6 ) 8.1 % 9.2 % (1.1 ) Others 14.7 % 15.9 % (1.2 ) 15.7 %
15.5 % 0.2
Total 29.4 % 32.9
% (3.5 ) 30.8 % 32.9
% (2.1 )
In the quarter, the increase in the estimated total market was
mainly driven by favorable net inventory movements compared to the
third quarter of 2014, reflecting estimated trade inventory
deloading following excise tax-driven price increases in July 2014.
Excluding net inventory movements, the total cigarette market
decreased by an estimated 2.9% in the quarter and was essentially
flat year-to-date, reflecting lower consumer purchasing power as a
result of a weak economy, and continued business disruption due to
the political instability in the east of the country, partly offset
by a lower prevalence of illicit trade. The decrease in PMI's
cigarette shipment volume in the quarter and year-to-date largely
reflected lower market share. The decrease in PMI's market share in
the quarter and year-to-date was primarily due to Marlboro,
reflecting the impact of lower consumer purchasing power, and Bond
Street, mainly resulting from competitive price pressure in the low
price segment.
ASIA
REGION
2015 Third-Quarter
Reported net revenues of $2.0 billion decreased by 11.1%.
Excluding unfavorable currency of $268 million, net revenues
increased by 0.9%, driven by favorable pricing of $73 million,
mainly in Australia and Indonesia. The favorable pricing was
partially offset by unfavorable volume/mix of $53 million, mainly
due to unfavorable inventory movements in Japan, partly offset by
improved mix in the Philippines.
Reported operating companies income of $690 million decreased by
13.6%. Excluding unfavorable currency of $122 million, operating
companies income increased by 1.6%, principally reflecting
favorable pricing and lower costs, partly offset by unfavorable
volume/mix of $75 million.
Adjusted operating companies income is shown in the table below
and detailed on Schedule 11. Adjusted operating companies income
margin, excluding unfavorable currency, increased by 0.3 points to
36.1%, as detailed on Schedule 11, reflecting the factors mentioned
above.
Asia
OCI
Third-Quarter
Nine Months
Year-to-Date
(in millions) Excl.
Excl.
2015
2014
Change
Curr.
2015
2014
Change
Curr.
Reported OCI $ 690 $ 799 (13.6 )% 1.6 % $ 2,421 $ 2,614 (7.4
)% 4.0 % Asset impairment & exit costs — — —
(24 )
Adjusted OCI $ 690 $
799 (13.6 )% 1.6 % $
2,421 $ 2,638 (8.2 )% 3.1
% Adjusted OCI Margin* 34.8 % 35.8 % (1.0 ) 0.3 38.5
% 39.2 % (0.7 ) 0.2
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
2015 Third-Quarter and Nine Months
Year-to-Date
In the quarter, PMI's cigarette shipment volume of 67.8 billion
units decreased by 6.3%, largely due to: Indonesia, mainly
reflecting a lower estimated total market; a lower estimated total
market and share in Japan; and Pakistan, reflecting a lower
estimated total market resulting from trade inventory deloading
following the June 2015 excise tax increase coupled with an
increase in the prevalence of illicit trade, and lower market
share. Excluding unfavorable inventory movements in Japan, PMI's
cigarette shipment volume decreased by 5.1%.
Cigarette shipment volume of Marlboro of 18.3 billion units
increased by 7.7%, predominantly driven by Japan, the Philippines
and Vietnam, partly offset by Indonesia. Cigarette shipment volume
of Parliament of 2.6 billion units decreased by 7.4%, due to Korea,
partly offset by Japan. Cigarette shipment volume of Lark of 4.3
billion units decreased by 30.1%, reflecting the timing of
shipments in Japan compared to the third quarter of 2014.
Year-to-date, PMI's cigarette shipment volume of 213.2 billion
units decreased by 2.6%, mainly due to Japan, Korea, Pakistan and
the Philippines.
Cigarette shipment volume of Marlboro of 55.2 billion units
increased by 1.3%, mainly driven by the Philippines and Vietnam,
partly offset by Indonesia, Japan and Korea. Cigarette shipment
volume of Parliament of 6.9 billion units decreased by 17.5%, due
to Japan and Korea. Cigarette shipment volume of Lark of 14.5
billion units increased by 0.5%, driven by Japan, partly offset by
Korea.
Asia Key Market
Commentaries
In Indonesia, estimated industry size, PMI cigarette
shipment volume and market share performance are shown in the table
below.
Indonesia Key
Market Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 75.4 78.8 (4.2 )%
232.3 235.0 (1.1 )%
PMI Shipments (million units)
26,552 27,686 (4.1 )% 81,895 81,820 0.1
%
PMI Cigarette Market Share Sampoerna A 15.0 % 14.6 %
0.4 15.0 % 14.3 % 0.7 Dji Sam Soe 7.2 % 6.6 % 0.6 7.1 % 6.2 % 0.9 U
Mild 4.8 % 5.4 % (0.6 ) 4.9 % 5.4 % (0.5 ) Others 8.2 % 8.6 % (0.4
) 8.2 % 8.9 % (0.7 )
Total 35.2 % 35.2
% — 35.2 % 34.8 %
0.4
In the quarter and year-to-date, the decline of the estimated
total cigarette market was mainly due to a soft economic
environment. For the full year 2015, the estimated total cigarette
market is forecast to be flat.
The decline in PMI's cigarette shipment volume in the quarter
mainly reflected U Mild's crossing a critical price point ahead of
competition earlier in the year, and the impact of the softer
macro-economic environment. PMI's market share in the quarter and
year-to-date was driven by a strong performance from its
machine-made kretek brands, notably Sampoerna A, Dji Sam Soe Magnum
and Dji Sam Soe Magnum Blue, partly offset by U Mild and a decline
in its hand-rolled kretek portfolio, notably due to Sampoerna Hijau
in "Others," down by 0.3 points to 2.9% in the quarter, largely
reflecting the decline of the total segment. While Marlboro's
market share was flat at 5.1%, its share of the “white” cigarettes
segment, which represented 6.4% of the total cigarette market,
increased by 2.0 points to 80.8%. While the machine-made kretek
segment, representing 75.2% of the total cigarette market,
increased by 1.4 points, PMI's share of the segment decreased by
0.3 points to 30.1%. Although the hand-rolled kretek segment,
representing 18.5% of the total cigarette market, decreased by 1.3
points, PMI's share of the segment increased by 1.6 points to
40.3%.
