Regulatory News:
Philip Morris International Inc. (NYSE: PM) today announces its 2022 first-quarter results. Growth rates presented in this press release on an organic basis reflect currency-neutral adjusted results, excluding acquisitions. Given the uncertainty and volatility regarding the company's operations in Russia and Ukraine, PMI is also providing figures and comparisons on a pro forma basis, which exclude the company's operations in these two markets for all periods and provide a more comparable view of PMI's business performance. A glossary of key terms, definitions and explanatory notes is included at the end of this press release. Adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures are included in the schedules to this press release.
2022 FIRST-QUARTER HIGHLIGHTS
|
Reported |
Adjusted |
|||
Total Shipment Volume Growth |
3.5% |
|
3.5% |
|
|
HTU Shipment Volume (units billion) |
24.8 |
|
24.8 |
|
|
- Growth |
14.2% |
|
14.2% |
|
|
Net Revenue Growth |
2.1% |
|
9.0% |
(a) |
|
Operating Income Growth |
(4.2)% |
|
8.3% |
(a) |
|
Operating Income Margin Growth |
(2.8)pp |
|
(0.3)pp |
(a) |
|
Diluted Earnings per Share |
$1.50 |
|
$1.56 |
|
|
- Growth |
(3.2)% |
|
14.0% |
(b) |
|
(a) On an organic basis |
|||||
(b) Excluding currency |
"The recent months have been an extremely challenging time for many in the PMI family given the war in Ukraine," said Jacek Olczak, Chief Executive Officer. "Our primary concern is for our people and their families, and we are doing everything in our power to help them."
"Despite this tragic situation, we were able to deliver a very strong performance in the first quarter -- reflecting the hard work and dedication of our employees globally -- with organic net revenue and currency-neutral adjusted diluted EPS growth coming ahead of our expectations."
"The re-acceleration of our IQOS business continued in the quarter, highlighted by a sequential increase of over one million total IQOS users, excluding Russia and Ukraine, and the superb performance of ILUMA in initial launch markets. This was complemented by the robust performance of our combustible business, which exceeded our objective of stable category share in the quarter and delivered positive shipment volume and organic net revenue growth."
"We expect to deliver robust top- and bottom-line growth this year on a pro forma adjusted basis, including full-year adjusted diluted EPS growth of 9% to 11%, excluding currency. This gives us confidence in achieving our 2021 to 2023 compound annual growth targets, on a pro forma basis, and our ambition to become a majority smoke-free company by 2025."
2022 FIRST-QUARTER SUMMARY
Net revenues increased by 9.0% on an organic basis, reflecting total volume growth driven by the underlying strength of IQOS, the ongoing recovery of the combustible business in many markets against a pandemic-affected comparison, and some positive timing impacts, including inventory movements. The easing of device supply constraints allowed the replenishment of channel inventories, which is expected to continue in the second quarter.
Net revenue per unit increased by 5.3% on an organic basis, driven by the increasing proportion of heated tobacco units in PMI's sales mix, higher device sales and higher pricing. Pricing for combustible products increased by over 3%, or by around 6% excluding Indonesia.
Adjusted operating income margin declined by 30 basis points on an organic basis, partly reflecting the comparison to a strong prior year margin performance, which benefited from higher productivity mainly due to timing factors. In addition, adjusted operating margin was impacted by: higher device sales for increasing IQOS user acquisition; the growth of IQOS ILUMA (with its higher initial unit cost for devices and consumables); channel replenishment of IQOS device inventories (noted above for net revenues); and inflation in certain elements of the company's supply chain -- including energy, wages and direct materials, and an increase in the use of air freight -- which was also exacerbated by the impact of the war in Ukraine.
