Regulatory News:
- Reported diluted earnings per share of
$1.18, down by $0.10 or 7.8% versus $1.28 in 2013
- Excluding unfavorable currency of
$0.16, reported diluted earnings per share up by $0.06 or 4.7%
versus $1.28 in 2013 as detailed in the attached Schedule 9
- Adjusted diluted earnings per share of
$1.19, down by $0.10 or 7.8% versus $1.29 in 2013
- Excluding unfavorable currency of
$0.16, adjusted diluted earnings per share up by $0.06 or 4.7%
versus $1.29 in 2013 as detailed in the attached Schedule 8
- Cigarette shipment volume of 196.0
billion units, down by 4.4%
- Reported net revenues, excluding excise
taxes, of $6.9 billion, down by 8.8%
- Excluding unfavorable currency,
reported net revenues, excluding excise taxes, down by 1.6%
- Reported operating companies income of
$3.0 billion, down by 12.9%
- Excluding unfavorable currency,
reported operating companies income down by 3.7%
- Adjusted operating companies income of
$3.0 billion, down by 12.3%
- Excluding unfavorable currency,
adjusted operating companies income down by 3.1%
- Reported operating income of $3.0
billion, down by 13.0%
- Repurchased 15.4 million shares of the
company's common stock for $1.25 billion
- PMI revises its 2014 full-year reported
diluted earnings per share forecast to be in a range of $5.09 to
$5.19, versus $5.26 in 2013. This forecast includes:
- unfavorable currency of approximately
$0.61 per share, at prevailing exchange rates, versus unfavorable
currency of approximately $0.71 per share in its prior guidance;
and
- an estimated restructuring charge of
$0.03 per share related to the closure of its manufacturing
operations in Australia by the end of 2014, of which $0.01 per
share charge was recorded as asset impairment and exit costs in the
first quarter of 2014
- Excluding the unfavorable currency
impact, at prevailing exchange rates, of approximately $0.61 for
the full-year 2014, and the $0.03 per share restructuring charge,
reported diluted earnings per share are projected to increase by
approximately 6% to 8% versus adjusted diluted earnings per share
of $5.40 in 2013, as detailed in the attached Schedule 12
Philip Morris International Inc. (NYSE / Euronext Paris: PM)
today announced its 2014 first-quarter results.
“Our first-quarter results were in line with our expectations,
given the known challenges we face in Asia and inventory
distortions," said André Calantzopoulos, Chief Executive
Officer.
“While currencies remain volatile, we have recently witnessed an
improvement in their unfavorable impact on our business, and
accordingly, together with the restructuring charge, we are
increasing our 2014 full-year reported diluted earnings per share
guidance by $0.07.”
"Based on our expectation of robust pricing, market share growth
momentum and early signs that the operating environment is
improving in Europe, combined with our continued investments for
the long-term, we remain confident in our constant-currency
adjusted diluted EPS growth rate of 6%-8% for this year."
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 17, 2014.
Access is available at www.pmi.com/webcasts.
Dividends and Share Repurchase
Program
During the quarter, PMI declared a regular quarterly dividend of
$0.94, representing an annualized rate of $3.76 per common share,
and spent $1.25 billion to repurchase 15.4 million shares. Under
the current $18 billion share repurchase program, PMI has spent
$10.1 billion to repurchase 114.8 million shares, as shown in the
table below.
Current $18
Billion, Three-Year Program
Value
Shares
($
Mio.)
000
August - December 2012 $ 2,853 32,206 January - December
2013 6,000 67,231 January - March 2014 1,250 15,409
Total Under
Program $ 10,103 114,846
Since May 2008, when PMI began its first share repurchase
program, the company has spent an aggregate of $35.1 billion to
repurchase 571.6 million shares at an average price of $61.41 per
share, or 27.1% of the shares outstanding at the time of the
spin-off in March 2008.
Global Manufacturing Footprint
Optimization
As part of the company's ongoing review of its global
manufacturing operations, PMI announced:
On April 2, 2014, its plans to cease cigarette production in
Australia by the end of 2014 and transition all Australian
cigarette production to the company's affiliate in South Korea,
incurring $0.01 per share for asset impairment and exits costs in
the first quarter of 2014; and
On April 4, 2014, the initiation by its affiliate, Philip Morris
Holland B.V. (PMH), of consultations on a proposal to discontinue
cigarette production in Bergen op Zoom in the Netherlands. Subject
to the final outcome of the consultations and fulfillment of
certain other conditions, PMH would anticipate implementing the
contemplated decision by October 2014. During the consultation
period, PMI will not be providing information on the financial
implications of this proposal.
2014 Full-Year Forecast
PMI revises its 2014 full-year reported diluted earnings per
share forecast to be in a range of $5.09 to $5.19, versus $5.26 in
2013. Excluding the unfavorable currency impact, at prevailing
exchange rates, of approximately $0.61 for the full-year 2014, and
the estimated $0.03 per share restructuring charge in Australia,
reported diluted earnings per share are projected to increase by
approximately 6% to 8% versus adjusted diluted earnings per share
of $5.40 in 2013, as detailed in the attached Schedule 12.
This forecast includes a productivity and cost savings target of
$300 million and a share repurchase target of $4.0 billion.
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. This
forecast also excludes the proposal to discontinue cigarette
production in Bergen op Zoom in the Netherlands.
The factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to
these projections.
2014 FIRST-QUARTER
CONSOLIDATED RESULTS
In this press release, “PMI” refers to Philip Morris
International Inc. and its subsidiaries. References to total
international cigarette market, defined as worldwide cigarette
volume excluding the United States, total cigarette market, total
market and market shares are PMI estimates based on the latest
available data from a number of internal and external sources and
may, in defined instances, exclude the People's Republic of China
and/or PMI's duty-free business. North Africa is defined as
Algeria, Egypt, Libya, Morocco and Tunisia. The term “net revenues”
refers to operating revenues from the sale of our products,
excluding excise taxes and net of sales and promotion incentives.
Operating companies income, or “OCI,” is defined as operating
income, excluding general corporate expenses and the amortization
of intangibles, plus equity (income)/loss in unconsolidated
subsidiaries, net. PMI's management evaluates business segment
performance and allocates resources based on OCI. EBITDA is defined
as earnings before interest, taxes, depreciation and amortization.