In Japan, estimated industry size, PMI cigarette shipment
volume and market share performance are shown in the table
below.
Japan Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 47.2 48.0 (1.5 )%
135.8 138.8 (2.2 )%
PMI Shipments (million units)
10,796 12,179 (11.4 )% 36,194 37,416 (3.3 )%
PMI
Cigarette Market Share Marlboro 11.3 % 11.6 % (0.3 ) 11.4 %
11.6 % (0.2 ) Parliament 2.3 % 2.3 % — 2.3 % 2.2 % 0.1 Lark 10.0 %
10.0 % — 10.0 % 9.9 % 0.1 Others 1.7 % 2.0 % (0.3 ) 1.7 % 2.2 %
(0.5 )
Total 25.3 % 25.9 %
(0.6 ) 25.4 % 25.9 %
(0.5 )
In the quarter and year-to-date, the decrease of the estimated
total cigarette market moderated to 1.5% and 2.2%, respectively.
For the full year 2015, the estimated total cigarette market in
Japan is forecast to decrease by 2.5% to 3.0%.
The decrease of PMI's cigarette shipment volume in the quarter
was primarily due to unfavorable distributor inventory movements.
Excluding inventory movements, PMI's total cigarette shipment
volume decreased by 3.7% in the quarter and by 3.8% year-to-date,
mainly reflecting a lower total market and market share.
In Korea, estimated industry size, PMI cigarette shipment
volume and market share performance are shown in the table
below.
Korea Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 20.3 24.6 (17.1 )%
51.0 66.4 (23.1 )%
PMI Shipments (million units)
4,163 4,630 (10.1 )% 10,352 12,860 (19.5 )%
PMI Cigarette
Market Share Marlboro 9.4 % 7.4 % 2.0 9.3 % 7.6 % 1.7
Parliament 6.8 % 6.7 % 0.1 6.9 % 7.0 % (0.1 ) Virginia S. 3.6 % 3.8
% (0.2 ) 3.7 % 4.0 % (0.3 ) Others 0.6 % 0.7 % (0.1 ) 0.5 % 0.7 %
(0.2 )
Total 20.4 % 18.6 %
1.8 20.4 % 19.3 % 1.1
In the quarter and year-to-date, the decline of the estimated
total cigarette market reflected the impact of the January 2015
excise tax increase and related retail price increases. Excluding
the impact of estimated inventory movements associated with the
timing of the excise tax increase, the total cigarette market
declined by approximately 12% and 17% in the quarter and
year-to-date, respectively. For the full year 2015, the estimated
underlying total cigarette market is forecast to decline by
approximately 17%.
The decline in PMI's cigarette shipment volume in the quarter
and year-to-date reflected the lower estimated total market, partly
offset by share growth, driven by Marlboro, benefiting from the
positive impact of pricing for PMI's principal domestic
competitor's main brands.
In the Philippines, estimated tax-paid industry size, PMI
cigarette shipment volume and market share performance are shown in
the table below.
Philippines Key
Market Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 21.9 21.8 0.6
%
62.0 60.5 2.4 %
PMI Shipments (million units) 17,192
17,456 (1.5 )% 49,821 50,865 (2.1 )%
PMI Cigarette Market
Share Marlboro 19.9 % 17.0 % 2.9 20.6 % 18.1 % 2.5 Fortune 32.8
% 32.8 % — 32.5 % 34.0 % (1.5 ) Jackpot 13.0 % 17.3 % (4.3 ) 14.3 %
17.6 % (3.3 ) Others 12.8 % 13.1 % (0.3 ) 13.0 % 14.3 % (1.3 )
Total 78.5 % 80.2 % (1.7
) 80.4 % 84.0 % (3.6
)
In the quarter and year-to-date, the increase in the estimated
total tax-paid industry cigarette volume reflected higher estimated
tax-paid volume by PMI's principal domestic competitor. The decline
in PMI's cigarette shipment volume in both periods was mainly due
to lower consumption of low and super-low price brands, following
consecutive price increases in late 2014 and early 2015, partly
offset by adult smoker uptrading to Marlboro, reflecting the
narrowing of retail price gaps with brands at the bottom end of the
market. August quarter-to-date and year-to-date market share
performance, as measured by Nielsen, which PMI believes provides
additional insight into share performance in the current
environment, increased by 1.4 and 0.9 points to 73.7% and 72.9%,
respectively, driven by Marlboro, up by 2.9 and 2.0 points to 21.0%
and 20.4%, and low-price, Fortune, up by 0.9 and 0.4 points to
31.6% and 30.7%, respectively.
LATIN AMERICA &
CANADA REGION
2015 Third-Quarter
Reported net revenues of $804 million decreased by 3.5%.
Excluding unfavorable currency of $145 million, net revenues
increased by 13.9%, driven by favorable pricing of $141 million,
principally in Argentina, Brazil, Canada, Ecuador and Mexico,
partially offset by unfavorable volume/mix of $25 million.
Reported operating companies income of $294 million increased by
10.1%. Excluding unfavorable currency of $52 million, operating
companies income increased by 29.6%, principally reflecting
favorable pricing, partly offset by unfavorable volume/mix of $28
million and higher costs.
Adjusted operating companies income is shown in the table below
and detailed on Schedule 11. Adjusted operating companies income
margin, excluding unfavorable currency, increased by 3.6 points to
36.5%, as detailed on Schedule 11, reflecting the factors mentioned
above.
Latin America
& Canada OCI
Third-Quarter
Nine Months
Year-to-Date
(in millions) Excl.
Excl.
2015
2014
Change
Curr.
2015
2014
Change
Curr.
