Philip Morris International Inc. (PMI) Reports 2017 First-Quarter Results;
Increases, for Favorable Tax Item Only, 2017 Full-Year Reported Diluted EPS Forecast Range to $4.84 to
$4.99
Regulatory News:
Excluding Currency and Tax Item, Forecast Reflects Growth of Approximately 9% to 12%
vs. 2016 Adjusted Diluted EPS of $4.48
2017 First-Quarter
- Reported diluted earnings per share of $1.02, up by $0.04 or 4.1% versus $0.98 in 2016
- Adjusted diluted earnings per share of $0.98, flat versus 2016, reflecting a tax item as detailed in
the attached Schedule 9
- No impact from currency on reported and adjusted diluted earnings per share versus 2016
- Total cigarette and heated tobacco unit shipment volume of 178.0 billion, down by 9.4%
- Cigarette shipment volume of 173.6 billion units, down by 11.5%
- Heated tobacco unit shipment volume of 4.4 billion units, up from 453 million units in 2016
- Reported net revenues of $16.6 billion, down by 1.4%
- Net revenues, excluding excise taxes, of $6.1 billion, down by 0.3%
- Excluding unfavorable currency of $120 million, net revenues, excluding excise taxes, up by 1.7%
as detailed in the attached Schedule 6
- Reported operating income of $2.4 billion, down by 3.1%
- Operating companies income of $2.5 billion, down by 2.2%
- Excluding unfavorable currency of $12 million, operating companies income down by 1.7% as
detailed in the attached Schedule 6
- Adjusted operating companies income, reflecting the items detailed in the attached Schedule 8, of
$2.5 billion, down by 2.2%
- Excluding unfavorable currency of $12 million, adjusted operating companies income down by 1.7%
as detailed in the attached Schedule 8
2017 Full-Year Forecast
- PMI increases, for a favorable discrete tax item of $0.04 only, its 2017 full-year reported diluted
earnings per share to a range of $4.84 to $4.99, at prevailing exchange rates, versus $4.48 in 2016. Excluding an unfavorable
currency impact, at prevailing exchange rates, of approximately $0.08 for the full-year 2017, as well as the tax item of $0.04
recorded in the first quarter, the forecast range represents a projected increase of approximately 9% to 12% versus adjusted
diluted earnings per share of $4.48 in 2016 as detailed in the attached Schedule 12
- This forecast assumes net revenue growth, excluding excise taxes, in excess of the company's current
annual growth target range of 4% to 6%, excluding currency and acquisitions
- This forecast does not include any share repurchases in 2017
- 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 2017 first-quarter results.
“Our results were in line with our previously communicated expectation of a relatively weak first quarter, due to lower
cigarette volume -- primarily related to low-price brands in specific markets where the impact on our profitability was limited --
and certain timing factors," said André Calantzopoulos, Chief Executive Officer.
"We are fully on track to deliver our full-year EPS guidance, driven by robust pricing and accelerating IQOS volume
growth. We anticipate a combined cigarette and heated tobacco unit volume decline of 3% to 4% for the full year.
“It is extremely encouraging that already today, despite persistent capacity constraints, 1.8 million consumers have effectively
stopped smoking and have switched to our heat-not-burn alternative, IQOS."
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 April 20, 2017. Access is at www.pmi.com/2017Q1earnings . 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
During the quarter, PMI declared a regular quarterly dividend of $1.04, representing an annualized rate of $4.16 per common
share.
2017 FIRST-QUARTER CONSOLIDATED RESULTS
Key Terms, Definitions and Explanatory Notes
General
- “PMI” refers to Philip Morris International Inc. and its subsidiaries. Trademarks and service marks
that are the registered property of, or licensed by, the subsidiaries of PMI, are italicized.
- Comparisons are made to the same prior-year period unless otherwise stated.
- Unless otherwise stated, references to total industry, total market, PMI volume and PMI market share
performance reflect cigarettes and PMI’s heated tobacco units for those markets that have commercial sales of IQOS.
- References to total international market, defined as worldwide cigarette and PMI heated tobacco unit
volume excluding the United States, total industry, 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.
- "Combustible products" is the term PMI uses to refer to cigarettes and OTP, combined.
- "OTP" is defined as other tobacco products, primarily roll-your-own and make-your-own cigarettes,
pipe tobacco, cigars and cigarillos, and does not include reduced-risk products.
- "Total shipment volume" is defined as the combined total of cigarette shipment volume and heated
tobacco unit shipment volume.
- "EEMA" is defined as Eastern Europe, Middle East and Africa and includes PMI's international duty
free business.
- "North Africa" is defined as Algeria, Egypt, Libya, Morocco and Tunisia.
Financial
- Net revenues, excluding excise taxes, related to combustible products refer to the operating revenues
generated from the sale of these products, 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. 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, and unusual items.
- "Net debt" is defined as total debt, less cash and cash equivalents.
- Management reviews OCI, OCI margins, operating cash flow 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 other special items.
- Management reviews these measures because they exclude changes in currency exchange rates and other
factors that may distort underlying business trends, thereby improving the comparability of PMI’s business performance between
reporting periods. Furthermore, PMI uses several of these measures in its management compensation program to promote internal
fairness and a disciplined assessment of performance against company targets. PMI discloses these measures to enable investors to
view the business through the eyes of management.
- Non-GAAP measures used in this release should neither be considered in isolation nor as a substitute
for the financial measures prepared in accordance with U.S. GAAP. For a reconciliation of non-GAAP measures to the most directly
comparable GAAP measures, see the relevant schedules provided with this press release.
Reduced-Risk Products
- "Reduced-risk products," or "RRPs," is the term PMI uses to refer to products that present, are
likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continued
smoking. PMI has a range of RRPs in various stages of development, scientific assessment and commercialization. Because PMI's
RRPs do not burn tobacco, they produce far lower quantities of harmful and potentially harmful compounds than found in cigarette
smoke.
- "Heated tobacco units" is the term PMI uses to refer to heat-not-burn consumables, which include
HEETS, HEETS Marlboro and HEETS FROM MARLBORO, defined collectively as HEETS, as well as Marlboro
HeatSticks and Parliament HeatSticks.
- Net revenues, excluding excise taxes, related to RRPs represent the sale of heated tobacco units,
IQOS devices and related accessories, and other nicotine-containing products, primarily e-vapor products, net of sales and
promotion incentives.
SHIPMENT VOLUME & MARKET SHARE
PMI shipment volume by Region and brand are shown in the table below.
PMI Shipment Volume by Region
|
|
|
First-Quarter
|
|
(million units) |
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
|
|
|
|
|
|
|
|
|
Cigarettes
|
|
|
|
|
|
|
|
|
European Union |
|
|
42,540 |
|
45,993 |
|
(7.5)% |
|
EEMA |
|
|
56,574 |
|
63,126 |
|
(10.4)% |
|
Asia |
|
|
55,142 |
|
65,222 |
|
(15.5)% |
|
Latin America & Canada |
|
|
19,296 |
|
21,700 |
|
(11.1)% |
|
Total PMI |
|
|
173,552 |
|
196,041 |
|
(11.5)% |
|
|
|
|
|
|
|
|
|
|
Heated Tobacco Units
|
|
|
|
|
|
|
|
|
European Union |
|
|
184 |
|
16 |
|
+100% |
|
EEMA |
|
|
105 |
|
2 |
|
+100% |
|
Asia |
|
|
4,145 |
|
435 |
|
+100% |
|
Latin America & Canada |
|
|
1 |
|
— |
|
—% |
|
Total PMI |
|
|
4,435 |
|
453 |
|
+100% |
|
|
|
|
|
|
|
|
|
|
Cigarettes and Heated Tobacco Units
|
|
|
|
|
|
|
|
|
European Union |
|
|
42,724 |
|
46,009 |
|
(7.1)% |
|
EEMA |
|
|
56,679 |
|
63,128 |
|
(10.2)% |
|
Asia |
|
|
59,287 |
|
65,657 |
|
(9.7)% |
|
Latin America & Canada |
|
|
19,297 |
|
21,700 |
|
(11.1)% |
|
Total PMI |
|
|
177,987 |
|
196,494 |
|
(9.4)% |
|
|
|
|
|
|
|
|
|
|
PMI Shipment Volume by Brand
|
|
|
First-Quarter
|
|
(million units) |
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
Cigarettes
|
|
|
|
|
|
|
|
|
Marlboro |
|
|
62,399 |
|
67,985 |
|
(8.2)% |
|
L&M |
|
|
21,913 |
|
23,690 |
|
(7.5)% |
|
Chesterfield |
|
|
11,544 |
|
10,176 |
|
13.4% |
|
Parliament |
|
|
9,199 |
|
10,137 |
|
(9.3)% |
|
Bond Street |
|
|
8,485 |
|
9,721 |
|
(12.7)% |
|
Philip Morris |
|
|
10,608 |
|
9,209 |
|
15.2% |
|
Lark |
|
|
6,526 |
|
6,501 |
|
0.4% |
|
Others |
|
|
42,878 |
|
58,622 |
|
(26.9)% |
|
Total Cigarettes |
|
|
173,552 |
|
196,041 |
|
(11.5)% |
|
Heated Tobacco Units |
|
|
4,435 |
|
453 |
|
+100% |
|
Total PMI |
|
|
177,987 |
|
196,494 |
|
(9.4)% |
|
|
|
|
|
|
|
|
|
|
PMI's total shipment volume of cigarettes and heated tobacco units decreased by 9.4%, or by 7.8% excluding net estimated
inventory movements, reflecting a challenging comparison with the first quarter of 2016, which declined by a more modest 1.1%, as
well as ongoing declines of primarily low-price volumes in specific markets, such as Pakistan and the Philippines. The first
quarter of 2016 also benefited from the favorable estimated impact of the leap year.
PMI's cigarette volume decreased by 11.5% due to: the EU, principally Italy and Spain, partly offset by Poland; EEMA, mainly
North Africa, primarily Egypt and Tunisia, as well as Russia and Ukraine; Asia, principally Indonesia, Japan, Korea, Pakistan and
the Philippines; and Latin America & Canada, principally Argentina, Canada and Mexico.
The decline in PMI's cigarette shipment volume was partly offset by higher heated tobacco unit shipment volume of 4.4 billion
units, up from 453 million units in the first quarter of 2016, driven by Japan.
Cigarette shipment volume of Marlboro decreased in: the EU, mainly due to Italy and Spain; EEMA, mainly due to Saudi
Arabia and Tunisia, partly offset by Algeria; Asia, mainly due to Japan, principally reflecting out-switching to Marlboro
HeatSticks; and Latin America & Canada, mainly due to Argentina and Mexico.
Cigarette shipment volume of L&M decreased, mainly due to Egypt, as well as Russia, Turkey and Ukraine, partly offset
by Kazakhstan and Saudi Arabia. Cigarette shipment volume of Chesterfield increased, mainly driven by Argentina and Turkey,
partly offset by Italy and Russia. Cigarette shipment volume of Parliament decreased, mainly due to Russia. Cigarette
shipment volume of Bond Street decreased, mainly due to Russia and Ukraine. Cigarette shipment volume of Philip
Morris increased, driven by Russia and Ukraine, partly offset by Argentina and Italy. Cigarette shipment volume of Lark
increased, principally driven by Japan and Korea, partly offset by Turkey. Cigarette shipment volume of "Others" decreased, mainly
due to local, low-margin brands in Pakistan, the Philippines, Russia and Ukraine.
PMI's market share increased in a number of markets, including Algeria, Belgium, France, Germany, Hong Kong, Japan, Kazakhstan,
Kuwait, Poland, Saudi Arabia, Switzerland and the United Arab Emirates.