Management also reviews OCI, OCI margins and earnings per share, or
“EPS,” and EBITDA on an adjusted basis (which may exclude the
impact of currency and other items such as acquisitions, asset
impairment and exit costs, discrete tax items and unusual items),
as well as free cash flow, defined as net cash provided by
operating activities less capital expenditures, and net debt. PMI
believes it is appropriate to disclose these measures as they
improve comparability and help investors analyze business
performance and trends. Non-GAAP measures used in this release
should be considered neither in isolation nor as a substitute for
the financial measures prepared in accordance with U.S. GAAP.
Comparisons are to the same prior-year period unless otherwise
stated. For a reconciliation of non-GAAP measures to corresponding
GAAP measures, see the relevant schedules provided with this press
release. In 2013, PMI concluded a number of business development
initiatives and agreements that were not accounted for as
acquisitions; thus, non-GAAP financial measures for 2013 that
exclude acquisitions do not exclude the impact of said initiatives
and agreements. Trademarks and service marks in this press release
that are the registered property of, or licensed by, the
subsidiaries of PMI, are italicized.
NET
REVENUES
PMI Net Revenues
($ Millions)
First-Quarter
Excl.
2014
2013
Change
Curr.
European Union $ 2,013 $ 1,970 2.2 % (0.4 )%
Eastern
Europe, Middle East & Africa 2,009 2,043 (1.7 )% 4.5 %
Asia 2,182 2,790 (21.8 )% (8.7 )%
Latin America &
Canada 713 781 (8.7 )% 4.2 %
Total PMI
$ 6,917 $ 7,584 (8.8 )%
(1.6 )%
Net revenues of $6.9 billion were down by 8.8%, including
unfavorable currency of $542 million. Excluding currency, net
revenues decreased by 1.6%, reflecting unfavorable volume/mix of
$531 million, mainly due to: lower total markets; and lower share
and unfavorable estimated inventory movements, notably in Japan;
partially offset by favorable pricing of $406 million across all
Regions, as well as the impact of the change to PMI's new business
structure in Egypt announced on January 29, 2014. The positive
pricing variance was partially offset by lower estimated excise
tax-driven inventory movements in the Philippines compared to the
first quarter of 2013.
OPERATING
COMPANIES INCOME
PMI Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2014
2013
Change
Curr.
European Union $ 978 $ 938 4.3 % 1.3 %
Eastern Europe,
Middle East & Africa 927 935 (0.9 )% 7.7 %
Asia 915
1,342 (31.8 )% (15.8 )%
Latin America & Canada 202
254 (20.5 )% — %
Total PMI $
3,022 $ 3,469 (12.9 )%
(3.7 )%
Reported operating companies income of $3.0 billion was down by
12.9%, including unfavorable currency of $319 million. Excluding
currency, operating companies income decreased by 3.7%, due to:
unfavorable volume/mix of $438 million, reflecting lower total
markets and unfavorable estimated inventory movements which,
combined, represented approximately two-thirds of the total
volume/mix variance; lower market share, mainly in Asia; higher
manufacturing costs, mainly due to the impact of the change to
PMI's new business structure in Egypt; and higher asset impairment
and exit costs, principally due to the factory closure in
Australia; partially offset by favorable pricing.
Adjusted operating companies income decreased by 12.3% as shown
in the table below and detailed in Schedule 7. Adjusted operating
companies income, excluding unfavorable currency, decreased by
3.1%. Adjusted operating companies income margin, excluding
unfavorable currency, decreased by 0.7 points to 45.1%, as detailed
in Schedule 7.
PMI Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2014
2013
Change
Curr.
Reported OCI $ 3,022 $ 3,469 (12.9 )% (3.7 )% Asset
impairment & exit costs (23 ) (3 )
Adjusted OCI $
3,045 $ 3,472 (12.3 )%
(3.1 )% Adjusted OCI Margin* 44.0 % 45.8 %
(1.8 ) (0.7 )
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
SHIPMENT VOLUME
& MARKET SHARE
PMI Cigarette
Shipment Volume (Million Units)
First-Quarter
2014
2013
Change
European Union 41,705 42,967 (2.9 )%
Eastern Europe,
Middle East & Africa 62,006 66,834 (7.2 )%
Asia
70,801 72,619 (2.5 )%
Latin America & Canada 21,449
22,527 (4.8 )%
Total PMI 195,961
204,947 (4.4 )%
PMI's cigarette shipment volume of 196.0 billion units decreased
by 4.4%, or 9.0 billion units, due principally to: the EU, mainly
reflecting lower total markets, partially offset by market share
growth; EEMA, due mainly to a lower total market in Russia and
unfavorable estimated inventory movements across various markets
within the Region, partially offset by Turkey; Asia, mainly
reflecting a lower market share in Indonesia, lower market share
and the adverse timing of PMI shipments in Japan, partially offset
by the total market growth driven by retail trade and consumer
purchasing in anticipation of the April 1, 2014, consumption tax
increase, and lower share in Pakistan, partially offset by the
Philippines driven by a favorable comparison with the first quarter
of 2013; and Latin America & Canada, due largely to the
unfavorable impact of price increases in Mexico. Excluding the
unfavorable impact of estimated inventory movements in the quarter,
PMI's cigarette shipment volume decreased by approximately
2.0%.
Total cigarette shipments of Marlboro of 65.9 billion units
decreased by 4.1%, due primarily to unfavorable estimated inventory
movements in EEMA and Japan, lower share in Japan, and a lower
total market in the EU and Mexico, partially offset by the
Philippines.
Total cigarette shipments of L&M of 21.0 billion units
decreased by 5.8%, driven notably by Algeria, Egypt and Saudi
Arabia, partially offset by Germany. Total cigarette shipments of
Bond Street of 9.3 billion units decreased by 6.3%, due
predominantly to Hungary, Kazakhstan and Russia. Total cigarette
shipments of Philip Morris of 8.0 billion units decreased by 5.4%,
due primarily to the morphing to Lark in Japan, partially offset by
Argentina. Total cigarette shipments of Parliament of 9.9 billion
units increased by 1.2%, driven mainly by Turkey, partially offset
by Japan and Russia. Total cigarette shipments of Chesterfield of
8.8 billion units increased by 14.3%, due primarily to Italy,
Poland and Turkey, partially offset by Russia and Ukraine. Total
cigarette shipments of Lark of 6.8 billion units decreased by 0.3%,
due predominantly to Turkey, partially offset by Japan reflecting
the morphing from Philip Morris.
Total shipment volume of OTP, in cigarette equivalent units,
decreased by 1.1%, mainly due to declines in the pipe tobacco and
snuff categories in Southern Africa that offset slight growth in
the fine cut category. Total shipment volume for cigarettes and
OTP, in cigarette equivalent units, decreased by 4.3%.