Reported OCI $ 294 $ 267 10.1 % 29.6 % $ 849 $ 734 15.7 %
35.7 % Asset impairment & exit costs — (7 ) — (7
)
Adjusted OCI $ 294 $ 274
7.3 % 26.3 % $ 849
$ 741 14.6 % 34.4 %
Adjusted OCI Margin* 36.6 % 32.9 % 3.7 3.6 36.3 % 31.5 % 4.8
5.6
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
2015 Third-Quarter and Nine Months
Year-to-Date
In the quarter, PMI's cigarette shipment volume of 23.0 billion
units decreased by 1.9%, mainly due to Argentina, Brazil and
Ecuador, partly offset by Mexico. Although shipment volume of
Marlboro of 8.9 billion units decreased by 1.6%, its Regional
market share increased by 0.5 points to an estimated 15.3%. Market
share of Marlboro increased notably in Brazil and Colombia, by 0.6
and 1.2 points to 9.7% and 9.1%, respectively. Shipment volume of
Philip Morris of 4.7 billion units increased by 0.2%, driven by
Canada.
Year-to-date, PMI's cigarette shipment volume of 66.8 billion
units decreased by 1.7%, mainly due to Argentina, Canada and
Ecuador, partly offset by Mexico. Although shipment volume of
Marlboro of 25.9 billion units decreased by 1.4%, its Regional
market share increased by 0.4 points to an estimated 14.9%. Market
share of Marlboro increased notably in Argentina, Brazil and
Colombia, by 0.2, 0.7 and 1.3 points to 24.2%, 9.6% and 9.0%,
respectively. Shipment volume of Philip Morris of 14.1 billion
units increased by 1.1%, driven by Canada.
Latin America & Canada Key Market
Commentaries
In Argentina, estimated industry size, PMI cigarette
shipment volume and market share performance are shown in the table
below.
Argentina Key
Market Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 9.8 10.0 (2.1 )% 29.6
30.7 (3.6 )%
PMI Shipments (million units) 7,648
7,810 (2.1 )% 23,234 23,745 (2.2 )%
PMI Cigarette Market
Share Marlboro 23.8 % 24.2 % (0.4 ) 24.2 % 24.0 % 0.2
Parliament 2.1 % 2.2 % (0.1 ) 2.1 % 2.1 % — Philip Morris 44.6 %
43.6 % 1.0 44.8 % 43.3 % 1.5 Others 6.8 % 7.2 % (0.4 ) 7.1 % 7.5 %
(0.4 )
Total 77.3 % 77.2 %
0.1 78.2 % 76.9 % 1.3
In the quarter and year-to-date, the decline of the estimated
total cigarette market was mainly due to the cumulative impact of
price increases in 2014 and 2015 and a challenging economic
environment. The decrease in PMI's shipment volume in the quarter
and year-to-date reflected a lower estimated total market, partly
offset by market share growth, driven primarily by Philip Morris,
reflecting the positive impact of the brand's capsule variants.
In Canada, estimated industry size, PMI cigarette
shipment volume and market share performance are shown in the table
below.
Canada Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 7.0 7.3 (4.4 )% 19.7
20.4 (3.1 )%
PMI Shipments (million units) 2,725
2,758 (1.2 )% 7,424 7,689 (3.4 )%
PMI Cigarette Market
Share Belmont 3.6 % 3.1 % 0.5 3.3 % 2.9 % 0.4 Canadian Classics
10.8 % 10.7 % 0.1 10.5 % 10.5 % — Next 11.1 % 10.6 % 0.5 10.7 %
10.7 % — Others 13.7 % 13.6 % 0.1 13.2 % 13.8 % (0.6 )
Total 39.2 % 38.0 % 1.2
37.7 % 37.9 % (0.2 )
In the quarter and year-to-date, the decline of the estimated
total cigarette market was mainly due to the impact of tax-driven
price increases in 2014 and 2015. The decrease in PMI's cigarette
shipment volume in the quarter was mainly driven by a lower
estimated total market, partly offset by market share growth of
premium Belmont and low price Next. The decrease in PMI's cigarette
shipment volume year-to-date was mainly due to a lower estimated
total market.
In Mexico, estimated industry size, PMI cigarette
shipment volume and market share performance are shown in the table
below.
Mexico Key Market
Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2015
2014
% /
p.p.
2015
2014
% /
p.p.
Total Cigarette Market (billion units) 8.5 8.3 3.0 % 24.6
23.9 3.1 %
PMI Shipments (million units) 5,980 5,879
1.7 % 16,866 16,741 0.7 %
PMI Cigarette Market Share
Marlboro 48.9 % 49.9 % (1.0 ) 47.3 % 48.8 % (1.5 ) Delicados 10.8 %
10.8 % — 10.8 % 11.0 % (0.2 ) Benson & Hedges 4.6 % 5.1 % (0.5
) 4.6 % 5.1 % (0.5 ) Others 5.9 % 5.3 % 0.6 5.7 % 5.2 % 0.5
Total 70.2 % 71.1 %
(0.9 ) 68.4 % 70.1 %
(1.7 )
In the quarter, the increase of the estimated total cigarette
market was unfavorably impacted by the timing of estimated trade
inventory movements compared to the third quarter of 2014.
Excluding the impact of these inventory movements, the estimated
total cigarette market increased by 6.6%, primarily reflecting a
lower prevalence of illicit trade. The increase in PMI's cigarette
shipment volume in the quarter and year-to-date was mainly driven
by the higher estimated total market. The decline in PMI's market
share in the quarter and year-to-date was mainly due to Marlboro,
reflecting adult smoker down-trading and the timing of price
increases by PMI's principal competitor in the first quarter of
2015, partly offset by gains for certain low price local trademark
brands.
Philip Morris International Inc.
Profile
Philip Morris International Inc. (PMI) is the leading
international tobacco company, with six of the world's top 15
international brands, including Marlboro, the number one cigarette
brand worldwide. PMI's products are sold in more than 180 markets.
In 2014, the company held an estimated 15.5% share of the estimated
total international cigarette market outside of the U.S., or 28.5%
excluding the People's Republic of China and the U.S. For more
information, see www.pmi.com.
