2019 Full-Year Reported Diluted EPS of $4.61 vs. $5.08 in 2018, Reflecting Currency-Neutral Like-For-Like Adjusted Diluted EPS Growth of 9.9%; Provides 2020 Earnings Per Share Forecast
NEW YORK--(BUSINESS WIRE)-- Regulatory News:
Philip Morris International Inc. (NYSE: PM) today announces its 2019 fourth-quarter and full-year results. Comparisons presented in this press release on a "like-for-like" basis reflect pro forma 2018 results, which have been adjusted for the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019 (the date of deconsolidation). In addition, reflecting the deconsolidation, PMI's total market share has been restated for previous periods.
2019FULL-YEAR & FOURTH-QUARTER HIGHLIGHTS
2019 Full-Year
2019 Fourth-Quarter
"2019 marked a year of strong underlying business performance for PMI, driven by broad-based growth for IQOS and solid pricing for our combustible tobacco portfolio, with like-for-like adjusted diluted EPS up by 9.9%, excluding currency," said André Calantzopoulos, Chief Executive Officer.
"We continue to make significant progress in the transformation of our business, with smoke-free products now accounting for 8% of shipment volume and nearly one-fifth of net revenues, while further demonstrating our ability to maintain combustible tobacco leadership internationally, as evidenced by Marlboro’s full-year cigarette share of 10% -- an all-time high."
"Although we anticipate a few temporary headwinds, notably in Indonesia, we enter 2020 with favorable momentum, and expect to deliver like-for-like currency-neutral net revenue and adjusted diluted EPS growth this year consistent with our 2019 to 2021 compound annual growth targets of at least 5% and 8%, as well as further margin expansion."
2020 FULL-YEAR FORECAST
| Full-Year | |||||||||
2020 EPS Forecast | 2020 Forecast |
| 2019 |
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| Adjusted Growth | ||||
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Reported Diluted EPS | ≥ | $5.50 |
| $4.61 |
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2019 Tax items |
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| (0.04 | ) |
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2019 Asset impairment and exit costs |
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| 0.23 |
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2019 Canadian tobacco litigation-related expense |
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| 0.09 |
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2019 Loss on deconsolidation of RBH |
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| 0.12 |
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2019 Russia excise and VAT audit charge |
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| 0.20 |
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2019 Fair value adjustment for equity security investments |
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| (0.02 | ) |
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Adjusted Diluted EPS |
| $5.50 |
| $5.19 |
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Net earnings attributable to RBH |
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| (0.06 | ) | (a) |
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Adjusted Diluted EPS |
| $5.50 |
| $5.13 | (b) |
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Currency |
| (0.04 | ) |
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Adjusted Diluted EPS, excluding currency | ≥ | $5.54 |
| $5.13 | (b) | ≥ | 8% | |||
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(a) Net reported diluted EPS attributable to RBH from January 1, 2019 through March 21, 2019. | ||||||||||
(b) Pro forma. |
Reported diluted earnings per share forecast to be at least $5.50, at prevailing exchange rates, representing a projected increase of at least 19% versus reported diluted earnings per share of $4.61 in 2019.
2020 Full-Year Forecast Assumptions
This forecast assumes:
This forecast excludes the impact of any future acquisitions, unanticipated asset impairment and exit cost charges, future changes in currency exchange rates, further developments related to the U.S. Tax Cuts and Jobs Act, further developments pertaining to the judgment in the two Québec Class Action lawsuits and the Companies’ Creditors Arrangement Act (CCAA) protection granted to RBH, and any unusual events.
Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.
Global Collaboration Agreement with KT&G
On January 29, 2020, PMI announced a global collaboration agreement with the leading tobacco and nicotine company in South Korea, KT&G, to commercialize KT&G’s smoke-free products outside of the country. This collaboration serves to accelerate the achievement of PMI's vision of a smoke-free future, by offering adult smokers a broader choice of smoke-free alternatives to cigarettes.
The agreement, which will run for an initial period of three years, allows PMI to distribute current KT&G smoke-free products, and their evolutions, on an exclusive basis, and does not restrict PMI from distributing its own or third-party products. KT&G’s smoke-free product portfolio includes heat-not-burn tobacco products (e.g., Lil Mini and Lil Plus), hybrid technologies that combine heat-not-burn tobacco and e-vapor technologies (e.g., Lil Hybrid), and e-vapor products (e.g., Lil Vapor).
Products sold under the agreement will be subject to careful assessment to ensure they meet the regulatory requirements in the markets where they are launched, as well as PMI’s high standards of quality and scientific substantiation of their harm reduction potential. PMI and KT&G will seek any necessary regulatory approvals that may be required on a market-by-market basis.
PMI will be responsible for the commercialization of smoke-free products supplied under the agreement. The agreement does not pertain to the South Korean market or combustible products. There are no current plans to commercialize KT&G products in the U.S.
Conference Call
A conference call, hosted by André Calantzopoulos, Chief Executive Officer, and Martin King, Chief Financial Officer, will be webcast at 9:00 a.m., Eastern Time, on February 6, 2020. Access is at www.pmi.com/2019Q4earnings. 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.
CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE
PMI Shipment Volume by Region | Fourth-Quarter | Full-Year | ||||||||||||
(million units) | 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||
Cigarettes |
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European Union | 41,226 | 43,744 | (5.8 | )% | 174,319 | 179,622 | (3.0 | )% | ||||||
Eastern Europe | 25,865 | 28,424 | (9.0 | )% | 100,644 | 108,718 | (7.4 | )% | ||||||
Middle East & Africa | 32,611 | 35,774 | (8.8 | )% | 134,568 | 136,605 | (1.5 | )% | ||||||
South & Southeast Asia | 44,704 | 47,623 | (6.1 | )% | 174,934 | 178,469 | (2.0 | )% | ||||||
East Asia & Australia | 11,301 | 12,772 | (11.5 | )% | 49,951 | 56,163 | (11.1 | )% | ||||||
Latin America & Canada | 19,387 | 21,909 | (11.5 | )% | 72,293 | 80,738 | (10.5 | )% | ||||||
Total PMI | 175,094 | 190,246 | (8.0 | )% | 706,709 | 740,315 | (4.5 | )% | ||||||
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Heated Tobacco Units |
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European Union | 3,759 | 2,124 | 77.0 | % | 12,569 | 5,977 | +100 | % | ||||||
Eastern Europe | 5,240 | 2,312 | +100 | % | 13,453 | 4,979 | +100 | % | ||||||
Middle East & Africa | 593 | 571 | 3.9 | % | 2,654 | 3,403 | (22.0 | )% | ||||||
South & Southeast Asia | — | — | — | % | — | — | — | % | ||||||
East Asia & Australia | 7,424 | 7,111 | 4.4 | % | 30,677 | 26,866 | 14.2 | % | ||||||
Latin America & Canada (1) | 97 | 49 | 98.0 | % | 299 | 147 | +100 | % | ||||||
Total PMI | 17,113 | 12,167 | 40.7 | % | 59,652 | 41,372 | 44.2 | % | ||||||
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Cigarettes and Heated Tobacco Units |
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European Union | 44,985 | 45,868 | (1.9 | )% | 186,888 | 185,599 | 0.7 | % | ||||||
Eastern Europe | 31,105 | 30,736 | 1.2 | % | 114,097 | 113,697 | 0.4 | % | ||||||
Middle East & Africa | 33,204 | 36,345 | (8.6 | )% | 137,222 | 140,008 | (2.0 | )% | ||||||
South & Southeast Asia | 44,704 | 47,623 | (6.1 | )% | 174,934 | 178,469 | (2.0 | )% | ||||||
East Asia & Australia | 18,725 | 19,883 | (5.8 | )% | 80,628 | 83,029 | (2.9 | )% | ||||||
Latin America & Canada | 19,484 | 21,958 | (11.3 | )% | 72,592 | 80,885 | (10.3 | )% | ||||||
Total PMI | 192,207 | 202,413 | (5.0 | )% | 766,361 | 781,687 | (2.0 | )% | ||||||
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license. |
Full-Year
Estimated international industry cigarette and heated tobacco unit volume, excluding China and the U.S., of 2.7 trillion, decreased by 2.0%, due to the EU, EE, S&SA, EA&A and LA&C, as described in the Regional sections below.
PMI's total shipment volume decreased by 2.0%, or by 1.4% on a like-for-like basis, due to:
partly offset by
Impact of Inventory Movements
On a like-for-like basis, excluding the net favorable impact of estimated distributor inventory movements of approximately 1.1 billion units, PMI’s total in-market sales declined by 1.5%, due to a 3.7% decline of cigarettes, partly offset by a 35.3% increase in heated tobacco units.
The net favorable impact of estimated distributor inventory movements of approximately 1.1 billion units reflected a 2.7 billion favorable impact from heated tobacco units (driven primarily by Japan, mainly reflecting a favorable comparison with 2018 in which IQOS consumable inventories were reduced, partly offset by PMI Duty Free), partially offset by a 1.6 billion unfavorable impact from cigarettes (due primarily to Japan, North Africa and Thailand, partly offset by the EU Region and Saudi Arabia).
Fourth-Quarter
PMI's total shipment volume decreased by 5.0%, or by 4.4% on a like-for-like basis, principally due to:
partly offset by
Impact of Inventory Movements
On a like-for-like basis, excluding the net unfavorable impact of estimated distributor inventory movements of approximately 2.5 billion units, PMI’s total in-market sales declined by 3.1%, due to a 6.0% decline of cigarettes, partly offset by a 44.7% increase in heated tobacco units.
The net unfavorable impact of estimated distributor inventory movements of approximately 2.5 billion units reflected a 2.3 billion impact from cigarettes, due mainly to the EU Region, Japan and North Africa.
PMI Shipment Volume by Brand
PMI Shipment Volume by Brand | Fourth-Quarter | Full-Year | ||||||||||||
(million units) | 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||
Cigarettes |
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Marlboro | 66,025 | 68,436 | (3.5 | )% | 262,908 | 264,423 | (0.6 | )% | ||||||
L&M | 23,107 | 23,038 | 0.3 | % | 92,873 | 89,789 | 3.4 | % | ||||||
Chesterfield | 13,683 | 14,831 | (7.7 | )% | 57,185 | 59,452 | (3.8 | )% | ||||||
Philip Morris | 12,216 | 13,177 | (7.3 | )% | 49,164 | 49,864 | (1.4 | )% | ||||||
Parliament | 9,639 | 10,656 | (9.5 | )% | 38,723 | 41,697 | (7.1 | )% | ||||||
Sampoerna A | 9,121 | 10,391 | (12.2 | )% | 35,133 | 39,522 | (11.1 | )% | ||||||
Dji Sam Soe | 9,346 | 8,044 | 16.2 | % | 32,435 | 29,195 | 11.1 | % | ||||||
Bond Street | 6,926 | 8,212 | (15.7 | )% | 28,025 | 32,173 | (12.9 | )% | ||||||
Lark | 4,027 | 5,417 | (25.7 | )% | 19,602 | 23,021 | (14.9 | )% | ||||||
Fortune | 3,129 | 4,805 | (34.9 | )% | 12,831 | 16,596 | (22.7 | )% | ||||||
Others | 17,875 | 23,239 | (23.1 | )% | 77,830 | 94,583 | (17.7 | )% | ||||||
Total Cigarettes | 175,094 | 190,246 | (8.0 | )% | 706,709 | 740,315 | (4.5 | )% | ||||||
Heated Tobacco Units (1) | 17,113 | 12,167 | 40.7 | % | 59,652 | 41,372 | 44.2 | % | ||||||
Total PMI | 192,207 | 202,413 | (5.0 | )% | 766,361 | 781,687 | (2.0 | )% | ||||||
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license. | ||||||||||||||
Note: Sampoerna A includes Sampoerna; Philip Morris includes Philip Morris/Dubliss; and Lark includes Lark Harmony. |
Full-Year
PMI's cigarette shipment volume of the following brands decreased:
The increase in PMI's heated tobacco unit shipment volume was mainly driven by: the EU (notably Italy and Poland), Eastern Europe (notably Kazakhstan, Russia and Ukraine) and Japan, partly offset by Korea and PMI Duty Free.
PMI's cigarette shipment volume of the following brands increased:
International Share of Market
PMI's total international market share (excluding China and the U.S.), defined as PMI's cigarette and heated tobacco unit sales volume as a percentage of total industry cigarette and heated tobacco unit sales volume, increased by 0.1 point to 28.4%, reflecting:
PMI's total international cigarette market share, defined as PMI's cigarette sales volume as a percentage of total industry cigarette sales volume, was down by 0.3 points to 26.9%, mainly reflecting: out-switching to heated tobacco units, notably in the EU and Japan; and lower cigarette market share, notably in Argentina, Indonesia, Korea and Turkey.
In 2019, PMI owned six of the world's top 15 international cigarette brands, with international cigarette market shares as follows: Marlboro, 10.0%; L&M, 3.5%; Chesterfield, 2.2%; Philip Morris, 1.9%; Parliament, 1.5%; and Bond Street, 1.1%.
Fourth-Quarter
PMI's cigarette shipment volume of the following brands decreased:
The increase in PMI's heated tobacco unit shipment volume was mainly driven by the EU (notably Italy and Poland), Eastern Europe (notably Kazakhstan, Russia and Ukraine) and Japan, partly offset by Korea.
PMI's cigarette shipment volume of the following brands increased:
International Share of Market
PMI's total international market share (excluding China and the U.S.) decreased by 0.2 points to 28.4%, reflecting:
PMI's total international cigarette market share was down by 0.9 points to 26.7%, mainly reflecting: out-switching to heated tobacco units, notably in the EU Region and Russia; and lower cigarette market share, notably in Argentina, Indonesia, Korea and Turkey.