PMI's market share increased in a number of key markets,
including Algeria, Argentina, Austria, Belgium, Brazil, Canada,
France, Germany, Greece, Korea, Poland, Russia, Saudi Arabia,
Spain, Thailand, the United Kingdom and Vietnam.
EUROPEAN UNION REGION
(EU)
2014 First-Quarter
Net revenues of $2.0 billion increased by 2.2%. Excluding
favorable currency of $51 million, net revenues decreased by 0.4%,
due to unfavorable volume/mix of $60 million, predominantly
resulting from a lower total market, notably in France and Poland,
partially offset by favorable pricing of $52 million, driven
principally by Germany, partially offset by Italy.
Operating companies income of $978 million increased by 4.3%,
including favorable currency of $28 million. Excluding currency,
operating companies income increased by 1.3%, mainly driven by
favorable pricing and lower costs, partially offset by unfavorable
volume/mix of $59 million.
Adjusted operating companies income increased by 4.3%, as shown
in the table below and detailed on Schedule 7. Adjusted operating
companies income, excluding favorable currency, increased by
1.3%.
EU Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2014
2013
Change
Curr.
Reported OCI $ 978 $ 938 4.3 % 1.3 % Asset impairment &
exit costs — —
Adjusted OCI $
978 $ 938 4.3 % 1.3
% Adjusted OCI Margin* 48.6 % 47.6 % 1.0 0.8
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding favorable
currency, increased by 0.8 points to 48.4%, as detailed in Schedule
7.
The total cigarette market in the EU of 106.3 billion units
decreased by 5.6%, due primarily to the impact of tax-driven price
increases, the unfavorable economic and employment environment and
the prevalence of non-duty paid products. The total OTP market in
the EU of 38.4 billion cigarette equivalent units decreased by
1.0%, principally reflecting a lower total fine cut market, down by
0.9% to 33.6 billion cigarette equivalent units.
EU Region &
Key Market Shares
First-Quarter
2014
2013
Change
p.p.
Total EU 38.9 % 38.0 % 0.9 France 41.0 % 40.0 % 1.0 Germany 36.9 %
36.1 % 0.8 Italy 53.0 % 53.2 % (0.2 ) Poland 35.1 % 33.4 % 1.7
Spain 31.2 % 30.4 % 0.8
Although PMI's cigarette shipment volume of 41.7 billion units
decreased by 2.9%, predominantly reflecting a lower total market,
PMI's market share increased by 0.9 points to 38.9% as shown in the
table above. While shipment volume of Marlboro of 20.2 billion
units decreased by 3.8%, mainly due to the lower total market,
market share increased by 0.4 points to 19.1%, driven notably by
Italy and Spain. Shipment volume of L&M increased by 1.0% to
7.4 billion units and market share increased by 0.3 points to 6.9%,
driven notably by Germany. Shipment volume of Chesterfield of 5.4
billion units increased by 26.9% and market share increased by 0.6
points to 4.9%, driven notably by Italy and Poland. Shipment volume
of Philip Morris of 2.4 billion units increased by 3.0% and market
share increased by 0.1 point to 2.1%, driven notably by Italy.
PMI's shipments of OTP of 5.3 billion cigarette equivalent units
increased by 1.9%, driven principally by higher share. PMI's OTP
total market share was 13.8%, up by 1.0 point, reflecting gains in
the fine cut category, notably in Hungary, up by 10.3 points to
18.3%, Italy, up by 10.7 points to 41.2%, Poland, up by 16.2 points
to 32.7%, Portugal, up by 5.1 points to 33.4%, and Spain, up by 2.3
points to 15.7%.
EU Key Market
Commentaries
In France, the total cigarette market of 10.5 billion units
decreased by 8.9%, mainly reflecting the unfavorable impact of
price increases in July 2013 and January 2014, and the growth of
e-vapor products. While PMI's shipments of 4.6 billion units
decreased by 8.0%, market share increased by 1.0 point to 41.0%,
mainly driven by Marlboro and premium Philip Morris, up by 0.5 and
0.2 points to 25.0% and 9.4%, respectively. Market share of L&M
increased by 0.1 point to 2.6% and share of Chesterfield was flat
at 3.4%. The total industry fine cut category of 3.2 billion
cigarette equivalent units decreased by 6.3%. PMI's market share of
the category decreased by 0.3 points to 26.1%.
In Germany, the total cigarette market of 18.2 billion units
decreased by 3.0%. While PMI's shipments of 6.7 billion units
decreased by 0.7%, market share increased by 0.8 points to 36.9%,
driven by L&M and Chesterfield, up by 1.2 points and 0.1 point
to 11.7% and 1.7%, respectively, partially offset by Marlboro, down
by 0.3 points to 22.0%, reflecting the brand's crossing the
€5.00/pack price point in the second quarter of 2013. The total
industry fine cut category of 9.8 billion cigarette equivalent
units decreased by 0.9%. PMI's market share of the category
decreased by 1.8 points to 13.1%.
In Italy, the total cigarette market of 16.8 billion units
decreased by 0.5%, mainly reflecting a stabilization in the
prevalence of illicit trade and a lower incidence of e-vapor and
fine cut products. PMI's shipments of 9.1 billion units increased
by 0.8%, including favorable estimated inventory movements.
Excluding these trade inventory movements, PMI's shipments declined
by 0.8%. PMI's market share decreased by 0.2 points to 53.0%, due
primarily to: Diana in the low-price segment, down by 2.1 points to
9.9%, impacted by the growth of the super-low price segment;
partially offset by Philip Morris, up by 0.6 points to 2.5%, and
Chesterfield, up by 1.5 points to 5.1%, benefiting from its
repositioning in February 2014 into the €4.00/pack price segment.
Market share of Marlboro was flat at 25.6%. While the total
industry fine cut category of 1.4 billion cigarette equivalent
units decreased by 2.2%, PMI's market share of the category
increased by 10.7 points to 41.2%, driven by Marlboro following its
launch in the first quarter of 2013.