Forward-Looking and Cautionary
Statements
This press release contains projections of future results and
other forward-looking statements. Achievement of projected results
is subject to risks, uncertainties and inaccurate assumptions. In
the event that risks or uncertainties materialize, or underlying
assumptions prove inaccurate, actual results could vary materially
from those contained in such forward-looking statements. Pursuant
to the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995, PMI is identifying important factors
that, individually or in the aggregate, could cause actual results
and outcomes to differ materially from those contained in any
forward-looking statements made by PMI.
PMI's business risks include: significant increases in
cigarette-related taxes; the imposition of discriminatory excise
tax structures; fluctuations in customer inventory levels due to
increases in product taxes and prices; increasing marketing and
regulatory restrictions, often with the goal of reducing or
preventing the use of tobacco products; health concerns relating to
the use of tobacco products and exposure to environmental tobacco
smoke; litigation related to tobacco use; intense competition; the
effects of global and individual country economic, regulatory and
political developments; changes in adult smoker behavior; lost
revenues as a result of counterfeiting, contraband and cross-border
purchases; governmental investigations; unfavorable currency
exchange rates and currency devaluations; adverse changes in
applicable corporate tax laws; adverse changes in the cost and
quality of tobacco and other agricultural products and raw
materials; and the integrity of its information systems. PMI's
future profitability may also be adversely affected should it be
unsuccessful in its attempts to produce and commercialize products
that have the potential to reduce individual risk and population
harm; if it is unable to successfully introduce new products,
promote brand equity, enter new markets or improve its margins
through increased prices and productivity gains; if it is unable to
expand its brand portfolio internally or through acquisitions and
the development of strategic business relationships; or if it is
unable to attract and retain the best global talent.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including the Form 10-Q for the
quarter ended June 30, 2015. PMI cautions that the foregoing list
of important factors is not a complete discussion of all potential
risks and uncertainties. PMI does not undertake to update any
forward-looking statement that it may make from time to time,
except in the normal course of its public disclosure
obligations.
Schedule 1 PHILIP
MORRIS INTERNATIONAL INC. and Subsidiaries Condensed Statements of
Earnings
For the Quarters Ended September 30, ($ in
millions, except per share data) (Unaudited)
2015
2014 % Change Net
revenues $ 19,422 $
21,335 (9.0)% Cost of sales
2,383 2,734 (12.8)% Excise taxes on products (1) 12,495
13,479 (7.3)% Gross profit 4,544 5,122 (11.3)%
Marketing, administration and research costs 1,566 1,763 Asset
impairment and exit costs — (9 ) Amortization of intangibles 19
23
Operating income (2) 2,959
3,345 (11.5)% Interest expense, net 247
267 Earnings before income taxes 2,712 3,078 (11.9)%
Provision for income taxes 748 918 (18.5)% Equity (income)/loss in
unconsolidated subsidiaries, net (20 ) (38 ) Net earnings
1,984 2,198 (9.7)% Net earnings attributable to noncontrolling
interests 42 43
Net earnings attributable
to PMI $ 1,942
$ 2,155 (9.9)%
Per share data: (3) Basic earnings per share
$ 1.25 $
1.38 (9.4)% Diluted
earnings per share $ 1.25
$ 1.38
(9.4)% (1) The segment detail of excise taxes on
products sold for the quarters ended September 30, 2015 and 2014 is
shown on Schedule 2. (2) PMI's management evaluates segment
performance and allocates resources based on operating companies
income, which PMI defines as operating income, excluding general
corporate expenses and amortization of intangibles, plus equity
(income)/loss in unconsolidated subsidiaries, net. The
reconciliation from operating income to operating companies income
is as follows:
2015
2014 % Change Operating
Income $ 2,959 $
3,345 (11.5)%
Excluding:
- Amortization of Intangibles 19 23
- General corporate expenses (included in
marketing,administration and research costs above)
33 50 Plus: Equity (income)/loss in unconsolidated subsidiaries,
net (20 ) (38 )
Operating Companies Income $
3,031 $
3,456 (12.3)% (3) Net
earnings and weighted-average shares used in the basic and diluted
earnings per share computations for the quarters ended September
30, 2015 and 2014 are shown on Schedule 4, Footnote 1.
Schedule 2 PHILIP MORRIS
INTERNATIONAL INC. and Subsidiaries Selected Financial Data by
Business Segment
For the Quarters Ended September 30, ($ in
millions) (Unaudited)
Net Revenues
excluding Excise Taxes
European
Union
EEMA Asia
Latin
America
& Canada
Total 2015 Net Revenues (1) $ 6,633 $
5,492 $ 4,880 $ 2,417 $
19,422 Excise Taxes on Products (4,592 ) (3,394 )
(2,896 ) (1,613 ) (12,495 )
Net Revenues excluding
Excise Taxes 2,041 2,098 1,984 804
6,927 2014 Net Revenues $ 7,777 $ 6,111 $
4,943 $ 2,504 $ 21,335 Excise Taxes on Products (5,420 )
(3,677 ) (2,711 ) (1,671 ) (13,479 )
Net
Revenues excluding Excise Taxes 2,357 2,434
2,232 833 7,856 Variance
Currency (422 ) (555 ) (268 ) (145 ) (1,390 ) Acquisitions — — — —
— Operations 106 219 20
116 461
Variance Total (316
) (336 ) (248 ) (29
) (929 ) Variance Total (%) (13.4 )% (13.8 )%
(11.1 )% (3.5 )% (11.8 )% Variance excluding Currency 106
219 20 116 461 Variance excluding Currency (%) 4.5 % 9.0 % 0.9 %
13.9 % 5.9 % Variance excluding Currency & Acquisitions
106 219 20 116 461 Variance excluding Currency & Acquisitions
(%) 4.5 % 9.0 % 0.9 % 13.9 % 5.9 % (1) 2015
Currency decreased net revenues as follows: European Union $ (1,389
) EEMA (1,587 ) Asia (622 ) Latin America & Canada (447 ) $
(4,045 )
Schedule 3
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Selected
Financial Data by Business Segment
For the Quarters Ended
September 30, ($ in millions) (Unaudited)
Operating Companies Income
European
Union
EEMA Asia
Latin
America &
Canada
Total 2015 $ 1,014 $ 1,033 $
690 $ 294 $ 3,031 2014 1,186 1,204 799 267
3,456 % Change (14.5 )% (14.2 )% (13.6 )% 10.1 % (12.3 )%
Reconciliation:
For the quarter ended September 30, 2014 $
1,186 $ 1,204 $ 799 $
267 $ 3,456 2014 Asset impairment and
exit costs (16 ) — — 7 (9 ) 2015 Asset impairment and exit costs —
— — — — Acquired businesses — — — — — Currency (242 ) (319 )
(122 ) (52 ) (735 ) Operations 86 148
13 72 319
For the
quarter ended September 30, 2015 $ 1,014
$ 1,033
$ 690 $
294 $ 3,031
Schedule 4 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Diluted Earnings Per Share
For the Quarters Ended September
30, ($ in millions, except per share data) (Unaudited)
Diluted
E.P.S.