Despite the margin pressures -- some of which are expected to be temporary -- the company's strong net revenue growth, coupled with the positive effects from the increasing size of IQOS, higher pricing, and cost efficiencies, drove adjusted diluted EPS of $1.56 and pro forma adjusted diluted EPS of $1.46, reflecting currency-neutral growth of 14.0% and 16.0%, respectively, as outlined in the table below.
|
|
Quarters Ended March 31, |
||||||
|
|
2022 |
|
2021 |
|
Currency |
|
Var. excl.
|
Reported Diluted EPS |
|
$ 1.50 |
$ 1.55 |
$ (0.23) |
11.6% |
|||
Asset impairment and exit costs |
|
? |
0.02 |
|
|
|||
Charges related to the war in Ukraine |
|
0.03 |
? |
|
|
|||
Fair value adj. for equity security investments (1) |
|
0.03 |
? |
|
|
|||
Adjusted Diluted EPS |
|
$ 1.56 |
$ 1.57 |
$ (0.23) |
14.0% |
|||
Less: Net earnings attributable to Russia and Ukraine |
|
0.10 |
0.13 |
(0.02) |
|
|||
Pro Forma Adjusted Diluted EPS |
|
$ 1.46 |
$ 1.44 |
$ (0.21) |
16.0% |
1) Reflects the adjustment resulting from share price movements in PMI's investments in India and Sri Lanka, which are publicly traded entities that are not controlled or influenced by PMI |
2022 FULL-YEAR FORECAST
|
Full-Year |
|||||||||
|
2022
|
|
2021 |
|
Growth |
|||||
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted EPS |
$5.39 |
- |
$5.50 |
|
$ 5.83 |
|
|
|
|
|
Asset impairment and exit costs |
? |
|
0.12 |
|
|
|
|
|||
Charges related to the war in Ukraine |
0.03 |
|
? |
|
|
|
|
|||
Saudi Arabia customs assessments |
? |
|
0.14 |
|
|
|
|
|||
Fair value adj. for equity security investments (1) |
0.03 |
|
? |
|
|
|
|
|||
Asset acquisition cost |
? |
|
0.03 |
|
|
|
|
|||
Equity investee ownership dilution |
? |
|
(0.04 |
) |
|
|
|
|||
Adjusted Diluted EPS |
$5.45 |
- |
$5.56 |
|
$ 6.08 |
|
|
|
|
|
Less: Net earnings attributable to Russia and Ukraine |
0.10 |
|
0.60 |
|
|
|
|
|||
Pro Forma Adjusted Diluted EPS |
$5.35 |
- |
$5.46 |
|
$ 5.48 |
|
|
|
|
|
Less: Pro Forma Currency |
(0.63) |
|
|
|
|
|
|
|||
Pro Forma Adjusted Diluted EPS, ex-currency |
$5.98 |
- |
$6.09 |
|
$ 5.48 |
|
9% |
- |
11% |
1) Reflects the adjustment resulting from share price movements in PMI's investments in India and Sri Lanka, which are publicly traded entities that are not controlled or influenced by PMI |
Reported diluted EPS forecast to be in a range of $5.39 to $5.50, at prevailing exchange rates, versus reported diluted EPS of $5.83 in 2021. Excluding (i) charges related to the war in Ukraine of $0.03 per share, (ii) a fair value adjustment for equity security investments of $0.03 per share, (iii) adjusted diluted EPS attributable to Russia and Ukraine of $0.10 per share in the first quarter, and (iv) an adverse pro forma currency impact, at prevailing exchange rates, of $0.63 per share, this forecast represents a projected increase of 9% to 11% versus pro forma adjusted diluted EPS of $5.48 in 2021, as outlined in the above table.
2022 Full-Year Forecast Assumptions
This forecast assumes:
Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.
Mid-term Targets and 2025 Majority Smoke-Free Ambition
PMI's 2022 outlook puts the company firmly on track to deliver, on a pro forma basis, its 2021 to 2023 compound annual growth targets of more than 5% for organic net revenues and more than 9% for currency-neutral adjusted diluted EPS. The company is also on track to deliver around $2 billion in gross cost savings.
PMI's ambition to become a majority smoke-free business by net revenues in 2025 remains intact, underpinned by the company's continued confidence in the rapid pace and long-term opportunity of its transformation.
War in Ukraine
Since the onset of the war in Ukraine, PMI's main priority has been the safety and security of its more than 1,300 employees and their families in the country. PMI has taken action to achieve three critical missions: helping to evacuate more than 1,000 people from Ukraine and relocate over 2,700 others from conflict zones to locations in the country away from the heaviest fighting; providing critical aid to employees who cannot leave or who decide to remain in Ukraine; and providing those who have left the country with logistical, medical, financial, and other practical support in neighboring countries. The company is continuing to pay salaries to all its Ukrainian employees and is also providing substantial in-kind support to them and their families. In addition, PMI has already contributed around $10 million in funds and donated essential items across the country, directly to humanitarian organizations and through the company's own employee-led initiative, 'Projects With a Heart'.