CONSOLIDATED FINANCIAL SUMMARY
Full-Year
Financial Summary - Years Ended December 31, |
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| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other(1) | ||||||||||
(in millions) |
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Net Revenues |
| $ 29,805 | $ 29,625 |
| 0.6 | % | 3.8 | % |
| 180 |
| (937 | ) | 1,483 |
| 397 |
| (763 | ) | ||
Cost of Sales |
| (10,513 | ) | (10,758 | ) |
| 2.3 | % | (0.5 | )% |
| 245 |
| 302 |
| — |
| (309 | ) | 252 |
|
Marketing, Administration and Research Costs (2) |
| (8,695 | ) | (7,408 | ) |
| (17.4 | )% | (22.0 | )% |
| (1,287 | ) | 340 |
| — |
| — |
| (1,627 | ) |
Amortization of Intangibles |
| (66 | ) | (82 | ) |
| 19.5 | % | 15.9 | % |
| 16 |
| 3 |
| — |
| — |
| 13 |
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Operating Income |
| $ 10,531 | $ 11,377 |
| (7.4 | )% | (4.9 | )% |
| (846 | ) | (292 | ) | 1,483 |
| 88 |
| (2,125 | ) | ||
Asset Impairment & Exit Costs (3) |
| (422 | ) | — |
|
| — | % | — | % |
| (422 | ) | — |
| — |
| — |
| (422 | ) |
Canadian Tobacco Litigation-Related Expense (3) |
| (194 | ) | — |
|
| — | % | — | % |
| (194 | ) | — |
| — |
| — |
| (194 | ) |
Loss on Deconsolidation of RBH (3) |
| (239 | ) | — |
|
| — | % | — | % |
| (239 | ) | — |
| — |
| — |
| (239 | ) |
Russia Excise and VAT Audit Charge (3) |
| (374 | ) | — |
|
| — | % | — | % |
| (374 | ) | — |
| — |
| — |
| (374 | ) |
Adjusted Operating Income |
| $ 11,760 | $ 11,377 |
| 3.4 | % | 5.9 | % |
| 383 |
| (292 | ) | 1,483 |
| 88 |
| (896 | ) | ||
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Adjusted Operating Income Margin |
| 39.5 | % | 38.4 | % |
| 1.1pp | 0.8pp |
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(1) Cost/Other variance includes the impact of the RBH deconsolidation. | |||||||||||||||||||||
(2) Unfavorable Cost/Other variance includes the 2019 Canadian tobacco litigation-related expense, the loss on deconsolidation of RBH, asset impairment and exit costs, the impact of the RBH deconsolidation and the Russia excise and VAT audit charge. | |||||||||||||||||||||
(3) Included in Marketing, Administration and Research Costs above. | |||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. |
Net revenues, excluding unfavorable currency, increased by 3.8%, mainly reflecting: a favorable pricing variance, notably in Germany, Indonesia, Japan, the Philippines and Turkey; and favorable volume/mix, mainly driven by heated tobacco unit and IQOS device volume in the EU and Russia, and heated tobacco unit volume in Japan, partly offset by unfavorable volume/mix of cigarettes, notably in Australia, the EU, Indonesia, Japan and Russia, unfavorable heated tobacco unit volume in PMI Duty Free, and unfavorable IQOS device volume in Japan and Korea. The currency-neutral growth in net revenues of 3.8% came despite the unfavorable impact of $763 million, shown in "Cost/Other," predominantly resulting from the deconsolidation of RBH. On a like-for-like basis, net revenues, excluding unfavorable currency, increased by 6.4%, as detailed in Schedule 9.
Operating income, excluding unfavorable currency, decreased by 4.9%. Excluding the loss on deconsolidation of RBH, the Canadian tobacco litigation-related expense, asset impairment and exit charges related to plant closures in Argentina, Colombia, Germany and Pakistan as part of global manufacturing infrastructure optimization, as well as the Russia excise and VAT audit charge, adjusted operating income, excluding unfavorable currency, increased by 5.9%, primarily reflecting: a favorable pricing variance; favorable volume/mix, mainly driven by heated tobacco units in the EU, Japan and Russia, partly offset by unfavorable volume/mix of cigarettes, notably in Australia, the EU, Indonesia, Japan and Russia, as well as unfavorable heated tobacco unit volume in PMI Duty Free; and lower manufacturing costs; partly offset by higher marketing, administration and research costs, reflecting increased investment behind reduced-risk products (mainly in the EU and Eastern Europe), and the net unfavorable impact resulting from the deconsolidation of RBH shown in "Cost/Other." On a like-for-like basis, adjusted operating income, excluding unfavorable currency, increased by 11.2%, as detailed in Schedule 9.
Adjusted operating income margin, excluding currency, increased by 0.8 points to 39.2%, as detailed in Schedule 8, or by 1.7 points to 39.2% on a like-for-like basis, as detailed in Schedule 9.
Fourth-Quarter
Financial Summary - Quarters Ended December 31, |
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| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other(1) | ||||||||||
(in millions) |
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Net Revenues |
| $ 7,713 | $ 7,499 |
| 2.9 | % | 2.9 | % |
| 214 |
| (6 | ) | 530 |
| (60 | ) | (250 | ) | ||
Cost of Sales |
| (2,778 | ) | (2,781 | ) |
| 0.1 | % | (0.9 | )% |
| 3 |
| 28 |
| — |
| (54 | ) | 29 |
|
Marketing, Administration and Research Costs (2) |
| (2,413 | ) | (1,997 | ) |
| (20.8 | )% | (21.2 | )% |
| (416 | ) | 7 |
| — |
| — |
| (423 | ) |
Amortization of Intangibles |
| (16 | ) | (19 | ) |
| 15.8 | % | 15.8 | % |
| 3 |
| — |
| — |
| — |
| 3 |
|
Operating Income |
| $ 2,506 | $ 2,702 |
| (7.3 | )% | (8.3 | )% |
| (196 | ) | 29 |
| 530 |
| (114 | ) | (641 | ) | ||
Asset Impairment & Exit Costs (3) |
| (357 | ) | — |
|
| — | % | — | % |
| (357 | ) | — |
| — |
| — |
| (357 | ) |
Adjusted Operating Income |
| $ 2,863 | $ 2,702 |
| 6.0 | % | 4.9 | % |
| 161 |
| 29 |
| 530 |
| (114 | ) | (284 | ) | ||
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Adjusted Operating Income Margin |
| 37.1 | % | 36.0 | % |
| 1.1pp | 0.7pp |
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(1) Cost/Other variance includes the impact of the RBH deconsolidation. | |||||||||||||||||||||
(2) Unfavorable Cost/Other variance includes 2019 asset impairment and exit costs. | |||||||||||||||||||||
(3) Included in Marketing, Administration and Research Costs above. | |||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. |
Net revenues, excluding unfavorable currency, increased by 2.9%, mainly reflecting: a favorable pricing variance, driven notably by France, Germany, the Philippines and Saudi Arabia; partly offset by unfavorable volume/mix, due mainly to cigarette volume, notably in Australia, the EU, Japan, the Philippines and Russia, and cigarette mix in Indonesia, largely offset by favorable heated tobacco unit volume, notably in the EU, Japan and Russia. The currency-neutral growth in net revenues of 2.9% came despite the unfavorable impact of $250 million, shown in "Cost/Other," predominantly resulting from the deconsolidation of RBH. On a like-for-like basis, net revenues, excluding unfavorable currency, increased by 6.3%, as detailed in Schedule 9.
Operating income, excluding favorable currency, decreased by 8.3%. Excluding asset impairment and exit charges related to plant closures, notably in Germany, adjusted operating income, excluding favorable currency, increased by 4.9%, primarily reflecting: a favorable pricing variance; partly offset by unfavorable volume/mix, reflecting the same drivers as for net revenues noted above; higher marketing, administration and research costs, reflecting increased investment behind reduced-risk products (mainly in the EU and Eastern Europe); and the net unfavorable impact resulting from the deconsolidation of RBH shown in "Cost/Other." On a like-for-like basis, adjusted operating income, excluding favorable currency, increased by 11.9%, as detailed in Schedule 9.
Adjusted operating income margin, excluding currency, increased by 0.7 points to 36.7%, as detailed in Schedule 8, or by 1.8 points to 36.7% on a like-for-like basis, as detailed in Schedule 9.
EUROPEAN UNION REGION
Full-Year
Financial Summary - Years Ended December 31, |
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| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
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Net Revenues |
| $ 9,817 | $ 9,298 |
| 5.6 | % | 11.6 | % |
| 519 |
| (563 | ) | 288 |
| 794 |
| — |
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Operating Income |
| $ 3,970 | $ 4,105 |
| (3.3 | )% | 4.8 | % |
| (135 | ) | (330 | ) | 288 |
| 587 |
| (680 | ) | ||
Asset Impairment & Exit Costs (1) |
| (342 | ) | — |
|
| — | % | — | % |
| (342 | ) | — |
| — |
| — |
| (342 | ) |
Adjusted Operating Income |
| $ 4,312 | $ 4,105 |
| 5.0 | % | 13.1 | % |
| 207 |
| (330 | ) | 288 |
| 587 |
| (338 | ) | ||
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Adjusted Operating Income Margin |
| 43.9 | % | 44.1 | % |
| (0.2)pp | 0.6pp |
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(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 11.6%, reflecting a favorable pricing variance, driven principally by France and Germany, partly offset by Poland; and favorable volume/mix, primarily driven by heated tobacco unit and IQOS device volume, notably in the Czech Republic, Germany, Greece, Italy and Poland, partly offset by lower cigarette volume, notably in France and Italy, and unfavorable cigarette volume/mix in Germany.
Operating income, excluding unfavorable currency, increased by 4.8%. Excluding asset impairment and exit charges related to the plant closure in Germany, adjusted operating income, excluding unfavorable currency, increased by 13.1%, mainly reflecting: a favorable pricing variance; favorable volume/mix, primarily driven by heated tobacco unit volume, notably in the Czech Republic, Germany, Greece, Italy and Poland, partly offset by lower cigarette volume, notably in France and Italy, and unfavorable cigarette volume/mix in Germany; partially offset by higher manufacturing costs and higher marketing, administration and research costs, notably related to increased investment behind reduced-risk products.
Adjusted operating income margin, excluding currency, increased by 0.6 points to 44.7%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - Quarters Ended December 31, |
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| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
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Net Revenues |
| $ 2,436 |
| $ 2,340 |
|
| 4.1 | % | 8.6 | % |
| 96 |
| (106 | ) | 82 |
| 120 |
| — |
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|
|
|
|
| |||||||||
Operating Income |
| $ 624 |
| $ 1,009 |
|
| (38.2 | )% | (31.3 | )% |
| (385 | ) | (69 | ) | 82 |
| 69 |
| (467 | ) |
Asset Impairment & Exit Costs (1) |
| (342 | ) | — |
| — | % | — | % |
| (342 | ) | — |
| — |
| — |
| (342 | ) | |
Adjusted Operating Income |
| $ 966 |
| $ 1,009 |
|
| (4.3 | )% | 2.6 | % |
| (43 | ) | (69 | ) | 82 |
| 69 |
| (125 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 39.7 | % | 43.1 | % |
| (3.4)pp | (2.4)pp |
|
|
|
|
|
| |||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 8.6%, reflecting a favorable pricing variance, driven principally by France and Germany, and favorable volume/mix, mainly driven by heated tobacco unit volume, notably in the Czech Republic, Germany, Italy and Poland, partly offset by lower cigarette volume, notably in France and Italy, and unfavorable cigarette volume/mix in Germany.
Operating income, excluding unfavorable currency, decreased by 31.3%, due primarily to the unfavorable impact, shown in "Cost/Other," of the asset impairment and exit charges related to the plant closure in Germany. Excluding these charges, adjusted operating income, excluding unfavorable currency, increased by 2.6%, mainly reflecting: a favorable pricing variance; favorable volume/mix, reflecting the same drivers as for net revenues noted above; partly offset by higher manufacturing costs; and higher marketing, administration and research costs, largely related to increased investments behind reduced-risk products.
Adjusted operating income margin, excluding currency, decreased by 2.4 points to 40.7%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
European Union Key Data |
| Fourth-Quarter |
| Full-Year | |||||||||||||
|
|
|
|
|
| Change |
|
|
|
|
|
| Change | ||||
|
| 2019 |
| 2018 |
| % / pp |
|
| 2019 |
| 2018 |
| % / pp | ||||
Total Market (billion units) |
| 118.6 | 119.3 | (0.6)% |
| 482.5 | 484.5 | (0.4)% | |||||||||
|
|
|
|
|
|
|
|
| |||||||||
PMI Shipment Volume (million units) |
|
|
|
|
|
|
|
| |||||||||
Cigarettes |
| 41,226 | 43,744 | (5.8)% |
| 174,319 | 179,622 | (3.0)% | |||||||||
Heated Tobacco Units |
| 3,759 | 2,124 | 77.0% |
| 12,569 | 5,977 | +100.0% | |||||||||
Total EU |
| 44,985 | 45,868 | (1.9)% |
| 186,888 | 185,599 | 0.7% | |||||||||
|
|
|
|
|
|
|
|
| |||||||||
PMI Market Share |
|
|
|
|
|
|
|
| |||||||||
Marlboro |
| 17.8 | % | 18.6 | % | (0.8) |
| 18.0 | % | 18.5 | % | (0.5) | |||||
L&M |
| 6.5 | % | 6.8 | % | (0.3) |
| 6.7 | % | 6.9 | % | (0.2) | |||||
Chesterfield |
| 5.7 | % | 5.8 | % | (0.1) |
| 5.8 | % | 5.9 | % | (0.1) | |||||
Philip Morris |
| 2.6 | % | 2.8 | % | (0.2) |
| 2.7 | % | 2.9 | % | (0.2) | |||||
HEETS |
| 3.2 | % | 1.7 | % | 1.5 |
| 2.5 | % | 1.2 | % | 1.3 | |||||
Others |
| 3.0 | % | 3.2 | % | (0.2) |
| 3.1 | % | 3.1 | % | — | |||||
Total EU |
| 38.8 | % | 38.9 | % | (0.1) |
| 38.8 | % | 38.5 | % | 0.3 |
Full-Year
The estimated total market in the EU decreased by 0.4% to 482.5 billion units, notably due to:
partly offset by
PMI's total shipment volume increased by 0.7% to 186.9 billion units, reflecting:
partly offset by
PMI's Regional market share increased by 0.3 points to 38.8%, with gains in the Czech Republic, Germany, Greece and Portugal, partly offset by declines in France, Poland and Spain.
Fourth-Quarter
The estimated total market in the EU decreased by 0.6% to 118.6 billion units, mainly driven by:
partly offset by
PMI's total shipment volume decreased by 1.9% to 45.0 billion units, reflecting:
partly offset by:
PMI's Regional market share decreased by 0.1 point to 38.8%, with declines in France, Germany and Spain largely offset by gains in the Czech Republic, Greece, Italy and Romania.