2015 Diluted Earnings Per Share $ 1.25 (1)
2014 Diluted Earnings Per Share $ 1.38 (1) Change $ (0.13 ) %
Change (9.4 )%
Reconciliation:
2014 Diluted Earnings Per Share $ 1.38 (1)
Special
Items:
2014 Asset impairment and exit costs 0.01 2014 Tax items — 2015
Asset impairment and exit costs — 2015 Tax items 0.01
Currency (0.37 ) Interest — Change in tax rate 0.03 Impact of lower
shares outstanding and share-based payments — Operations 0.19
2015 Diluted Earnings Per Share $
1.25 (1) (1) Basic and diluted EPS were
calculated using the following (in millions):
Q32015 Q32014 Net earnings
attributable to PMI $ 1,942 $
2,155 Less distributed and undistributed earnings attributable to
share-based payment awards 7 9 Net earnings for basic
and diluted EPS $ 1,935 $
2,146 Weighted-average shares for basic
and diluted EPS 1,549 1,560 Schedule 5
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Condensed
Statements of Earnings
For the Nine Months Ended September
30, ($ in millions, except per share data) (Unaudited)
2015 2014
% Change Net revenues $
55,537 $
60,165 (7.7)% Cost of sales 6,990 7,804 (10.4)%
Excise taxes on products (1) 35,135 37,595
(6.5)% Gross profit 13,412 14,766 (9.2)% Marketing, administration
and research costs 4,628 5,026 Asset impairment and exit costs —
503 Amortization of intangibles 62 67
Operating income (2) 8,722 9,170 (4.9)%
Interest expense, net 781 789 Earnings before
income taxes 7,941 8,381 (5.2)% Provision for income taxes 2,276
2,446 (7.0)% Equity (income)/loss in unconsolidated subsidiaries,
net (69 ) (74 ) Net earnings 5,734 6,009 (4.6)% Net earnings
attributable to noncontrolling interests 110 128
Net earnings attributable to PMI $
5,624 $
5,881 (4.4)% Per share data: (3)
Basic earnings per share $
3.62 $ 3.73
(2.9)% Diluted earnings per share $
3.62 $
3.73 (2.9)% (1) The
segment detail of excise taxes on products sold for the nine months
ended September 30, 2015 and 2014 is shown on Schedule 6.
(2) PMI's management evaluates segment performance and allocates
resources based on operating companies income, which PMI defines as
operating income, excluding general corporate expenses and
amortization of intangibles, plus equity (income)/loss in
unconsolidated subsidiaries, net. The reconciliation from operating
income to operating companies income is as follows:
2015 2014 % Change
Operating Income $ 8,722
$ 9,170 (4.9)%
Excluding:
- Amortization of Intangibles 62 67
- General corporate expenses (included in
marketing,administration and research costs above)
115 130 Plus: Equity (income)/loss in unconsolidated subsidiaries,
net (69 ) (74 )
Operating Companies Income $
8,968 $
9,441 (5.0)% (3) Net
earnings and weighted-average shares used in the basic and diluted
earnings per share computations for the nine months ended September
30, 2015 and 2014 are shown on Schedule 8, Footnote 1.
Schedule 6 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months
Ended September 30, ($ in millions) (Unaudited)
Net
Revenues excluding Excise Taxes
European
Union
EEMA Asia
Latin
America
& Canada
Total 2015 Net Revenues (1) $ 18,909 $
14,915 $ 14,683 $ 7,030 $
55,537 Excise Taxes on Products (12,988 ) (9,055 )
(8,399 ) (4,693 ) (35,135 )
Net Revenues
excluding Excise Taxes 5,921 5,860 6,284
2,337 20,402 2014 Net Revenues $ 22,225
$ 16,347 $ 14,515 $ 7,078 $ 60,165 Excise Taxes on Products
(15,462 ) (9,621 ) (7,790 ) (4,722 )
(37,595 )
Net Revenues excluding Excise Taxes 6,763
6,726 6,725 2,356 22,570
Variance Currency (1,188 ) (1,464 ) (625 ) (345 ) (3,622 )
Acquisitions 11 1 — 4 16 Operations 335 597
184 322 1,438
Variance Total (842 ) (866 )
(441 ) (19 ) (2,168 )
Variance Total (%) (12.5 )% (12.9 )% (6.6 )% (0.8 )% (9.6 )%
Variance excluding Currency 346 598 184 326 1,454 Variance
excluding Currency (%) 5.1 % 8.9 % 2.7 % 13.8 % 6.4 %
Variance excluding Currency & Acquisitions 335 597 184 322
1,438 Variance excluding Currency & Acquisitions (%) 5.0 % 8.9
% 2.7 % 13.7 % 6.4 % (1) 2015 Currency decreased net
revenues as follows: European Union $ (3,837 ) EEMA (3,931 ) Asia
(1,339 ) Latin America & Canada (1,083 ) $ (10,190 )
Schedule 7 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months
Ended September 30, ($ in millions) (Unaudited)
Operating Companies
Income
European
Union
EEMA Asia
Latin
America &
Canada
Total 2015 $ 2,904 $ 2,794 $
2,421 $ 849 $ 8,968 2014 2,875 3,218 2,614 734
9,441 % Change 1.0 % (13.2 )% (7.4 )% 15.7 % (5.0 )%
Reconciliation:
For the nine months ended September 30, 2014 $
2,875 $ 3,218 $ 2,614 $
734 $ 9,441 2014 Asset impairment and