In Poland, the total cigarette market of 10.5 billion units
decreased by 10.6%, including the unfavorable impact of estimated
trade inventory movements. Excluding these trade inventory
movements, the total cigarette market declined by an estimated
7.8%, partially reflecting the growth of the fine cut category and
non-duty paid OTP products. Although PMI's shipments of 3.7 billion
units decreased by 6.0%, PMI's market share increased by 1.7 points
to 35.1%, driven by Marlboro, up by 0.1 point to 10.2%, L&M, up
by 0.6 points to 16.4%, and Chesterfield, up by 1.4 points to 6.9%,
benefiting from the morphing of Red & White in the fourth
quarter of 2013. The total industry fine cut category of 1.0
billion cigarette equivalent units increased by 7.1%. PMI's market
share of the category increased by 16.2 points to 32.7%.
In Spain, the total cigarette market of 10.5 billion units
decreased by 3.6%, mainly due to the impact of the unfavorable
economic and employment environment. PMI's shipments of 3.2 billion
units increased by 3.0%, including favorable estimated trade
inventory movements. Excluding these trade inventory movements,
PMI's shipments decreased by 1.1%. PMI's market share increased by
0.8 points to 31.2%, driven by higher share of Marlboro and
Chesterfield, up by 1.0 and 0.1 point to 15.1% and 9.3%,
respectively, partially offset by L&M, down by 0.2 to 6.2%.
While the total industry fine cut category of 2.2 billion cigarette
equivalent units decreased by 12.8%, partly reflecting the impact
of tax-driven price harmonization with the cigarette category in
July 2013, PMI's market share of the fine cut category increased by
2.3 points to 15.7%.
EASTERN EUROPE, MIDDLE
EAST & AFRICA REGION (EEMA)
2014 First-Quarter
Net revenues of $2.0 billion decreased by 1.7%. Excluding
unfavorable currency of $126 million, net revenues increased by
4.5%, reflecting favorable pricing of $234 million, driven
principally by Russia as well as the impact of the change to PMI's
new business structure in Egypt, partially offset by unfavorable
volume/mix of $142 million, mainly due to lower volume in
Russia.
Operating companies income of $927 million decreased by 0.9%.
Excluding unfavorable currency of $80 million, operating companies
income increased by 7.7%, due primarily to higher pricing,
partially offset by unfavorable volume/mix of $105 million and
higher costs, principally related to the impact of the change to
PMI's new business structure in Egypt.
Adjusted operating companies income decreased
by 0.9%, as shown in the table below and detailed on Schedule 7.
Adjusted operating companies income, excluding unfavorable
currency, increased by 7.7%.
EEMA Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2014
2013
Change
Curr.
Reported OCI $ 927 $ 935 (0.9 )% 7.7 % Asset impairment
& exit costs — —
Adjusted OCI $
927 $ 935 (0.9 )% 7.7
% Adjusted OCI Margin* 46.1 % 45.8 % 0.3 1.4
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency, increased by 1.4 points to 47.2%, as detailed
on Schedule 7.
PMI's cigarette shipment volume of 62.0 billion units decreased
by 7.2%, mainly due to Kazakhstan, Russia, Serbia and Ukraine,
partially offset by Turkey. Excluding the unfavorable impact of
estimated inventory movements, PMI's cigarette shipment volume
decreased by 3.0%.
PMI's cigarette shipment volume of premium brands decreased by
3.0%, due principally to Marlboro, down by 6.0% to 18.5 billion
units, partially due to the aforementioned inventory movements,
partially offset by Parliament, up by 4.5% to 7.2 billion
units.
EEMA Key Market
Commentaries
In North Africa, the total cigarette market increased by 2.2% to
an estimated 34.0 billion units, driven mainly by Egypt. PMI’s
shipment volume of 8.6 billion units decreased by 3.5%, principally
reflecting temporarily lower production of PMI's products as part
of the transition to the new business structure in Egypt. PMI’s
market share decreased by 1.3 points to 25.4%, due to lower share
in Egypt, partially offset by gains in the other four markets.
Market share of Marlboro increased by 1.5 points to 15.3%, while
share of L&M decreased by 2.7 points to 8.1%.
In Russia, the total cigarette market declined by 6.7% to an
estimated 66.9 billion units, mainly due to the unfavorable impact
of the tax-driven price increases of June 2013 and January 2014 and
the prevalence of illicit trade. PMI's shipment volume of 18.6
billion units decreased by 8.9%. PMI's February quarter-to-date
market share of 26.7%, as measured by Nielsen, was up by 0.5
points, and up by 0.4 points versus the fourth quarter of 2013.
Market share of Parliament, L&M and Bond Street increased by
0.2, 0.4 and 0.4 points to 3.5%, 3.0% and 7.0%, respectively,
partially offset by Marlboro and Chesterfield, down by 0.2 and 0.3
points to 1.6% and 2.9%, respectively.
In Turkey, the total cigarette market increased by 1.3% to an
estimated 18.8 billion units. PMI's shipment volume of 9.0 billion
units increased by 9.7%, mainly reflecting a favorable comparison
with the first quarter of 2013 in which shipments declined by 17.4%
as a result of the reversal of estimated trade inventory movements
in the fourth quarter of 2012 ahead of the January 2013 excise tax
increase. PMI's February quarter-to-date market share, as measured
by Nielsen, decreased by 0.4 points to 44.3%, mainly due to
Marlboro, mid-price Muratti and low-price L&M, down by 0.3, 0.5
and 1.0 points to 8.6%, 6.3% and 6.6%, respectively, partially
offset by premium Parliament, up by 1.1 points to 10.4%.
In Ukraine, the total cigarette market decreased by 6.5% to an
estimated 15.2 billion units, mainly reflecting the impact of price
increases in 2013, a worsening economy and the prevalence of
illicit trade. PMI's shipment volume of 5.1 billion units decreased
by 9.8% principally due, in addition to the aforementioned factors,
to a decrease in PMI's February quarter-to-date market share as
measured by Nielsen, down by 0.9 points to 33.1% as a result of
price competition and down-trading, with Marlboro and Parliament
down by 0.6 and 0.3 points to 5.1% and 3.1%, respectively. The
decrease in PMI's market share was partially offset by growth from
PMI's low-price segment brands, Bond Street and President.
ASIA
REGION
2014 First-Quarter
Net revenues of $2.2 billion decreased by 21.8%, including
unfavorable currency of $366 million. Excluding currency, net
revenues decreased by 8.7%, due primarily to unfavorable volume/mix
of $276 million, mainly due to Indonesia and the adverse timing of
shipments in Japan, partially offset by favorable pricing of $34
million. The positive pricing variance, driven notably by
Indonesia, was partially offset by lower estimated excise
tax-driven inventory movements in the Philippines compared to the
first quarter of 2013.