NET REVENUES (Excluding Excise Taxes)
PMI Net Revenues (Excluding Excise Taxes)
|
|
|
First-Quarter
|
(in millions) |
|
|
|
|
|
|
|
|
Excl. |
|
|
|
2017 |
|
2016 |
|
Change |
|
Curr. |
Combustible Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
European Union |
|
|
$ |
1,709 |
|
|
$ |
1,855 |
|
|
(7.9 |
)% |
|
|
(4.9 |
)% |
|
EEMA |
|
|
1,470 |
|
|
1,603 |
|
|
(8.3 |
)% |
|
|
(2.1 |
)% |
|
Asia |
|
|
1,845 |
|
|
1,921 |
|
|
(4.0 |
)% |
|
|
(6.0 |
)% |
|
Latin America & Canada |
|
|
605 |
|
|
650 |
|
|
(6.8 |
)% |
|
|
(3.5 |
)% |
|
Total PMI |
|
|
$ |
5,629 |
|
|
$ |
6,028 |
|
|
(6.6 |
)% |
|
|
(4.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
RRPs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
European Union |
|
|
$ |
31 |
|
|
$ |
9 |
|
|
+100 |
% |
|
+100 |
% |
EEMA |
|
|
7 |
|
|
(1 |
) |
|
+100 |
% |
|
+100 |
% |
Asia |
|
|
396 |
|
|
47 |
|
|
+100 |
% |
|
+100 |
% |
Latin America & Canada |
|
|
0 |
|
|
0 |
|
|
20.0
|
%
|
|
12.5
|
%
|
Total PMI |
|
|
$ |
435 |
|
|
$ |
55 |
|
|
+100 |
% |
|
+100 |
% |
|
|
|
|
|
|
|
|
|
|
Combustible Products and RRPs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
European Union |
|
|
$ |
1,740 |
|
|
$ |
1,863 |
|
|
(6.6 |
)% |
|
|
(3.7 |
)% |
|
EEMA |
|
|
1,477 |
|
|
1,602 |
|
|
(7.8 |
)% |
|
|
(1.6 |
)% |
|
Asia |
|
|
2,241 |
|
|
1,968 |
|
|
13.9 |
% |
|
|
11.0 |
% |
|
Latin America & Canada |
|
|
606 |
|
|
650 |
|
|
(6.8 |
)% |
|
|
(3.4 |
)% |
|
Total PMI |
|
|
$ |
6,064 |
|
|
$ |
6,083 |
|
|
(0.3 |
)% |
|
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Note: Sum of product categories or Regions might not foot to total PMI
due to rounding. |
|
Net revenues, excluding excise taxes, of $6.1 billion declined by 0.3%, as detailed above and in the attached Schedule 6.
Excluding unfavorable currency of $120 million, net revenues, excluding excise taxes, increased by 1.7%, driven by a favorable
pricing variance of $408 million from across all Regions, principally EEMA and Asia. The favorable pricing variance was partly
offset by unfavorable volume/mix of $307 million, due to the EU, EEMA and Latin America & Canada, partly offset by Asia.
OPERATING COMPANIES INCOME
PMI OCI
|
|
|
First-Quarter
|
(in millions) |
|
|
|
|
|
|
|
|
Excl. |
|
|
|
2017 |
|
2016 |
|
Change |
|
Curr. |
European Union |
|
|
$ |
772 |
|
|
$ |
906 |
|
|
(14.8 |
)% |
|
(11.7 |
)% |
EEMA |
|
|
690 |
|
|
633 |
|
|
9.0 |
% |
|
10.9 |
% |
Asia |
|
|
852 |
|
|
778 |
|
|
9.5 |
% |
|
2.6 |
% |
Latin America & Canada |
|
|
177 |
|
|
229 |
|
|
(22.7 |
)% |
|
(11.4 |
)% |
Total PMI |
|
|
$ |
2,491 |
|
|
$ |
2,546 |
|
|
(2.2 |
)% |
|
(1.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating companies income of $2.5 billion decreased by 2.2%. Excluding unfavorable currency of $12 million, operating companies
income decreased by 1.7%, mainly due to an unfavorable volume/mix of $375 million, principally in the EU and EEMA, as well as an
unfavorable cost comparison, largely reflecting increased support behind reduced-risk products, notably in the EU and Asia. The
decrease in operating companies income was partly offset by a favorable pricing variance across all Regions.
Adjusted operating companies income and margin are shown in the table below and detailed in Schedule 8. Adjusted operating
companies income, excluding unfavorable currency, decreased by 1.7%. Adjusted operating companies income margin, excluding
unfavorable currency, decreased by 1.4 points to 40.5%, reflecting the factors mentioned above, as detailed on Schedule 8.
PMI OCI
|
|
|
First-Quarter
|
(in millions) |
|
|
|
|
|
|
|
|
Excl. |
|
|
|
2017 |
|
2016 |
|
Change |
|
Curr. |
OCI |
|
|
$ |
2,491 |
|
|
$ |
2,546 |
|
|
(2.2 |
)% |
|
(1.7 |
)% |
Asset impairment & exit costs |
|
|
— |
|
|
— |
|
|
|
|
|
Adjusted OCI |
|
|
$ |
2,491 |
|
|
$ |
2,546 |
|
|
(2.2 |
)% |
|
(1.7 |
)% |
Adjusted OCI Margin* |
|
|
41.1 |
% |
|
41.9 |
% |
|
(0.8 |
) |
|
(1.4 |
) |
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
EUROPEAN UNION REGION (EU)
Net revenues, excluding excise taxes, of $1.7 billion, decreased by 6.6%. Excluding unfavorable currency of $55 million, net
revenues, excluding excise taxes, decreased by 3.7%, principally reflecting unfavorable volume/mix of $115 million, mainly due to
the unfavorable impact of inventory movements and the lower total market in Italy and Spain, partly offset by a favorable pricing
variance of $47 million, notably in Germany, Italy and Poland.
Operating companies income of $772 million decreased by 14.8%. Excluding unfavorable currency of $28 million, operating
companies income decreased by 11.7%, mainly due to unfavorable volume/mix of $109 million, mainly in Italy and Spain, and increased
investment behind reduced-risk products, partly offset by favorable pricing.
Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 8. Adjusted operating
companies income, excluding unfavorable currency, decreased by 11.7%. Adjusted operating companies income margin, excluding
unfavorable currency, decreased by 4.0 points to 44.6%, reflecting the factors mentioned above, as detailed on Schedule 8.
EU OCI
|
|
|
|
|
|
|
First-Quarter
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Excl. |
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
Curr. |
OCI |
|
|
|
|
|
|
$ |
772 |
|
|
$ |
906 |
|
|
(14.8 |
)% |
|
(11.7 |
)% |
Asset impairment & exit costs |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
Adjusted OCI |
|
|
|
|
|
|
$ |
772 |
|
|
$ |
906 |
|
|
(14.8 |
)% |
|
(11.7 |
)% |
Adjusted OCI Margin* |
|
|
|
|
|
|
44.4 |
% |
|
48.6 |
% |
|
(4.2 |
) |
|
(4.0 |
) |
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
EU Total Market, PMI Shipment & Market Share Commentaries
|
|
EU PMI Shipment Volume
|
|
|
First-Quarter
|
|
|
(million units) |
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Cigarettes |
|
|
42,540 |
|
|
45,993 |
|
|
(7.5 |
)% |
|
|
Heated Tobacco Units |
|
|
184 |
|
|
16 |
|
|
+100 |
% |
|
|
Total EU |
|
|
42,724 |
|
|
46,009 |
|
|
(7.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EU PMI Shipment Volume by Brand
|
|
|
First-Quarter
|
|
|
(million units) |
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
|
Cigarettes
|
|
|
|
|
|
|
|
|
|
Marlboro |
|
|
20,924 |
|
|
22,700 |
|
|
(7.8 |
)% |
|
|
L&M |
|
|
7,933 |
|
|
8,188 |
|
|
(3.1 |
)% |
|
|
Chesterfield |
|
|
6,496 |
|
|
7,148 |
|
|
(9.1 |
)% |
|
|
Philip Morris |
|
|
3,696 |
|
|
4,054 |
|
|
(8.8 |
)% |
|
|
Others |
|
|
3,491 |
|
|
3,903 |
|
|
(10.6 |
)% |
|
|
Total Cigarettes |
|
|
42,540 |
|
|
45,993 |
|
|
(7.5 |
)% |
|
|
Heated Tobacco Units |
|
|
184 |
|
|
16 |
|
|
+100 |
% |
|
|
Total EU |
|
|
42,724 |
|
|
46,009 |
|
|
(7.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EU Market Shares by Brand
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
2017 |
|
2016 |
|
p.p. |
|
|
Marlboro |
|
|
18.8 |
% |
|
19.0 |
% |
|
(0.2 |
) |
|
|
L&M |
|
|
7.0 |
% |
|
6.9 |
% |
|
0.1 |
|
|
|
Chesterfield |
|
|
6.1 |
% |
|
5.9 |
% |
|
0.2 |
|
|
|
Philip Morris |
|
|
3.2 |
% |
|
3.3 |
% |
|
(0.1 |
) |
|
|
Others* |
|
|
3.4 |
% |
|
3.5 |
% |
|
(0.1 |
) |
|
|
Total EU |
|
|
38.5 |
% |
|
38.6 |
% |
|
(0.1 |
) |
|
|
*Includes heated tobacco units. |
|
|
|
|
|
|
|
|
|
|
|
The estimated total market in the EU decreased by 2.8% to 112.1 billion units, partly reflecting a challenging comparison to the
first quarter of 2016, which increased by 0.8%, benefiting from a lower prevalence of illicit trade and e-vapor products and, in
certain geographies, the estimated favorable impact of immigration. The decline of the estimated total market also reflected the
impact of price increases and the implementation of elements of the Tobacco Products Directive, notably in Italy and the United
Kingdom. The net impact of inventory movements on the estimated total market was immaterial.
As shown in the table above, PMI's total shipment volume decreased by 7.1% to 42.7 billion units, mainly due to cigarette volume
declines in Italy and Spain, partly offset by Poland. Excluding estimated inventory movements, principally associated with
distributor cigarette inventory movements in Italy and Spain, PMI's total shipment volume decreased by 2.9%. The decrease in
cigarette shipment volume of Marlboro was mainly due to Italy and Spain. The decrease in cigarette shipment volume of
L&M was mainly due to Romania and Spain. The decrease in cigarette shipment volume of Chesterfield was mainly due
to Italy and Spain, partly offset by Poland and the United Kingdom. The decrease in cigarette shipment volume of Philip
Morris was mainly due to Italy. The decrease in cigarette shipment volume of "Others" was mainly due to Merit and
Muratti in Italy.
As shown in the table above, PMI's total market share decreased by 0.1 point to 38.5%, with declines, mainly in Italy and Spain,
partly offset by gains, notably in France, Germany and Poland.
EU Key Market Commentaries
In France, estimated industry size, PMI shipment volume and market share performance, shown in the table below, include
cigarettes and PMI's heated tobacco units.
|
|
France Key Market Data
|
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
% / p.p. |
|
|
|
|
Total Market (billion units) |
|
|
|
10.8 |
|
|
10.7 |
|
|
1.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Shipments (million units) |
|
|
|
4,726 |
|
|
4,779 |
|
|
(1.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Market Share |
|
|
|
|
|
|
|
|
|
|
|
|
Marlboro |
|
|
|
26.6 |
% |
|
26.1 |
% |
|
0.5 |
|
|
|
|
|
Philip Morris |
|
|
|
10.3 |
% |
|
10.1 |
% |
|
0.2 |
|
|
|
|
|
Chesterfield |
|
|
|
3.1 |
% |
|
3.1 |
% |
|
— |
|
|
|
|
|
Others* |
|
|
|
2.8 |
% |
|
2.8 |
% |
|
— |
|
|
|
|
|
Total |
|
|
|
42.8 |
% |
|
42.1 |
% |
|
0.7 |
|
|
|
|
|
*Includes heated tobacco units (in Monaco). |
|
|
|
|
|
|
|
The estimated total market increased by 1.4%. Excluding net estimated distributor cigarette inventory movements largely
associated with the implementation of the Tobacco Products Directive at the beginning of 2016, PMI's shipment volume increased by
2.8%, reflecting the higher total market, as well as higher market share.