EASTERN EUROPE REGION
Full-Year
Financial Summary - Years Ended December 31, |
|
|
|
| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
|
|
| ||||||||||||||||||
Net Revenues |
| $ 3,282 |
| $ 2,921 |
|
| 12.4 | % | 16.1 | % |
| 361 |
| (108 | ) | 85 |
| 384 |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating Income |
| $ 547 |
| $ 902 |
|
| (39.4 | )% | (41.9 | )% |
| (355 | ) | 23 |
| 85 |
| 109 |
| (572 | ) |
Asset Impairment & Exit Costs |
| — |
| — |
|
| — | % | — | % |
| — |
| — |
| — |
| — |
| — |
|
Russia Excise and VAT Audit Charge (1) |
| (374 | ) | — |
|
| — | % | — | % |
| (374 | ) | — |
| — |
| — |
| (374 | ) |
Adjusted Operating Income |
| $ 921 |
| $ 902 |
|
| 2.1 | % | (0.4 | )% |
| 19 |
| 23 |
| 85 |
| 109 |
| (198 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 28.1 | % | 30.9 | % |
| (2.8)pp | (4.4)pp |
|
|
|
|
|
| |||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 16.1%, reflecting a favorable pricing variance, mainly driven by Russia and Ukraine, and favorable volume/mix, predominantly driven by heated tobacco unit and IQOS device volume in Russia and Ukraine, and heated tobacco unit volume in Kazakhstan, partly offset by unfavorable cigarette volume/mix in Russia and lower cigarette volume in Ukraine.
Operating income, excluding favorable currency, decreased by 41.9%, primarily due to the unfavorable impact of the Russia excise and VAT audit charge, shown in "Cost/Other." Excluding this charge, adjusted operating income, excluding favorable currency, decreased by 0.4%, due to: higher marketing, administration and research costs, notably reflecting increased investments behind reduced-risk products (primarily in Russia in support of geographic expansion); and higher manufacturing costs; partly offset by a favorable pricing variance; and favorable volume/mix, predominantly driven by heated tobacco unit volume in Kazakhstan, Russia and Ukraine, partly offset by unfavorable cigarette volume/mix in Russia.
Adjusted operating income margin, excluding currency, decreased by 4.4 points to 26.5%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - Quarters Ended December 31, |
|
|
|
| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
|
|
| ||||||||||||||||||
Net Revenues |
| $ 982 | $ 816 |
| 20.3 | % | 16.8 | % |
| 166 |
| 29 |
| 35 |
| 102 |
| — |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating Income |
| $ 263 | $ 220 |
| 19.5 | % | 4.5 | % |
| 43 |
| 33 |
| 35 |
| 36 |
| (61 | ) | ||
Asset Impairment & Exit Costs |
| — |
| — |
|
| — | % | — | % |
| — |
| — |
| — |
| — |
| — |
|
Adjusted Operating Income |
| $ 263 | $ 220 |
| 19.5 | % | 4.5 | % |
| 43 |
| 33 |
| 35 |
| 36 |
| (61 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 26.8 | % | 27.0 | % |
| (0.2)pp | (2.9)pp |
|
|
|
|
|
|
Net revenues, excluding favorable currency, increased by 16.8%, mainly reflecting: a favorable pricing variance, driven mainly by Russia, as well as favorable volume/mix, predominantly driven by heated tobacco unit volume in Russia and Ukraine, partly offset by unfavorable cigarette volume/mix mainly due to Russia.
Operating income, excluding favorable currency, increased by 4.5%, mainly reflecting: a favorable pricing variance; favorable volume/mix, predominantly driven by heated tobacco unit volume in Russia, partly offset by unfavorable cigarette volume/mix primarily in Russia; partially offset by higher marketing, administration and research costs, notably reflecting increased investments behind reduced-risk products (primarily in Russia in support of geographic expansion); and higher manufacturing costs.
Adjusted operating income margin, excluding currency, decreased by 2.9 points to 24.1%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume | Fourth-Quarter | Full-Year | |||||||||||||
(million units) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||
Cigarettes | 25,865 | 28,424 | (9.0 | )% | 100,644 | 108,718 | (7.4 | )% | |||||||
Heated Tobacco Units | 5,240 | 2,312 | +100.0 | % | 13,453 | 4,979 | +100.0 | % | |||||||
Total Eastern Europe | 31,105 | 30,736 | 1.2 | % | 114,097 | 113,697 | 0.4 | % |
Full-Year
The estimated total market in Eastern Europe decreased by 5.4% to 397.4 billion units, notably due to:
partly offset by
PMI's Regional market share increased by 1.6 points to 28.7%.
PMI's total shipment volume increased by 0.4% to 114.1 billion units, notably reflecting:
partly offset by
Fourth-Quarter
The estimated total market in Eastern Europe decreased, notably due to:
partly offset by
PMI's total shipment volume increased by 1.2% to 31.1 billion units, driven by:
partly offset by
MIDDLE EAST & AFRICA REGION
Full-Year
Financial Summary - Years Ended December 31, |
|
|
|
| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
|
|
| ||||||||||||||||||
Net Revenues |
| $ 4,042 | $ 4,114 |
| (1.8 | )% | 2.2 | % |
| (72 | ) | (162 | ) | 207 |
| (113 | ) | (4 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating Income |
| $ 1,684 | $ 1,627 |
| 3.5 | % | 6.8 | % |
| 57 |
| (53 | ) | 207 |
| (128 | ) | 31 |
| ||
Asset Impairment & Exit Costs |
| — |
| — |
|
| — | % | — | % |
| — |
| — |
| — |
| — |
| — |
|
Adjusted Operating Income |
| $ 1,684 | $ 1,627 |
| 3.5 | % | 6.8 | % |
| 57 |
| (53 | ) | 207 |
| (128 | ) | 31 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 41.7 | % | 39.5 | % |
| 2.2pp | 1.8pp |
|
|
|
|
|
|
Net revenues, excluding unfavorable currency, increased by 2.2%, mainly reflecting: a favorable pricing variance, primarily driven by Egypt, the GCC, PMI Duty Free and Turkey, partly offset by Morocco; partially offset by unfavorable volume/mix, mainly due to heated tobacco unit and cigarette volume in PMI Duty Free, as well as cigarette volume in Kuwait, partly offset by favorable cigarette volume in Egypt and favorable cigarette volume/mix in Algeria and Saudi Arabia.
Operating income, excluding unfavorable currency, increased by 6.8%, mainly reflecting a favorable pricing variance; lower manufacturing costs; and lower marketing, administration and research costs, notably in the GCC; partly offset by unfavorable volume/mix, mainly due to the same factors as for net revenues noted above.
Adjusted operating income margin, excluding currency, increased by 1.8 points to 41.3%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - Quarters Ended December 31, |
|
|
|
| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
|
|
| ||||||||||||||||||
Net Revenues |
| $ 984 | $ 988 |
| (0.4 | )% | (1.6 | )% |
| (4 | ) | 12 |
| 53 |
| (68 | ) | (1 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating Income |
| $ 380 | $ 359 |
| 5.8 | % | 1.7 | % |
| 21 |
| 15 |
| 53 |
| (47 | ) | — |
| ||
Asset Impairment & Exit Costs |
| — |
| — |
|
| — | % | — | % |
| — |
| — |
| — |
| — |
| — |
|
Adjusted Operating Income |
| $ 380 | $ 359 |
| 5.8 | % | 1.7 | % |
| 21 |
| 15 |
| 53 |
| (47 | ) | — |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 38.6 | % | 36.3 | % |
| 2.3pp | 1.3pp |
|
|
|
|
|
|
Net revenues, excluding favorable currency, decreased by 1.6%, reflecting unfavorable volume/mix, notably due to cigarette volume in Kuwait and Turkey, partly offset by a favorable pricing variance, driven predominantly by the GCC (mainly Saudi Arabia), partially offset by Morocco.
Operating income, excluding favorable currency, increased by 1.7%, mainly reflecting a favorable pricing variance and lower marketing, research and administration costs, partly offset by unfavorable volume/mix, mainly reflecting the same drivers as for net revenues noted above, and higher manufacturing costs.
Adjusted operating income margin, excluding currency, increased by 1.3 points to 37.6%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume | Fourth-Quarter | Full-Year | ||||||||||||
(million units) | 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||
Cigarettes | 32,611 | 35,774 | (8.8 | )% | 134,568 | 136,605 | (1.5 | )% | ||||||
Heated Tobacco Units | 593 | 571 | 3.9 | % | 2,654 | 3,403 | (22.0 | )% | ||||||
Total Middle East & Africa | 33,204 | 36,345 | (8.6 | )% | 137,222 | 140,008 | (2.0 | )% |
Full-Year
The estimated total market in the Middle East & Africa was essentially flat at 592.4 billion units, notably reflecting:
offset by
PMI's Regional market share decreased by 0.2 points to 23.5%.
PMI's total shipment volume decreased by 2.0% to 137.2 billion units, notably in:
partly offset by
Fourth-Quarter
The estimated total market in the Middle East & Africa decreased, notably driven by:
partly offset by
PMI's total shipment volume decreased by 8.6% to 33.2 billion units, notably due to:
partly offset by
SOUTH & SOUTHEAST ASIA REGION
Full-Year
Financial Summary - Years Ended December 31, |
|
|
|
| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
|
|
| ||||||||||||||||||
Net Revenues |
| $ 5,094 | $ 4,656 |
| 9.4 | % | 9.6 | % |
| 438 |
| (10 | ) | 583 |
| (135 | ) | — |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating Income |
| $ 2,163 | $ 1,747 |
| 23.8 | % | 22.8 | % |
| 416 |
| 17 |
| 583 |
| (99 | ) | (85 | ) | ||
Asset Impairment & Exit Costs (1) |
| (20 | ) | — |
|
| — | % | — | % |
| (20 | ) | — |
| — |
| — |
| (20 | ) |
Adjusted Operating Income |
| $ 2,183 | $ 1,747 |
| 25.0 | % | 24.0 | % |
| 436 |
| 17 |
| 583 |
| (99 | ) | (65 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 42.9 | % | 37.5 | % |
| 5.4pp | 4.9pp |
|
|
|
|
|
| |||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 9.6%, reflecting: a favorable pricing variance, principally driven by Indonesia and the Philippines, partly offset by unfavorable volume/mix, largely due to Indonesia, partly offset by favorable volume in India and Thailand, as well as favorable mix in the Philippines.
Operating income, excluding favorable currency, increased by 22.8%. Excluding asset impairment and exit costs related to a plant closure in Pakistan in the first quarter of 2019, adjusted operating income, excluding favorable currency, increased by 24.0%, mainly reflecting: a favorable pricing variance and lower manufacturing costs, partly offset by unfavorable volume/mix, reflecting the same factors as for net revenues noted above, and higher marketing, administration and research costs, partly due to the Philippines.
Adjusted operating income margin, excluding currency, increased by 4.9 points to 42.4%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - Quarters Ended December 31, |
|
|
|
| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
|
|
| ||||||||||||||||||
Net Revenues |
| $ 1,487 | $ 1,222 |
| 21.7 | % | 16.1 | % |
| 265 |
| 68 |
| 270 |
| (73 | ) | — |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating Income |
| $ 692 | $ 423 |
| 63.6 | % | 53.7 | % |
| 269 |
| 42 |
| 270 |
| (58 | ) | 15 |
| ||
Asset Impairment & Exit Costs |
| — |
| — |
|
| — | % | — | % |
| — |
| — |
| — |
| — |
| — |
|
Adjusted Operating Income |
| $ 692 | $ 423 |
| 63.6 | % | 53.7 | % |
| 269 |
| 42 |
| 270 |
| (58 | ) | 15 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 46.5 | % | 34.6 | % |
| 11.9pp | 11.2pp |
|
|
|
|
|
|
Net revenues, excluding favorable currency, increased by 16.1%, reflecting a favorable pricing variance, principally driven by Indonesia and the Philippines, partly offset by unfavorable volume/mix, mainly due to Indonesia.
Operating income, excluding favorable currency, increased by 53.7%, reflecting a favorable pricing variance and lower manufacturing costs, partly offset by unfavorable volume/mix, principally due to Indonesia.
Adjusted operating income margin, excluding currency, increased by 11.2 points to 45.8%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume | Fourth-Quarter | Full-Year | |||||||||||||
(million units) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||
Cigarettes | 44,704 | 47,623 | (6.1 | )% | 174,934 | 178,469 | (2.0 | )% | |||||||
Heated Tobacco Units | — |
| — |
| — | % |
| — |
| — |
| — | % | ||
Total South & Southeast Asia | 44,704 | 47,623 | (6.1 | )% | 174,934 | 178,469 | (2.0 | )% |
Full-Year
The estimated total market in South & Southeast Asia decreased by 1.2% to 738.1 billion units, notably due to:
partly offset by
PMI's Regional market share decreased by 0.1 point to 23.7%.
PMI's total shipment volume decreased by 2.0% to 174.9 billion units, notably due to:
partly offset by
Fourth-Quarter
The estimated total market in South & Southeast Asia decreased, notably due to:
partly offset by
PMI's total shipment volume decreased by 6.1% to 44.7 billion units, notably due to:
partly offset by
EAST ASIA & AUSTRALIA REGION
Full-Year
Financial Summary - Years Ended December 31, |
|
|
|
| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
|
|
| ||||||||||||||||||
Net Revenues |
| $ 5,364 | $ 5,580 |
| (3.9 | )% | (3.4 | )% |
| (216 | ) | (26 | ) | 230 |
| (420 | ) | — |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating Income |
| $ 1,932 | $ 1,851 |
| 4.4 | % | 2.4 | % |
| 81 |
| 37 |
| 230 |
| (292 | ) | 106 |
| ||
Asset Impairment & Exit Costs |
| — |
| — |
|
| — | % | — | % |
| — |
| — |
| — |
| — |
| — |
|
Adjusted Operating Income |
| $ 1,932 | $ 1,851 |
| 4.4 | % | 2.4 | % |
| 81 |
| 37 |
| 230 |
| (292 | ) | 106 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 36.0 | % | 33.2 | % |
| 2.8pp | 2.0pp |
|
|
|
|
|
|
Net revenues, excluding unfavorable currency, decreased by 3.4%, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume in Australia, Japan and Korea, lower IQOS device volume in Japan, and lower heated tobacco unit volume and IQOS device volume in Korea, partly offset by higher heated tobacco unit volume in Japan. The unfavorable volume/mix was partly offset by a favorable pricing variance, predominantly driven by Australia and Japan.
Operating income, excluding favorable currency, increased by 2.4%, mainly reflecting: a favorable pricing variance and lower manufacturing costs, primarily related to Japan and Korea, partly offset by unfavorable volume/mix, mainly reflecting the same drivers as for net revenues noted above, as well as higher marketing, administration and research costs.