Operating companies income of $915 million decreased by 31.8%,
including unfavorable currency of $215 million. Excluding currency,
operating companies income decreased by 15.8%, principally due to
unfavorable volume/mix of $226 million, the unfavorable impact of
the aforementioned inventory movements, and higher asset impairment
and exit costs due to the announced factory closure in Australia,
partially offset by favorable pricing.
Adjusted operating companies income decreased by 30.3% as shown
in the table below and detailed on Schedule 7. Adjusted operating
companies income, excluding unfavorable currency, decreased by
14.3%.
Asia Operating
Companies Income ($ Millions)
First-Quarter
Excl.
2014
2013
Change
Curr.
Reported OCI $ 915 $ 1,342 (31.8 )% (15.8 )% Asset
impairment & exit costs (23 ) (3 )
Adjusted OCI $
938 $ 1,345 (30.3 )%
(14.3 )% Adjusted OCI Margin* 43.0 % 48.2 %
(5.2 ) (2.9 )
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency, decreased by 2.9 points to 45.3%, as detailed
on Schedule 7, reflecting the impact of the aforementioned
factors.
PMI's cigarette shipment volume of 70.8 billion units decreased
by 2.5%, due primarily to: a lower market share in Australia and
Indonesia, lower market share and the adverse timing of inventory
movements in Japan; and lower share in Pakistan; partially offset
by the Philippines driven by a favorable comparison with the first
quarter of 2013 which was significantly impacted by a disruptive
excise tax increase. Excluding the unfavorable impact of estimated
inventory movements, PMI's cigarette shipment volume was
essentially flat.
Shipment volume of Marlboro of 18.9 billion units increased by
0.8%, driven by Indonesia and the Philippines, partially offset by
Japan.
Asia Key Market
Commentaries
In Indonesia, the total cigarette market decreased by 1.0% to
73.8 billion units, mainly reflecting a weaker economy. The total
cigarette market for the full-year 2014 is estimated to increase by
up to 1.0%. PMI's shipment volume in the quarter of 25.5 billion
units decreased by 5.5%, primarily due to lower market share, down
by 1.6 points to 34.6% as a result of: the share decline of
hand-rolled Dji Sam Soe, which decreased by 2.1 points to 4.2%, due
to the continuing decline of the hand-rolled kretek segment,
partially offset by the growth of machine-made Dji Sam Soe Magnum,
and the fact that the brand crossed a critical price point ahead of
competition; the withdrawal of PMI's ultra-low price brands Trend
Mild and Vegas Mild following the implementation of excise tax
legislation relating to sister companies in the fourth quarter of
2013; and increased competition in the machine-made LTLN (low-tar,
low-nicotine) segment. Market share of Sampoerna A, in the premium
machine-made LTLN segment, increased by 0.1 point to 14.4%, while
mid-price U Mild was up by 1.1 points to 5.2%. Marlboro's market
share increased by 0.3 points to 5.3% and its share of the “white”
cigarettes segment, which represented 6.6% of the total cigarette
market, increased by 5.9 points to 80.4%.
In Japan, the total cigarette market increased by 9.6% to 49.4
billion units, mainly driven by retail trade and consumer
purchasing ahead of the consumption tax-driven retail price
increases of April 1, 2014. Excluding the favorable impact of these
inventory movements, the total cigarette market is estimated to
have declined by approximately 2.0%. For the full-year 2014, the
total cigarette market is projected to decline by an estimated 3.0%
to 3.5%. PMI's shipment volume in the quarter of 13.5 billion units
decreased by 9.1%, principally due to the adverse timing of PMI
shipments and lower market share. PMI's market share decreased by
2.0 points to 25.5%, with share of Marlboro, Lark, Philip Morris
and Virginia S. down by 0.4, 0.8, 0.2 and 0.3 points to 11.9%,
7.5%, 2.0% and 1.9%, respectively. Excluding the impact of retail
trade and consumer purchasing on the total market, PMI's estimated
market share of 25.9% was flat against the fourth quarter of
2013.
In Korea, the total cigarette market decreased by 5.4% to 19.4
billion units, mainly due to an unfavorable comparison with the
first quarter of 2013 resulting from trade inventory movements
ahead of an anticipated excise tax increase in 2013 that did not
materialize. Although PMI's shipment volume of 3.8 billion units
decreased by 3.3%, market share increased by 0.7 points to 19.9%,
with share of Marlboro, up by 0.3 points to 7.9%, Parliament, up by
0.3 points to 7.1%, driven by Parliament Hybrid 5mg and the
successful launch in October 2013 of Parliament Hybrid 1mg, and
Virginia S., flat at 4.1%.
In the Philippines, the total tax-paid industry cigarette volume
increased by 25.9% to an estimated 19.3 billion units, primarily
reflecting a favorable comparison with the first quarter of 2013
which was significantly impacted by a disruptive excise tax
increase in January and a surge in the prevalence of domestic
non-duty paid products. PMI's shipment volume of 16.2 billion units
increased by 19.6%. PMI's market share of 83.7%, down by 4.4
points, was up compared to the fourth-quarter and full-year 2013
market shares of 72.3% and 79.3%, respectively. Marlboro's market
share decreased by 2.8 points to 18.8% in the first quarter of
2014. Share of Fortune decreased by 11.4 points to 32.3%, more than
offset by gains from PMI's other local brands.
LATIN AMERICA &
CANADA REGION
2014 First-Quarter
Net revenues of $713 million decreased by 8.7%, including
unfavorable currency of $101 million. Excluding currency, net
revenues increased by 4.2%, driven by favorable pricing of $86
million, principally in Argentina, Canada and Mexico, partially
offset by unfavorable volume/mix of $53 million, principally due to
unfavorable estimated trade inventory movements in Mexico.
Operating companies income of $202 million decreased by 20.5%,
including unfavorable currency of $52 million. Excluding currency,
operating companies income was flat, reflecting favorable pricing
offset by unfavorable volume/mix of $48 million, principally due to
the trade inventory movements in Mexico, and higher costs,
primarily reflecting the impact of inflation in Argentina and
business-building initiatives, notably in Brazil.
Adjusted operating companies income decreased by 20.5% as shown
in the table below and detailed on Schedule 7. Adjusted operating
companies income, excluding unfavorable currency, was flat.
Latin America
& Canada Operating Companies Income ($ Millions)
First-Quarter
Excl.
2014
2013
Change
Curr.