In Germany, estimated industry size, PMI shipment volume and market share performance, shown in the
table below, include cigarettes and PMI's heated tobacco units.
|
|
Germany Key Market Data
|
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
% / p.p. |
|
|
|
|
Total Market (billion units) |
|
|
|
17.5 |
|
|
17.8 |
|
|
(2.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Shipments (million units) |
|
|
|
6,662 |
|
|
6,767 |
|
|
(1.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Market Share |
|
|
|
|
|
|
|
|
|
|
|
|
Marlboro |
|
|
|
23.4 |
% |
|
22.9 |
% |
|
0.5 |
|
|
|
|
|
L&M |
|
|
|
11.7 |
% |
|
11.8 |
% |
|
(0.1 |
) |
|
|
|
|
Chesterfield |
|
|
|
1.6 |
% |
|
1.6 |
% |
|
— |
|
|
|
|
|
Others* |
|
|
|
1.5 |
% |
|
1.6 |
% |
|
(0.1 |
) |
|
|
|
|
Total |
|
|
|
38.2 |
% |
|
37.9 |
% |
|
0.3 |
|
|
|
|
|
*Includes heated tobacco units. |
|
|
|
|
|
|
|
The estimated total market decreased by 2.2%, partly reflecting the lapsed contribution of favorable factors in 2016, including
a lower prevalence of illicit trade. The decrease in PMI's shipment volume was mainly due to the lower total market. The increase
in PMI's market share was driven by Marlboro, largely reflecting the positive impact of marketing support.
In Italy, estimated industry size, PMI shipment volume and market share performance, shown in the table below, include
cigarettes and PMI's heated tobacco units.
|
|
Italy Key Market Data
|
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
% / p.p. |
|
|
|
|
Total Market (billion units) |
|
|
|
16.2 |
|
|
17.1 |
|
|
(5.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Shipments (million units) |
|
|
|
7,801 |
|
|
9,853 |
|
|
(20.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Market Share |
|
|
|
|
|
|
|
|
|
|
|
|
Marlboro |
|
|
|
23.5 |
% |
|
24.4 |
% |
|
(0.9 |
) |
|
|
|
|
Chesterfield |
|
|
|
11.3 |
% |
|
11.6 |
% |
|
(0.3 |
) |
|
|
|
|
Philip Morris |
|
|
|
7.9 |
% |
|
9.0 |
% |
|
(1.1 |
) |
|
|
|
|
HEETS |
|
|
|
0.5 |
% |
|
— |
% |
|
0.5 |
|
|
|
|
|
Others |
|
|
|
8.5 |
% |
|
8.5 |
% |
|
— |
|
|
|
|
|
Total |
|
|
|
51.7 |
% |
|
53.5 |
% |
|
(1.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated total market decreased by 5.2%, or by 6.5% excluding the net impact of trade inventory movements, mainly due to
the implementation of elements of the Tobacco Products Directive, notably the ban on pack sizes of ten cigarettes, which fueled
growth in cheaper alternatives such as fine cut, cigarillos, e-vapor and illicit products. The decline of the total market also
reflected a challenging comparison with the first quarter of 2016, which grew by 3.9%. The decline of PMI's shipments, down by 7.9%
excluding the net impact of distributor inventory movements, mainly reflected the lower total market, as well as lower cigarette
market share, notably due to: Marlboro, as a result of its price increase in the second quarter of 2016, the ban on pack
sizes of ten cigarettes, and out-switching to HEETS; and low-price Philip Morris, impacted by the growth of the
super-low price segment.
In Poland, estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance are
shown in the table below.
|
|
Poland Key Market Data
|
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
% / p.p. |
|
|
|
|
Total Cigarette Market (billion units) |
|
|
|
10.2 |
|
|
10.1 |
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Cigarette Shipments (million units) |
|
|
|
4,302 |
|
|
4,145 |
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
|
|
|
|
|
|
Marlboro |
|
|
|
10.2 |
% |
|
11.2 |
% |
|
(1.0 |
) |
|
|
|
|
L&M |
|
|
|
18.8 |
% |
|
18.5 |
% |
|
0.3 |
|
|
|
|
|
Chesterfield |
|
|
|
9.9 |
% |
|
8.6 |
% |
|
1.3 |
|
|
|
|
|
Others |
|
|
|
3.2 |
% |
|
2.9 |
% |
|
0.3 |
|
|
|
|
|
Total |
|
|
|
42.1 |
% |
|
41.2 |
% |
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated total cigarette market increased by 1.5%, despite a challenging comparison with the first quarter of 2016, which
grew by 3.1%. The increase in PMI's cigarette shipment volume primarily reflected the higher total cigarette market, as well as
higher cigarette market share, mainly reflecting higher share of Chesterfield, driven by brand support, partly offset by
Marlboro, unfavorably impacted by the estimated trade inventory movements.
In Spain, estimated industry size, PMI shipment volume and market share performance, shown in the table below, include
cigarettes and PMI's heated tobacco units.
|
|
Spain Key Market Data
|
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
% / p.p. |
|
|
|
|
Total Market (billion units) |
|
|
|
9.9 |
|
|
10.4 |
|
|
(4.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Shipments (million units) |
|
|
|
3,185 |
|
|
4,022 |
|
|
(20.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMI Market Share |
|
|
|
|
|
|
|
|
|
|
|
|
Marlboro |
|
|
|
16.2 |
% |
|
17.7 |
% |
|
(1.5 |
) |
|
|
|
|
L&M |
|
|
|
5.5 |
% |
|
5.6 |
% |
|
(0.1 |
) |
|
|
|
|
Chesterfield |
|
|
|
8.7 |
% |
|
8.9 |
% |
|
(0.2 |
) |
|
|
|
|
Others* |
|
|
|
1.8 |
% |
|
1.9 |
% |
|
(0.1 |
) |
|
|
|
|
Total |
|
|
|
32.2 |
% |
|
34.1 |
% |
|
(1.9 |
) |
|
|
|
|
*Includes heated tobacco units. |
|
|
|
|
|
|
|
The estimated total market decreased by 4.7%, or by 0.3% excluding the impact of estimated trade inventory reductions following
increases ahead of retail price increases in December 2016. The decline of PMI's shipments, down by 8.8% excluding the net impact
of distributor inventory movements, mainly associated with the replenishment in the first quarter of 2016 of low inventory levels
at the end of 2015, was mainly due to the lower total market and lower market share, principally due to Marlboro, reflecting
the impact of price increases, particularly past the round €5.00 per pack price point in the vending channel, as well as a
challenging comparison with the first quarter of 2016 in which the market share of Marlboro grew by 1.6 points.
EASTERN EUROPE, MIDDLE EAST & AFRICA REGION (EEMA)
Net revenues, excluding excise taxes, of $1.5 billion decreased by 7.8%. Excluding unfavorable currency of $99 million, net
revenues, excluding excise taxes, decreased by 1.6%, principally reflecting unfavorable volume/mix of $179 million, mainly due to:
North Africa, notably Egypt and Tunisia; Russia, mainly due to the unfavorable impact of estimated inventory movements and a lower
total market; and Saudi Arabia; partly offset by a favorable pricing variance of $153 million, driven principally by North Africa,
notably Egypt, Saudi Arabia and Ukraine.
Operating companies income of $690 million increased by 9.0%. Excluding unfavorable currency of $12 million, operating companies
income increased by 10.9%, principally reflecting a favorable pricing variance and a favorable cost comparison with 2016, partly
offset by unfavorable volume/mix of $135 million, mainly due to North Africa, notably Tunisia, Russia and Saudi Arabia.
Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 8. Adjusted operating
companies income, excluding unfavorable currency, increased by 10.9%. Adjusted operating companies income margin, excluding
unfavorable currency, increased by 5.0 points to 44.5%, reflecting the factors mentioned above, as detailed on Schedule 8.
EEMA OCI
|
|
|
|
|
|
|
First-Quarter
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Excl. |
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
Curr. |
OCI |
|
|
|
|
|
|
$ |
690 |
|
|
$ |
633 |
|
|
9.0 |
% |
|
10.9 |
% |
Asset impairment & exit costs |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
Adjusted OCI |
|
|
|
|
|
|
$ |
690 |
|
|
$ |
633 |
|
|
9.0 |
% |
|
10.9 |
% |
Adjusted OCI Margin* |
|
|
|
|
|
|
46.7 |
% |
|
39.5 |
% |
|
7.2 |
|
|
5.0 |
|
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
EEMA PMI Shipment Commentaries
EEMA PMI Shipment Volume
|
|
First-Quarter
|
(million units) |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
|
|
|
|
|
|
Cigarettes |
|
56,574 |
|
|
63,126 |
|
|
(10.4 |
)% |
Heated Tobacco Units |
|
105 |
|
|
2 |
|
|
+100% |
Total EEMA |
|
56,679 |
|
|
63,128 |
|
|
(10.2 |
)% |
|
|
|
|
|
|
EEMA PMI Shipment Volume by Brand
|
|
First-Quarter
|
(million units) |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
Cigarettes
|
|
|
|
|
|
|
Marlboro |
|
16,116 |
|
|
17,532 |
|
|
(8.1 |
)% |
L&M |
|
11,489 |
|
|
12,865 |
|
|
(10.7 |
)% |
Bond Street |
|
8,133 |
|
|
9,250 |
|
|
(12.1 |
)% |
Parliament |
|
6,542 |
|
|
7,302 |
|
|
(10.4 |
)% |
Others |
|
14,294 |
|
|
16,177 |
|
|
(11.6 |
)% |
Total Cigarettes |
|
56,574 |
|
|
63,126 |
|
|
(10.4 |
)% |
Heated Tobacco Units |
|
105 |
|
|
2 |
|
|
+100% |
Total EEMA |
|
56,679 |
|
|
63,128 |
|
|
(10.2 |
)% |
|
|
|
|
|
|
|
|
|
|
As shown in the table above, PMI's total shipment volume decreased by 10.2% to 56.7 billion units, mainly due to cigarette
volume declines in North Africa, primarily Egypt associated with continuity of supply, Tunisia associated with the timing of
shipments, Russia and Ukraine.
The decrease in cigarette shipment volume of Marlboro was mainly due to Saudi Arabia and Tunisia, partly offset by
Algeria. The decrease in cigarette shipment volume of L&M was mainly due to Egypt, Russia, Turkey and Ukraine, partly
offset by Kazakhstan and Saudi Arabia. The decrease in cigarette shipment volume of Bond Street was mainly due to Russia and
Ukraine. The decrease in cigarette shipment volume of Parliament was mainly due to Russia. The decrease in cigarette
shipment volume of "Others" was mainly due to largely local, lower-margin brands in Russia and Ukraine.
EEMA Key Market Commentaries
In North Africa, estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance
are shown in the table below.