Adjusted operating income margin, excluding currency, increased by 2.0 points to 35.2%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - Quarters Ended December 31, |
|
|
|
| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | ||||||||||
(in millions) |
|
|
| ||||||||||||||||||
Net Revenues |
| $ 1,270 | $ 1,345 |
| (5.6 | )% | (5.6 | )% |
| (75 | ) | — |
| 44 |
| (119 | ) | — |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating Income |
| $ 412 | $ 412 |
| — | % | (1.0 | )% |
| — |
| 4 |
| 44 |
| (102 | ) | 54 |
| ||
Asset Impairment & Exit Costs |
| — |
| — |
|
| — | % | — | % |
| — |
| — |
| — |
| — |
| — |
|
Adjusted Operating Income |
| $ 412 | $ 412 |
| — | % | (1.0 | )% |
| — |
| 4 |
| 44 |
| (102 | ) | 54 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted Operating Income Margin |
| 32.4 | % | 30.6 | % |
| 1.8pp | 1.5pp |
|
|
|
|
|
|
Net revenues, excluding currency, decreased by 5.6%, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume in Australia and Japan, lower IQOS device volume in Japan, and lower heated tobacco unit and IQOS device volume in Korea, partly offset by higher heated tobacco unit volume in Japan. The unfavorable volume/mix was partly offset by a favorable pricing variance, mainly driven by Australia.
Operating income, excluding favorable currency, decreased by 1.0%, mainly reflecting unfavorable volume/mix, mainly due to lower cigarette volume in Australia and Japan, and lower heated tobacco unit volume in Korea, partly offset by higher heated tobacco unit volume in Japan. The unfavorable volume/mix was partly offset by a favorable pricing variance, as well as lower manufacturing costs and lower marketing, administration and research costs, principally in Japan.
Adjusted operating income margin, excluding currency, increased by 1.5 points to 32.1%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume | Fourth-Quarter | Full-Year | |||||||||||||
(million units) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||
Cigarettes | 11,301 | 12,772 | (11.5 | )% | 49,951 | 56,163 | (11.1 | )% | |||||||
Heated Tobacco Units | 7,424 | 7,111 | 4.4 | % | 30,677 | 26,866 | 14.2 | % | |||||||
Total East Asia & Australia | 18,725 | 19,883 | (5.8 | )% | 80,628 | 83,029 | (2.9 | )% |
Full-Year
The estimated total market in East Asia & Australia, excluding China, decreased by 4.0% to 299.2 billion units, notably due to:
PMI's Regional market share, excluding China, decreased by 0.5 points to 26.9%.
PMI's total shipment volume decreased by 2.9% to 80.6 billion units, notably in:
partly offset by
Fourth-Quarter
The estimated total market in East Asia & Australia, excluding China, increased, notably due to:
partly offset by
PMI's total shipment volume decreased by 5.8% to 18.7 billion units, notably in:
LATIN AMERICA & CANADA REGION
Full-Year
Financial Summary - Years Ended December 31, |
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| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other(1) | ||||||||||
(in millions) |
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Net Revenues |
| $ 2,206 | $ 3,056 |
| (27.8 | )% | (25.6 | )% |
| (850 | ) | (68 | ) | 90 |
| (113 | ) | (759 | ) | ||
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Operating Income |
| $ 235 | $ 1,145 |
| (79.5 | )% | (80.7 | )% |
| (910 | ) | 14 |
| 90 |
| (89 | ) | (925 | ) | ||
Asset Impairment & Exit Costs (2) |
| (60 | ) | — |
|
| — | % | — | % |
| (60 | ) | — |
| — |
| — |
| (60 | ) |
Canadian Tobacco Litigation-Related Expense (2) |
| (194 | ) | — |
|
| — | % | — | % |
| (194 | ) | — |
| — |
| — |
| (194 | ) |
Loss on Deconsolidation of RBH (2) |
| (239 | ) | — |
|
| — | % | — | % |
| (239 | ) | — |
| — |
| — |
| (239 | ) |
Adjusted Operating Income |
| $ 728 | $ 1,145 |
| (36.4 | )% | (37.6 | )% |
| (417 | ) | 14 |
| 90 |
| (89 | ) | (432 | ) | ||
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Adjusted Operating Income Margin |
| 33.0 | % | 37.5 | % |
| (4.5)pp | (6.1)pp |
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(1) Unfavorable Cost/Other variance includes the impact of the RBH deconsolidation. | |||||||||||||||||||||
(2) Included in marketing, administration and research costs at the consolidated operating income level. | |||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. |
Net revenues, excluding unfavorable currency, decreased by 25.6%, predominantly due to the unfavorable impact of the deconsolidation of RBH, shown in "Cost/Other." On a like-for-like basis, net revenues, excluding unfavorable currency, decreased by 1.9%, as detailed in Schedule 10, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume in Argentina and Canada, partly offset by a favorable pricing variance, notably in Brazil, Canada, Colombia and Mexico, partially offset by Argentina, mainly due to the adoption of highly inflationary accounting.
Operating income, excluding favorable currency, decreased by 80.7%, predominantly due to the unfavorable impact of the deconsolidation of RBH and reporting adjustments, shown in "Cost/Other." Excluding asset impairment and exit costs related to plant closures in Argentina and Colombia, the Canadian tobacco litigation-related expense and the loss on deconsolidation of RBH, adjusted operating income, excluding favorable currency, decreased by 37.6%. On a like-for-like basis, excluding favorable currency, adjusted operating income increased by 18.0%, as detailed in Schedule 10. This increase reflected: a favorable pricing variance, lower manufacturing costs and lower marketing, administration and research costs, partially offset by an unfavorable volume/mix, mainly due to lower cigarette volume in Argentina and Canada.
Adjusted operating income margin, excluding currency, decreased by 6.1 points to 31.4%, as detailed in Schedule 8, or increased by 5.3 points to 31.4% on a like-for-like basis, as detailed in Schedule 10.
Fourth-Quarter
Financial Summary - Quarters Ended December 31, |
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| Change Fav./(Unfav.) |
| Variance Fav./(Unfav.) | ||||||||||||||
| 2019 | 2018 |
| Total | Excl. Curr. |
| Total | Cur- rency | Price | Vol/ Mix | Cost/ Other(1) | ||||||||||
(in millions) |
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Net Revenues |
| $ 554 | $ 788 |
| (29.7 | )% | (28.6 | )% |
| (234 | ) | (9 | ) | 46 |
| (22 | ) | (249 | ) | ||
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Operating Income |
| $ 135 | $ 279 |
| (51.6 | )% | (53.0 | )% |
| (144 | ) | 4 |
| 46 |
| (12 | ) | (182 | ) | ||
Asset Impairment & Exit Costs (2) |
| (15 | ) | — |
|
| — | % | — | % |
| (15 | ) | — |
| — |
| — |
| (15 | ) |
Adjusted Operating Income |
| $ 150 | $ 279 |
| (46.2 | )% | (47.7 | )% |
| (129 | ) | 4 |
| 46 |
| (12 | ) | (167 | ) | ||
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Adjusted Operating Income Margin |
| 27.1 | % | 35.4 | % |
| (8.3)pp | (9.5)pp |
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(1) Unfavorable Cost/Other variance includes the impact of the RBH deconsolidation. | |||||||||||||||||||||
(2) Included in marketing, administration and research costs at the consolidated operating income level. | |||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. |
Net revenues, excluding unfavorable currency, decreased by 28.6%, almost entirely due to the unfavorable impact of the deconsolidation of RBH shown in "Cost/Other." On a like-for-like basis, net revenues, excluding unfavorable currency, increased by 1.4%, as detailed in Schedule 10, reflecting a favorable pricing variance, driven by Mexico, partly offset by unfavorable cigarette volume, notably in Argentina.
Operating income, excluding favorable currency, decreased by 53.0%, predominantly due to the unfavorable impact of the deconsolidation of RBH, shown in "Cost/Other." Excluding asset impairment and exit costs related to a plant closure in Argentina, adjusted operating income, excluding favorable currency, decreased by 47.7%. On a like-for-like basis, excluding favorable currency, adjusted operating income increased by 31.3%, as detailed in Schedule 10, reflecting a favorable pricing variance, partly offset by unfavorable cigarette volume, notably in Argentina.
Adjusted operating income margin, excluding currency, decreased by 9.5 points to 25.9%, as detailed in Schedule 8, or increased by 6.0 points to 26.2% on a like-for-like basis, as detailed in Schedule 10.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume | Fourth-Quarter | Full-Year | ||||||||||||
(million units) | 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||
Cigarettes | 19,387 | 21,909 | (11.5 | )% | 72,293 | 80,738 | (10.5 | )% | ||||||
Heated Tobacco Units | 97 | 49 | 98.0 | % | 299 | 147 | +100.0 | % | ||||||
Total Latin America & Canada | 19,484 | 21,958 | (11.3 | )% | 72,592 | 80,885 | (10.3 | )% |
Full-Year
The estimated total market in Latin America & Canada decreased by 4.3% to 194.1 billion units, notably due to:
PMI's Regional market share decreased by 0.4 points to 36.9%.
PMI's total shipment volume decreased by 10.3% to 72.6 billion units, or by 5.2% on a like-for-like basis, notably due to:
Fourth-Quarter
The estimated total market in Latin America & Canada decreased, notably due to:
PMI's total shipment volume decreased by 11.3% to 19.5 billion units, or by 5.2% on a like-for-like basis, notably due to:
Philip Morris International: Delivering a Smoke-Free Future
Philip Morris International (PMI) is leading a transformation in the tobacco industry to create a smoke-free future and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue to smoke, society, the company and its shareholders. PMI is a leading international tobacco company engaged in the manufacture and sale of cigarettes, as well as smoke-free products and associated electronic devices and accessories, and other nicotine-containing products in markets outside the United States. In addition, PMI ships a version of its IQOS Platform 1 device and its consumables authorized by the U.S. Food and Drug Administration to Altria Group, Inc. for sale in the United States under license. PMI is building a future on a new category of smoke-free products that, while not risk-free, are a much better choice than continuing to smoke. Through multidisciplinary capabilities in product development, state-of-the-art facilities and scientific substantiation, PMI aims to ensure that its smoke-free products meet adult consumer preferences and rigorous regulatory requirements. PMI's smoke-free IQOS product portfolio includes heat-not-burn and nicotine-containing vapor products. As of December 31, 2019, PMI estimates that approximately 9.7 million adult smokers around the world have already stopped smoking and switched to PMI's heat-not-burn product, available for sale in 52 markets in key cities or nationwide under the IQOS brand. For more information, please visit 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 and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful in its attempts to produce and commercialize reduced-risk products or if regulation or taxation do not differentiate between such products and cigarettes; 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. Future results are also subject to the lower predictability of our reduced-risk product category's performance.
PMI is further subject to other risks detailed from time to time in its publicly filed documents, including the Form 10-Q for the quarter ended September 30, 2019. 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.
