Attached files
 2011
Full-Year and Fourth-Quarter Results
February 9, 2012
Exhibit 99.3
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2
Introduction
Unless otherwise stated, we will be talking about results for the full-
year or fourth-quarter 2011 and comparing them with the same period
in 2010
References to PMI volumes refer to PMI shipment data, unless
otherwise stated
Industry volume and market shares are the latest data available from
a number of sources
Organic volume refers to volume excluding acquisitions
Net revenues exclude excise taxes
OCI stands for Operating Companies Income, which is defined as
operating income before general corporate expenses and the
amortization of intangibles. OCI growth rates are on an adjusted
basis, which excludes asset impairment, exit and other costs
Data tables showing adjustments to net revenues and OCI for
currency, acquisitions, asset impairment, exit and other costs, free
cash flow calculations, adjustments to EPS, and reconciliations to
U.S. GAAP measures are at the end of today’s webcast slides and
are posted on our web site |
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3
Forward-Looking and Cautionary Statements
This presentation and related discussion contain statements that, to the
extent they do not relate strictly to historical or current facts, constitute
“forward-looking statements”
within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are
based on current plans, estimates and expectations, and are not
guarantees of future performance. They are based on management’s
expectations that involve a number of business risks and uncertainties,
any of which could cause actual results to differ materially from those
expressed in or implied by the forward-looking statements. PMI
undertakes no obligation to publicly update or revise any forward-looking
statements, except in the normal course of its public disclosure
obligations. The risks and uncertainties relating to the forward-looking
statements in this presentation include those described under Item 1A.
“Risk Factors”
in PMI’s Form 10-Q for the quarter ended September 30,
2011, filed with the Securities and Exchange Commission.
|
 4
Outstanding 2011 Results
Organic cigarette volume growth of 0.5%, thanks notably
to Indonesia and Japan
Fourth consecutive year of global share growth driven by
our superior brand portfolio
Solid volume performance, strong pricing, and significant
productivity savings led to record profitability
Strong cash flow driving generous returns to shareholders
Source: PMI Financials
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|
 Outstanding 2011 Results
(a)
Excluding currency and acquisitions
(b)
Excluding currency
Source: PMI Financials
5
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 6
Reversal of Currency Favorability in 2012
Recent unfavorable currency movements:
Weaker Euro, due to debt issues in Europe
Depreciation of certain emerging market currencies
At prevailing exchange rates, forecast currency headwind
of approximately 10 cents per share in 2012
This would amount to a reversal of about half the 2011
favorability of 19 cents per share
Source: PMI Forecasts
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|
 7
2012 EPS Guidance
Excellent business momentum
We will fully compensate the EPS hurdle of 10 cents
related to the exceptional circumstances in Japan in 2011
Reported diluted EPS guidance for 2012, at prevailing
exchange rates, is $5.25 to $5.35 versus $4.85 in 2011
This corresponds to a growth rate of approximately 10%
to 12% on a currency-neutral basis, compared to adjusted
diluted EPS of $4.88 in 2011
Expect to again meet our mid to long-term currency-
neutral annual growth targets in 2012
Source: PMI Forecasts
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|
 8
Growing Free Cash Flow
(a)
at Double-Digit Rate
(a)
Free cash flow equals net cash provided by operating activities less capital
expenditures Source: PMI Financials
($ billion)
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|
 9
Accelerated Share Repurchases