North Africa Key Market Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
Change |
|
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Cigarette Market (billion units) |
|
|
33.1 |
|
|
34.4 |
|
|
(3.5 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Shipments (million units) |
|
|
8,780 |
|
|
10,230 |
|
|
(14.2 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
|
Marlboro |
|
|
8.3 |
% |
|
7.3 |
% |
|
1.0 |
|
L&M |
|
|
12.1 |
% |
|
14.1 |
% |
|
(2.0 |
) |
Others |
|
|
2.7 |
% |
|
3.1 |
% |
|
(0.4 |
) |
Total |
|
|
23.1 |
% |
|
24.5 |
% |
|
(1.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
The estimated total cigarette market decreased by 3.5%, mainly due to Egypt, reflecting the impact of price increases since the
third quarter of 2016. The decrease in PMI's cigarette shipment volume, down by 7.9% excluding estimated distributor inventory
movements, was mainly due to the lower total cigarette market, as well as lower cigarette market share, notably of L&M
in Egypt as a result of widening price gaps with competitors' brands, partly offset by the recovery of Marlboro in Algeria
following the lower-than-anticipated acceptance of Architecture 2.0 in 2016.
In Russia, estimated industry size and PMI shipment volume, shown in the table below, include cigarettes and PMI's heated
tobacco units. February quarter-to-date market share performance, as measured by Nielsen and shown in the table below, reflects
that of cigarettes.
Russia Key Market Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
Change |
|
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Market (billion units) |
|
|
54.7 |
|
|
59.4 |
|
|
(7.9 |
)% |
|
|
|
|
|
|
|
|
PMI Shipments (million units) |
|
|
14,839 |
|
|
17,811 |
|
|
(16.7 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
|
Marlboro |
|
|
1.3 |
% |
|
1.4 |
% |
|
(0.1 |
) |
Parliament |
|
|
3.6 |
% |
|
3.9 |
% |
|
(0.3 |
) |
Bond Street |
|
|
9.3 |
% |
|
8.4 |
% |
|
0.9 |
|
Others |
|
|
13.2 |
% |
|
14.1 |
% |
|
(0.9 |
) |
Total |
|
|
27.4 |
% |
|
27.8 |
% |
|
(0.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
The estimated total market decreased by 7.9%, reflecting the impact of excise tax-driven price increases. Excluding the net
impact of estimated distributor inventory movements, mainly associated with the replenishment in the first quarter of 2016 of low
inventory levels at the end of 2015, PMI's shipment volume decreased by 7.5%, mainly due to the lower total market. The decrease of
PMI's cigarette market share was mainly due to: Parliament, reflecting the impact of price increases; Chesterfield,
L&M and Next/Dubliss in "Others," primarily reflecting slower-than-anticipated retail price penetration of
competitors' brands, partly offset by Bond Street; and the growth of recently-launched Philip Morris in "Others,"
reflecting the successful ongoing morphing of super-low price Optima and Apollo Soyuz.
In Turkey, estimated cigarette industry size, PMI cigarette shipment volume and February quarter-to-date cigarette market
share performance, as measured by Nielsen, are shown in the table below.
Turkey Key Market Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
Change |
|
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Cigarette Market (billion units) |
|
|
22.6 |
|
|
22.4 |
|
|
0.8 |
% |
|
|
|
|
|
|
|
|
PMI Cigarette Shipments (million units) |
|
|
9,830 |
|
|
10,345 |
|
|
(5.0 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
|
Marlboro |
|
|
9.9 |
% |
|
10.0 |
% |
|
(0.1 |
) |
Parliament |
|
|
11.3 |
% |
|
11.5 |
% |
|
(0.2 |
) |
Lark |
|
|
6.8 |
% |
|
7.8 |
% |
|
(1.0 |
) |
Others |
|
|
14.9 |
% |
|
14.6 |
% |
|
0.3 |
|
Total |
|
|
42.9 |
% |
|
43.9 |
% |
|
(1.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
The estimated total cigarette market increased by 0.8%. Excluding the impact of estimated trade inventory movements associated
with the comparative timing of purchases ahead of anticipated price increases, the estimated total cigarette market declined by
5.4%, mainly reflecting the impact of price increases and a higher prevalence of illicit trade. The decrease in PMI's shipments was
mainly due to lower cigarette market share, reflecting the impact of price increases and, in the case of low-price Lark,
competitive pressure from super-low price alternatives.
In Ukraine, estimated industry size and PMI cigarette shipment volume, shown in the table below, include cigarettes and
PMI's heated tobacco units. February quarter-to-date market share performance, as measured by Nielsen and shown in the table below,
reflects that of cigarettes.
Ukraine Key Market Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
Change |
|
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Market (billion units) |
|
|
14.9 |
|
|
17.3 |
|
|
(14.2 |
)% |
|
|
|
|
|
|
|
|
PMI Shipments (million units) |
|
|
4,110 |
|
|
5,648 |
|
|
(27.2 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
|
Marlboro |
|
|
3.1 |
% |
|
3.3 |
% |
|
(0.2 |
) |
Parliament |
|
|
3.1 |
% |
|
2.8 |
% |
|
0.3 |
|
Bond Street |
|
|
9.2 |
% |
|
10.1 |
% |
|
(0.9 |
) |
Others |
|
|
12.0 |
% |
|
13.4 |
% |
|
(1.4 |
) |
Total |
|
|
27.4 |
% |
|
29.6 |
% |
|
(2.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
The estimated total market decreased by 14.2%, mainly due to the impact of price increases and a challenging comparison with the
first quarter of 2016, which grew by 17.3%. The decrease in PMI's shipment volume was mainly due to the lower total market, as well
as lower cigarette market share, primarily of low-price Bond Street, as well as President, down by 3.0 points to
1.4%, and Chesterfield, down by 0.7 points to 2.1%, in "Others," largely reflecting the impact of price increases.
The decline in PMI's cigarette market share was partly offset by Parliament, as well as L&M, up by 1.9 points to
6.5%, in "Others."
ASIA REGION
Net revenues, excluding excise taxes, of $2.2 billion increased by 13.9%. Excluding favorable currency of $56 million, net
revenues, excluding excise taxes, increased by 11.0%, reflecting a favorable pricing variance of $143 million, driven principally
by Australia, Indonesia and the Philippines. The favorable pricing variance was supported by favorable volume/mix of $74 million,
predominantly driven by favorable heated tobacco unit volume in Japan, partly offset by unfavorable volume/mix in Indonesia and
unfavorable volume in Australia, Pakistan and the Philippines.
Operating companies income of $852 million increased by 9.5%. Excluding favorable currency of $54 million, operating companies
income increased by 2.6%, mainly driven by a favorable pricing variance, partly offset by: unfavorable volume/mix of $56 million,
mainly due to unfavorable volume/mix in Indonesia and unfavorable volume in Australia and Pakistan, partly offset by favorable
volume in Japan, driven by heated tobacco units; and an unfavorable cost comparison, notably related to increased investment behind
reduced-risk products, notably in Japan.
Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 8. Adjusted operating
companies income, excluding favorable currency, increased by 2.6%. Adjusted operating companies income margin, excluding favorable
currency, decreased by 3.0 points to 36.5%, reflecting the factors mentioned above, as detailed on Schedule 8.
Asia OCI
|
|
|
|
|
|
|
First-Quarter
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Excl. |
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
Curr. |
OCI |
|
|
|
|
|
|
$ |
852 |
|
|
$ |
778 |
|
|
9.5 |
% |
|
2.6 |
% |
Asset impairment & exit costs |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
Adjusted OCI |
|
|
|
|
|
|
$ |
852 |
|
|
$ |
778 |
|
|
9.5 |
% |
|
2.6 |
% |
Adjusted OCI Margin* |
|
|
|
|
|
|
38.0 |
% |
|
39.5 |
% |
|
(1.5 |
) |
|
(3.0 |
) |
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
Asia PMI Shipment Commentaries
Asia PMI Shipment Volume
|
|
First-Quarter
|
(million units) |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
|
|
|
|
|
|
Cigarettes |
|
55,142 |
|
|
65,222 |
|
|
(15.5 |
)% |
Heated Tobacco Units |
|
4,145 |
|
|
435 |
|
|
+100% |
Total Asia |
|
59,287 |
|
|
65,657 |
|
|
(9.7 |
)% |
|
|
|
Asia PMI Shipment Volume by Brand
|
|
First-Quarter
|
(million units) |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
Cigarettes
|
|
|
|
|
|
|
Marlboro |
|
17,734 |
|
|
18,873 |
|
|
(6.0 |
)% |
Lark |
|
4,566 |
|
|
4,302 |
|
|
6.1 |
% |
Parliament |
|
2,326 |
|
|
2,410 |
|
|
(3.5 |
)% |
Others |
|
30,516 |
|
|
39,637 |
|
|
(23.0 |
)% |
Total Cigarettes |
|
55,142 |
|
|
65,222 |
|
|
(15.5 |
)% |
Heated Tobacco Units |
|
4,145 |
|
|
435 |
|
|
+100% |
Total Asia |
|
59,287 |
|
|
65,657 |
|
|
(9.7 |
)% |
|
|
|
|
|
|
|
|
|
|
As shown in the table above, PMI's total shipment volume decreased by 9.7% to 59.3 billion units, mainly due to cigarette volume
declines in: Indonesia; Japan; Korea; Pakistan, reflecting the impact of excise tax-driven price increases and an increase in the
prevalence of illicit trade; and the Philippines; partly offset by higher heated tobacco unit volume in Japan.
The decrease in cigarette shipment volume of Marlboro was mainly due to Japan, primarily reflecting out-switching to
Marlboro HeatSticks. The increase in cigarette shipment volume of Lark was driven by Japan and Korea. The decrease in
cigarette shipment volume of Parliament was mainly due to Japan. The decrease in cigarette shipment volume of "Others" was
mainly due to local, low-margin brands in Pakistan and the Philippines.
Asia Key Market Commentaries
In Indonesia, estimated cigarette industry size, PMI cigarette shipment volume, cigarette market share and segmentation
performance are shown in the tables below.
Indonesia Key Market Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
2017 |
|
2016 |
|
% / p.p. |
|
Total Cigarette Market (billion units) |
|
|
71.0 |
|
|
75.2 |
|
|
(5.5 |
)% |
|
|
|
|
|
|
|
|
|
|
PMI Cigarette Shipments (million units) |
|
|
23,399 |
|
|
25,142 |
|
|
(6.9 |
)% |
|
|
|
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
|
|
Sampoerna A |
|
|
13.9 |
% |
|
14.3 |
% |
|
(0.4 |
) |
|
Dji Sam Soe |
|
|
6.3 |
% |
|
6.6 |
% |
|
(0.3 |
) |
|
Sampoerna U |
|
|
5.0 |
% |
|
4.5 |
% |
|
0.5 |
|
|
Others |
|
|
7.8 |
% |
|
8.1 |
% |
|
(0.3 |
) |
|
Total |
|
|
33.0 |
% |
|
33.5 |
% |
|
(0.5 |
) |
|
|
|
|
|
|
|
|
|
|
Indonesia Segmentation Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
2017 |
|
2016 |
|
p.p. |
|
Segment % of Total Market |
|
|
|
|
|
|
|
|
Hand-Rolled Kretek (SKT) |
|
|
18.2 |
% |
|
18.8 |
% |
|
(0.6 |
) |
|
Machine-Made Kretek (SKM) |
|
|
76.3 |
% |
|
75.2 |
% |
|
1.1 |
|
|
Whites (SPM) |
|
|
5.5 |
% |
|
6.0 |
% |
|
(0.5 |
) |
|
Total |
|
|
100.0 |
% |
|
100.0 |
% |
|
— |
|
|
|
|
|
|
|
|
|
|
|
PMI % Share of Segment |
|
|
|
|
|
|
|
|
Hand-Rolled Kretek (SKT) |
|
|
38.0 |
% |
|
38.1 |
% |
|
(0.1 |
) |
|
Machine-Made Kretek (SKM) |
|
|
28.6 |
% |
|
28.5 |
% |
|
0.1 |
|
|
Whites (SPM) |
|
|
76.5 |
% |
|
81.3 |
% |
|
(4.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated total cigarette market decreased by 5.5%, primarily reflecting the impact of tax-driven price increases. The
decrease in PMI's cigarette shipments was mainly due to the lower estimated total market. The decline of PMI's cigarette market
share mainly reflected the decline of PMI's share of the SPM segment and the soft performance of PMI's SKT portfolio, broadly in
line with industry trends.