Key Terms, Definitions and Explanatory Notes
General
Financial
Reduced-Risk Products
IQOS in the United States
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| Appendix 1 | |||||||||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||||||||||||||||||||||||||||||||
Key Market Data | |||||||||||||||||||||||||||||||||||||||||||
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| Quarters Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
Market |
| Total Market, bio units |
| PMI Shipments, bio units |
| PMI Market Share, % (1) | |||||||||||||||||||||||||||||||||||||
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| Total |
| Cigarette |
| HTU |
| Total |
| HTU | |||||||||||||||||||||||||||||||||
| 2019 | 2018 | % Change |
| 2019 | 2018 | % Change |
| 2019 | 2018 | % Change |
| 2019 | 2018 | % Change |
| 2019 | 2018 | pp Change |
| 2019 | 2018 | pp Change | ||||||||||||||||||||
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Total |
| 684.8 |
| 701.0 |
| (2.3 | ) |
| 192.2 |
| 202.4 |
| (5.0 | ) |
| 175.1 |
| 190.2 |
| (8.0 | ) |
| 17.1 |
| 12.2 |
| 40.7 |
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| 28.4 |
| 28.6 |
| (0.2 | ) |
| 2.4 |
| 1.6 |
| 0.8 |
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European Union |
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France |
| 8.8 |
| 9.8 |
| (10.3 | ) |
| 3.9 |
| 4.4 |
| (12.2 | ) |
| 3.8 |
| 4.4 |
| (12.7 | ) |
| — |
| — |
| — |
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| 45.1 |
| 46.3 |
| (1.2 | ) |
| 0.3 |
| 0.2 |
| 0.1 |
| |
Germany |
| 18.2 |
| 19.0 |
| (4.5 | ) |
| 7.1 |
| 7.5 |
| (5.5 | ) |
| 6.8 |
| 7.4 |
| (7.6 | ) |
| 0.3 |
| 0.1 |
| +100 |
|
| 39.0 |
| 39.4 |
| (0.4 | ) |
| 1.6 |
| 0.8 |
| 0.8 |
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Italy |
| 16.8 |
| 16.9 |
| (0.5 | ) |
| 8.3 |
| 8.7 |
| (4.0 | ) |
| 7.2 |
| 8.1 |
| (10.2 | ) |
| 1.1 |
| 0.6 |
| 80.9 |
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| 52.3 |
| 52.0 |
| 0.3 |
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| 6.1 |
| 3.3 |
| 2.8 |
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Poland |
| 10.8 |
| 10.1 |
| 7.3 |
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| 4.5 |
| 4.2 |
| 7.9 |
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| 4.1 |
| 4.0 |
| 1.8 |
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| 0.4 |
| 0.1 |
| +100 |
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| 41.5 |
| 41.3 |
| 0.2 |
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| 3.8 |
| 1.5 |
| 2.3 |
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Spain |
| 10.9 |
| 10.9 |
| 0.2 |
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| 3.1 |
| 3.0 |
| 3.4 |
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| 3.0 |
| 3.0 |
| 1.8 |
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| 0.1 |
| 0.1 |
| 97.2 |
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| 30.7 |
| 31.8 |
| (1.1 | ) |
| 0.8 |
| 0.5 |
| 0.3 |
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Eastern Europe |
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Russia |
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| 58.4 |
| 61.7 |
| (5.3 | ) |
| 19.2 |
| 19.3 |
| (0.5 | ) |
| 15.4 |
| 17.5 |
| (12.2 | ) |
| 3.8 |
| 1.8 |
| +100 |
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| 31.2 |
| 29.6 |
| 1.6 |
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| 5.0 |
| 1.7 |
| 3.3 |
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Middle East & Africa |
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Saudi Arabia |
| 4.6 |
| 5.4 |
| (14.9 | ) |
| 2.6 |
| 2.1 |
| 21.9 |
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| 2.6 |
| 2.1 |
| 21.9 |
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| — |
| — |
| — |
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| 51.6 |
| 42.7 |
| 8.9 |
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| — |
| — |
| — |
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Turkey |
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| 25.5 |
| 30.3 |
| (15.9 | ) |
| 11.4 |
| 14.1 |
| (19.5 | ) |
| 11.4 |
| 14.1 |
| (19.5 | ) |
| — |
| — |
| — |
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| 44.9 |
| 46.6 |
| (1.7 | ) |
| — |
| — |
| — |
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South & Southeast Asia |
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Indonesia |
| 83.4 |
| 80.9 |
| 3.1 |
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| 26.4 |
| 26.9 |
| (2.0 | ) |
| 26.4 |
| 26.9 |
| (2.0 | ) |
| — |
| — |
| — |
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| 31.6 |
| 33.3 |
| (1.7 | ) |
| — |
| — |
| — |
| |
Philippines |
| 17.8 |
| 20.6 |
| (13.5 | ) |
| 12.5 |
| 14.5 |
| (14.0 | ) |
| 12.5 |
| 14.5 |
| (14.0 | ) |
| — |
| — |
| — |
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| 69.9 |
| 70.3 |
| (0.4 | ) |
| — |
| — |
| — |
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East Asia & Australia |
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Australia |
| 2.8 |
| 3.1 |
| (11.0 | ) |
| 0.8 |
| 1.0 |
| (21.8 | ) |
| 0.8 |
| 1.0 |
| (21.8 | ) |
| — |
| — |
| — |
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| 27.2 |
| 31.0 |
| (3.8 | ) |
| — |
| — |
| — |
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Japan |
| 37.8 |
| 36.9 |
| 2.4 |
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| 11.9 |
| 12.3 |
| (3.0 | ) |
| 5.7 |
| 6.7 |
| (15.2 | ) |
| 6.3 |
| 5.7 |
| 11.4 |
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| 34.9 |
| 33.0 |
| 1.9 |
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| 17.6 |
| 15.2 |
| 2.4 |
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Korea |
| 16.9 |
| 17.1 |
| (1.4 | ) |
| 3.7 |
| 4.3 |
| (14.5 | ) |
| 2.6 |
| 2.8 |
| (8.4 | ) |
| 1.1 |
| 1.4 |
| (26.4 | ) |
| 21.7 |
| 25.3 |
| (3.6 | ) |
| 6.3 |
| 8.5 |
| (2.2 | ) | |
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Latin America & Canada |
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Argentina |
| 8.7 |
| 9.1 |
| (4.8 | ) |
| 5.8 |
| 6.6 |
| (13.1 | ) |
| 5.8 |
| 6.6 |
| (13.1 | ) |
| — |
| — |
| — |
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| 66.4 |
| 73.2 |
| (6.8 | ) |
| — |
| — |
| — |
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Mexico |
| 10.4 |
| 10.1 |
| 2.5 |
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| 7.3 |
| 7.3 |
| (0.1 | ) |
| 7.3 |
| 7.3 |
| (0.2 | ) |
| — |
| — |
| — |
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| 70.0 |
| 71.8 |
| (1.8 | ) |
| 0.1 |
| — |
| 0.1 |
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(1) Market share estimates are calculated using IMS data | |||||||||||||||||||||||||||||||||||||||||||
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands. |
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| Appendix 2 | |||||||||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||||||||||||||||||||||||||||||||
Key Market Data | |||||||||||||||||||||||||||||||||||||||||||
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| Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
Market |
| Total Market, bio units |
| PMI Shipments, bio units |
| PMI Market Share, % (1) | |||||||||||||||||||||||||||||||||||||
|
| Total |
| Cigarette |
| HTU |
| Total |
| HTU | |||||||||||||||||||||||||||||||||
| 2019 | 2018 | % Change |
| 2019 | 2018 | % Change |
| 2019 | 2018 | % Change |
| 2019 | 2018 | % Change |
| 2019 | 2018 | pp Change |
| 2019 | 2018 | pp Change | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Total |
| 2,703.6 |
| 2,757.7 |
| (2.0 | ) |
| 766.4 |
| 781.7 |
| (2.0 | ) |
| 706.7 |
| 740.3 |
| (4.5 | ) |
| 59.7 |
| 41.4 |
| 44.2 |
|
| 28.4 |
| 28.3 |
| 0.1 |
|
| 2.2 |
| 1.6 |
| 0.6 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
European Union |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
France |
| 37.9 |
| 40.9 |
| (7.4 | ) |
| 17.0 |
| 18.5 |
| (7.9 | ) |
| 16.9 |
| 18.4 |
| (8.2 | ) |
| 0.1 |
| — |
| — |
|
| 45.0 |
| 45.5 |
| (0.5 | ) |
| 0.2 |
| 0.1 |
| 0.1 |
| |
Germany |
| 73.3 |
| 75.2 |
| (2.5 | ) |
| 27.9 |
| 28.1 |
| (0.7 | ) |
| 27.0 |
| 27.7 |
| (2.5 | ) |
| 0.9 |
| 0.4 |
| +100 |
|
| 38.0 |
| 37.3 |
| 0.7 |
|
| 1.2 |
| 0.5 |
| 0.7 |
| |
Italy |
| 67.9 |
| 69.0 |
| (1.5 | ) |
| 34.9 |
| 35.2 |
| (1.1 | ) |
| 31.4 |
| 33.5 |
| (6.5 | ) |
| 3.5 |
| 1.7 |
| +100 |
|
| 51.8 |
| 51.8 |
| — |
|
| 4.8 |
| 2.2 |
| 2.6 |
| |
Poland |
| 46.2 |
| 43.2 |
| 6.8 |
|
| 19.0 |
| 17.9 |
| 6.1 |
|
| 17.9 |
| 17.6 |
| 1.8 |
|
| 1.1 |
| 0.4 |
| +100 |
|
| 41.2 |
| 41.5 |
| (0.3 | ) |
| 2.5 |
| 0.9 |
| 1.6 |
| |
Spain |
| 45.3 |
| 45.0 |
| 0.8 |
|
| 14.5 |
| 14.1 |
| 2.7 |
|
| 14.1 |
| 13.9 |
| 1.6 |
|
| 0.3 |
| 0.2 |
| 84.4 |
|
| 31.3 |
| 32.1 |
| (0.8 | ) |
| 0.7 |
| 0.4 |
| 0.3 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Eastern Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Russia |
|
| 226.5 |
| 238.9 |
| (5.2 | ) |
| 68.0 |
| 68.0 |
| — |
|
| 58.8 |
| 64.6 |
| (9.0 | ) |
| 9.2 |
| 3.4 |
| +100 |
|
| 30.1 |
| 28.3 |
| 1.8 |
|
| 3.8 |
| 1.0 |
| 2.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Middle East & Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Saudi Arabia |
| 20.8 |
| 20.6 |
| 0.7 |
|
| 9.2 |
| 7.4 |
| 24.9 |
|
| 9.2 |
| 7.4 |
| 24.9 |
|
| — |
| — |
| — |
|
| 43.0 |
| 41.5 |
| 1.5 |
|
| — |
| — |
| — |
| |
Turkey |
|
| 118.9 |
| 118.5 |
| 0.3 |
|
| 51.9 |
| 55.0 |
| (5.6 | ) |
| 51.9 |
| 55.0 |
| (5.6 | ) |
| — |
| — |
| — |
|
| 43.7 |
| 46.4 |
| (2.7 | ) |
| — |
| — |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
South & Southeast Asia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Indonesia |
| 306.8 |
| 303.6 |
| 1.1 |
|
| 98.5 |
| 101.4 |
| (2.9 | ) |
| 98.5 |
| 101.4 |
| (2.9 | ) |
| — |
| — |
| — |
|
| 32.1 |
| 33.4 |
| (1.3 | ) |
| — |
| — |
| — |
| |
Philippines |
| 70.5 |
| 73.2 |
| (3.7 | ) |
| 49.7 |
| 51.2 |
| (2.9 | ) |
| 49.7 |
| 51.2 |
| (2.9 | ) |
| — |
| — |
| — |
|
| 70.5 |
| 69.9 |
| 0.6 |
|
| — |
| — |
| — |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
East Asia & Australia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Australia |
| 12.0 |
| 12.8 |
| (5.9 | ) |
| 3.3 |
| 3.8 |
| (12.7 | ) |
| 3.3 |
| 3.8 |
| (12.7 | ) |
| — |
| — |
| — |
|
| 27.5 |
| 29.7 |
| (2.2 | ) |
| — |
| — |
| — |
| |
Japan |
| 158.0 |
| 167.3 |
| (5.6 | ) |
| 52.4 |
| 52.3 |
| 0.3 |
|
| 26.6 |
| 30.8 |
| (13.7 | ) |
| 25.8 |
| 21.4 |
| 20.6 |
|
| 34.5 |
| 34.0 |
| 0.5 |
|
| 17.1 |
| 15.5 |
| 1.6 |
| |
Korea |
| 68.6 |
| 69.5 |
| (1.4 | ) |
| 15.5 |
| 17.4 |
| (11.1 | ) |
| 10.8 |
| 12.0 |
| (9.7 | ) |
| 4.6 |
| 5.4 |
| (14.3 | ) |
| 22.6 |
| 25.0 |
| (2.4 | ) |
| 6.8 |
| 7.8 |
| (1.0 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Latin America & Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Argentina |
| 33.4 |
| 35.0 |
| (4.6 | ) |
| 23.3 |
| 25.8 |
| (9.4 | ) |
| 23.3 |
| 25.8 |
| (9.4 | ) |
| — |
| — |
| — |
|
| 70.0 |
| 73.8 |
| (3.8 | ) |
| — |
| — |
| — |
| |
Mexico |
| 35.5 |
| 35.5 |
| (0.1 | ) |
| 23.8 |
| 24.2 |
| (1.4 | ) |
| 23.8 |
| 24.2 |
| (1.4 | ) |
| — |
| — |
| — |
|
| 67.1 |
| 68.0 |
| (0.9 | ) |
| — |
| — |
| — |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1) Market share estimates are calculated using IMS data | |||||||||||||||||||||||||||||||||||||||||||
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands. |
|
|
|
|
|
|
|
|
|
|
|
| Appendix 3 | |||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||||||
Reconciliation of Non-GAAP Measures | |||||||||||||||||
Shipment Volume Adjusted for the Impact of RBH Deconsolidation | |||||||||||||||||
(in million units) / (Unaudited) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Total PMI |
| Quarters Ended December 31, |
| Years Ended December 31, | ||||||||||||
|
|
| 2019 | 2018 |
| % Change |
| 2019 | 2018 |
| % Change | ||||||