Reported OCI $ 202 $ 254 (20.5 )% — % Asset impairment &
exit costs — —
Adjusted OCI $
202 $ 254 (20.5 )% —
% Adjusted OCI Margin* 28.3 % 32.5 % (4.2 ) (1.3 )
*Margins are calculated as adjusted OCI,
divided by net revenues, excluding excise taxes.
Adjusted operating companies income margin, excluding
unfavorable currency, decreased by 1.3 points to 31.2%, as detailed
on Schedule 7, reflecting the aforementioned factors.
PMI's cigarette shipment volume of 21.4 billion units decreased
by 4.8%, principally due to the timing of estimated trade inventory
movements in Mexico. Shipment volume of Marlboro of 8.2 billion
units decreased by 10.5%.
Latin America & Canada Key Market
Commentaries
In Argentina, the total cigarette market decreased by 0.9% to
10.7 billion units. PMI's cigarette shipment volume of 8.3 billion
units increased by 2.2% and market share increased by 2.5 points to
77.1%, driven by mid-price Philip Morris, up by 3.2 points to
43.3%, reflecting the positive impact of its capsule variants,
partially offset by low-price Next, down by 0.6 points to 2.2%.
Share of Marlboro was up by 0.1 point to 24.1%.
In Canada, the total cigarette market decreased by 7.5% to 5.8
billion units, mainly due to the depletion of estimated trade
inventory levels and the unfavorable impact of price increases.
Excluding the impact of these inventory movements, the total market
is estimated to have declined by 4.0%. While PMI's cigarette
shipment volume of 2.2 billion units decreased by 2.7%, market
share increased by 2.4 points to 38.5%, with premium brands Benson
& Hedges flat at 2.3% and Belmont up by 0.4 points to 2.8%.
Market share of mid-price Canadian Classics was up by 0.9 points to
10.9%. Market share of low-price brand Next was up by 1.6 points to
10.8%, partially offset by mid-price Number 7 and low-price Accord,
down by 0.1 point and 0.3 points to 4.2% and 2.7%,
respectively.
In Mexico, the total cigarette market decreased by 11.3% to 7.2
billion units, mainly due to the depletion of estimated trade
inventory levels built up ahead of PMI's price increase in December
2013. Excluding these trade inventory movements, the total
cigarette market declined by 2.0%. PMI's cigarette shipment volume
of 4.9 billion units decreased by 18.3%. PMI's market share
decreased by 5.8 points to 67.7%, or by 1.7 points to 71.3%,
excluding the impact of trade inventory movements. While market
share of Marlboro was down by 6.2 points to 47.0%, or down by 2.8
points to 50.4% excluding the impact of the trade inventory
movements, and share of Benson & Hedges was down by 0.6 points
to 5.2%, reflecting consumer down-trading and the timing of price
increases by PMI's principal competitor, PMI's share of the premium
price segment was up by 1.3 points to 91.2%. Market share of
Delicados, the second best-selling brand in the market, increased
by 0.2 points to 10.7%.
Philip Morris International Inc.
Profile
Philip Morris International Inc. (PMI) is the leading
international tobacco company, with seven of the world's top 15
international brands, including Marlboro, the number one cigarette
brand worldwide. PMI's products are sold in more than 180 markets.
In 2013, the company held an estimated 15.7% share of the total
international cigarette market outside of the U.S., or 28.2%
excluding the People's Republic of China and the U.S. For more
information, see www.pmi.com.
Forward-Looking and Cautionary
Statements
This press release contains projections of future results and
other forward-looking statements. Achievement of projected results
is subject to risks, uncertainties and inaccurate assumptions. In
the event that risks or uncertainties materialize, or underlying
assumptions prove inaccurate, actual results could vary materially
from those contained in such forward-looking statements. Pursuant
to the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995, PMI is identifying important factors
that, individually or in the aggregate, could cause actual results
and outcomes to differ materially from those contained in any
forward-looking statements made by PMI.
PMI's business risks include: significant increases in
cigarette-related taxes; the imposition of discriminatory excise
tax structures; fluctuations in customer inventory levels due to
increases in product taxes and prices; increasing marketing and
regulatory restrictions, often with the goal of reducing or
preventing the use of tobacco products; health concerns relating to
the use of tobacco products and exposure to environmental tobacco
smoke; litigation related to tobacco use; intense competition; the
effects of global and individual country economic, regulatory and
political developments; changes in adult smoker behavior; lost
revenues as a result of counterfeiting, contraband and cross-border
purchases; governmental investigations; unfavorable currency
exchange rates and currency devaluations; adverse changes in
applicable corporate tax laws; adverse changes in the cost and
quality of tobacco and other agricultural products and raw
materials; and the integrity of its information systems. PMI's
future profitability may also be adversely affected should it be
unsuccessful in its attempts to produce products with the potential
to reduce the risk of smoking-related diseases; 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, 2013. 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)
2014 2013 (1) %
Change Net revenues $ 17,779
$ 18,527 (4.0 )% Cost of sales
2,374 2,489 (4.6 )% Excise taxes on products (2) 10,862
10,943 (0.7 )% Gross profit 4,543 5,095 (10.8 )%
Marketing, administration and research costs 1,547 1,677 Asset
impairment and exit costs 23 3 Amortization of intangibles 22
24
Operating income (3) 2,951
3,391 (13.0 )% Interest expense, net 268
236 Earnings before income taxes 2,683 3,155
(15.0 )% Provision for income taxes 776 933 (16.8 )% Equity
(income)/loss in unconsolidated subsidiaries, net (9 ) 4
Net earnings 1,916 2,218 (13.6 )% Net earnings attributable
to noncontrolling interests 41 93
Net
earnings attributable to PMI $ 1,875
$ 2,125 (11.8
)% Per share data:(4) Basic earnings per
share $ 1.18 $
1.28 (7.8 )% Diluted earnings per
share $ 1.18 $
1.28 (7.8 )%
(1) Certain amounts have been reclassified
to conform to the current year's presentation due to the separate
disclosure ofequity (income)/loss in unconsolidated subsidiaries,
net.
(2) The segment detail of excise taxes on
products sold for the quarters ended March 31, 2014 and 2013 is
shown onSchedule 2.