$12 billion three-year share repurchase program initiated
in May 2010
$3.6 billion available under this program at the end of
2011
Current program expected to be completed well ahead of
schedule
Plan to spend $6 billion on share repurchases in 2012
Source: PMI Financials and PMI Forecasts
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|
 10
2011 Key Drivers and 2012 Business Outlook
Manageable excise tax environment
Stable industry volume trends
Superior brand portfolio
Market share growth
Favorable pricing environment
Limited input cost increases and strong productivity gains
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11
Manageable Excise Tax Environment
Most governments appear to have understood that large
disruptive excise tax increases usually do not generate
targeted increases in revenues, nor are sustainable
No excessive excise tax increases implemented or
announced so far in 2011
Reasonable approach in terms of incidence and structure
Several countries in Europe are most likely to increase
VAT this year, but believe this should be manageable
Source: PMI Forecasts |
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12
Outlook for Industry Volume Trends
Cigarette industry volume trends anticipated to be similar
to those prevalent in 2011
Potential for growth in non-OECD markets where adult
smoking population expanding and economy vibrant
(Asia, Middle East)
Moderate decline expected in OECD markets and Eastern
Europe
Southern Europe remains a concern, due to high and
rising unemployment
Expect PMI organic cigarette volume to be relatively flat in
2012
Source: PMI Forecasts |
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13
PMI Market Share Growth Momentum
(a)
(a)
Excluding USA and China. Historical data adjusted for pro-forma inclusion
of 2010 business combination with FTC in the Philippines and the
2011 acquisition in Jordan
(b)
Also excluding duty-free
(c)
Organisation for Economic Co-operation and Development (OECD) member countries
are listed on their website (www.oecd.org) Source: PMI estimates
(%)
Non-OECD Markets
(b)
(%)
Total
(%)
Top 30 OCI Markets
(%)
OECD Markets
(b)(c) |
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14
Top Ten PMI Brands Grew in 2011
% Volume Growth vs. Prior Year
Q4, 2011
FY 2011
Marlboro
2.3%
0.9%
L&M
(1.9)
1.7
Fortune
6.4
8.2
(a)
Bond Street
1.5
2.0
Parliament
18.7
12.1
Philip Morris
2.4
1.4
Chesterfield
1.4
0.6
Sampoerna A
12.0
11.8
Lark
25.8
17.5
Dji Sam Soe
10.1
10.3
(a) March through December (business combination with FTC)
Source: PMI Financials |
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Market Shares
2009
2010
2011
Asia
(a)
5.8%
6.1%
6.4%
EEMA
6.4
6.5
6.8
EU
18.4
18.1
17.9
LA&C
13.8
14.1
13.8
(c)
Total
(a)(b)
9.0
9.1
9.2
15
Marlboro
Gaining
Market
Share
(a) Excluding China
(b)
Also excluding the USA
(c)
Marlboro
share
up
in
all
major
markets
in
the
Latin
America
&
Canada
Region.
However,
the
regional
share
decreased
due
to
a
steep
excise
tax-
driven decline in industry volume in Mexico where the brand had a 52.3% market
share in 2011 Source: PMI estimates |
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16
Tremendous Performance of Parliament
Luxury positioning
Above premium price
Volume in 2011 grew by
12.1% to 39 billion units
PMI Market Shares
(%)
Note: Kaz. is Kazakhstan
Source:
PMI
Financials,
PMI
estimates,
Hankook
Research
and
A.C.
Nielsen |
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17
Increased Volume of L&M
Leading international low-
price brand
Volume in 2011 grew by
1.7% to 90 billion units
Innovative line extensions
(%)
PMI Market Shares
Source: PMI Financials and PMI estimates |
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18
Favorable OCI Volume/Mix Variance in 2011
Source: PMI Financials |
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Pricing Variance of $1.9 Billion in 2011
($ million)
Source: PMI Financials
2008-10 average:
$1,623 mio.
19 |
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Adjusted OCI Margins
Full-Year
2010
2011
(a)
Variance
(a)
Asia
38.7%
44.7%
6.0pp
EEMA
42.5
42.9