| Total Shipment Volume |
| 192,207 |
| 202,413 |
|
| (5.0 | )% |
| 766,361 |
| 781,687 |
|
| (2.0 | )% |
| Shipment Volume for RBH-owned brands (1) |
|
|
| (1,413 | ) |
|
|
|
|
| (4,335 | ) | (2) |
| ||
| Total Shipment Volume |
| 192,207 |
| 201,000 |
| (3) | (4.4 | )% |
| 766,361 |
| 777,352 |
| (3) | (1.4 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Latin America & Canada |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Total Shipment Volume |
| 19,484 |
| 21,958 |
|
| (11.3 | )% |
| 72,592 |
| 80,885 |
|
| (10.3 | )% |
| Shipment Volume for RBH-owned brands |
|
|
| (1,399 | ) |
|
|
|
|
| (4,295 | ) | (2) |
| ||
| Total Shipment Volume |
| 19,484 |
| 20,559 |
| (3) | (5.2 | )% |
| 72,592 |
| 76,590 |
| (3) | (5.2 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| (1) Includes Duty Free sales in Canada | ||||||||||||||||
| (2) Represents volume for RBH-owned brands from March 22, 2018 through end of period date | ||||||||||||||||
| (3) Pro forma | ||||||||||||||||
| Note: Shipment Volume includes Cigarettes and Heated Tobacco Units; following the deconsolidation of RBH, we report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owners |
|
|
|
|
|
|
|
|
|
| Schedule 1 | ||||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||||||||||||||||
Diluted Earnings Per Share (EPS) | ||||||||||||||||||||||||
($ in millions, except per share data) / (Unaudited) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Quarters Ended |
| Diluted EPS |
| Years Ended | ||||||||||||||||||
|
| December 31, |
|
| December 31, | |||||||||||||||||||
|
|
|
| $ | 1.04 |
|
|
|
| 2019 Diluted Earnings Per Share (1) |
|
|
| $ | 4.61 |
|
|
| ||||||
|
|
|
| $ | 1.23 |
|
|
|
| 2018 Diluted Earnings Per Share (1) |
|
|
| $ | 5.08 |
|
|
| ||||||
|
|
|
| $ | (0.19 | ) |
|
|
| Change |
|
|
| $ | (0.47 | ) |
|
| ||||||
|
|
|
| (15.4 | )% |
|
|
| % Change |
|
|
| (9.3 | )% |
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
| Reconciliation: |
|
|
|
|
|
| ||||||||||
|
|
|
| $ | 1.23 |
|
|
|
| 2018 Diluted Earnings Per Share (1) |
|
|
| $ | 5.08 |
|
|
| ||||||
|
|
|
| — |
|
|
|
| 2018 Asset impairment and exit costs |
|
|
| — |
|
|
| ||||||||
|
|
|
| 0.02 |
|
|
|
| 2018 Tax items |
|
|
| 0.02 |
|
|
| ||||||||
|
|
|
| (0.20 | ) |
|
|
| 2019 Asset impairment and exit costs |
|
|
| (0.23 | ) |
|
| ||||||||
|
|
|
| — |
|
|
|
| 2019 Canadian tobacco litigation-related expense |
|
|
| (0.09 | ) |
|
| ||||||||
|
|
|
| — |
|
|
|
| 2019 Loss on deconsolidation of RBH |
|
|
| (0.12 | ) |
|
| ||||||||
|
|
|
| — |
|
|
|
| 2019 Russia excise and VAT audit charge |
|
|
| (0.20 | ) |
|
| ||||||||
|
|
|
| 0.02 |
|
|
|
| 2019 Fair value adjustment for equity security investments |
|
|
| 0.02 |
|
|
| ||||||||
|
|
|
| — |
|
|
|
| 2019 Tax items |
|
|
| 0.04 |
|
|
| ||||||||
|
|
|
| — |
|
|
|
| Currency |
|
|
| (0.13 | ) |
|
| ||||||||
|
|
|
| (0.01 | ) |
|
|
| Interest |
|
|
| 0.04 |
|
|
| ||||||||
|
|
|
| (0.07 | ) |
|
|
| Change in tax rate |
|
|
| (0.04 | ) |
|
| ||||||||
|
|
|
| 0.05 |
|
|
|
| Operations (2) |
|
|
| 0.22 |
|
|
| ||||||||
|
|
|
| $ | 1.04 |
|
|
|
| 2019 Diluted Earnings Per Share (1) |
|
|
| $ | 4.61 |
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(1) Basic and diluted EPS were calculated using the following (in millions): | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| Quarters Ended |
|
|
| Years Ended | ||||||||||||||||||
|
| December 31, |
|
|
| December 31, | ||||||||||||||||||
|
| 2019 |
| 2018 |
|
|
| 2019 |
| 2018 | ||||||||||||||
|
| $ 1,616 |
| $ 1,910 |
| Net Earnings attributable to PMI |
| $ 7,185 |
| $ 7,911 | ||||||||||||||
|
| 4 |
| 3 |
| Less distributed and undistributed earnings attributable to share-based payment awards |
| 17 |
| 16 | ||||||||||||||
|
| $ 1,612 |
| $ 1,907 |
| Net Earnings for basic and diluted EPS |
| $ 7,168 |
| $ 7,895 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| 1,556 |
| 1,555 |
| Weighted-average shares for basic EPS |
| 1,555 |
| 1,555 | ||||||||||||||
|
| 1 |
| — |
| Plus Contingently Issuable Performance Stock Units |
| 1 |
| — | ||||||||||||||
|
| 1,557 |
| 1,555 |
| Weighted-average shares for diluted EPS |
| 1,556 |
| 1,555 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(2) Includes the impact of shares outstanding and share-based payments |
|
|
|
|
|
|
|
| Schedule 2 | ||||||||||
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, excluding Currency | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Quarters Ended December 31, |
|
|
| Years Ended December 31, | ||||||||||||||
| 2019 |
| 2018 | % Change |
|
|
|
| 2019 |
| 2018 | % Change | ||||||
$ | 1.04 | $ | 1.23 | (15.4 | )% |
| Reported Diluted EPS |
| $ | 4.61 | $ | 5.08 | (9.3 | )% | ||||
— |
|
|
| Currency |
|
| (0.13) |
|
| |||||||||
$ | 1.04 | $ | 1.23 | (15.4 | )% |
| Reported Diluted EPS, excluding Currency |
| $ | 4.74 | $ | 5.08 | (6.7 | )% | ||||
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Quarters Ended December 31, |
|
|
| Years Ended December 31, | ||||||||||||||
| 2019 |
| 2018 | % Change |
|
|
|
| 2019 |
| 2018 | % Change | ||||||
$ | 1.04 | $ | 1.23 | (15.4 | )% |
| Reported Diluted EPS |
| $ | 4.61 | $ | 5.08 | (9.3 | )% | ||||
| 0.20 | — |
|
| Asset impairment and exit costs |
|
| 0.23 | — |
| ||||||||
— | — |
|
| Canadian tobacco litigation-related expense |
|
| 0.09 | — |
| |||||||||
— | — |
|
| Loss on deconsolidation of RBH |
|
| 0.12 | — |
| |||||||||
— | — |
|
| Russia excise and VAT audit charge |
|
| 0.20 | — |
| |||||||||
| (0.02) | — |
|
| Fair value adjustment for equity security investments |
|
| (0.02) | — |
| ||||||||
— |
| 0.02 |
|
| Tax items |
|
| (0.04) |
| 0.02 |
| |||||||
$ | 1.22 | $ | 1.25 | (2.4 | )% |
| Adjusted Diluted EPS |
| $ | 5.19 | $ | 5.10 | 1.8 | % | ||||
— |
|
|
| Currency |
|
| (0.13) |
|
| |||||||||
$ | 1.22 | $ | 1.25 | (2.4 | )% |
| Adjusted Diluted EPS, excluding Currency |
| $ | 5.32 | $ | 5.10 | 4.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
| Schedule 3 | ||||||||||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||||||||||||||||||||||
Reconciliation of Non-GAAP Measures | |||||||||||||||||||||||||||||||||
Reconciliation of Reported Diluted EPS to Pro Forma Adjusted Diluted EPS | |||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |||||||||||||||
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| Quarter Ended | Quarter Ended | Six Months Ended | Quarter Ended | Nine Months Ended | Quarter Ended | Year Ended | Quarter Ended | |||||||||||||||||||||||
|
|
| March 31, | June 30, | June 30, | September 30, | September 30, | December 31, | December 31, | March 31, | |||||||||||||||||||||||
|
|
| 2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2019 | |||||||||||||||||||||||
| Reported Diluted EPS |
| $ | 1.00 |
| $ | 1.41 |
|
| $ | 2.41 |
|
| $ | 1.44 |
|
| $ | 3.85 |
|
| $ | 1.23 |
|
| $ | 5.08 |
|
| $ | 0.87 |
| |
| Asset impairment and exit costs |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| 0.01 |
| ||||||||||||||
| Canadian tobacco litigation-related expense |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| 0.09 |
| ||||||||||||||
| Loss on deconsolidation of RBH |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| 0.12 |
| ||||||||||||||
| Tax items |
| — |
| — |
| — |
| — |
| — |
|
| 0.02 |
|
|
| 0.02 |
|
| — |
| |||||||||||
| Adjusted Diluted EPS |
| $ | 1.00 |
| $ | 1.41 |
|
| $ | 2.41 |
|
| $ | 1.44 |
|
| $ | 3.85 |
|
| $ | 1.25 |
|
| $ | 5.10 |
|
| $ | 1.09 | (3) | |
| Net earnings attributable to RBH |
| — | (1) |
| (0.08 | ) |
|
| (0.08 | ) | (1) |
| (0.09 | ) |
|
| (0.18 | ) | (1) |
| (0.08 | ) |
|
| (0.26 | ) | (1) | — | (2) | |||
| Pro Forma Adjusted Diluted EPS |
| $ | 1.00 |
| $ | 1.33 |
|
| $ | 2.33 |
|
| $ | 1.35 |
|
| $ | 3.67 |
|
| $ | 1.17 |
|
| $ | 4.84 |
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| ||
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| |||||||||||||||
| (1) Represents the impact of net earnings attributable to RBH from March 22, 2018 through end of period date | ||||||||||||||||||||||||||||||||
| (2) Represents the impact of net earnings attributable to RBH from March 22, 2019 through end of period date | ||||||||||||||||||||||||||||||||
| (3) Includes approximately $0.06 per share of net earnings attributable to RBH from January 1, 2019 through March 21, 2019 | ||||||||||||||||||||||||||||||||
| Note: EPS is computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may not agree to the total for the year. |
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| Schedule 4 | |
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||||
Reconciliation of Non-GAAP Measures | ||||||||||||
Net Revenues by Product Category and Adjustments of Net Revenues for the Impact of Currency and Acquisitions | ||||||||||||
($ in millions) / (Unaudited) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues | Currency | Net Revenues excluding Currency | Acquisitions | Net Revenues excluding Currency & Acquisitions |
| Quarters Ended December 31, |
| Net Revenues |
| Total | Excluding Currency | Excluding Currency & Acquisitions |
2019 |
| Combustible Products |
| 2018 |
| % Change | ||||||
$ 1,954 | $ (85) | $ 2,039 | $ — | $ 2,039 |
| European Union |
| $ 2,051 |
| (4.7)% | (0.6)% | (0.6)% |
663 | 17 | 646 | — | 646 |
| Eastern Europe |
| 671 |
| (1.1)% | (3.7)% | (3.7)% |
910 | 10 | 900 | — | 900 |
| Middle East & Africa |
| 919 |
| (1.0)% | (2.1)% | (2.1)% |
1,487 | 68 | 1,419 | — | 1,419 |
| South & Southeast Asia |
| 1,222 |
| 21.7% | 16.1% | 16.1% |
619 | (7) | 626 | — | 626 |
| East Asia & Australia |
| 726 |
| (14.7)% | (13.8)% | (13.8)% |
546 | (9) | 554 | — | 554 |
| Latin America & Canada |
| 783 |
| (30.4)% | (29.3)% | (29.3)% |
$ 6,179 | $ (4) | $ 6,184 | $ — | $ 6,184 |
| Total Combustible |
| $ 6,373 |
| (3.0)% | (3.0)% | (3.0)% |
2019 |
| Reduced-Risk Products |
| 2018 |
| % Change | ||||||
$ 482 | $ (21) | $ 503 | $ — | $ 503 |
| European Union |
| $ 289 |
| 67.0% | 74.4% | 74.4% |
319 | 12 | 307 | — | 307 |
| Eastern Europe |
| 145 |
| +100% | +100% | +100% |
74 | 2 | 72 | — | 72 |
| Middle East & Africa |
| 69 |
| 7.4% | 4.6% | 4.6% |
— | — | — | — | — |
| South & Southeast Asia |
| — |
| —% | —% | —% |
651 | 7 | 644 | — | 644 |
| East Asia & Australia |
| 619 |
| 5.1% | 4.1% | 4.1% |
8 | — | 9 | — | 9 |
| Latin America & Canada(1) |
| 5 |
| 85.5% | 92.8% | 92.8% |
$ 1,534 | $ (2) | $ 1,535 | $ — | $ 1,535 |
| Total RRPs |
| $ 1,126 |
| 36.2% | 36.3% | 36.3% |
2019 |
| PMI |
| 2018 |
| % Change | ||||||
$ 2,436 | $ (106) | $ 2,542 | $ — | $ 2,542 |
| European Union |
| $ 2,340 |
| 4.1% | 8.6% | 8.6% |
982 | 29 | 953 | — | 953 |
| Eastern Europe |
| 816 |
| 20.3% | 16.8% | 16.8% |
984 | 12 | 972 | — | 972 |
| Middle East & Africa |
| 988 |
| (0.4)% | (1.6)% | (1.6)% |
1,487 | 68 | 1,419 | — | 1,419 |
| South & Southeast Asia |
| 1,222 |
| 21.7% | 16.1% | 16.1% |
1,270 | — | 1,270 | — | 1,270 |
| East Asia & Australia |
| 1,345 |
| (5.6)% | (5.6)% | (5.6)% |
554 | (9) | 563 | — | 563 |
| Latin America & Canada |
| 788 |
| (29.7)% | (28.6)% | (28.6)% |
$ 7,713 | $ (6) | $ 7,719 | $ — | $ 7,719 |
| Total PMI |
| $ 7,499 |
| 2.9% | 2.9% | 2.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. | ||||||||||||
Note: Sum of product categories or Regions might not foot to Total PMI due to roundings. “-“ indicates amounts between -$0.5 million and +$0.5 million. |
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|
|
| Schedule 5 | |
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||||
Reconciliation of Non-GAAP Measures | ||||||||||||
Net Revenues by Product Category and Adjustments of Net Revenues for the Impact of Currency and Acquisitions | ||||||||||||
($ in millions) / (Unaudited) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues | Currency | Net Revenues excluding Currency | Acquisitions | Net Revenues excluding Currency & Acquisitions |