In Japan, estimated industry size, PMI shipment volume and market share performance, shown in the table below, include
cigarettes and PMI's heated tobacco units.
Japan Key Market Data
|
|
|
|
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Market (billion units) |
|
|
|
|
|
|
40.6 |
|
|
43.9 |
|
|
(7.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
PMI Shipments (million units) |
|
|
|
|
|
|
|
|
|
|
|
Cigarettes |
|
|
|
|
|
|
10,701 |
|
|
11,551 |
|
|
(7.4 |
)% |
Heated Tobacco Units |
|
|
|
|
|
|
4,145 |
|
|
435 |
|
|
+100%
|
Total |
|
|
|
|
|
|
14,846 |
|
|
11,986 |
|
|
23.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
PMI Market Share |
|
|
|
|
|
|
|
|
|
|
|
Marlboro |
|
|
|
|
|
|
10.0 |
% |
|
10.6 |
% |
|
(0.6 |
) |
Marlboro HeatSticks |
|
|
|
|
|
|
7.1 |
% |
|
0.8 |
% |
|
6.3 |
|
Parliament |
|
|
|
|
|
|
2.2 |
% |
|
2.3 |
% |
|
(0.1 |
) |
Lark |
|
|
|
|
|
|
9.2 |
% |
|
9.2 |
% |
|
— |
|
Others |
|
|
|
|
|
|
1.5 |
% |
|
1.7 |
% |
|
(0.2 |
) |
Total |
|
|
|
|
|
|
30.0 |
% |
|
24.6 |
% |
|
5.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated total market decreased by 7.4%, or by 4.3% excluding the net impact of estimated trade inventory movements mainly
associated with PMI's principal competitor's products in the first quarter of 2016 ahead of its retail price increases. PMI's
shipment volume increased by 11.6%, excluding the net impact of distributor inventory movements primarily associated with the
timing of Marlboro HeatSticks in transit to Japan, mainly reflecting higher share driven by Marlboro HeatSticks.
In Korea, estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance are
shown in the table below.
Korea Key Market Data
|
|
First-Quarter
|
|
|
|
|
|
|
Change |
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Cigarette Market (billion units) |
|
16.1 |
|
|
17.0 |
|
|
(5.2 |
)% |
|
|
|
|
|
|
|
PMI Cigarette Shipments (million units) |
|
3,049 |
|
|
3,543 |
|
|
(13.9 |
)% |
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
Marlboro |
|
8.7 |
% |
|
9.4 |
% |
|
(0.7 |
) |
Parliament |
|
8.0 |
% |
|
7.5 |
% |
|
0.5 |
|
Virginia S. |
|
2.0 |
% |
|
3.4 |
% |
|
(1.4 |
) |
Others |
|
0.4 |
% |
|
0.6 |
% |
|
(0.2 |
) |
Total |
|
19.1 |
% |
|
20.9 |
% |
|
(1.8 |
) |
|
|
|
|
|
|
|
|
|
|
The estimated total cigarette market decreased by 5.2%, primarily reflecting a challenging comparison with the first quarter of
2016 which increased by 40.9%. The decrease in PMI's cigarette shipment volume was due to the lower total market, as well as lower
cigarette market share, which was unfavorably impacted by the estimated trade inventory movements.
In the Philippines, estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share
performance are shown in the table below.
Philippines Key Market Data
|
|
First-Quarter
|
|
|
|
|
|
|
Change |
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Cigarette Market (billion units) |
|
16.6 |
|
|
19.6 |
|
|
(15.6 |
)% |
|
|
|
|
|
|
|
PMI Cigarette Shipments (million units) |
|
10,955 |
|
|
14,474 |
|
|
(24.3 |
)% |
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
Marlboro |
|
32.5 |
% |
|
27.5 |
% |
|
5.0 |
|
Fortune |
|
17.4 |
% |
|
25.0 |
% |
|
(7.6 |
) |
Jackpot |
|
5.9 |
% |
|
9.0 |
% |
|
(3.1 |
) |
Others |
|
10.3 |
% |
|
12.2 |
% |
|
(1.9 |
) |
Total |
|
66.1 |
% |
|
73.7 |
% |
|
(7.6 |
) |
|
|
|
|
|
|
|
|
|
|
The estimated total cigarette market decreased by 15.6%, mainly due to the impact of excise tax-driven price increases,
including those on PMI's full brand portfolio in the fourth quarter of 2016, as well as a high prevalence of illicit trade. The
decline in PMI's cigarette shipment volume was due to the lower total cigarette market, as well as lower cigarette market share,
particularly of PMI's low and super-low price brands as a result of the timing of competitors' price increases, and widened price
gaps to PMI's principal competitor's discounted brands, partly offset by Marlboro, which benefited from in-switching from
lower-priced brands.
LATIN AMERICA & CANADA REGION
Net revenues, excluding excise taxes, of $606 million decreased by 6.8%. Excluding unfavorable currency of $22 million, net
revenues, excluding excise taxes, decreased by 3.4%, primarily reflecting unfavorable volume/mix of $87 million, mainly due to
Argentina, Canada and Mexico, partly offset by a favorable pricing variance of $65 million, principally in Argentina, Canada and
Mexico.
Operating companies income of $177 million decreased by 22.7%. Excluding unfavorable currency of $26 million, operating
companies income decreased by 11.4%, primarily due to: unfavorable volume/mix of $75 million, mainly due to Argentina, Canada and
Mexico; and higher costs, mainly inflation-driven in Argentina; partly offset by a favorable pricing variance.
Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 8. Adjusted operating
companies income, excluding unfavorable currency, decreased by 11.4%. Adjusted operating companies income margin, excluding
unfavorable currency, decreased by 2.9 points to 32.3%, principally driven by the factors mentioned above, as detailed on Schedule
8.
Latin America & Canada OCI
|
|
|
|
|
|
|
|
|
|
|
|
First-Quarter
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excl. |
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Change |
|
|
Curr. |
OCI |
|
|
|
|
|
|
|
|
|
|
|
$ |
177 |
|
|
|
$ |
229 |
|
|
|
(22.7 |
)% |
|
|
(11.4 |
)% |
Asset impairment & exit costs |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
Adjusted OCI |
|
|
|
|
|
|
|
|
|
|
|
$ |
177 |
|
|
|
$ |
229 |
|
|
|
(22.7 |
)% |
|
|
(11.4 |
)% |
Adjusted OCI Margin* |
|
|
|
|
|
|
|
|
|
|
|
29.2 |
% |
|
|
35.2 |
% |
|
|
(6.0 |
) |
|
|
(2.9 |
) |
*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.
Latin America & Canada PMI Shipment Commentaries
Latin America & Canada PMI Shipment Volume
|
|
First-Quarter
|
(million units) |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
|
|
|
|
|
|
Cigarettes |
|
19,296 |
|
21,700 |
|
(11.1 |
)% |
Heated Tobacco Units |
|
1 |
|
— |
|
— |
% |
Total Latin America & Canada |
|
19,297 |
|
21,700 |
|
(11.1 |
)% |
|
|
|
Latin America & Canada PMI Shipment Volume by Brand
|
|
First-Quarter
|
(million units) |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
Cigarettes
|
|
|
|
|
|
|
Marlboro |
|
7,625 |
|
8,880 |
|
(14.1 |
)% |
Philip Morris |
|
3,440 |
|
4,631 |
|
(25.7 |
)% |
Chesterfield |
|
1,887 |
|
171 |
|
+100.0% |
Others |
|
6,344 |
|
8,018 |
|
(20.9 |
)% |
Total Cigarettes |
|
19,296 |
|
21,700 |
|
(11.1 |
)% |
Heated Tobacco Units |
|
1 |
|
— |
|
— |
% |
Total Latin America & Canada |
|
19,297 |
|
21,700 |
|
(11.1 |
)% |
|
|
|
|
|
|
|
|
As shown in the table above, PMI's total shipment volume decreased by 11.1% to 19.3 billion units, mainly due to cigarette
volume declines in Argentina, Canada and Mexico.
The decrease in cigarette shipment volume of Marlboro was mainly due to Argentina and Mexico. The decrease in cigarette
shipment volume of Philip Morris was mainly due to Argentina. The increase in cigarette shipment volume of
Chesterfield was driven by Argentina, Colombia and Venezuela. The decrease in cigarette shipment volume of "Others" was
mainly due to largely local, lower-margin brands in Canada, Colombia and Mexico.
Latin America & Canada Key Market Commentaries
In Argentina, estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance are
shown in the table below.
Argentina Key Market Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
Change |
|
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Cigarette Market (billion units) |
|
|
9.3 |
|
|
9.8 |
|
|
(4.3 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Shipments (million units) |
|
|
6,948 |
|
|
7,526 |
|
|
(7.7 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
|
Marlboro |
|
|
20.2 |
% |
|
24.0 |
% |
|
(3.8 |
) |
Chesterfield |
|
|
14.5 |
% |
|
1.6 |
% |
|
12.9 |
|
Philip Morris |
|
|
33.9 |
% |
|
44.6 |
% |
|
(10.7 |
) |
Others |
|
|
5.9 |
% |
|
7.0 |
% |
|
(1.1 |
) |
Total |
|
|
74.5 |
% |
|
77.2 |
% |
|
(2.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
The estimated total cigarette market decreased by 4.3%, primarily reflecting the impact of excise tax increases in May 2016,
which drove a more than 50% increase in average industry retail prices, as well as retail price increases in the first quarter of
2017. The decrease in PMI's cigarette shipment volume was mainly due to the lower total market, as well as lower cigarette market
share, impacted by down-trading of Marlboro and mid-price Philip Morris, partly offset by low-price
Chesterfield that also benefited from its successful morphing from Next.
In Canada, estimated industry size, PMI shipment volume and market share performance, shown in the table below, include
cigarettes and PMI's heated tobacco units.
Canada Key Market Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
Change |
|
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Market (billion units) |
|
|
4.9 |
|
|
5.6 |
|
|
(12.4 |
)% |
|
|
|
|
|
|
|
|
PMI Shipments (million units) |
|
|
1,776 |
|
|
2,184 |
|
|
(18.7 |
)% |
|
|
|
|
|
|
|
|
PMI Market Share |
|
|
|
|
|
|
|
Belmont |
|
|
3.6 |
% |
|
3.7 |
% |
|
(0.1 |
) |
Canadian Classics |
|
|
8.9 |
% |
|
10.7 |
% |
|
(1.8 |
) |
Next |
|
|
10.9 |
% |
|
11.6 |
% |
|
(0.7 |
) |
Others* |
|
|
11.5 |
% |
|
13.2 |
% |
|
(1.7 |
) |
Total |
|
|
34.9 |
% |
|
39.2 |
% |
|
(4.3 |
) |
*Includes heated tobacco units. |
|
The estimated total market decreased by 12.4%, mainly reflecting a difficult comparison with the first quarter of 2016, which
grew by 1.4%. Excluding the impact of estimated trade inventory movements associated with retail price increases in January 2017,
the total market decreased by 8.8%. The decrease in PMI's shipment volume was mainly due to the lower total market, as well as
lower cigarette market share, which largely reflected the unfavorable impact of the estimated trade inventory movements.
In Mexico, estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance are
shown in the table below.
