Philip Morris International Inc · NYSE:PM
Philip Morris International — Q1 2017 Earnings Presentation
32 slides from Philip Morris International's earnings presentation, Apr 20, 2017
Slide 1: 2017 First-Quarter Results
2017 First-Quarter Results April 20, 2017 Exhibit 99.3
Slide 2: Introduction
2 Introduction ● Unless otherwise stated, we will be talking about results for the first quarter of 2017 and comparing them to the same period in 2016 ● Unless otherwise stated, references to total industry, total market, PMI volume and PMI market share performance reflect cigarettes and PMI’s heate
Slide 3: Forward-Looking and Cautionary Statements
3 Forward-Looking and Cautionary Statements ● This presentation and related discussion contain 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 mat
Slide 4: Increasing 2017 EPS Guidance for Favorable Tax Item Only
4 Increasing 2017 EPS Guidance for Favorable Tax Item Only ● Increasing 2017 reported diluted EPS guidance to a range of $4.84 to $4.99 at prevailing exchange rates, compared to $4.48 in 2016: - Includes four cents for favorable tax item - Includes eight cents of unfavorable currency at prevailing e
Slide 5: PMI Volume: Q1, 2017 Decline Driven Mainly by the Industry
5 Note: Figures do not sum due to rounding Source: PMI Financials or estimates PMI Volume: Q1, 2017 Decline Driven Mainly by the Industry ● PMI volume down by 9.4%, or by 7.8% excluding estimated inventory movements, due primarily to: - The impact of lower total cigarette industry volume, partly ref
Slide 6: PMI Volume: Over Half of Decline Due to Low-Price Segment
6 Note: Premium includes above premium. Low includes super low Source: PMI Financials or estimates PMI Volume: Over Half of Decline Due to Low-Price Segment 52% 21% 27% Mid Low PMI Portfolio Volume by Price Segment (Q1, 2017) 25% 23% 52% Premium Mid PMI Portfolio Volume Variance by Price Segment (Q1
Slide 7: PMI Volume: Expect Decline of 3% to 4% for Full-Year
7 Source: PMI Financials or estimates PMI Volume: Expect Decline of 3% to 4% for Full-Year 2017 ● Q1 volume decline slightly larger than anticipated ● Expect a combined decline of 3% to 4% for full-year 2017 ● Three main factors support the expected improvement for the full year: - The lapping of ch
Slide 8: Q1, 2017: Financial Results
8 Q1, 2017: Financial Results ● Net revenues up by 1.7%, ex-currency, despite cigarette-driven volume decline, driven by: - Favorable pricing, particularly in the Asia and EEMA Regions - Higher heated tobacco unit and IQOS device sales ● Adjusted OCI down by 1.7%, ex-currency, primarily reflecting:
Slide 9: Q1, 2017: Strong Pricing Variance
9 Q1, 2017: Strong Pricing Variance Source: PMI Financials or estimates ● Strong pricing variance driven by all Regions ● Announced or implemented price increases in a number of markets, notably in Algeria, Argentina, Australia, Brazil, Canada, Egypt, Germany, Indonesia, Poland, Mexico, Russia, Turk
Slide 10: PMI International Market Share
10 PMI International Market Share Note: Excluding China and the U.S. Below-premium includes mid, low and super-low. Premium also includes above-premium Source: PMI Financials or estimates +0.2pp (1.1)pp 27.7 26.8 Q1, 2016 Below-Premium Brands Premium Brands Q1, 2017
Slide 11: EU Region: Q1, 2017 Results Distorted by Inventory Movements
11 EU Region: Q1, 2017 Results Distorted by Inventory Movements ● Total industry volume down by 2.8%, consistent with our full-year 2017 decline forecast of 2% to 3% ● PMI volume down by 7.1%: - Impacted by unfavorable distributor cigarette inventory movements, notably related to the TPD implementat
Slide 12: Russia: Balancing Cigarette Market Share and Profitability Growth
12 Russia: Balancing Cigarette Market Share and Profitability Growth ● Industry volume down by 7.9% in Q1, 2017, primarily reflecting the impact of excise tax-driven price increases: - Expect full-year decline of 5% to 6% ● PMI cigarette share down QTD February, 2017, due mainly to the slower penetr
Slide 13: Philippines: Strong Performance of Marlboro Continued in Q1, 2017
13 Source: PMI Financials or estimates Philippines: Strong Performance of Marlboro Continued in Q1, 2017 Marlboro Cigarette Market Share (%) ● Profitability growth driven by higher pricing and favorable portfolio mix ● Cigarette industry volume down by 15.6%, due mainly to the impact of excise tax-
Slide 14: Indonesia: U Bold and Marlboro Filter Black Performing Strongly
14 Source: PMI Financials or estimates Indonesia: U Bold and Marlboro Filter Black Performing Strongly ● Cigarette industry volume down by 5.5% in Q1, 2017, reflecting the continued soft economic environment and above- inflation tax-driven price increases: - Anticipate full-year decline of 1% to 2%,