exit costs 472 — 24 7 503 2015 Asset impairment and exit costs — —
— — — Acquired businesses (2 ) (1 ) — 3 — Currency (712 )
(843 ) (298 ) (147 ) (2,000 ) Operations 271 420
81 252 1,024
For the nine months ended September 30, 2015 $
2,904 $ 2,794
$ 2,421
$ 849 $
8,968 Schedule 8 PHILIP MORRIS
INTERNATIONAL INC. and Subsidiaries Diluted Earnings Per Share
For the Nine Months Ended September 30, ($ in millions,
except per share data) (Unaudited)
Diluted E.P.S. 2015 Diluted
Earnings Per Share $ 3.62 (1) 2014 Diluted
Earnings Per Share $ 3.73 (1) Change $ (0.11 ) % Change (2.9 )%
Reconciliation:
2014 Diluted Earnings Per Share $ 3.73 (1)
Special
Items:
2014 Asset impairment and exit costs 0.26 2014 Tax items — 2015
Asset impairment and exit costs — 2015 Tax items 0.01
Currency (1.01 ) Interest (0.03 ) Change in tax rate (0.01 ) Impact
of lower shares outstanding and share-based payments 0.05
Operations 0.62
2015 Diluted Earnings Per Share
$ 3.62 (1)
(1) Basic and diluted EPS were calculated using the following (in
millions):
YTD
September
2015
YTD
September
2014
Net earnings attributable to PMI $ 5,624 $ 5,881 Less
distributed and undistributed earnings attributable to share-based
payment awards 20 27 Net earnings for basic and diluted EPS
$ 5,604 $ 5,854
Weighted-average shares for basic and diluted EPS 1,549 1,571
Schedule 9 PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Balance Sheets ($ in millions,
except ratios) (Unaudited)
September 30, December 31, 2015 2014
Assets
Cash and cash equivalents $ 2,393 $
1,682 All other current assets 11,719 13,802 Property, plant
and equipment, net 5,600 6,071 Goodwill 7,404 8,388 Other
intangible assets, net 2,621 2,985 Investments in unconsolidated
subsidiaries 919 1,083 Other assets 1,355 1,176
Total assets $ 32,011
$ 35,187
Liabilities and
Stockholders' (Deficit) Equity
Short-term borrowings $ 1,007 $ 1,208 Current portion of long-term
debt 2,100 1,318 All other current liabilities 10,995 12,586
Long-term debt 25,800 26,929 Deferred income taxes 1,614 1,549
Other long-term liabilities 2,721 2,800 Total
liabilities 44,237 46,390 Total PMI stockholders' deficit
(13,582 ) (12,629 ) Noncontrolling interests 1,356 1,426
Total stockholders' deficit (12,226 ) (11,203 )
Total
liabilities and stockholders' (deficit) equity $
32,011 $
35,187 Total debt $ 28,907 $ 29,455 Total debt
to Adjusted EBITDA 2.39 (1) 2.24 (1) Net debt to Adjusted EBITDA
2.20 (1) 2.12 (1) (1) For the calculation of Total Debt to
Adjusted EBITDA and Net Debt to Adjusted EBITDA ratios, refer to
Schedule 18. Schedule 10 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)
2015 2014
% Change in Reported Net
Revenues excluding Excise Taxes
Reported
Net
Revenues
Less
Excise
Taxes
Reported
Net
Revenues
excluding
Excise
Taxes
Less
Currency
Reported
Net
Revenues
excluding
Excise
Taxes &
Currency
Less
Acquisi-
tions
Reported
Net
Revenues
excluding
Excise
Taxes, Currency &
Acquisitions
Reported
Net
Revenues
Less
Excise
Taxes
Reported
Net
Revenues
excluding
Excise
Taxes
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
$ 6,633 $ 4,592 $ 2,041 $ (422 ) $ 2,463 $ — $ 2,463
European Union $ 7,777 $ 5,420 $ 2,357 (13.4 )% 4.5% 4.5% 5,492
3,394 2,098 (555 ) 2,653 — 2,653 EEMA 6,111 3,677 2,434 (13.8 )%
9.0% 9.0% 4,880 2,896 1,984 (268 ) 2,252 — 2,252 Asia 4,943 2,711
2,232 (11.1 )% 0.9% 0.9% 2,417 1,613 804 (145 ) 949 — 949
Latin America
& Canada
2,504 1,671 833 (3.5 )% 13.9% 13.9%
$
19,422 $ 12,495 $ 6,927 $
(1,390 ) $ 8,317 $ —
$ 8,317 PMI Total $
21,335 $ 13,479 $ 7,856
(11.8 )% 5.9% 5.9%
2015 2014
% Change in Reported Operating
Companies Income
Reported
Operating
Companies
Income
Less
Currency
Reported
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Reported
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
$ 1,014 $ (242 ) $ 1,256 $ — $ 1,256 European Union $ 1,186
(14.5 )% 5.9% 5.9% 1,033 (319 ) 1,352 — 1,352 EEMA 1,204 (14.2 )%
12.3% 12.3% 690 (122 ) 812 — 812 Asia 799 (13.6 )% 1.6% 1.6% 294
(52 ) 346 — 346
Latin America
& Canada
267 10.1 % 29.6% 29.6%
$ 3,031 $ (735 ) $
3,766 $ — $ 3,766
PMI Total $ 3,456 (12.3 )%
9.0% 9.0% Schedule 11 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 Ended September 30, ($ in
millions) (Unaudited)
2015 2014
% Change in Adjusted Operating
Companies Income
Reported
Operating
Companies
Income
Less
Asset
Impairment
& Exit
Costs
Adjusted
Operating
Companies
Income
Less
Currency
Adjusted
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Less
Asset
Impairment
& Exit
Costs
Adjusted
Operating
Companies
Income
Adjusted
Adjusted
excluding
Currency