Mexico Key Market Data
|
|
|
First-Quarter
|
|
|
|
|
|
|
|
Change |
|
|
|
2017 |
|
2016 |
|
% / p.p. |
Total Cigarette Market (billion units) |
|
|
7.9 |
|
|
8.9 |
|
|
(11.3 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Shipments (million units) |
|
|
5,059 |
|
|
5,982 |
|
|
(15.4 |
)% |
|
|
|
|
|
|
|
|
PMI Cigarette Market Share |
|
|
|
|
|
|
|
Marlboro |
|
|
46.0 |
% |
|
47.5 |
% |
|
(1.5 |
) |
Delicados |
|
|
8.2 |
% |
|
9.9 |
% |
|
(1.7 |
) |
Benson & Hedges |
|
|
4.9 |
% |
|
4.2 |
% |
|
0.7 |
|
Others |
|
|
5.2 |
% |
|
5.9 |
% |
|
(0.7 |
) |
Total |
|
|
64.3 |
% |
|
67.5 |
% |
|
(3.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
The estimated total cigarette market decreased by 11.3%. Excluding the impact of estimated trade inventory movements associated
with industry retail price increases in January 2017, the estimated total cigarette market increased by 1.8%. The decrease in PMI's
cigarette shipment volume mainly reflected the lower total cigarette market. The decline of PMI's cigarette market share largely
reflected the unfavorable impact of the estimated trade inventory movements.
About Philip Morris International Inc. (“PMI”)
PMI is the world’s leading international tobacco company, with six of the world's top 15 international brands and products sold
in more than 180 markets. In addition to the manufacture and sale of cigarettes, including Marlboro, the number one global
cigarette brand, and other tobacco products, PMI is engaged in the development and commercialization of reduced-risk products
(“RRPs”). RRPs is the term PMI uses to refer to products that present, are likely to present, or have the potential to present less
risk of harm to smokers who switch to these products versus continued smoking. Through multidisciplinary capabilities in
product development, state-of-the-art facilities, and industry-leading scientific substantiation, PMI aims to provide an RRP
portfolio that meets a broad spectrum of adult smoker preferences and rigorous regulatory requirements. For more information, see
www.pmi.com and www.pmiscience.com .
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other forward-looking statements. Achievement of future 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: excise tax increases and discriminatory tax structures; increasing marketing and regulatory
restrictions that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of
our 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, natural disasters and conflicts; 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,
and limitations on the ability to repatriate funds; 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
reduced-risk products; 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-K for
the year ended December 31, 2016. 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 March 31, |
($ in millions, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
% Change
|
Net Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
16,556 |
|
|
|
$ |
|
|
|
16,788 |
|
|
|
(1.4)% |
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,177 |
|
|
|
2,096 |
|
|
|
3.9% |
Excise Taxes on products (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
10,492 |
|
|
|
10,705 |
|
|
|
(2.0)% |
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,887 |
|
|
|
3,987 |
|
|
|
(2.5)% |
Marketing, administration and research costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,469 |
|
|
|
1,496 |
|
|
|
|
Asset impairment and exit costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
Amortization of intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
|
22 |
|
|
|
18 |
|
|
|
|
Operating Income (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,396 |
|
|
|
2,473 |
|
|
|
(3.1)% |
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
219 |
|
|
|
247 |
|
|
|
|
Earnings before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,177 |
|
|
|
2,226 |
|
|
|
(2.2)% |
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
541 |
|
|
|
630 |
|
|
|
(14.1)% |
Equity (income)/loss in unconsolidated subsidiaries, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
(22 |
) |
|
|
(9 |
) |
|
|
|
Net Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,658 |
|
|
|
1,605 |
|
|
|
3.3% |
Net Earnings attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
68 |
|
|
|
75 |
|
|
|
|
Net Earnings attributable to PMI |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
1,590 |
|
|
|
$ |
|
|
|
1,530 |
|
|
|
3.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
1.02 |
|
|
|
$ |
|
|
|
0.98 |
|
|
|
4.1% |
Diluted Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
1.02 |
|
|
|
$ |
|
|
|
0.98 |
|
|
|
4.1% |
|
|
(1) The segment detail of Excise Taxes on products sold for the quarters ended March
31, 2017 and 2016 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: |
|
|
|
|
2017 |
|
2016 |
|
% Change
|
Operating Income |
|
|
$ |
|
|
|
|
2,396 |
|
|
$ |
|
|
|
|
2,473 |
|
|
(3.1)% |
Excluding:
|
|
|
|
|
|
|
|
- Amortization of intangibles |
|
|
22 |
|
|
18 |
|
|
|
- General corporate expenses (included in marketing, administration
and research costs above)
|
|
|
51 |
|
|
46 |
|
|
|
Plus: Equity (income)/loss in unconsolidated subsidiaries, net |
|
|
(22 |
) |
|
(9 |
) |
|
|
Operating Companies Income |
|
|
$ |
|
|
|
|
2,491 |
|
|
$ |
|
|
|
|
2,546 |
|
|
(2.2)% |
|
(3) Net Earnings and weighted-average shares used in the basic and diluted earnings
per share computations for the quarters ended March 31, 2017 and 2016 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 March 31, |
($ in millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues excluding Excise Taxes |
|
|
|
|
|
European
Union
|
|
EEMA |
|
Asia |
|
|
Latin
America &
Canada
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
Net Revenues (1) |
|
|
$ |
5,889 |
|
|
$ |
|
|
3,695 |
|
|
$ |
|
4,838 |
|
|
|
$ |
|
2,134 |
|
|
$ |
16,556 |
|
|
|
Excise Taxes on products |
|
|
(4,149 |
) |
|
(2,218 |
) |
|
(2,597 |
) |
|
|
(1,528 |
) |
|
(10,492 |
) |
|
|
Net Revenues excluding Excise Taxes |
|
|
1,740 |
|
|
1,477 |
|
|
2,241 |
|
|
|
606 |
|
|
6,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
Net Revenues |
|
|
$ |
6,143 |
|
|
$ |
|
|
3,997 |
|
|
$ |
|
4,689 |
|
|
|
$ |
|
1,959 |
|
|
$ |
16,788 |
|
|
|
Excise Taxes on products |
|
|
(4,280 |
) |
|
(2,395 |
) |
|
(2,721 |
) |
|
|
(1,309 |
) |
|
(10,705 |
) |
|
|
Net Revenues excluding Excise Taxes |
|
|
1,863 |
|
|
1,602 |
|
|
1,968 |
|
|
|
650 |
|
|
6,083 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variance |
|
Currency |
|
|
(55 |
) |
|
(99 |
) |
|
56 |
|
|
|
(22 |
) |
|
(120 |
) |
|
|
Acquisitions |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
Operations |
|
|
(68 |
) |
|
(26 |
) |
|
217 |
|
|
|
(22 |
) |
|
101 |
|
|
|
Variance Total |
|
|
(123 |
) |
|
(125 |
) |
|
273 |
|
|
|
(44 |
) |
|
(19 |
) |
|
|
Variance Total (%) |
|
|
(6.6 |
)% |
|
(7.8 |
)% |
|
13.9 |
% |
|
|
(6.8 |
)% |
|
(0.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variance excluding Currency |
|
|
(68 |
) |
|
(26 |
) |
|
217 |
|
|
|
(22 |
) |
|
101 |
|
|
|
Variance excluding Currency (%) |
|
|
(3.7 |
)% |
|
(1.6 |
)% |
|
11.0 |
% |
|
|
(3.4 |
)% |
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variance excluding Currency & Acquisitions |
|
|
(68 |
) |
|
(26 |
) |
|
217 |
|
|
|
(22 |
) |
|
101 |
|
|
|
Variance excluding Currency & Acquisitions (%) |
|
|
(3.7 |
)% |
|
(1.6 |
)% |
|
11.0 |
% |
|
|
(3.4 |
)% |
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) 2017 Currency increased / (decreased) Net Revenues as follows: |
|
|
|
|
|
|
|
|
|
|
|
European Union |
|
|
$ |
(203 |
) |
|
|
|
|
|
|
|
|
|
|
|
EEMA |
|
|
(541 |
) |
|
|
|
|
|
|
|
|
|
|
|
Asia |
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
Latin America & Canada |
|
|
(138 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(786 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 3 |
|
PHILIP MORRIS INTERNATIONAL INC. |
|
and Subsidiaries |
|
Selected Financial Data by Business Segment |
|
For the Quarters Ended March 31, |
|
($ in millions) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Companies Income |
|
|
|
|
European
Union
|
|
EEMA |
|
Asia |
|
Latin
America &
Canada
|
|
Total |
|
2017 |
|
|
$ |
772 |
|
|
$ |
|
|
690 |
|
|
$ |
|
852 |
|
|
$ |
|
177 |
|
|
$ |
|
2,491 |
|
|
2016 |
|
|
906 |
|
|
633 |
|
|
778 |
|
|
229 |
|
|
2,546 |
|
|
% Change |
|
|
(14.8 |
)% |
|
9.0 |
% |
|
9.5 |
% |
|
(22.7 |
)% |
|
(2.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2016 |
|
|
$ |
906 |
|
|
$ |
|
|
633 |
|
|
$ |
|
778 |
|
|
$ |
|
229 |
|
|
$ |
|
2,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 Asset impairment and exit costs |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2017 Asset impairment and exit costs |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired businesses |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Currency |
|
|
(28 |
) |
|
(12 |
) |
|
54 |
|
|
(26 |
) |
|
(12 |
) |
|
Operations |
|
|
(106 |
) |
|
69 |
|
|
20 |
|
|
(26 |
) |
|
(43 |
) |
|
For the quarter ended March 31, 2017 |
|
|
$ |
772 |
|
|
$ |
|
|
690 |
|
|
$ |
|
852 |
|
|
$ |
|
177 |
|
|
$ |
|
2,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 4 |
PHILIP MORRIS INTERNATIONAL INC. |
and Subsidiaries |
Diluted Earnings Per Share |
For the Quarters Ended March 31, |
($ in millions, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
E.P.S.