On February 25th, PMI announced the temporary suspension of its operations in Ukraine, including at its factory, in Kharkiv. While activities in the east of Ukraine remain the most heavily impacted, the company has seen some resumption of retail activities where safety allows, as it seeks to provide product availability and service to adult consumers, using existing finished goods inventories on hand. The company is also working on future supply from other production centers, although this may involve higher costs. PMI is applying increased security and safety measures for personnel.
In 2021, Ukraine accounted for around 2% of PMI's total cigarette and heated tobacco unit shipment volume and under 2% of PMI's total net revenues. As of March 31, 2022, PMI's Ukrainian operations have approximately $400 million in total assets.
On March 24th, PMI announced the concrete steps it had taken to suspend planned investments and scale down its manufacturing operations in Russia, following its related announcement on March 9th. This included:
Further, PMI announced that its Board of Directors and senior executives are working on options to exit the Russian market in an orderly manner, in the context of an increasingly complex and rapidly changing regulatory and operating environment.
PMI employs more than 3,200 people in Russia and will continue to support its employees there, including paying their salaries, while continuing to fulfil its legal obligations. The company will continue to make decisions with their safety and security as a priority.
In 2021, Russia made up almost 10% of total shipment volumes and around 6% of PMI net revenues. As of March 31, 2022, PMI's Russian operations have approximately $1.4 billion in total assets.
IQOS 3 MRTP Authorization
On March 11th, the U.S. Food and Drug Administration (FDA) authorized the marketing of IQOS 3, a version of PMI's electrically heated tobacco system, as a Modified Risk Tobacco Product (MRTP). In doing so, the agency concluded that an IQOS 3 exposure modification order is appropriate to promote the public health.
The decision demonstrates that IQOS 3 is a fundamentally different tobacco product and a better choice for adults who would otherwise continue smoking. IQOS 3 and IQOS 2.4 are the only electronic inhalable nicotine alternatives authorized as MRTPs based on reduced exposure.
The FDA authorized the marketing of IQOS 3 with the following information:
The FDA concluded that the available scientific evidence demonstrates that IQOS 3 is expected to benefit the health of the population as a whole, taking into account both users of tobacco products and persons who do not currently use tobacco products.
PMI hopes to be able to resume the U.S. supply of its IQOS portfolio of authorized products in the first half of 2023.
U.S. GAAP Treatment of Turkey as a Highly Inflationary Economy
Following the categorization of Turkey by the International Practices Task Force of the Center for Audit Quality as a country with a three-year cumulative inflation rate greater than 100%, the country is considered highly inflationary in accordance with U.S. GAAP. Consequently, PMI has begun to account for the operations of its Turkish affiliates as highly inflationary, and treat the U.S. dollar as the functional currency of the affiliates, effective April 1, 2022.
Conference Call
A conference call, hosted by Jacek Olczak, Chief Executive Officer, and Emmanuel Babeau, Chief Financial Officer, will be webcast at 9:00 a.m., Eastern Time, on April 21, 2022. This will be the final earnings conference call introduced by Nick Rolli, Vice President, Investor Relations & Financial Communications, who will retire at the end of May, following 35 years of dedicated service to Philip Morris International and its former corporate parent. Access the call at www.pmi.com/2022Q1earnings.
CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE
PMI Shipment Volume by Region |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
|
|
|
||
European Union |
|
36,444 |
36,769 |
(0.9)% |
||
Eastern Europe |
|
18,514 |
19,966 |
(7.3)% |
||
Middle East & Africa |
|
29,471 |
27,642 |
6.6% |
||
South & Southeast Asia |
|
37,461 |
34,888 |
7.4% |
||
East Asia & Australia |
|
11,553 |
11,362 |
1.7% |
||
Americas |
|
14,795 |
14,885 |
(0.6)% |
||
Total PMI |
|
148,238 |
145,512 |
1.9% |
||
|
|
|
|
|
||
Heated Tobacco Units |
|
|
|
|
||
European Union |
|
8,566 |
6,426 |
33.3% |
||
Eastern Europe |
|
5,866 |
5,635 |
4.1% |
||
Middle East & Africa |
|
897 |
396 |
+100% |
||
South & Southeast Asia |
|
94 |
33 |
+100% |
||
East Asia & Australia |
|
9,288 |
9,139 |
1.6% |
||
Americas |
|
108 |
105 |
2.9% |
||
Total PMI |
|
24,819 |
21,734 |
14.2% |
||
|
|
|
|
|
||
Cigarettes and Heated Tobacco Units |
|
|
|
|
||
European Union |
|
45,010 |
43,195 |
4.2% |
||
Eastern Europe |
|
24,380 |
25,601 |
(4.8)% |
||
Middle East & Africa |
|
30,368 |
28,038 |
8.3% |
||
South & Southeast Asia |
|
37,555 |
34,921 |
7.5% |
||
East Asia & Australia |
|
20,841 |
20,501 |
1.7% |
||
Americas |
|
14,903 |
14,990 |
(0.6)% |
||
Total PMI |
|
173,057 |
167,246 |
3.5% |
During the quarter, PMI's total shipment volume increased by 3.5%, driven by:
partly offset by
On a pro forma basis, PMI's total shipment volume increased by 4.9%, reflecting an increase of 4.5% in the Eastern Europe Region, as detailed in Appendix 2 and Appendix 3, respectively.
Impact of Inventory Movements
Excluding the net favorable impact of estimated distributor inventory movements of approximately 1.7 billion units, PMI's total in-market sales increased by 2.5%, driven by a 16.7% increase in heated tobacco units and a 0.4% increase in cigarettes.
The net favorable impact of approximately 1.7 billion units reflected:
On a pro forma basis, PMI's total in-market sales increased by 3.8%.
PMI's total heated tobacco unit in-market sales volume in the quarter was 24.8 billion units, or 19.5 billion units on a pro forma basis, representing growth of 16.7% and 19.5%, respectively.
PMI Shipment Volume by Brand
PMI Shipment Volume by Brand |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
|
|
|
||
Marlboro |
|
57,264 |
53,682 |
6.7% |
||
L&M |
|
20,198 |
20,367 |
(0.8)% |
||
Chesterfield |
|
15,606 |
12,758 |
22.3% |
||
Philip Morris |
|
9,753 |
10,184 |
(4.2)% |
||
Sampoerna A |
|
9,718 |
8,698 |
11.7% |
||
Parliament |
|
9,152 |
8,957 |
2.2% |
||
Dji Sam Soe |
|
5,772 |
5,704 |
1.2% |
||
Lark |
|
3,452 |
3,899 |
(11.5)% |
||
Others |
|
17,323 |
21,263 |
(18.5)% |
||
Total Cigarettes |
|
148,238 |
145,512 |
1.9% |
||
Heated Tobacco Units |
|
24,819 |
21,734 |
14.2% |
||
Total PMI |
|
173,057 |
167,246 |
3.5% |
||
Note: Lark includes Lark Harmony; Philip Morris includes Philip Morris/Dubliss; and Sampoerna A includes Sampoerna. |
The increase in PMI's heated tobacco unit shipment volume was mainly driven by the EU (notably Germany, Italy and Poland), Japan and the Middle East & Africa (notably Egypt). On a pro forma basis, PMI's heated tobacco unit shipment volume increased by 18.4%.
PMI's cigarette shipment volume of the following brands increased:
PMI's cigarette shipment volume of the following brands decreased:
On a pro forma basis, PMI's cigarette shipment volume increased by: 5.1% for Marlboro, 0.1% for L&M, 10.8% for Chesterfield, 13.3% for Philip Morris and 4.9% for Parliament.
International Share of Market
PMI's pro forma 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 0.7 points to 26.7%, reflecting:
PMI's pro forma total international cigarette sales volume as a percentage of pro forma total industry cigarette sales volume increased by 0.4 points to 24.4%, mainly reflecting higher cigarette market share and/or a favorable geographic mix impact, notably in Indonesia, PMI Duty Free and the Philippines, partly offset by Algeria and Germany.