0.4
EU
49.2
49.4
0.2
LA&C
31.2
31.4
0.2
Total
42.3
44.2
1.9
20
Improved Margins
(a)
Excluding currency and acquisitions
Source: PMI Financials |
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21
$300 Million Productivity Target in 2012
Forecast moderate increases in tobacco leaf prices and direct
material costs, broadly in line with inflation
Increased but manageable costs, mainly in Europe, relating to
the imposition of “RCIP”
paper
$300 million productivity pre-tax target in 2012, mainly derived
from manufacturing and supply chain initiatives
Source: PMI Forecasts |
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Peer Group
Tobacco Sector
Free Cash Flow as a % of Net Revenues –
(YTD September, 2011)
22
Note: Free cash flow as a percentage of net revenues is defined as total January 1,
2011 – September 30, 2011 period free cash flow over total
January 1, 2011 –
September 30, 2011 period net revenues. Free cash flow is defined as net cash
provided by operating activities less capital expenditures. Nearest
comparable period is used where the January 1, 2011 – September 30,
2011 comparison is not available. PMI’s free cash flow and net revenues
for the period were $9,000 million and $23,426 million, respectively Source:
Company filings, compiled by Centerview |
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Significant Returns to Shareholders Through
Dividends and Share Repurchases
Note: Dividends for 2008 and 2011 are annualized rates. 2008 annualized rate is
based on a quarterly dividend of $0.46 per common share, declared June 18,
2008. The annualized rate for 2011 is based on a quarterly dividend of $0.77 per common share, declared September 14, 2011. The
outstanding PMI shares at the time of the spin were 2,109 million
Source: PMI Financials
23 |
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PMI Outperformed All 30 Stocks in the Dow Jones
Industrial Average in 2011
24
Source: FactSet, compiled by Centerview |
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25
Questions & Answers
2011 Full-Year and Fourth-Quarter
Results |
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PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of Currency and Acquisitions
For the Quarters Ended December 31,
($ in millions)
(Unaudited)
Reported Net
Revenues
Less
Excise
Taxes
Reported Net
Revenues
excluding
Excise Taxes
Less
Currency
Reported Net
Revenues
excluding
Excise Taxes &
Currency
Less
Acquisi-
tions
Reported Net
Revenues
excluding
Excise Taxes,
Currency &
Acquisitions
Reported
Net
Revenues
Less
Excise
Taxes
Reported Net
Revenues
excluding
Excise Taxes
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
7,118
$
4,910
$
2,208
$
38
$
2,170
$
-
$
2,170
$
European Union
6,997
$
4,804
$
2,193
$
0.7%
(1.0)%
(1.0)%
4,257
2,285
1,972
(66)
2,038
12
2,026
EEMA
4,263
2,385
1,878
5.0%
8.5%
7.9%
5,013
2,366
2,647
92
2,555
2
2,553
Asia
4,141
2,035
2,106
25.7%
21.3%
21.2%
2,488
1,644
844
(23)
867
-
867
Latin America & Canada
2,406
1,546
860
(1.9)%
0.8%
0.8%
18,876
$
11,205
$
7,671
$
41
$
7,630
$
14
$
7,616
$
PMI Total
17,807
$
10,770
$
7,037
$
9.0%
8.4%
8.2%
Reported
Operating
Companies
Income
Less
Currency
Reported
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Reported
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
1,012
$
41
$
971
$
-
$
971
$
European Union
1,031
$
(1.8)%
(5.8)%
(5.8)%
747
(64)
811
-
811
EEMA
740
0.9%
9.6%
9.6%
1,036
49
987
2
985
Asia
790
31.1%
24.9%
24.7%
214
(12)
226
-
226
Latin America & Canada
254
(15.7)%
(11.0)%
(11.0)%
3,009
$
14
$
2,995
$
2
$
2,993
$
PMI Total
2,815
$
6.9%
6.4%
6.3%
2011
2010
% Change in Reported Operating
Companies Income
2011
2010
% Change in Reported Net Revenues
excluding Excise Taxes
26 |
 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Operating Companies Income to Adjusted Operating
Companies Income & Reconciliation of Adjusted Operating Companies Income
Margin, excluding Currency and Acquisitions For the Quarters Ended December
31, ($ in millions)
(Unaudited)
(a) For the calculation of net revenues excluding excise taxes, currency and