Adjusted
excluding
Currency &
Acquisitions
$ 1,014 $ — $ 1,014 $ (242 ) $ 1,256 $ — $ 1,256 European
Union $ 1,186 $ 16 $ 1,170 (13.3 )% 7.4 % 7.4 % 1,033 — 1,033 (319
) 1,352 — 1,352 EEMA 1,204 — 1,204 (14.2 )% 12.3 % 12.3 % 690 — 690
(122 ) 812 — 812 Asia 799 — 799 (13.6 )% 1.6 % 1.6 % 294 — 294 (52
) 346 — 346
Latin America
& Canada
267 (7) 274 7.3 % 26.3 % 26.3 %
$ 3,031
$ — $ 3,031 $ (735
) $ 3,766 $ — $
3,766 PMI Total $ 3,456
$ 9 $ 3,447 (12.1
)% 9.3 % 9.3 %
2015 2014 % Points Change
Adjusted
Operating
Companies
Income
excluding
Currency
Net
Revenues
excluding
Excise
Taxes &
Currency(1)
Adjusted
Operating
Companies
Income
Margin
excluding
Currency
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Net
Revenues
excluding
Excise
Taxes,
Currency &
Acquisitions
(1)
Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions
Adjusted
Operating
Companies
Income
Net
Revenues
excluding
Excise
Taxes(1)
Adjusted
Operating
Companies
Income
Margin
Adjusted
Operating
Companies
Income
Margin
excluding
Currency
Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions
$ 1,256 $ 2,463 51.0 % $ 1,256 $ 2,463 51.0 % European Union
$ 1,170 $ 2,357 49.6 % 1.4 1.4 1,352 2,653 51.0 % 1,352 2,653 51.0
% EEMA 1,204 2,434 49.5 % 1.5 1.5 812 2,252 36.1 % 812 2,252 36.1 %
Asia 799 2,232 35.8 % 0.3 0.3 346 949 36.5 % 346 949 36.5 %
Latin America
& Canada
274 833 32.9 % 3.6 3.6
$ 3,766 $ 8,317
45.3 % $ 3,766
$ 8,317 45.3 %
PMI Total $ 3,447
$ 7,856 43.9 %
1.4 1.4 (1) For
the calculation of net revenues excluding excise taxes, currency
and acquisitions, refer to Schedule 10.
Schedule 12 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)
2015
2014
% Change
Reported Diluted EPS $
1.25 $ 1.38 (9.4)%
Adjustments: Asset impairment and exit costs — 0.01 Tax
items (0.01 ) —
Adjusted Diluted EPS $
1.24 $ 1.39 (10.8)% Less:
Currency impact (0.37 )
Adjusted Diluted EPS,
excluding Currency $ 1.61
$ 1.39
15.8 %
Schedule 13 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)
2015 2014
% Change
Reported Diluted EPS $
1.25 $
1.38 (9.4)% Less:
Currency impact (0.37 )
Reported Diluted EPS,
excluding Currency $
1.62 $
1.38
17.4 %
Schedule 14 PHILIP MORRIS INTERNATIONAL INC. and
Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for
the Impact of Currency and Acquisitions
For the Nine Months
Ended September 30, ($ in millions) (Unaudited)
2015 2014
% Change in Reported Net
Revenues excluding Excise Taxes
Reported
Net
Revenues
Less
Excise
Taxes
Reported
Net
Revenues
excluding
Excise
Taxes
Less
Currency
Reported
Net
Revenues
excluding
Excise
Taxes &
Currency
Less
Acquisi-
tions
Reported
Net
Revenues
excluding
Excise
Taxes,
Currency &
Acquisitions
Reported
Net
Revenues
Less
Excise
Taxes
Reported
Net
Revenues
excluding
Excise
Taxes
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
$ 18,909 $ 12,988 $ 5,921 $ (1,188 ) $ 7,109 $ 11 $ 7,098 European
Union $ 22,225 $ 15,462 $ 6,763 (12.5 )% 5.1% 5.0% 14,915 9,055
5,860 (1,464 ) 7,324 1 7,323 EEMA 16,347 9,621 6,726 (12.9 )% 8.9%
8.9% 14,683 8,399 6,284 (625 ) 6,909 — 6,909 Asia 14,515 7,790
6,725 (6.6 )% 2.7% 2.7% 7,030 4,693 2,337 (345 ) 2,682 4 2,678
Latin America
& Canada
7,078 4,722 2,356 (0.8 )% 13.8% 13.7%
$
55,537 $ 35,135 $ 20,402
$ (3,622 ) $ 24,024 $
16 $ 24,008 PMI Total $
60,165 $ 37,595 $ 22,570
(9.6 )% 6.4% 6.4% 2015
2014
% Change in Reported Operating
Companies Income
Reported
Operating
Companies
Income
Less
Currency
Reported
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Reported
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
$ 2,904 $ (712 ) $ 3,616 $ (2 ) $ 3,618 European Union $
2,875 1.0 % 25.8% 25.8% 2,794 (843 ) 3,637 (1 ) 3,638 EEMA 3,218
(13.2 )% 13.0% 13.1% 2,421 (298 ) 2,719 — 2,719 Asia 2,614 (7.4 )%
4.0% 4.0% 849 (147 ) 996 3 993
Latin America
& Canada
734 15.7 % 35.7% 35.3%
$ 8,968 $ (2,000 )
$ 10,968 $ — $
10,968 PMI Total $ 9,441 (5.0
)% 16.2% 16.2% Schedule 15
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 Nine Months Ended September 30, ($
in millions) (Unaudited)
2015
2014
% Change in Adjusted Operating
Companies Income
Reported
Operating
Companies
Income
Less
Asset
Impairment
& Exit Costs
Adjusted
Operating
Companies
Income
Less
Currency
Adjusted
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Less
Asset
Impairment
& Exit
Costs
Adjusted
Operating
Companies
Income
Adjusted
Adjusted
excluding
Currency
Adjusted
excluding
Currency &
Acquisitions
$ 2,904 $ — $ 2,904 $ (712 ) $ 3,616 $ (2) $ 3,618 European
Union $ 2,875 $ (472) $ 3,347 (13.2 )% 8.0% 8.1% 2,794 — 2,794 (843
) 3,637 (1) 3,638 EEMA 3,218 — 3,218 (13.2 )% 13.0% 13.1% 2,421 —