CONSOLIDATED FINANCIAL SUMMARY
Financial Summary - Quarters Ended March 31, |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
||||||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl.
|
|
Total |
|
Cur-
|
|
Acqui-
|
|
Price |
|
Vol/
|
|
Cost/
|
||||||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Revenues |
|
$ |
7,746 |
|
$ |
7,585 |
|
|
2.1 |
% |
9.0 |
% |
|
161 |
|
(590 |
) |
70 |
|
108 |
562 |
|
11 |
|
|||||||
Cost of Sales |
|
|
(2,608 |
) |
|
(2,274 |
) |
|
(14.7 |
)% |
(18.3 |
)% |
|
(334 |
) |
125 |
|
(42 |
) |
? |
(298 |
) |
(119 |
) |
|||||||
Marketing, Administration and Research Costs |
|
|
(1,802 |
) |
|
(1,849 |
) |
|
2.5 |
% |
1.7 |
% |
|
47 |
|
50 |
|
(35 |
) |
? |
? |
|
32 |
|
|||||||
Amortization of Intangibles |
|
|
(38 |
) |
|
(18 |
) |
|
-(100 |
)% |
(5.6 |
)% |
|
(20 |
) |
? |
|
(19 |
) |
? |
? |
|
(1 |
) |
|||||||
Operating Income |
|
$ |
3,298 |
|
$ |
3,444 |
|
|
(4.2 |
)% |
8.6 |
% |
|
(146 |
) |
(415 |
) |
(26 |
) |
108 |
264 |
|
(77 |
) |
|||||||
Asset Impairment & Exit Costs (1) |
|
|
? |
|
|
(48 |
) |
|
+100 |
% |
+100 |
% |
|
48 |
|
? |
|
? |
|
? |
? |
|
48 |
|
|||||||
Charges related to the war in Ukraine (2) |
|
|
(42 |
) |
|
? |
|
|
? |
% |
? |
% |
|
(42 |
) |
? |
|
? |
|
? |
? |
|
(42 |
) |
|||||||
Adjusted Operating Income |
|
$ |
3,340 |
|
$ |
3,492 |
|
|
(4.4 |
)% |
8.3 |
% |
|
(152 |
) |
(415 |
) |
(26 |
) |
108 |
264 |
|
(83 |
) |
|||||||
Adjusted Operating Income Margin |
|
|
43.1 |
% |
|
46.0 |
% |
|
(2.9 |
)pp |
(0.3 |
)pp |
|
|
|
|
|
|
|
||||||||||||
(1) Included in Marketing, Administration and Research Costs above. |
|||||||||||||||||||||||||||||||
(2) Included in Cost of Sales ($26 million) and Marketing, Administration and Research Costs ($16 million) above. |
During the quarter, net revenues increased by 9.0% on an organic basis, mainly reflecting: favorable volume/mix, primarily driven by higher heated tobacco unit volume (predominantly in the EU, particularly Germany, Italy and Poland), higher cigarette volume (mainly in Indonesia, PMI Duty Free and the Philippines, partly offset by Germany and Russia) and higher device volume (driven by the EU and Japan), partially offset by unfavorable cigarette mix (mainly in Japan); and a favorable pricing variance (notably driven by Germany, Russia and Turkey, partly offset by Indonesia and the Philippines).
During the quarter, Russia and Ukraine accounted for around 6% of PMI's total net revenues. Pro forma net revenues increased by 10.0% on an organic basis, as detailed in Schedule 10.
Operating income increased by 8.6%, excluding currency and acquisitions, primarily reflecting: favorable volume/mix, mainly driven by higher heated tobacco unit volume and higher cigarette volume (each mainly reflecting the same geographies as for net revenues noted above), partly offset by unfavorable cigarette mix (primarily in the EU and Japan) and device mix (predominantly in Japan); and a favorable pricing variance; partly offset by higher manufacturing costs (primarily due to higher logistics costs and other inflationary impacts, partially offset by productivity).