Slide 15: Japan: Strong Performance in Q1, 2017, Driven by IQOS
15 Note: "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. Pack designs are for illustrative purposes only Source: PMI
Slide 16: IQOS: Marlboro HeatSticks Share Growth in Japan Continues
16 IQOS: Marlboro HeatSticks Share Growth in Japan Continues Weekly Offtake Shares (%) Sept 2015 Apr 2016 National Sendai 2.2 5.1 0.5 Tokyo 0.4 4.0 Mar 2017 14.9 11.6 9.6 Note: Offtake share represents select C-Store sales volume for Marlboro HeatSticks as a percentage of the total estimated retail
Slide 17: IQOS: Launched in Key Cities in Markets To Date
17 IQOS: Launched in Key Cities in 24 Markets To Date EU Region ● Denmark ● Germany ● Greece ● Italy ● Lithuania (Feb 2017) ● Monaco ● Netherlands ● Poland (Apr 2017) ● Portugal ● Romania ● Spain ● Switzerland ● United Kingdom (a) Japan (Chitose, Chubu, Fukuoka, Osaka and Tokyo airports); Switzerlan
Slide 18: IQOS: Growing Heated Tobacco Unit National Market Shares
18 Japan Italy Switzerland Portugal National SoM (%) Focus Area (December 2016) National 5 cities 6 cities Lisbon Focus Area Cigarette Industry Volume Coverage(a) ̴ 100% ̴ 20% ̴ 35% ̴ 25% (a) Portion of cigarette industry volume covered by IQOS focus area in each market (as of December 2016) Note: "
Slide 19: IQOS: Growing Heated Tobacco Unit National Market Shares
19 Japan Italy Switzerland Portugal Germany National SoM (%) Focus Area (December 2016) National 5 cities 6 cities Lisbon 3 cities Focus Area Cigarette Industry Volume Coverage(b) ̴ 100% ̴ 20% ̴ 35% ̴ 25% ̴ 8% (a) Offtake share for three-city focus area (Berlin, Frankfurt and Munich) (b) Portion of
Slide 20: IQOS: Expanding Heated Tobacco Unit Capacity
20 IQOS: Expanding Heated Tobacco Unit Capacity Note: "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. Pack designs a
Slide 21: Conclusion: Outlook Remains Strong for Full-Year 2017
21 Conclusion: Outlook Remains Strong for Full-Year 2017 ● Q1 results generally came in as expected, though cigarette volume was lower than anticipated ● Full-year 2017 key assumptions remain intact ● Exceptional IQOS performance: - Making significant investments behind commercialization and the exp
Slide 22: 2017 First-Quarter Results Questions & Answers
Lorem ipsum sit amet dolor donec 2017 First-Quarter Results Questions & Answers Have you downloaded the PMI Investor Relations App yet? The free IR App is available to download at the Apple App Store for iOS devices and at Google Play for Android mobile devices. iOS Download Android Download Or go t
Slide 23: Glossary and Reconciliation of Non-GAAP Measures
Glossary and Reconciliation of Non-GAAP Measures
Slide 24: Glossary: General Terms
24 Glossary: General Terms ● "PMI" refers to Philip Morris International Inc. and its subsidiaries ● Until March 28, 2008, PMI was a wholly owned subsidiary of Altria Group, Inc. ("Altria"). Since that time the company has been independent and is listed on the New York Stock Exchange (ticker symbol
Slide 25: Glossary: Financial Terms
25 Glossary: Financial Terms ● Net revenues exclude excise taxes ● 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 defin
Slide 26: Glossary: Reduced-Risk Products
26 Glossary: 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 vari
Slide 27: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS
27 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) 2016 Reported Diluted EPS 4.48$ Adjustments: Asset impairment and exit costs - Tax items - Adjuste Dilut
Slide 28: Adjustments for the Impact of Currency and Acquisitions
28 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions For the Quarters Ended March 31, ($ in millions) (Unaudited) Net Revenues Less Excise Taxes Net Revenues excluding Excise Taxes Less Currency Net Revenues
Slide 29: Reconciliation of Operating Companies Income to Adjusted OCI
29 (a) For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to previous slide PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Operating Companies Income to Adjusted Operating Companies Income & Reconcilia
Slide 30: Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency
30 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency For the Quarters Ended March 31, (Unaudited) 2017 2016 % Change Reported Diluted EPS 1.02$ 0.98$ 4.1% A
Slide 31: Reconciliation of Reported Diluted EPS, excluding Currency
31 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency For the Quarters Ended March 31, (Unaudited) 2017 2016 % Change Reported Diluted EPS 1.02$ 0.98$ 4.1% Less: Currency impact - Re
Slide 32: 2017 First-Quarter Results
Lorem ipsum sit amet dolor donec 2017 First-Quarter Results April 20, 2017
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