2,421 (298 ) 2,719 — 2,719 Asia 2,614 (24) 2,638 (8.2 )% 3.1% 3.1%
849 — 849 (147 ) 996 3 993
Latin America
& Canada
734 (7) 741 14.6 % 34.4% 34.0%
$ 8,968
$ — $ 8,968 $
(2,000 ) $ 10,968 $ —
$ 10,968 PMI Total $ 9,441
$ (503) $ 9,944 (9.8
)% 10.3% 10.3% 2015 2014
% Points Change
Adjusted
Operating
Companies
Income
excluding
Currency
Net
Revenues
excluding
Excise Taxes
&
Currency(1)
Adjusted
Operating
Companies
Income
Margin
excluding
Currency
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Net
Revenues
excluding
Excise Taxes,
Currency &
Acquisitions(1)
Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions
Adjusted
Operating
Companies
Income
Net
Revenues
excluding
Excise
Taxes(1)
Adjusted
Operating
Companies
Income
Margin
Adjusted
Operating
Companies
Income
Margin
excluding
Currency
Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions
$ 3,616 $ 7,109 50.9 % $ 3,618 $ 7,098 51.0% European Union
$ 3,347 $ 6,763 49.5 % 1.4 1.5 3,637 7,324 49.7 % 3,638 7,323 49.7%
EEMA 3,218 6,726 47.8 % 1.9 1.9 2,719 6,909 39.4 % 2,719 6,909
39.4% Asia 2,638 6,725 39.2 % 0.2 0.2 996 2,682 37.1 % 993 2,678
37.1%
Latin America
& Canada
741 2,356 31.5 % 5.6 5.6
$ 10,968 $ 24,024
45.7 % $ 10,968
$ 24,008 45.7% PMI
Total $ 9,944 $
22,570 44.1 %
1.6 1.6 (1) For the calculation of net
revenues excluding excise taxes, currency and acquisitions, refer
to Schedule 14.
Schedule 16 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 Nine
Months Ended September 30, (Unaudited)
2015 2014
% Change
Reported Diluted EPS $
3.62 $
3.73 (2.9)% Adjustments: Asset
impairment and exit costs — 0.26 Tax items (0.01 ) —
Adjusted Diluted EPS $ 3.61 $
3.99 (9.5)% Less: Currency impact (1.01 )
Adjusted Diluted EPS, excluding Currency
$ 4.62
$ 3.99
15.8 %
Schedule 17 PHILIP MORRIS
INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP
Measures Reconciliation of Reported Diluted EPS to Reported Diluted
EPS, excluding Currency
For the Nine Months Ended September
30, (Unaudited)
2015
2014
% Change
Reported Diluted EPS $
3.62 $ 3.73
(2.9)% Less: Currency impact (1.01 )
Reported Diluted EPS, excluding Currency $
4.63 $
3.73
24.1 %
Schedule 18 PHILIP MORRIS
INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP
Measures Calculation of Total Debt to Adjusted EBITDA and Net Debt
to Adjusted EBITDA Ratios ($ in millions, except ratios)
(Unaudited)
For the Year Ended For the Year
Ended September 30, December 31, 2015
2014
October ~
December
January ~
September
12 months 2014 2015 rolling Earnings before income
taxes $ 2,269 $
7,941 $ 10,210 $ 10,650 Interest
expense, net 263 781 1,044 1,052 Depreciation and amortization 229
561 790 889
Extraordinary, unusual or non-
recurring expenses, net (1)
32 — 32 535
Adjusted EBITDA $ 2,793 $
9,283 $ 12,076 $ 13,126
September 30, December 31, 2015
2014 Short-term borrowings $ 1,007 $ 1,208 Current
portion of long-term debt 2,100 1,318 Long-term debt 25,800 26,929
Total Debt $ 28,907 $ 29,455
Less: Cash and cash equivalents 2,393 1,682
Net Debt
$ 26,514 $ 27,773
Ratios
Total Debt to Adjusted EBITDA 2.39 2.24 Net
Debt to Adjusted EBITDA 2.20 2.12 (1)
Asset Impairment and Exit Costs at Operating Income level.
Schedule 19 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 Reconciliation of Operating Cash Flow to Operating Cash
Flow, excluding Currency
For the Quarters and Nine Months Ended
September 30, ($ in millions) (Unaudited)
For the Quarters Ended For
the Nine Months Ended September 30, September 30,
2015 2014
%
Change
2015 2014
%
Change
Net cash provided by operating activities(a) $
2,693 $ 2,965 (9.2)%
$ 5,993 $ 6,385
(6.1)% Less: Capital expenditures 223 296 636
804
Free cash flow $ 2,470
$ 2,669 (7.5)% $ 5,357 $
5,581 (4.0)% Less: Currency impact (255 )
(1,809 )
Free cash flow, excluding
currency $ 2,725 $
2,669 2.1% $ 7,166 $
5,581 28.4% For
the Quarters Ended For the Nine Months Ended
September 30, September 30, 2015 2014
% Change 2015 2014 % Change
Net cash provided by operating activities(a) $
2,693 $ 2,965 (9.2)% $
5,993 $ 6,385 (6.1)% Less:
Currency impact (299 ) (1,924 )
Net cash provided
by operating activities,excluding currency $
2,992 $ 2,965 0.9%
$ 7,917 $ 6,385
24.0% (a) Operating cash flow.
Schedule 20 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 —
Adjusted Diluted EPS $
5.02
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151015005681/en/
Philip Morris International Inc.Investor Relations:New York: +1
(917) 663 2233Lausanne: +41 (0)58 242 4500orMedia:Lausanne: +41
(0)58 242 4666
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