On an organic basis, adjusted operating income increased by 8.3%, while adjusted operating income margin decreased by 0.3 points. Pro forma adjusted operating income increased by 9.1%, while pro forma operating income margin decreased by 0.4 points on the same basis, as detailed in Schedule 10. This reflects a lower gross margin compared to a strong prior year margin performance, which benefited from higher productivity mainly due to timing factors.
EUROPEAN UNION REGION
Financial Summary - Quarters Ended March 31, |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
||||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl.
|
|
Total |
|
Cur-
|
|
Acqui-
|
|
Price |
|
Vol/
|
|
Cost/
|
||||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net Revenues |
|
$ |
3,012 |
|
$ |
2,909 |
|
|
3.5 |
% |
10.5 |
% |
|
103 |
(206 |
) |
4 |
|
5 |
300 |
? |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating Income |
|
$ |
1,527 |
|
$ |
1,490 |
|
|
2.5 |
% |
12.3 |
% |
|
37 |
(145 |
) |
(2 |
) |
5 |
208 |
(29 |
) |
|||||||
Asset Impairment & Exit Costs (1) |
|
|
? |
|
|
(9 |
) |
|
+100 |
% |
+100 |
% |
|
9 |
? |
|
? |
|
? |
? |
9 |
|
|||||||
Adjusted Operating Income |
|
$ |
1,527 |
|
$ |
1,499 |
|
|
1.9 |
% |
11.7 |
% |
|
28 |
(145 |
) |
(2 |
) |
5 |
208 |
(38 |
) |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Adjusted Operating Income Margin |
|
|
50.7 |
% |
|
51.5 |
% |
|
(0.8 |
)pp |
0.6 |
pp |
|
|
|
|
|
|
|
||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
During the quarter, net revenues increased by 10.5% on an organic basis, reflecting: favorable volume/mix, mainly driven by higher heated tobacco unit volume (notably in Germany, Italy and Poland) and higher device volume (notably in Italy), partly offset by lower cigarette volume (mainly in Germany, partly offset by Spain). Pricing variance was slightly favorable, primarily reflecting higher combustible pricing (driven by Germany), largely offset by lower pricing for devices (notably in Italy).
Operating income increased by 12.3%, excluding currency and acquisitions, primarily reflecting: favorable volume/mix, mainly driven by higher heated tobacco unit volume (primarily reflecting the same geographies as for net revenues noted above), partly offset by lower cigarette volume (mainly in Germany); partially offset by higher manufacturing costs (primarily due to inflationary impacts).
Adjusted operating income increased by 11.7% on an organic basis. Adjusted operating income margin increased by 0.6 points on the same basis.
Total Market, PMI Shipment & Market Share Commentaries
European Union Key Data |
|
First-Quarter |
|||||||
|
|
|
|
Change |
|||||
|
|
2022 |
|
2021 |
|
% / pp |
|||
Total Market (billion units) |
|
109.6 |
|
106.4 |
|
3.0 |
% |
||
|
|
|
|
|
|||||
PMI Shipment Volume (million units) |
|
|
|
|
|||||
Cigarettes |
|
36,444 |
|
36,769 |
|
(0.9 |
)% |
||
Heated Tobacco Units |
|
8,566 |
|
6,426 |
|
33.3 |
% |
||
Total EU |
|
45,010 |
|
43,195 |
|
4.2 |
% |
||
|
|
|
|
|
|||||
PMI Market Share |
|
|
|
|
|||||
Marlboro |
|
16.2 |
% |
17.0 |
% |
(0.8 |
) |
||
L&M |
|
5.5 |
% |
5.8 |
% |
(0.3 |
) |
||
Chesterfield |
|
5.6 |
% |
5.5 |
% |
0.1 |
|
||
Philip Morris |
|
2.2 |
% |
2.2 |
% |
? |
|
||
Heated Tobacco Units |
|
7.6 |
% |
5.6 |
% |
2.0 |
|
||
Others |
|
3.0 |
% |
3.2 |
% |
(0.2 |
) |
||
Total EU |
|
40.1 |
% |
39.3 |
% |
0.8 |
|
In the quarter, the estimated total market in the EU increased by 3.0% to 109.6 billion units, primarily driven by:
partly offset by
PMI's total shipment volume increased by 4.2% to 45.0 billion units, mainly driven by:
Excluding the net unfavorable impact of estimated distributor inventory movements (notably in Italy, partly offset by Spain), PMI's total in-market sales volume increased by 5.2%.