|
|
|
|
|
|
|
|
|
|
2017 Diluted Earnings Per Share |
|
|
|
|
|
$ |
1.02 |
|
(1) |
2016 Diluted Earnings Per Share |
|
|
|
|
|
$ |
0.98 |
|
(1) |
Change |
|
|
|
|
|
$ |
0.04 |
|
|
% Change |
|
|
|
|
|
4.1 |
% |
|
|
|
|
|
|
|
|
|
Reconciliation:
|
|
|
|
|
|
|
|
2016 Diluted Earnings Per Share |
|
|
|
|
|
$ |
0.98 |
|
(1) |
|
|
|
|
|
|
|
|
Special Items:
|
|
|
|
|
|
|
|
2016 Asset impairment and exit costs |
|
|
|
|
|
— |
|
|
2016 Tax items |
|
|
|
|
|
— |
|
|
2017 Asset impairment and exit costs |
|
|
|
|
|
— |
|
|
2017 Tax items |
|
|
|
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
|
|
|
— |
|
|
Interest |
|
|
|
|
|
0.02 |
|
|
Change in tax rate |
|
|
|
|
|
0.01 |
|
|
Operations |
|
|
|
|
|
(0.03 |
) |
(2) |
2017 Diluted Earnings Per Share |
|
|
|
|
|
$ |
1.02 |
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Basic and diluted EPS were calculated using the following (in
millions): |
|
|
|
|
|
|
|
|
|
|
|
|
Q1
2017
|
|
|
Q1
2016
|
|
|
|
|
|
|
|
|
|
Net Earnings attributable to PMI |
|
|
$ |
1,590 |
|
|
|
$ |
1,530 |
|
|
Less distributed and undistributed earnings attributable |
|
|
|
|
|
|
|
to share-based payment awards |
|
|
3 |
|
|
|
5 |
|
|
Net Earnings for basic and diluted EPS |
|
|
$ |
1,587 |
|
|
|
$ |
1,525 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares for basic EPS |
|
|
1,552 |
|
|
|
1,550 |
|
|
Plus Contingently Issuable Performance Stock Units (PSUs) |
|
|
1 |
|
|
|
— |
|
|
Weighted-average shares for diluted EPS |
|
|
1,553 |
|
|
|
1,550 |
|
|
|
|
|
|
|
|
|
|
(2) Includes the impact of shares outstanding and share-based
payments |
|
|
|
|
Schedule 5 |
PHILIP MORRIS INTERNATIONAL INC. |
|
and Subsidiaries |
|
Condensed Balance Sheets |
|
($ in millions, except ratios) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
2017 |
|
|
2016 |
|
Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
|
|
|
|
|
|
|
5,076 |
|
|
|
$ |
4,239 |
|
|
All other current assets |
|
|
11,808 |
|
|
|
13,369 |
|
|
Property, plant and equipment, net |
|
|
6,264 |
|
|
|
6,064 |
|
|
Goodwill |
|
|
7,485 |
|
|
|
7,324 |
|
|
Other intangible assets, net |
|
|
2,517 |
|
|
|
2,470 |
|
|
Investments in unconsolidated subsidiaries |
|
|
1,079 |
|
|
|
1,011 |
|
|
Other assets |
|
|
2,398 |
|
|
|
2,374 |
|
|
Total assets |
|
|
$ |
|
|
|
|
|
|
|
36,627 |
|
|
|
$ |
36,851 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' (Deficit) Equity
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
$ |
|
|
|
|
|
|
|
1,004 |
|
|
|
$ |
643 |
|
|
Current portion of long-term debt |
|
|
1,754 |
|
|
|
2,573 |
|
|
All other current liabilities |
|
|
10,597 |
|
|
|
13,251 |
|
|
Long-term debt |
|
|
28,588 |
|
|
|
25,851 |
|
|
Deferred income taxes |
|
|
1,739 |
|
|
|
1,897 |
|
|
Other long-term liabilities |
|
|
3,502 |
|
|
|
3,536 |
|
|
Total liabilities |
|
|
47,184 |
|
|
|
47,751 |
|
|
|
|
|
|
|
|
|
|
Total PMI stockholders' deficit |
|
|
(12,392 |
) |
|
|
(12,688 |
) |
|
Noncontrolling interests |
|
|
1,835 |
|
|
|
1,788 |
|
|
Total stockholders' deficit |
|
|
(10,557 |
) |
|
|
(10,900 |
) |
|
Total liabilities and stockholders' (deficit) equity |
|
|
$ |
|
|
|
|
|
|
|
36,627 |
|
|
|
$ |
36,851 |
|
|
|
|
|
|
|
|
|
|
Total debt |
|
|
$ |
|
|
|
|
|
|
|
31,346 |
|
|
|
$ |
29,067 |
|
|
Total debt to Adjusted EBITDA |
|
|
2.73 |
|
(1) |
|
2.51 |
|
(1) |
Net debt to Adjusted EBITDA |
|
|
2.28 |
|
(1) |
|
2.15 |
|
(1) |
|
(1) For the calculation of Total Debt to Adjusted EBITDA and Net Debt to Adjusted
EBITDA ratios, refer to Schedule 10. |
|
|
Schedule 6 |
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
% Change in Net Revenues
excluding Excise Taxes
|
Net
Revenues
|
|
Less
Excise
Taxes
|
|
Net
Revenues
excluding
Excise
Taxes
|
|
Less
Currency
|
|
Net
Revenues
excluding
Excise
Taxes &
Currency
|
|
Less
Acquisitions
|
|
Net
Revenues
excluding
Excise
Taxes,
Currency &
Acquisitions
|
|
|
|
Net
Revenues
|
|
Less
Excise
Taxes
|
|
Net
Revenues
excluding
Excise
Taxes
|
|
Total |
|
Excluding
Currency
|
|
Excluding
Currency &
Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,889 |
|
|
$ |
4,149 |
|
|
$ |
1,740 |
|
|
$ |
(55 |
) |
|
$ |
1,795 |
|
|
$ |
— |
|
|
$ |
1,795 |
|
|
European Union |
|
$ |
6,143 |
|
|
$ |
4,280 |
|
|
$ |
1,863 |
|
|
(6.6 |
)% |
|
(3.7)% |
|
(3.7)% |
3,695 |
|
|
2,218 |
|
|
1,477 |
|
|
(99 |
) |
|
1,576 |
|
|
— |
|
|
1,576 |
|
|
EEMA |
|
3,997 |
|
|
2,395 |
|
|
1,602 |
|
|
(7.8 |
)% |
|
(1.6)% |
|
(1.6)% |
4,838 |
|
|
2,597 |
|
|
2,241 |
|
|
56 |
|
|
2,185 |
|
|
— |
|
|
2,185 |
|
|
Asia |
|
4,689 |
|
|
2,721 |
|
|
1,968 |
|
|
13.9 |
% |
|
11.0% |
|
11.0% |
2,134 |
|
|
1,528 |
|
|
606 |
|
|
(22 |
) |
|
628 |
|
|
— |
|
|
628 |
|
|
Latin America
& Canada
|
|
1,959 |
|
|
1,309 |
|
|
650 |
|
|
(6.8 |
)% |
|
(3.4)% |
|
(3.4)% |
$ |
16,556 |
|
|
$ |
10,492 |
|
|
$ |
6,064 |
|
|
$ |
(120 |
) |
|
$ |
6,184 |
|
|
$ |
— |
|
|
$ |
6,184 |
|
|
PMI Total |
|
$ |
16,788 |
|
|
$ |
10,705 |
|
|
$ |
6,083 |
|
|
(0.3 |
)% |
|
1.7% |
|
1.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
% Change in Operating Companies
Income
|
Operating
Companies
Income
|
|
|
|
|
|
Less
Currency
|
|
Operating
Companies
Income
excluding
Currency
|
|
Less
Acquisitions
|
|
Operating
Companies
Income
excluding
Currency &
Acquisitions
|
|
|
|
|
|
|
|
Operating
Companies
Income
|
|
Total |
|
Excluding
Currency
|
|
Excluding
Currency &
Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
772 |
|
|
|
|
|
|
$ |
(28 |
) |
|
$ |
800 |
|
|
$ |
— |
|
|
$ |
800 |
|
|
European Union |
|
|
|
|
|
$ |
906 |
|
|
(14.8 |
)% |
|
(11.7)% |
|
(11.7)% |
690 |
|
|
|
|
|
|
(12 |
) |
|
702 |
|
|
— |
|
|
702 |
|
|
EEMA |
|
|
|
|
|
633 |
|
|
9.0 |
% |
|
10.9% |
|
10.9% |
852 |
|
|
|
|
|
|
54 |
|
|
798 |
|
|
— |
|
|
798 |
|
|
Asia |
|
|
|
|
|
778 |
|
|
9.5 |
% |
|
2.6% |
|
2.6% |
177 |
|
|
|
|
|
|
(26 |
) |
|
203 |
|
|
— |
|
|
203 |
|
|
Latin America
& Canada
|
|
|
|
|
|
229 |
|
|
(22.7 |
)% |
|
(11.4)% |
|
(11.4)% |
$ |
2,491 |
|
|
|
|
|
|
$ |
(12 |
) |
|
$ |
2,503 |
|
|
$ |
— |
|
|
$ |
2,503 |
|
|
PMI Total |
|
|
|
|
|
$ |
2,546 |
|
|
(2.2 |
)% |
|
(1.7)% |
|
(1.7)% |
|
|
Schedule 7 |
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
Reconciliation of Non-GAAP Measures |
Selected Financial Data by Product Category |
For the Quarters Ended March 31, |
($ in millions) / (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
% Change in Combustible Products
Net Revenues excluding Excise
Taxes
|
Net
Revenues
(1)
|
|
Less
Excise
Taxes
(3)
|
|
Net
Revenues
excluding
Excise
Taxes
|
|
Less
Currency
|
|
Net
Revenues
excluding
Excise
Taxes &
Currency
|
|
Less
Acquisitions
|
|
Net
Revenues
excluding
Excise
Taxes,
Currency &
Acquisitions
|
|
Combustible
Products
|
|
Net
Revenues
(1)
|
|
Less
Excise
Taxes
(3)
|
|
Net
Revenues
excluding
Excise
Taxes
|
|
Total |
|
Excluding
Currency
|
|
Excluding
Currency &
Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,852 |
|
|
$ |
4,143 |
|
|
$ |
1,709 |
|
|
$ |
(55 |
) |
|
$ |
1,764 |
|
|
$ |
— |
|
|
$ |
1,764 |
|
|
European Union |
|
$ |
6,134 |
|
|
$ |
4,279 |
|
|
$ |
1,855 |
|
|
(7.9 |
)% |
|
(4.9)% |
|
(4.9)% |
3,687 |
|
|
2,218 |
|
|
1,470 |
|
|
(99 |
) |
|
1,569 |
|
|
— |
|
|
1,569 |
|
|
EEMA |
|
3,998 |
|
|
2,395 |
|
|
1,603 |
|
|
(8.3 |
)% |
|
(2.1)% |
|
(2.1)% |
4,442 |
|
|
2,597 |
|
|
1,845 |
|
|
38 |
|
|
1,806 |
|
|
— |
|
|
1,806 |
|
|
Asia |
|
4,642 |
|
|
2,722 |
|
|
1,921 |
|
|
(4.0 |
)% |
|
(6.0)% |
|
(6.0)% |
2,134 |
|
|
1,529 |
|
|
605 |
|
|
(22 |
) |
|
627 |
|
|
— |
|
|
627 |
|
|
Latin America
& Canada
|
|
1,958 |
|
|
1,309 |
|
|
650 |
|
|
(6.8 |
)% |
|
(3.5)% |
|
(3.5)% |
$ |
16,116 |
|
|
$ |
10,487 |
|
|
$ |
5,629 |
|
|
$ |
(137 |
) |
|
$ |
5,766 |
|
|
$ |
— |
|
|
$ |
5,766 |
|
|
Total Combustible
Products
|
|
$ |
16,732 |
|
|
$ |
10,704 |
|
|
$ |
6,028 |
|
|
(6.6 |
)% |
|
(4.3)% |
|
(4.3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
% Change in Reduced-Risk
Products Net Revenues excluding
Excise Taxes
|
Net
Revenues
(2)
|
|
Less
Excise
Taxes
(3)
|
|
Net
Revenues
excluding
Excise
Taxes
|
|
Less
Currency
|
|
Net
Revenues
excluding
Excise
Taxes &
Currency
|
|
Less
Acquisitions
|
|
Net
Revenues
excluding
Excise
Taxes,
Currency &
Acquisitions
|
|
Reduced-Risk
Products
|
|
Net
Revenues
(2)
|
|
Less
Excise
Taxes
(3)
|
|
Net
Revenues
excluding
Excise
Taxes
|
|
Total |
|
Excluding
Currency
|
|
Excluding
Currency &
Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
36 |
|
|
$ |
5 |
|
|
$ |
31 |
|
|
$ |
(1 |
) |
|
$ |
33 |
|
|
$ |
— |
|
|
$ |
33 |
|
|
European Union |
|
$ |
9 |
|
|
0 |
|
$ |
9 |
|
|
+100% |
|
+100% |
|
+100% |
8 |
|
|
1 |
|
|
7 |
|
|
0 |
|
7 |
|
|
— |
|
|
7 |
|
|
EEMA |
|
(1 |
) |
|
0 |
|
(1 |
) |
|
+100% |
|
+100% |
|
+100% |
396 |
|
|
0 |
|
396 |
|
|
18 |
|
|
379 |
|
|
— |
|
|
379 |
|
|
Asia |
|
47 |
|
|
— |
|
|
47 |
|
|
+100% |
|
+100% |
|
+100% |
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
— |
|
|
0
|
|
Latin America
& Canada
|
|
1 |
|
|
0 |
|
0 |
|
20.0 |
% |
|
12.5% |
|
12.5% |
$ |
440 |
|
|
$ |
5 |
|
|
$ |
435 |
|
|
$ |
17 |
|
|
$ |
418 |
|
|
$ |
— |
|
|
$ |
418 |
|
|
Total Reduced-Risk
Products
|
|
$ |
56 |
|
|
$ |
1 |
|
|
$ |
55 |
|
|
+100% |
|
+100% |
|
+100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
16,556 |
|
|
$ |
10,492 |
|
|
$ |
6,064 |
|
|
$ |
(120 |
) |
|
$ |
6,184 |
|
|
$ |
— |
|
|
$ |
6,184 |
|
|
PMI Total |
|
$ |
16,788 |
|
|
$ |
10,705 |
|
|
$ |
6,083 |
|
|
(0.3 |
)% |
|
1.7% |
|
1.7% |
|
(1) Net revenue amounts for our Combustible Products refer to the operating revenues
generated from the sale of these products, net of sales and promotion incentives. These net revenue amounts consist of the sale
of our cigarettes and other tobacco products combined. Other tobacco products primarily include tobacco for roll-your-own and
make-your-own cigarettes, pipe tobacco, cigars and cigarillos and do not include Reduced-Risk products. |
|
(2) Net revenue amounts for our Reduced-Risk Products refer to the operating revenues
generated from the sale of these products, net of sales and promotion incentives. These net revenue amounts consist of the sale
of our heated tobacco units, our IQOS devices and related accessories, and other nicotine-containing products, which
primarily include our e-vapor products. Reduced-Risk Products is the term we use to refer to products that present, are likely
to present, or have the potential to present less risk of harm to smokers who switch to these products versus continued
smoking. We have a range of Reduced-Risk Products in various stages of development, scientific assessment and
commercialization. Because our Reduced-Risk Products do not burn tobacco, they produce far lower quantities of harmful and
potentially harmful compounds than found in cigarette smoke. |
|
(3) PMI often collects excise taxes from its customers and then remits them to
governments, and, in those circumstances, PMI includes the excise taxes in its net revenues and in excise taxes on products. In
some jurisdictions, including Japan, PMI is not responsible for collecting excise taxes. |
Note: Sum of product categories or Regions might not foot to PMI total due to rounding.