| Years Ended December 31, |
| Net Revenues |
| Total | Excluding Currency | Excluding Currency & Acquisitions |
2019 |
| Combustible Products |
| 2018 |
| % Change | ||||||
$ 8,093 | $ (465) | $ 8,558 | $ — | $ 8,558 |
| European Union |
| $ 8,433 |
| (4.0)% | 1.5% | 1.5% |
2,438 | (89) | 2,526 | — | 2,526 |
| Eastern Europe |
| 2,597 |
| (6.1)% | (2.7)% | (2.7)% |
3,721 | (161) | 3,882 | — | 3,882 |
| Middle East & Africa |
| 3,732 |
| (0.3)% | 4.0% | 4.0% |
5,094 | (10) | 5,104 | — | 5,104 |
| South & Southeast Asia |
| 4,656 |
| 9.4% | 9.6% | 9.6% |
2,693 | (39) | 2,732 | — | 2,732 |
| East Asia & Australia |
| 3,074 |
| (12.4)% | (11.1)% | (11.1)% |
2,179 | (67) | 2,246 | — | 2,246 |
| Latin America & Canada |
| 3,037 |
| (28.2)% | (26.1)% | (26.1)% |
$ 24,218 | $ (831) | $ 25,049 | $ — | $ 25,049 |
| Total Combustible |
| $ 25,529 |
| (5.1)% | (1.9)% | (1.9)% |
2019 |
| Reduced-Risk Products |
| 2018 |
| % Change | ||||||
$ 1,724 | $ (98) | $ 1,822 | $ — | $ 1,822 |
| European Union |
| $ 865 |
| 99.2% | +100% | +100% |
844 | (19) | 864 | — | 864 |
| Eastern Europe |
| 324 |
| +100% | +100% | +100% |
321 | (1) | 322 | — | 322 |
| Middle East & Africa |
| 382 |
| (15.8)% | (15.7)% | (15.7)% |
— | — | — | — | — |
| South & Southeast Asia |
| — |
| —% | —% | —% |
2,671 | 13 | 2,658 | — | 2,658 |
| East Asia & Australia |
| 2,506 |
| 6.6% | 6.0% | 6.0% |
27 | (1) | 28 | — | 28 |
| Latin America & Canada(1) |
| 19 |
| 41.9% | 49.9% | 49.9% |
$ 5,587 | $ (106) | $ 5,693 | $ — | $ 5,693 |
| Total RRPs |
| $ 4,096 |
| 36.4% | 39.0% | 39.0% |
2019 |
| PMI |
| 2018 |
| % Change | ||||||
$ 9,817 | $ (563) | $ 10,380 | $ — | $ 10,380 |
| European Union |
| $ 9,298 |
| 5.6% | 11.6% | 11.6% |
3,282 | (108) | 3,390 | — | 3,390 |
| Eastern Europe |
| 2,921 |
| 12.4% | 16.1% | 16.1% |
4,042 | (162) | 4,204 | — | 4,204 |
| Middle East & Africa |
| 4,114 |
| (1.8)% | 2.2% | 2.2% |
5,094 | (10) | 5,104 | — | 5,104 |
| South & Southeast Asia |
| 4,656 |
| 9.4% | 9.6% | 9.6% |
5,364 | (26) | 5,390 | — | 5,390 |
| East Asia & Australia |
| 5,580 |
| (3.9)% | (3.4)% | (3.4)% |
2,206 | (68) | 2,274 | — | 2,274 |
| Latin America & Canada |
| 3,056 |
| (27.8)% | (25.6)% | (25.6)% |
$ 29,805 | $ (937) | $ 30,742 | $ — | $ 30,742 |
| Total PMI |
| $ 29,625 |
| 0.6% | 3.8% | 3.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. | ||||||||||||
Note: Sum of product categories or Regions might not foot to Total PMI due to roundings. “-“ indicates amounts between -$0.5 million and +$0.5 million. |
|
|
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|
|
|
|
|
|
|
|
| Schedule 6 | |
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||
Reconciliation of Non-GAAP Measures | |||||||||||||
Adjustments of Operating Income for the Impact of Currency and Acquisitions | |||||||||||||
($ in millions) / (Unaudited) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income | Currency | Operating Income excluding Currency | Acquisitions | Operating Income excluding Currency & Acquisitions |
|
|
| Operating Income |
| Total | Excluding Currency | Excluding Currency & Acquisitions | |
2019 |
| Quarters Ended December 31, |
| 2018 |
| % Change | |||||||
$ 624 | (1) | $ (69) | $ 693 | $ — | $ 693 |
| European Union |
| $ 1,009 |
| (38.2)% | (31.3)% | (31.3)% |
263 |
| 33 | 230 | — | 230 |
| Eastern Europe |
| 220 |
| 19.5% | 4.5% | 4.5% |
380 |
| 15 | 365 | — | 365 |
| Middle East & Africa |
| 359 |
| 5.8% | 1.7% | 1.7% |
692 |
| 42 | 650 | — | 650 |
| South & Southeast Asia |
| 423 |
| 63.6% | 53.7% | 53.7% |
412 |
| 4 | 408 | — | 408 |
| East Asia & Australia |
| 412 |
| —% | (1.0)% | (1.0)% |
135 | (2) | 4 | 131 | — | 131 |
| Latin America & Canada |
| 279 |
| (51.6)% | (53.0)% | (53.0)% |
$ 2,506 |
| $ 29 | $ 2,477 | $ — | $ 2,477 |
| Total PMI |
| $ 2,702 |
| (7.3)% | (8.3)% | (8.3)% |
2019 |
| Years Ended December 31, |
| 2018 |
| % Change | |||||||
$ 3,970 | (1) | $ (330) | $ 4,300 | $ — | $ 4,300 |
| European Union |
| $ 4,105 |
| (3.3)% | 4.8% | 4.8% |
547 | (3) | 23 | 524 | — | 524 |
| Eastern Europe |
| 902 |
| (39.4)% | (41.9)% | (41.9)% |
1,684 |
| (53) | 1,737 | — | 1,737 |
| Middle East & Africa |
| 1,627 |
| 3.5% | 6.8% | 6.8% |
2,163 | (4) | 17 | 2,146 | — | 2,146 |
| South & Southeast Asia |
| 1,747 |
| 23.8% | 22.8% | 22.8% |
1,932 |
| 37 | 1,895 | — | 1,895 |
| East Asia & Australia |
| 1,851 |
| 4.4% | 2.4% | 2.4% |
235 | (5) | 14 | 221 | — | 221 |
| Latin America & Canada |
| 1,145 |
| (79.5)% | (80.7)% | (80.7)% |
$ 10,531 |
| $ (292) | $ 10,823 | $ — | $ 10,823 |
| Total PMI |
| $ 11,377 |
| (7.4)% | (4.9)% | (4.9)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes asset impairment and exit costs ($342 million) | |||||||||||||
(2) Includes asset impairment and exit costs ($15 million) | |||||||||||||
(3) Includes the Russia excise and VAT audit charge ($374 million) | |||||||||||||
(4) Includes asset impairment and exit costs ($22 million) | |||||||||||||
(5) Includes asset impairment and exit costs ($60 million), the Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million) |
|
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|
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| Schedule 7 | |
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||||||
Reconciliation of Non-GAAP Measures | |||||||||||||||||
Reconciliation of Operating Income to Adjusted Operating Income, excluding Currency and Acquisitions | |||||||||||||||||
($ in millions) / (Unaudited) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income | Asset Impairment & Exit Costs and Others | Adjusted Operating Income | Currency | Adjusted Operating Income excluding Currency | Acqui- sitions | Adjusted Operating Income excluding Currency & Acqui- sitions |
|
|
| Operating Income | Asset Impairment & Exit Costs | Adjusted Operating Income |
| Total | Excluding Currency | Excluding Currency & Acqui- sitions | |
2019 |
| Quarters Ended December 31, |
| 2018 |
| % Change | |||||||||||
$ 624 | $ (342) | (1) | $ 966 | $ (69) | $ 1,035 | $ — | $ 1,035 |
| European Union |
| $ 1,009 | $ — | $ 1,009 |
| (4.3)% | 2.6% | 2.6% |
263 | — |
| 263 | 33 | 230 | — | 230 |
| Eastern Europe |
| 220 | — | 220 |
| 19.5% | 4.5% | 4.5% |
380 | — |
| 380 | 15 | 365 | — | 365 |
| Middle East & Africa |
| 359 | — | 359 |
| 5.8% | 1.7% | 1.7% |
692 | — |
| 692 | 42 | 650 | — | 650 |
| South & Southeast Asia |
| 423 | — | 423 |
| 63.6% | 53.7% | 53.7% |
412 | — |
| 412 | 4 | 408 | — | 408 |
| East Asia & Australia |
| 412 | — | 412 |
| —% | (1.0)% | (1.0)% |
135 | (15) | (1) | 150 | 4 | 146 | — | 146 |
| Latin America & Canada |
| 279 | — | 279 |
| (46.2)% | (47.7)% | (47.7)% |
$ 2,506 | $ (357) |
| $ 2,863 | $ 29 | $ 2,834 | $ — | $ 2,834 |
| Total PMI |
| $ 2,702 | $ — | $ 2,702 |
| 6.0% | 4.9% | 4.9% |
2019 |
| Years Ended December 31, | 2018 |
| % Change | ||||||||||||
$ 3,970 | $ (342) | (1) | $ 4,312 | $ (330) | $ 4,642 | $ — | $ 4,642 |
| European Union |
| $ 4,105 | $ — | $ 4,105 |
| 5.0% | 13.1% | 13.1% |
547 | (374) | (2) | 921 | 23 | 898 | — | 898 |
| Eastern Europe |
| 902 | — | 902 |
| 2.1% | (0.4)% | (0.4)% |
1,684 | — |
| 1,684 | (53) | 1,737 | — | 1,737 |
| Middle East & Africa |
| 1,627 | — | 1,627 |
| 3.5% | 6.8% | 6.8% |
2,163 | (20) | (1) | 2,183 | 17 | 2,166 | — | 2,166 |
| South & Southeast Asia |
| 1,747 | — | 1,747 |
| 25.0% | 24.0% | 24.0% |
1,932 | — |
| 1,932 | 37 | 1,895 | — | 1,895 |
| East Asia & Australia |
| 1,851 | — | 1,851 |
| 4.4% | 2.4% | 2.4% |
235 | (493) | (3) | 728 | 14 | 714 | — | 714 |
| Latin America & Canada |
| 1,145 | — | 1,145 |
| (36.4)% | (37.6)% | (37.6)% |
$ 10,531 | $ (1,229) |
| $ 11,760 | $ (292) | $ 12,052 | $ — | $ 12,052 |
| Total PMI |
| $ 11,377 | $ — | $ 11,377 |
| 3.4% | 5.9% | 5.9% |
| |||||||||||||||||
(1) Represents asset impairment and exit costs | |||||||||||||||||
(2) Represents the Russia excise and VAT audit charge | |||||||||||||||||
(3) Includes asset impairment and exit costs ($60 million), the Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million) |
|
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| Schedule 8 | |
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||||||||||||
Reconciliation of Non-GAAP Measures | ||||||||||||||||||||
Reconciliation of Adjusted Operating Income Margin, excluding Currency and Acquisitions | ||||||||||||||||||||
($ in millions) / (Unaudited) | ||||||||||||||||||||
|
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|
|
Adjusted Operating Income (1) | Net Revenues | Adjusted Operating Income Margin |
| Adjusted Operating Income excluding Currency (1) | Net Revenues excluding Currency (2) | Adjusted Operating Income Margin excluding Currency |
| Adjusted Operating Income excluding Currency & Acqui- sitions (1) | Net Revenues excluding Currency & Acqui- sitions (2) | Adjusted Operating Income Margin excluding Currency & Acqui- sitions |
|
|
| Adjusted Operating Income (1) | Net Revenues | Adjusted Operating Income Margin |
| Adjusted Operating Income Margin | Adjusted Operating Income Margin excluding Currency | Adjusted Operating Income Margin excluding Currency & Acqui- sitions |
2019 |
| Quarters Ended December 31, |
| 2018 |
| % Points Change | ||||||||||||||
$ 966 | $ 2,436 | 39.7% |
| $ 1,035 | $ 2,542 | 40.7% |
| $ 1,035 | $ 2,542 | 40.7% |
| European Union |
| $ 1,009 | $ 2,340 | 43.1% |
| (3.4) | (2.4) | (2.4) |
263 | 982 | 26.8% |
| 230 | 953 | 24.1% |
| 230 | 953 | 24.1% |
| Eastern Europe |
| 220 | 816 | 27.0% |
| (0.2) | (2.9) | (2.9) |
380 | 984 | 38.6% |
| 365 | 972 | 37.6% |
| 365 | 972 | 37.6% |
| Middle East & Africa |
| 359 | 988 | 36.3% |
| 2.3 | 1.3 | 1.3 |
692 | 1,487 | 46.5% |
| 650 | 1,419 | 45.8% |
| 650 | 1,419 | 45.8% |
| South & Southeast Asia |
| 423 | 1,222 | 34.6% |
| 11.9 | 11.2 | 11.2 |
412 | 1,270 | 32.4% |
| 408 | 1,270 | 32.1% |
| 408 | 1,270 | 32.1% |
| East Asia & Australia |
| 412 | 1,345 | 30.6% |
| 1.8 | 1.5 | 1.5 |
150 | 554 | 27.1% |
| 146 | 563 | 25.9% |
| 146 | 563 | 25.9% |
| Latin America & Canada |
| 279 | 788 | 35.4% |
| (8.3) | (9.5) | (9.5) |
$ 2,863 | $ 7,713 | 37.1% |
| $ 2,834 | $ 7,719 | 36.7% |
| $ 2,834 | $ 7,719 | 36.7% |
| Total PMI |
| $ 2,702 | $ 7,499 | 36.0% |
| 1.1 | 0.7 | 0.7 |
2019 |
| Years Ended December 31, | 2018 |
| % Points Change | |||||||||||||||
$ 4,312 | $ 9,817 | 43.9% |
| $ 4,642 | $ 10,380 | 44.7% |
| $ 4,642 | $ 10,380 | 44.7% |
| European Union |
| $ 4,105 | $ 9,298 | 44.1% |
| (0.2) | 0.6 | 0.6 |
921 | 3,282 | 28.1% |
| 898 | 3,390 | 26.5% |
| 898 | 3,390 | 26.5% |
| Eastern Europe |
| 902 | 2,921 | 30.9% |
| (2.8) | (4.4) | (4.4) |
1,684 | 4,042 | 41.7% |
| 1,737 | 4,204 | 41.3% |
| 1,737 | 4,204 | 41.3% |
| Middle East & Africa |
| 1,627 | 4,114 | 39.5% |
| 2.2 | 1.8 | 1.8 |
2,183 | 5,094 | 42.9% |
| 2,166 | 5,104 | 42.4% |
| 2,166 | 5,104 | 42.4% |
| South & Southeast Asia |
| 1,747 | 4,656 | 37.5% |
| 5.4 | 4.9 | 4.9 |
1,932 | 5,364 | 36.0% |
| 1,895 | 5,390 | 35.2% |
| 1,895 | 5,390 | 35.2% |
| East Asia & Australia |
| 1,851 | 5,580 | 33.2% |
| 2.8 | 2.0 | 2.0 |
728 | 2,206 | 33.0% |
| 714 | 2,274 | 31.4% |
| 714 | 2,274 | 31.4% |
| Latin America & Canada |
| 1,145 | 3,056 | 37.5% |
| (4.5) | (6.1) | (6.1) |
$ 11,760 | $ 29,805 | 39.5% |
| $ 12,052 | $ 30,742 | 39.2% |
| $ 12,052 | $ 30,742 | 39.2% |
| Total PMI |
| $ 11,377 | $ 29,625 | 38.4% |
| 1.1 | 0.8 | 0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to Schedule 7 | ||||||||||||||||||||
(2) For the calculation of Net Revenues excluding currency and acquisitions refer to Schedules 4 and 5 |
|
|
|
|
|
|
|
|
| Schedule 9 | |||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||||||
Reconciliation of Non-GAAP Measures | ||||||||||||||
Adjustments for the Impact of RBH, excluding Currency | ||||||||||||||