(3) 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, plusequity
(income)/loss in unconsolidated subsidiaries, net. The
reconciliation from operating income to operating companiesincome
is as follows:
2014 2013 % Change
Operating Income $ 2,951 $ 3,391
(13.0 )%
Excluding:
- Amortization of Intangibles 22 24 - General corporate expenses
(included in marketing, administration and research costs above) 40
58 Plus: Equity (income)/loss in unconsolidated subsidiaries, net
(9 ) 4
Operating Companies Income $
3,022 $ 3,469
(12.9 )%
(4) Net earnings and weighted-average
shares used in the basic and diluted earnings per share
computations for thequarters ended March 31, 2014 and 2013 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 2014
Net Revenues (1)
$ 6,619 $ 4,562 $ 4,475 $ 2,123 $
17,779 Excise Taxes on Products (4,606 ) (2,553 ) (2,293 )
(1,410 ) (10,862 )
Net Revenues excluding Excise
Taxes 2,013 2,009 2,182 713
6,917 2013 Net Revenues $ 6,523 $ 4,423 $
5,251 $ 2,330 $ 18,527 Excise Taxes on Products (4,553 ) (2,380 )
(2,461 ) (1,549 ) (10,943 )
Net Revenues excluding Excise
Taxes 1,970 2,043 2,790 781
7,584 Variance Currency 51 (126 ) (366 ) (101
) (542 ) Acquisitions — — — — — Operations (8 ) 92 (242 ) 33
(125 )
Variance Total 43 (34
) (608 ) (68 ) (667
) Variance Total (%) 2.2 % (1.7 )% (21.8 )% (8.7 )% (8.8 )%
Variance excluding Currency (8 ) 92 (242 ) 33 (125 )
Variance excluding Currency (%)
(0.4 )% 4.5 % (8.7 )% 4.2 % (1.6 )% Variance excluding
Currency & Acquisitions (8 ) 92 (242 ) 33 (125 )
Variance excluding Currency &
Acquisitions (%)
(0.4 )% 4.5 % (8.7 )% 4.2 % (1.6 )% (1) 2014
Currency increased (decreased) net revenues as follows: European
Union $ 151 EEMA (419 ) Asia (697 ) Latin America & Canada (357
) $ (1,322 ) 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 2014 $ 978 $ 927 $ 915 $ 202 $
3,022 2013 938 935 1,342 254 3,469 % Change 4.3 % (0.9 )%
(31.8 )% (20.5 )% (12.9 )%
Reconciliation:
For the quarter ended March 31, 2013 $ 938
$ 935 $ 1,342 $ 254
$ 3,469 2013 Asset impairment and exit costs —
— 3 — 3 2014 Asset impairment and exit costs — — (23 ) — (23 )
Acquired businesses — — — — — Currency 28 (80 ) (215 ) (52 )
(319 ) Operations 12 72 (192 ) —
(108 )
For the quarter ended March 31, 2014
$ 978 $ 927
$ 915 $ 202
$ 3,022
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. 2014
Diluted Earnings Per Share $ 1.18 (1) 2013 Diluted Earnings
Per Share $ 1.28 (1) Change $ (0.10 ) % Change (7.8 )%
Reconciliation:
2013 Diluted Earnings Per Share $ 1.28 (1)
Special
Items:
2013 Asset impairment and exit costs — 2013 Tax items 0.01 2014
Asset impairment and exit costs (0.01 ) 2014 Tax items —
Currency (0.16 ) Interest (0.01 ) Change in tax rate — Impact of
lower shares outstanding and share-based payments 0.05 Operations
0.02
2014 Diluted Earnings Per Share $
1.18 (1) (1) Basic and diluted EPS were
calculated using the following (in millions):
Q12014
Q12013
Net earnings attributable to PMI $ 1,875 $ 2,125 Less
distributed and undistributed earnings attributable to share-based
payment awards 9 11 Net earnings for basic and
diluted EPS $ 1,866 $ 2,114
Weighted-average shares for basic and diluted EPS 1,583
1,646 Schedule 5 PHILIP MORRIS
INTERNATIONAL INC. and Subsidiaries
Condensed Balance Sheets
($ in millions, except ratios) (Unaudited)
March
31, December 31, 2014 2013
Assets
Cash and cash equivalents $ 1,823 $ 2,154 All
other current assets 13,002 14,698 Property, plant and equipment,
net 6,670 6,755 Goodwill 9,009 8,893 Other intangible assets, net
3,234 3,193 Investments in unconsolidated subsidiaries 1,460 1,536
Other assets 939 939
Total assets $
36,137 $ 38,168
Liabilities and
Stockholders' (Deficit) Equity
Short-term borrowings $ 3,284 $ 2,400 Current portion of long-term
debt 406 1,255 All other current liabilities 10,281 13,411
Long-term debt 25,989 24,023 Deferred income taxes 1,491 1,477
Other long-term liabilities 1,843 1,876 Total
liabilities 43,294 44,442 Total PMI stockholders' deficit
(8,613 ) (7,766 ) Noncontrolling interests 1,456 1,492
Total stockholders' deficit (7,157 ) (6,274 )
Total
liabilities and stockholders' (deficit) equity $
36,137 $ 38,168
Total debt $ 29,679 $ 27,678 Total debt to EBITDA 2.08
(1)
1.88
(1)
Net debt to EBITDA 1.95
(1)
1.74
(1)
(1) For the calculation of Total Debt to EBITDA and Net Debt to
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)
2014
2013
% Change in Reported Net
Revenues excluding Excise
Taxes
Reported
Net
Revenues
Less
Excise
Taxes
Reported
Net
Revenues
excluding
Excise
Taxes
Less
Currency
Reported
Net
Revenues
excluding
Excise
Taxes &
Currency
Less
Acquisi-
tions
Reported Net
Revenues
excluding
Excise Taxes,
Currency &
Acquisitions
Reported
Net
Revenues
Less
Excise
Taxes
Reported Net
Revenues
excluding
Excise Taxes
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
$ 6,619 $ 4,606 $ 2,013 $ 51 $ 1,962 $ — $
1,962 European Union $ 6,523
$
4,553 $ 1,970 2.2 % (0.4 )% (0.4 )% 4,562 2,553 2,009 (126 )
2,135 — 2,135 EEMA 4,423 2,380 2,043 (1.7 )% 4.5 % 4.5 % 4,475
2,293 2,182 (366 ) 2,548 — 2,548 Asia 5,251 2,461 2,790 (21.8 )%
(8.7 )% (8.7 )% 2,123 1,410 713 (101 ) 814 — 814
Latin America
& Canada