|
|
|
Schedule 8 |
PHILIP MORRIS INTERNATIONAL INC. |
and Subsidiaries |
Reconciliation of Non-GAAP Measures |
Reconciliation of Operating Companies Income to Adjusted Operating
Companies Income & |
Reconciliation of Adjusted Operating Companies Income Margin, excluding
Currency and Acquisitions |
For the Quarters Ended March 31, |
($ in millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
% Change in Adjusted Operating
Companies Income
|
Operating
Companies
Income
|
|
Less
Asset
Impairment
& Exit
Costs
|
|
Adjusted
Operating
Companies
Income
|
|
Less
Currency
|
|
Adjusted
Operating
Companies
Income
excluding
Currency
|
|
Less
Acquisitions
|
|
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
|
|
|
|
Operating
Companies
Income
|
|
Less
Asset
Impairment
& Exit
Costs
|
|
Adjusted
Operating
Companies
Income
|
|
Adjusted |
|
Adjusted
excluding
Currency
|
|
Adjusted
excluding
Currency &
Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
772 |
|
|
$ |
— |
|
|
$ |
772 |
|
|
$ |
(28 |
) |
|
$ |
800 |
|
|
$ |
— |
|
|
$ |
800 |
|
|
European
Union
|
|
$ |
906 |
|
|
$ |
— |
|
|
$ |
906 |
|
|
(14.8 |
)% |
|
(11.7)% |
|
(11.7)% |
690 |
|
|
— |
|
|
690 |
|
|
(12 |
) |
|
702 |
|
|
— |
|
|
702 |
|
|
EEMA |
|
633 |
|
|
— |
|
|
633 |
|
|
9.0 |
% |
|
10.9% |
|
10.9% |
852 |
|
|
— |
|
|
852 |
|
|
54 |
|
|
798 |
|
|
— |
|
|
798 |
|
|
Asia |
|
778 |
|
|
— |
|
|
778 |
|
|
9.5 |
% |
|
2.6% |
|
2.6% |
177 |
|
|
— |
|
|
177 |
|
|
(26 |
) |
|
203 |
|
|
— |
|
|
203 |
|
|
Latin America
& Canada
|
|
229 |
|
|
— |
|
|
229 |
|
|
(22.7 |
)% |
|
(11.4)% |
|
(11.4)% |
$ |
2,491 |
|
|
$ |
— |
|
|
$ |
2,491 |
|
|
$ |
(12 |
) |
|
$ |
2,503 |
|
|
$ |
— |
|
|
$ |
2,503 |
|
|
PMI Total |
|
$ |
2,546 |
|
|
$ |
— |
|
|
$ |
2,546 |
|
|
(2.2 |
)% |
|
(1.7)% |
|
(1.7)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
% 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
800 |
|
|
$ |
1,795 |
|
|
44.6 |
% |
|
|
|
$ |
800 |
|
|
$ |
1,795 |
|
|
44.6 |
% |
|
European
Union
|
|
$ |
906 |
|
|
$ |
1,863 |
|
|
48.6 |
% |
|
|
|
(4.0) |
|
(4.0) |
702 |
|
|
1,576 |
|
|
44.5 |
% |
|
|
|
702 |
|
|
1,576 |
|
|
44.5 |
% |
|
EEMA |
|
633 |
|
|
1,602 |
|
|
39.5 |
% |
|
|
|
5.0 |
|
5.0 |
798 |
|
|
2,185 |
|
|
36.5 |
% |
|
|
|
798 |
|
|
2,185 |
|
|
36.5 |
% |
|
Asia |
|
778 |
|
|
1,968 |
|
|
39.5 |
% |
|
|
|
(3.0) |
|
(3.0) |
203 |
|
|
628 |
|
|
32.3 |
% |
|
|
|
203 |
|
|
628 |
|
|
32.3 |
% |
|
Latin America
& Canada
|
|
229 |
|
|
650 |
|
|
35.2 |
% |
|
|
|
(2.9) |
|
(2.9) |
$ |
2,503 |
|
|
$ |
6,184 |
|
|
40.5 |
% |
|
|
|
$ |
2,503 |
|
|
$ |
6,184 |
|
|
40.5 |
% |
|
PMI Total |
|
$ |
2,546 |
|
|
$ |
6,083 |
|
|
41.9 |
% |
|
|
|
(1.4) |
|
(1.4) |
|
(1) For the calculation of Net Revenues excluding Excise Taxes, currency
and acquisitions, refer to Schedule 6. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 9
|
|
PHILIP MORRIS INTERNATIONAL INC. |
|
and Subsidiaries |
|
Reconciliation of Non-GAAP Measures |
|
Reconciliation of Reported Diluted EPS to Reported Diluted EPS,
excluding Currency, and |
|
Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and
Adjusted Diluted EPS, excluding Currency |
|
For the Quarters Ended March 31, |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
% Change
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted EPS |
|
|
$ |
|
|
|
|
1.02 |
|
|
$ |
|
|
|
|
0.98 |
|
|
4.1% |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
Currency impact |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted EPS, excluding Currency |
|
|
$ |
|
|
|
|
1.02 |
|
|
$ |
|
|
|
|
0.98 |
|
|
4.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
% Change
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted EPS |
|
|
$ |
|
|
|
|
1.02 |
|
|
$ |
|
|
|
|
0.98 |
|
|
4.1% |
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Asset impairment and exit costs |
|
|
— |
|
|
— |
|
|
|
|
Tax items |
|
|
(0.04 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted EPS |
|
|
$ |
|
|
|
|
0.98 |
|
|
$ |
|
|
|
|
0.98 |
|
|
—% |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
Currency impact |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Diluted EPS, excluding Currency |
|
|
$ |
|
|
|
|
0.98 |
|
|
$ |
|
|
|
|
0.98 |
|
|
—% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 10 |
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 |
|
|
|
March 31, |
|
December 31, |
|
|
|
2017 |
|
2016 |
|
|
|
April ~
December
|
|
January ~
March
|
|
12 months |
|
|
|
|
|
2016 |
|
2017 |
|
rolling |
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings |
|
|
$ |
|
|
|
|
|
|
|
|
5,645 |
|
|
$ |
|
|
|
|
|
|
|
|
1,658 |
|
|
$ |
|
|
|
|
|
|
|
|
|
7,303 |
|
|
$ |
7,250 |
|
Equity (income)/loss in
unconsolidated subsidiaries, net
|
|
|
(85 |
) |
|
(22 |
) |
|
(107 |
) |
|
(94 |
) |
Provision for Income Taxes |
|
|
2,138 |
|
|
541 |
|
|
2,679 |
|
|
2,768 |
|
Interest expense, net |
|
|
644 |
|
|
219 |
|
|
863 |
|
|
891 |
|
Depreciation and amortization |
|
|
568 |
|
|
197 |
|
|
765 |
|
|
743 |
|
Asset impairment and exit costs |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted EBITDA |
|
|
$ |
|
|
|
|
|
|
|
|
8,910 |
|
|
$ |
|
|
|
|
|
|
|
|
2,593 |
|
|
$ |
|
|
|
|
|
|
|
|
|
11,503 |
|
|
$ |
11,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
|
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
1,004 |
|
|
$ |
643 |
|
Current portion of long-term debt |
|
|
|
|
|
|
1,754 |
|
|
2,573 |
|
Long-term debt |
|
|
|
|
|
|
28,588 |
|
|
25,851 |
|
Total Debt |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
31,346 |
|
|
$ |
29,067 |
|
Less: Cash and cash equivalents |
|
|
|
|
|
|
5,076 |
|
|
4,239 |
|
Net Debt |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
26,270 |
|
|
$ |
24,828 |
|
|
|
|
|
|
|
|
|
|
|
Ratios:
|
|
|
|
|
|
|
|
|
|
Total Debt to Adjusted EBITDA |
|
|
|
|
|
|
2.73 |
|
|
2.51 |
|
Net Debt to Adjusted EBITDA |
|
|
|
|
|
|
2.28 |
|
|
2.15 |
|
|
|
Schedule 11 |
PHILIP MORRIS INTERNATIONAL INC. |
and Subsidiaries |
Reconciliation of Non-GAAP Measures |
Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding
Currency |
For the Quarters Ended March 31, |
($ in millions) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended |
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities (1) |
|
|
|
|
|
|
$ |
|
|
|
|
|
843 |
|
|
|
$ |
|
|
|
|
|
462 |
|
|
|
82.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency impact |
|
|
|
|
|
|
(118 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities,
excluding currency |
|
|
|
|
|
|
$ |
|
|
|
|
|
961 |
|
|
|
$ |
|
|
|
|
|
462 |
|
|
|
+100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Operating cash flow. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Schedule 12 |
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PHILIP MORRIS INTERNATIONAL INC. |
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and Subsidiaries |
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Reconciliation of Non-GAAP Measures |
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Reconciliation of Reported Diluted EPS to Adjusted Diluted
EPS
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For the Year Ended December 31, |
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(Unaudited) |
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2016 |
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Reported Diluted EPS |
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$ |
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4.48 |
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Adjustments: |
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Asset impairment and exit costs |
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— |
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Tax items |
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— |
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Adjusted Diluted EPS |
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$ |
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4.48 |
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![](http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170420005588r1&sid=mstr1&distro=nx&lang=en)
Philip Morris International Inc.
Investor Relations:
New York: +1 (917) 663 2233
Lausanne: +41 (0)58 242 4666
InvestorRelations@pmi.com
or
Media:
Lausanne: +41 (0)58 242 4500
Media@pmi.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170420005588/en/