acquisitions, refer to previous slide Reported
Operating
Companies
Income
Less
Asset
Impairment &
Exit Costs
Adjusted
Operating
Companies
Income
Less
Currency
Adjusted
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Less
Asset Impairment &
Exit Costs
Adjusted
Operating
Companies
Income
Adjusted
Adjusted
excluding
Currency
Adjusted
excluding
Currency &
Acquisitions
1,012
$
(22)
$
1,034
$
41
$
993
$
-
$
993
$
European Union
1,031
$
(7)
$
1,038
$
(0.4)%
(4.3)%
(4.3)%
747
(7)
754
(64)
818
-
818
EEMA
740
-
740
1.9%
10.5%
10.5%
1,036
(8)
1,044
49
995
2
993
Asia
790
(20)
810
28.9%
22.8%
22.6%
214
(12)
226
(12)
238
-
238
Latin America & Canada
254
-
254
(11.0)%
(6.3)%
(6.3)%
3,009
$
(49)
$
3,058
$
14
$
3,044
$
2
$
3,042
$
PMI Total
2,815
$
(27)
$
2,842
$
7.6%
7.1%
7.0%
% Points Change
Adjusted
Operating
Companies
Income
excluding
Currency
Net Revenues
excluding
Excise Taxes &
Currency
(a)
Adjusted
Operating
Companies
Income
Margin
excluding
Currency
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Net Revenues
excluding
Excise Taxes,
Currency &
Acquisitions
(a)
Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions
Adjusted
Operating
Companies
Income
Net Revenues
excluding Excise
Taxes
(a)
Adjusted
Operating
Companies
Income
Margin
Adjusted
Operating
Companies
Income
Margin
excluding
Currency
Adjusted
Operating
Companies
Income Margin
excluding
Currency &
Acquisitions
993
$
2,170
$
45.8%
993
$
2,170
$
45.8%
European Union
1,038
$
2,193
$
47.3%
(1.5)
(1.5)
818
2,038
40.1%
818
2,026
40.4%
EEMA
740
1,878
39.4%
0.7
1.0
995
2,555
38.9%
993
2,553
38.9%
Asia
810
2,106
38.5%
0.4
0.4
238
867
27.5%
238
867
27.5%
Latin America & Canada
254
860
29.5%
(2.0)
(2.0)
3,044
$
7,630
$
39.9%
3,042
$
7,616
$
39.9%
PMI Total
2,842
$
7,037
$
40.4%
(0.5)
(0.5)
2010
2011
2010
2011
% Change in Adjusted Operating
Companies Income
27
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PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted
Diluted EPS, excluding Currency For the Quarters Ended December 31,
(Unaudited)
2011
2010
% Change
Reported Diluted EPS
1.08
$
0.96
$
12.5%
Adjustments:
Asset impairment and exit costs
0.02
0.01
Tax items
-
-
Adjusted Diluted EPS
1.10
$
0.97
$
13.4%
Less:
Currency impact
-
Adjusted Diluted EPS, excluding Currency
1.10
$
0.97
$
13.4%
28 |
 PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of Currency and Acquisitions
For the Years Ended December 31,
($ in millions)
(Unaudited)
(a) Includes the business combination in the Philippines ($105)
(b) Includes the business combination in the Philippines ($23)
Reported Net
Revenues
Less
Excise
Taxes
Reported Net
Revenues
excluding
Excise Taxes
Less
Currency
Reported Net
Revenues
excluding
Excise Taxes &
Currency
Less
Acquisi-
tions
Reported Net
Revenues
excluding
Excise Taxes,
Currency &
Acquisitions
Reported
Net
Revenues
Less
Excise
Taxes
Reported Net
Revenues
excluding
Excise Taxes
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
29,768
$
20,556
$
9,212
$
440
$
8,772
$
-
$
8,772
$
European Union
28,050
$
19,239
$
8,811
$
4.6%
(0.4)%
(0.4)%
17,452
9,571
7,881
49
7,832
25
7,807
EEMA
15,928
8,519
7,409
6.4%
5.7%
5.4%
19,590
8,885
10,705
690
10,015
112
(a)
9,903
Asia
15,235
7,300
7,935
34.9%
26.2%
24.8%
9,536
6,237
3,299
70
3,229
-
3,229
Latin America & Canada
8,500
5,447
3,053
8.1%
5.8%
5.8%
76,346
$
45,249
$
31,097
$
1,249
$
29,848
$
137
$
29,711
$
PMI Total
67,713
$
40,505
$
27,208
$
14.3%
9.7%
9.2%
Reported
Operating
Companies
Income
Less
Currency
Reported
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Reported
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Reported
Reported
excluding
Currency
Reported
excluding
Currency &
Acquisitions
4,560
$
277
$
4,283
$
(1)
$
4,284
$
European Union
4,311
$
5.8%
(0.6)%
(0.6)%
3,229
(97)
3,326
(13)
3,339
EEMA
3,152
2.4%
5.5%
5.9%
4,836
400
4,436
28
(b)
4,408
Asia
3,049
58.6%
45.5%
44.6%
988
(2)
990
-
990
Latin America & Canada
953
3.7%
3.9%
3.9%
13,613
$
578
$
13,035
$
14
$
13,021
$
PMI Total
11,465
$
18.7%
13.7%
13.6%
2011
2010
% Change in Reported Operating
Companies Income
2011
2010