($ in millions, except per share data) / (Unaudited) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarters Ended December 31, |
| Years Ended December 31, |
| ||||||||
|
|
| 2019 | 2018 | % Change |
| 2019 | 2018 | % Change |
| ||||
| Net Revenues |
| $ 7,713 |
| $ 7,499 |
| 2.9% |
| $ 29,805 |
| $ 29,625 |
| 0.6% |
|
| Net Revenues attributable to RBH |
|
|
| (236) |
|
|
|
|
| (742) | (1) |
|
|
| Net Revenues |
| $ 7,713 |
| $ 7,263 | (2) | 6.2% |
| $ 29,805 |
| $ 28,883 | (2) | 3.2% |
|
| Currency |
| (5) |
|
|
|
|
| (937) |
|
|
|
|
|
| Net Revenues, ex. currency |
| $ 7,718 |
| $ 7,263 | (2) | 6.3% |
| $ 30,742 |
| $ 28,883 | (2) | 6.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
| $ 2,506 |
| $ 2,702 |
| (7.3)% |
| $ 10,531 |
| $ 11,377 |
| (7.4)% |
|
| Asset impairment and exit costs |
| (357) |
| — |
|
|
| (422) |
| — |
|
|
|
| Canadian tobacco litigation-related expense |
| — |
| — |
|
|
| (194) |
| — |
|
|
|
| Loss on deconsolidation of RBH |
| — |
| — |
|
|
| (239) |
| — |
|
|
|
| Russia excise and VAT audit charge |
| — |
| — |
|
|
| (374) |
| — |
|
|
|
| Adjusted Operating Income |
| $ 2,863 |
| $ 2,702 |
| 6.0% |
| $ 11,760 |
| $ 11,377 |
| 3.4% |
|
| Operating Income attributable to RBH |
|
|
| (168) |
|
|
|
|
| (542) | (1) |
|
|
| Adjusted Operating Income |
| $ 2,863 |
| $ 2,534 | (2) | 13.0% |
| $ 11,760 |
| $ 10,835 | (2) | 8.5% |
|
| Currency |
| 28 |
|
|
|
|
| (293) |
|
|
|
|
|
| Adjusted Operating Income, ex. currency |
| $ 2,835 |
| $ 2,534 | (2) | 11.9% |
| $ 12,053 |
| $ 10,835 | (2) | 11.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted OI Margin |
| 37.1% |
| 36.0% |
| 1.1 |
| 39.5% |
| 38.4% |
| 1.1 |
|
| Adjusted OI Margin attributable to RBH |
|
|
| (1.1) |
|
|
|
|
| (0.9) | (1) |
|
|
| Adjusted OI Margin |
| 37.1% |
| 34.9% | (2) | 2.2 |
| 39.5% |
| 37.5% | (2) | 2.0 |
|
| Currency |
| 0.4 |
|
|
|
|
| 0.3 |
|
|
|
|
|
| Adjusted OI Margin, ex. currency |
| 36.7% |
| 34.9% | (2) | 1.8 |
| 39.2% |
| 37.5% | (2) | 1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted Diluted EPS (3) |
| $ 1.22 |
| $ 1.25 |
| (2.4)% |
| $ 5.19 |
| $ 5.10 |
| 1.8% |
|
| Net earnings attributable to RBH |
|
|
| (0.08) |
|
|
|
|
| (0.26) | (1) |
|
|
| Adjusted Diluted EPS |
| $ 1.22 |
| $ 1.17 | (2) | 4.3% |
| $ 5.19 |
| $ 4.84 | (2) | 7.2% |
|
| Currency |
| — |
|
|
|
|
| (0.13) |
|
|
|
|
|
| Adjusted Diluted EPS, ex. currency |
| $ 1.22 |
| $ 1.17 | (2) | 4.3% |
| $ 5.32 |
| $ 4.84 | (2) | 9.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Represents the impact attributable to RBH from March 22, 2018 through end of period date |
| ||||||||||||
| (2) Pro forma |
| ||||||||||||
| (3) For the calculation, see Schedule 2 |
| ||||||||||||
| Note: Financials attributable to RBH include Duty Free sales in Canada |
|
|
|
|
|
|
|
|
|
| Schedule 10 | |||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||||||
Reconciliation of Non-GAAP Measures | ||||||||||||||
Adjustments for the Impact of RBH, excluding Currency | ||||||||||||||
($ in millions) / (Unaudited) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Latin America & Canada |
| Quarters Ended December 31, |
| Years Ended December 31, |
| ||||||||
|
|
| 2019 | 2018 | % Change |
| 2019 | 2018 | % Change |
| ||||
| Net Revenues |
| $ 554 |
| $ 788 |
| (29.7)% |
| $ 2,206 |
| $ 3,056 |
| (27.8)% |
|
| Net Revenues attributable to RBH |
|
|
| (234) |
|
|
|
|
| (737) | (1) |
|
|
| Net Revenues |
| $ 554 |
| $ 554 | (2) | —% |
| $ 2,206 |
| $ 2,319 | (2) | (4.9)% |
|
| Currency |
| (8) |
|
|
|
|
| (68) |
|
|
|
|
|
| Net Revenues, ex. currency |
| $ 562 |
| $ 554 | (2) | 1.4% |
| $ 2,274 |
| $ 2,319 | (2) | (1.9)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
| $ 135 |
| $ 279 |
| (51.6)% |
| $ 235 |
| $ 1,145 |
| (79.5)% |
|
| Asset impairment and exit costs |
| (15) |
| — |
|
|
| (60) |
| — |
|
|
|
| Canadian tobacco litigation-related expense |
| — |
| — |
|
|
| (194) |
| — |
|
|
|
| Loss on deconsolidation of RBH |
| — |
| — |
|
|
| (239) |
| — |
|
|
|
| Adjusted Operating Income |
| $ 150 |
| $ 279 |
| (46.2)% |
| $ 728 |
| $ 1,145 |
| (36.4)% |
|
| Operating Income attributable to RBH |
|
|
| (167) |
|
|
|
|
| (539) | (1) |
|
|
| Adjusted Operating Income |
| $ 150 |
| $ 112 | (2) | 33.9% |
| $ 728 |
| $ 606 | (2) | 20.1% |
|
| Currency |
| 3 |
|
|
|
|
| 13 |
|
|
|
|
|
| Adjusted Operating Income, ex. currency |
| $ 147 |
| $ 112 | (2) | 31.3% |
| $ 715 |
| $ 606 | (2) | 18.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted OI Margin |
| 27.1% |
| 35.4% |
| (8.3) |
| 33.0% |
| 37.5% |
| (4.5) |
|
| Adjusted OI Margin attributable to RBH |
|
|
| (15.2) |
|
|
|
|
| (11.4) | (1) |
|
|
| Adjusted OI Margin |
| 27.1% |
| 20.2% | (2) | 6.9 |
| 33.0% |
| 26.1% | (2) | 6.9 |
|
| Currency |
| 0.9 |
|
|
|
|
| 1.6 |
|
|
|
|
|
| Adjusted OI Margin, ex. currency |
| 26.2% |
| 20.2% | (2) | 6.0 |
| 31.4% |
| 26.1% | (2) | 5.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Represents the impact attributable to RBH from March 22, 2018 through end of period date |
| ||||||||||||
| (2) Pro forma |
|
|
|
|
|
|
|
| Schedule 11 | ||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||
Condensed Statements of Earnings | |||||||||||||
($ in millions, except per share data) / (Unaudited) | |||||||||||||
|
|
|
|
|
|
|
|
|
| ||||
| Quarters Ended December 31, |
|
|
| Years Ended December 31, | ||||||||
| 2019 |
| 2018 |
| Change Fav./(Unfav.) |
|
|
| 2019 |
| 2018 |
| Change Fav./(Unfav.) |
| $ 19,849 | $ 19,858 | —% |
| Revenues including Excise Taxes |
| $ 77,921 | $ 79,823 | (2.4)% | ||||
| 12,136 | 12,359 | 1.8% |
| Excise Taxes on products |
| 48,116 | 50,198 | 4.1% | ||||
| 7,713 | 7,499 | 2.9% |
| Net Revenues |
| 29,805 | 29,625 | 0.6% | ||||
| 2,778 | 2,781 | 0.1% |
| Cost of sales |
| 10,513 | 10,758 | 2.3% | ||||
| 4,935 | 4,718 | 4.6% |
| Gross profit |
| 19,292 | 18,867 | 2.3% | ||||
| 2,413 | 1,997 | (20.8)% |
| Marketing, administration and research costs (1) |
| 8,695 | 7,408 | (17.4)% | ||||
| 16 | 19 |
|
| Amortization of intangibles |
| 66 | 82 |
| ||||
| 2,506 | 2,702 | (7.3)% |
| Operating Income |
| 10,531 | 11,377 | (7.4)% | ||||
| 136 | 125 | (8.8)% |
| Interest expense, net |
| 570 | 665 | 14.3% | ||||
| 28 | 22 | (27.3)% |
| Pension and other employee benefit costs |
| 89 | 41 | -(100)% | ||||
| 2,342 | 2,555 | (8.3)% |
| Earnings before income taxes |
| 9,872 | 10,671 | (7.5)% | ||||
| 623 | 551 | (13.1)% |
| Provision for income taxes |
| 2,293 | 2,445 | 6.2% | ||||
| (63) | 1 |
|
| Equity investments and securities (income)/loss, net |
| (149) | (60) |
| ||||
| 1,782 | 2,003 | (11.0)% |
| Net Earnings |
| 7,728 | 8,286 | (6.7)% | ||||
| 166 | 93 |
|
| Net Earnings attributable to noncontrolling interests |
| 543 | 375 |
| ||||
| $ 1,616 | $ 1,910 | (15.4)% |
| Net Earnings attributable to PMI |
| $ 7,185 | $ 7,911 | (9.2)% | ||||
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
| Per share data (2): |
|
|
|
| ||||
| $ 1.04 | $ 1.23 | (15.4)% |
| Basic Earnings Per Share |
| $ 4.61 | $ 5.08 | (9.3)% | ||||
| $ 1.04 | $ 1.23 | (15.4)% |
| Diluted Earnings Per Share |
| $ 4.61 | $ 5.08 | (9.3)% |
(1) Year ended December 31, 2019 includes asset impairment and exit costs ($422 million), the Canadian tobacco litigation-related expense ($194 million), the loss on deconsolidation of RBH ($239 million) and the Russia excise and VAT audit charge ($374 million). Quarter ended December 31, 2019 includes asset impairment and exit costs ($357 million). |
(2) Net Earnings and weighted-average shares used in the basic and diluted Earnings Per Share computations for the quarters and for the year ended December 31, 2019 and 2018 are shown on Schedule 1, Footnote 1. |
|
| Schedule 12 | ||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||
Condensed Balance Sheets | ||||||||||
($ in millions, except ratios) / (Unaudited) | ||||||||||
|
|
|
|
|
|
| ||||
|
| December 31, |
| December 31, | ||||||
|
| 2019 |
| 2018 | ||||||
Assets |
|
|
|
|
|
| ||||
Cash and cash equivalents |
|
| $ | 6,861 |
|
|
| $ | 6,593 |
|
All other current assets |
|
| 13,653 |
|
|
| 12,849 |
| ||
Property, plant and equipment, net |
|
| 6,631 |
|
|
| 7,201 |
| ||
Goodwill |
|
| 5,858 |
|
|
| 7,189 |
| ||
Other intangible assets, net |
|
| 2,113 |
|
|
| 2,278 |
| ||
Investments in unconsolidated subsidiaries and equity securities |
|
| 4,635 |
|
|
| 1,269 |
| ||
Other assets |
|
| 3,124 |
|
|
| 2,422 |
| ||
Total assets |
|
| $ | 42,875 |
|
|
| $ | 39,801 |
|
|
|
|
|
|
|
| ||||
Liabilities and Stockholders' (Deficit) Equity |
|
|
|
|
|
| ||||
Short-term borrowings |
|
| $ | 338 |
|
|
| $ | 730 |
|
Current portion of long-term debt |
|
| 4,051 |
|
|
| 4,054 |
| ||
All other current liabilities |
|
| 14,444 |
|
|
| 12,407 |
| ||
Long-term debt |
|
| 26,656 |
|
|
| 26,975 |
| ||
Deferred income taxes |
|
| 908 |
|
|
| 898 |
| ||
Other long-term liabilities |
|
| 6,077 |
|
|
| 5,476 |
| ||
Total liabilities |
|
| 52,474 |
|
|
| 50,540 |
| ||
|
|
|
|
|
|
| ||||
Total PMI stockholders' deficit |
|
| (11,577 | ) |
|
| (12,459 | ) | ||
Noncontrolling interests |
|
| 1,978 |
|
|
| 1,720 |
| ||
Total stockholders' (deficit) equity |
|
| (9,599 | ) |
|
| (10,739 | ) | ||
Total liabilities and stockholders' (deficit) equity | $ | 42,875 | $ | 39,801 |
|
|
|
|
|
| Schedule 13 | |||||
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) | |||||||||||
|
|
|
|
|
|
|
| ||||
|
|
| Year Ended December 31, 2019 |
| Year Ended December 31, 2018 | ||||||
|
|
|
| ||||||||
|
|
|
| ||||||||
Net Earnings |
|
|
| $ | 7,728 |
|
|
| $ | 8,286 |
|
Equity investments and securities (income)/loss, net |
|
|
| (149 | ) |
|
| (60 | ) | ||
Provision for income taxes |
|
|
| 2,293 |
|
|
| 2,445 |
| ||
Interest expense, net |
|
|
| 570 |
|
|
| 665 |
| ||
Depreciation and amortization |
|
|
| 964 |
|
|
| 989 |
| ||
Asset impairment and exit costs and Others (1) |
|
|
| 1,229 |
|
|
| — |
| ||
Adjusted EBITDA |
|
|
| $ 12,635 |
|
| $ | 12,325 |
| ||
|
|
|
|
|
|
|
| ||||
|
|
| December 31, |
| December 31, | ||||||
|
|
| 2019 |
| 2018 | ||||||
Short-term borrowings |
|
|
| $ | 338 |
|
|
| $ | 730 |
|
Current portion of long-term debt |
|
|
| 4,051 |
|
|
| 4,054 |
| ||
Long-term debt |
|
|
| 26,656 |
|
|
| 26,975 |
| ||
Total Debt |
|
|
| $ | 31,045 |
|
|
| $ | 31,759 |
|
Cash and cash equivalents |
|
|
| 6,861 |
|
|
| 6,593 |
| ||
Net Debt |
|
|
| $ | 24,184 |
|
|
| $ | 25,166 |
|
|
|
|
|
|
|
|
| ||||
Ratios: |
|
|
|
|
|
|
| ||||
Total Debt to Adjusted EBITDA |
|
|
| 2.46 |
|
|
| 2.58 |
| ||
Net Debt to Adjusted EBITDA |
|
|
| 1.91 |
|
|
| 2.04 |
|
(1) Others include the Canadian tobacco litigation-related expense ($194 million), the loss on deconsolidation of RBH ($239 million) and the Russia excise and VAT audit charge ($374 million) |
|
|
|
|
|
|
|
| Schedule 14 | ||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||||||||||||
Reconciliation of Non-GAAP Measures | ||||||||||||||||||||
Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding Currency | ||||||||||||||||||||
($ in millions) / (Unaudited) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| Quarters Ended December 31, |
|
|
| Years Ended December 31, | |||||||||||||||
| 2019 |
| 2018 |
| % Change |
|
|
| 2019 |
| 2018 |
| % Change | |||||||
| $ | 3,324 |
| $ 2,422 | 37.2 | % |
| Net cash provided by operating activities (1) |
| $ | 10,090 |
| $ | 9,478 | 6.5 | % | ||||
|
| (112 | ) |
|
|
| Currency |
|
| (972 | ) |
|
| |||||||
| $ | 3,436 |
| $ 2,422 | 41.9 | % |
| Net cash provided by operating activities, excluding currency |
| $ | 11,062 |
| $ | 9,478 | 16.7 | % | ||||
|
|
|
|
|
|
|
|
|
| |||||||||||
(1) Operating cash flow |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200206005364/en/
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Source: Philip Morris International