2,330 1,549 781 (8.7 )% 4.2 % 4.2 %
$
17,779 $ 10,862 $
6,917 $ (542 ) $
7,459 $ — $ 7,459
PMI Total $ 18,527 $
10,943 $ 7,584
(8.8 )% (1.6 )% (1.6 )%
2014 2013
% Change in Reported Operating
Companies Income
Reported
Operating
Companies
Income
Less
Currency
Reported
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Reported
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
$ 978 $ 28 $ 950 $ — $ 950 European Union $ 938 4.3 % 1.3 %
1.3 % 927 (80 ) 1,007 — 1,007 EEMA 935 (0.9 )% 7.7 % 7.7 % 915 (215
) 1,130 — 1,130 Asia 1,342 (31.8 )% (15.8 )% (15.8 )% 202 (52 ) 254
— 254
Latin America
& Canada
254 (20.5 )% — % — %
$ 3,022 $ (319
) $ 3,341 $ —
$ 3,341 PMI Total $ 3,469
(12.9 )% (3.7 )% (3.7
)% Schedule 7 PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation
of Reported Operating Companies Income to Adjusted Operating
Companies Income & Reconciliation of Adjusted Operating
Companies Income Margin, excluding Currency and Acquisitions
For
the Quarters Ended March 31, ($ in millions) (Unaudited)
2014 2013
% Change in Adjusted Operating
Companies Income
Reported
Operating
Companies
Income
Less
Asset
Impairment &
Exit Costs
Adjusted
Operating
Companies
Income
Less
Currency
Adjusted
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Less
Asset
Impairment &
Exit Costs
Adjusted
Operating
Companies
Income
Adjusted
Adjusted
excluding
Currency
Adjusted
excluding
Currency &
Acquisitions
$ 978 $ — $ 978 $ 28 $ 950 $ — $ 950 European
Union $ 938 $ — $ 938 4.3 % 1.3 % 1.3 % 927 — 927 (80 ) 1,007 —
1,007 EEMA 935 — 935 (0.9 )% 7.7 % 7.7 % 915 (23 ) 938 (215 ) 1,153
— 1,153 Asia 1,342 (3 ) 1,345 (30.3 )% (14.3 )% (14.3 )% 202 — 202
(52 ) 254 — 254
Latin America
& Canada
254 — 254 (20.5 )% — % — %
$ 3,022
$ (23 ) $ 3,045
$ (319 ) $ 3,364
$ — $ 3,364 PMI
Total $ 3,469 $ (3 )
$ 3,472 (12.3 )% (3.1
)% (3.1 )% 2014 2013
% 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
$ 950 $ 1,962 48.4 % $ 950 $ 1,962 48.4 % European Union $
938 $ 1,970 47.6 % 0.8 0.8 1,007 2,135 47.2 % 1,007 2,135 47.2 %
EEMA 935 2,043 45.8 % 1.4 1.4 1,153 2,548 45.3 % 1,153 2,548 45.3 %
Asia 1,345 2,790 48.2 % (2.9 ) (2.9 ) 254 814 31.2 % 254 814 31.2 %
Latin America
& Canada
254 781 32.5 % (1.3 ) (1.3 )
$ 3,364 $ 7,459
45.1 % $ 3,364 $
7,459 45.1 % PMI Total
$ 3,472 $ 7,584
45.8 % (0.7 ) (0.7 )
(1) For the calculation of net revenues excluding excise
taxes, currency and acquisitions, refer to Schedule 6.
Schedule 8 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)
2014 2013
% Change Reported Diluted EPS $
1.18 $ 1.28 (7.8 )%
Adjustments: Asset impairment and exit costs 0.01 — Tax items —
0.01
Adjusted Diluted EPS $
1.19 $ 1.29 (7.8 )% Less:
Currency impact (0.16 )
Adjusted Diluted EPS,
excluding Currency $ 1.35 $
1.29 4.7 % Schedule 9
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)
2014
2013
% Change Reported Diluted EPS $
1.18 $ 1.28 (7.8 )% Less:
Currency impact (0.16 )
Reported Diluted EPS,
excluding Currency $ 1.34 $
1.28 4.7 %
Schedule 10 PHILIP MORRIS INTERNATIONAL INC. and
Subsidiaries Reconciliation of Non-GAAP Measures Calculation of
Total Debt to EBITDA and Net Debt to EBITDA Ratios ($ in millions,
except ratios) (Unaudited)
For the Year Ended For
the Year Ended March 31, December 31, 2014
2013
April ~ December
January ~ March
12 months 2013 2014 rolling Earnings before income
taxes $ 9,387 $ 2,683 $ 12,070 $
12,542 Interest expense, net 737 268 1,005 973 Depreciation and
amortization 660 211 871 882
Extraordinary, unusual or non-recurring
expenses, net (1)
306 23 329 309
EBITDA $
11,090 $ 3,185 $ 14,275 $
14,706 March 31, December 31,
2014 2013 Short-term borrowings $ 3,284 $
2,400 Current portion of long-term debt 406 1,255 Long-term debt
25,989 24,023
Total Debt $ 29,679
$ 27,678 Less: Cash and cash equivalents 1,823
2,154
Net Debt $ 27,856 $ 25,524
Ratios
Total Debt to EBITDA 2.08 1.88 Net
Debt to EBITDA 1.95 1.74 (1)
Asset Impairment and Exit Costs at Operating Income level.
Schedule 11 PHILIP MORRIS INTERNATIONAL
INC. and Subsidiaries Reconciliation of Non-GAAP Measures
Reconciliation of Operating Cash Flow to Free Cash Flow and Free
Cash Flow, excluding Currency Reconciliation of Operating Cash Flow
to Operating Cash Flow, excluding Currency
For the Quarters
Ended March 31, ($ in millions) (Unaudited)
For the
Quarters Ended March 31, 2014 2013 %
Change Net cash provided by operating
activities(a) $ 715 $ 1,363
(47.5 )% Less: Capital expenditures 256
240
Free cash flow $ 459
$ 1,123 (59.1 )% Less: Currency
impact (253 )
Free cash flow, excluding
currency $ 712 $ 1,123
(36.6 )%
For the Quarters Ended
March 31, 2014 2013 % Change
Net cash provided by operating activities(a) $
715 $ 1,363 (47.5 )%
Less: Currency impact (268 )
Net cash provided by
operating activities,excluding currency $
983 $ 1,363 (27.9
)% (a) Operating cash flow.
Schedule 12
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)
2013 Reported
Diluted EPS $ 5.26 Adjustments: Asset
impairment and exit costs 0.12 Tax items 0.02
Adjusted Diluted EPS $ 5.40
Philip Morris International Inc.Investor Relations:New York: +1
(917) 663 2233Lausanne: +41 (0)58 242 4666orMedia:Lausanne: +41
(0)58 242 4500
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