% Change in Reported Net Revenues
excluding Excise Taxes
29
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PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Operating Companies Income to Adjusted Operating
Companies Income & Reconciliation of Adjusted Operating Companies Income
Margin, excluding Currency and Acquisitions For the Years Ended December
31, ($ in millions)
(Unaudited)
(a) Includes the business combination in the Philippines ($23)
(b) For the calculation of net revenues excluding excise taxes, currency and
acquisitions, refer to previous slide Reported
Operating
Companies
Income
Less
Asset
Impairment &
Exit Costs
Adjusted
Operating
Companies
Income
Less
Currency
Adjusted
Operating
Companies
Income
excluding
Currency
Less
Acquisi-
tions
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Reported
Operating
Companies
Income
Less
Asset Impairment &
Exit Costs
Adjusted
Operating
Companies
Income
Adjusted
Adjusted
excluding
Currency
Adjusted
excluding
Currency &
Acquisitions
4,560
$
(45)
$
4,605
$
277
$
4,328
$
(1)
$
4,329
$
European Union
4,311
$
(27)
$
4,338
$
6.2%
(0.2)%
(0.2)%
3,229
(25)
3,254
(97)
3,351
(1)
3,352
EEMA
3,152
-
3,152
3.2%
6.3%
6.3%
4,836
(15)
4,851
400
4,451
28
(a)
4,423
Asia
3,049
(20)
3,069
58.1%
45.0%
44.1%
988
(24)
1,012
(2)
1,014
-
1,014
Latin America & Canada
953
-
953
6.2%
6.4%
6.4%
13,613
$
(109)
$
13,722
$
578
$
13,144
$
26
$
13,118
$
PMI Total
11,465
$
(47)
$
11,512
$
19.2%
14.2%
14.0%
% Points Change
Adjusted
Operating
Companies
Income
excluding
Currency
Net Revenues
excluding
Excise Taxes &
Currency
(b)
Adjusted
Operating
Companies
Income
Margin
excluding
Currency
Adjusted
Operating
Companies
Income
excluding
Currency &
Acquisitions
Net Revenues
excluding
Excise Taxes,
Currency &
Acquisitions
(b)
Adjusted
Operating
Companies
Income
Margin
excluding
Currency &
Acquisitions
Adjusted
Operating
Companies
Income
Net Revenues
excluding Excise
Taxes
(b)
Adjusted
Operating
Companies
Income
Margin
Adjusted
Operating
Companies
Income
Margin
excluding
Currency
Adjusted
Operating
Companies
Income Margin
excluding
Currency &
Acquisitions
4,328
$
8,772
$
49.3%
4,329
$
8,772
$
49.4%
European Union
4,338
$
8,811
$
49.2%
0.1
0.2
3,351
7,832
42.8%
3,352
7,807
42.9%
EEMA
3,152
7,409
42.5%
0.3
0.4
4,451
10,015
44.4%
4,423
9,903
44.7%
Asia
3,069
7,935
38.7%
5.7
6.0
1,014
3,229
31.4%
1,014
3,229
31.4%
Latin America & Canada
953
3,053
31.2%
0.2
0.2
13,144
$
29,848
$
44.0%
13,118
$
29,711
$
44.2%
PMI Total
11,512
$
27,208
$
42.3%
1.7
1.9
2010
2011
2010
2011
% Change in Adjusted Operating
Companies Income
30 |
 ***********************************************************************************************
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted
Diluted EPS, excluding Currency For the Years Ended December 31,
(Unaudited)
2011
2010
% Change
Reported Diluted EPS
4.85
$
3.92
$
23.7%
Adjustments:
Asset impairment and exit costs
0.05
0.02
Tax items
(0.02)
(0.07)
Adjusted Diluted EPS
4.88
$
3.87
$
26.1%
Less:
Currency impact
0.19
Adjusted Diluted EPS, excluding Currency
4.69
$
3.87
$
21.2%
31 |
 ***********************************************************************************************
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Operating Cash Flow to Free Cash Flow
($ in millions)
(Unaudited)
(a) Operating Cash Flow
32
For the Years Ended
December 31,
2008
2009
2010
2011
Net cash provided by operating activities
(a)
7,935
$
7,884
$
9,437
$
10,529
$
Less:
Capital expenditures
1,099
715
713
897
Free cash flow
6,836
$
7,169
$
8,724
$
9,632
$ |
 ***********************************************************************************************
33
Reconciliation of Operating Cash Flow to Free Cash Flow and
Free Cash Flow as a Percent of Net Revenues excluding Excise Taxes
($ in millions)
(Unaudited)
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
(a) Operating Cash Flow |
 34
2011 Full-Year and Fourth-Quarter
Results
February 9, 2012
***********************************************************************************************
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