EASTERN EUROPE REGION
Financial Summary - Quarters Ended March 31, |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
|||||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl.
|
|
Total |
|
Cur-
|
|
Acqui-
|
|
Price |
|
Vol/
|
|
Cost/
|
|||||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Net Revenues |
|
$ |
726 |
|
$ |
796 |
|
|
(8.8 |
)% |
0.3 |
% |
|
(70 |
) |
(72 |
) |
? |
36 |
(34 |
) |
? |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating Income |
|
$ |
144 |
|
$ |
261 |
|
|
(44.8 |
)% |
(21.8 |
)% |
|
(117 |
) |
(60 |
) |
? |
36 |
(26 |
) |
(67 |
) |
|||||||
Asset Impairment & Exit Costs (1) |
|
|
? |
|
|
(2 |
) |
|
+100 |
% |
+100 |
% |
|
2 |
|
? |
|
? |
? |
? |
|
2 |
|
|||||||
Charges related to the war in Ukraine (2) |
|
|
(42 |
) |
|
? |
|
|
? |
% |
? |
% |
|
(42 |
) |
? |
|
? |
? |
? |
|
(42 |
) |
|||||||
Adjusted Operating Income |
|
$ |
186 |
|
$ |
263 |
|
|
(29.3 |
)% |
(6.5 |
)% |
|
(77 |
) |
(60 |
) |
? |
36 |
(26 |
) |
(27 |
) |
|||||||
Adjusted Operating Income Margin |
|
|
25.6 |
% |
|
33.0 |
% |
|
(7.4 |
)pp |
(2.2 |
)pp |
|
|
|
|
|
|
|
|||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
||||||||||||||||||||||||||||||
(2) Included in Cost of Sales ($26 million) and Marketing, Administration and Research Costs ($16 million) at the consolidated operating income level |
During the quarter, net revenues increased by 0.3% on an organic basis, reflecting: a favorable pricing variance, mainly driven by higher combustible pricing (primarily in Russia); largely offset by unfavorable volume/mix, mainly due to unfavorable cigarette volume (mainly in Russia). During the quarter, Russia and Ukraine accounted for around 65% of PMI's total net revenues in the Region. Pro forma net revenues increased by 11.1% on an organic basis, as detailed in Schedule 10.
Operating income decreased by 21.8%, excluding currency and acquisitions, notably reflecting charges related to the war in Ukraine.
Adjusted operating income decreased by 6.5% on an organic basis, primarily reflecting: unfavorable volume/mix, mainly due to unfavorable cigarette volume/mix (primarily in Russia); and higher marketing, administration and research costs; partly offset by a favorable pricing variance.
Adjusted operating income margin decreased by 2.2 points on an organic basis.
Pro forma adjusted operating income increased by 6.1% on an organic basis, while pro forma adjusted operating income margin decreased by 1.6 points, on the same basis, as detailed in Schedule 10.
Total Market, PMI Shipment & Market Share Commentaries
Given the company's intention to exit the Russian market and the impact of the war in Ukraine on business operations in the country, PMI is providing a total market estimate for the Eastern Europe Region excluding Russia and Ukraine.
In the quarter, the pro forma estimated total market in Eastern Europe increased, mainly driven by:
The company's reported shipment volume, presented in the table below, includes Russia and Ukraine.
PMI Shipment Volume |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
18,514 |
19,966 |
(7.3)% |
||
Heated Tobacco Units |
|
5,866 |
5,635 |
4.1% |
||
Total Eastern Europe |
|
24,380 |
25,601 |
(4.8)% |
PMI's total shipment volume decreased by 4.8% to 24.4 billion units, primarily due to:
During the quarter, Russia and Ukraine accounted for around 73% of PMI's total shipment volume in the Region. Pro forma total shipment volume, excluding Russia and Ukraine, increased by 4.5%, as detailed in Appendix 3.
MIDDLE EAST & AFRICA REGION
Financial Summary - Quarters Ended March 31, |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl.
|
|
Total |
|
Cur-
|
|
Acqui-
|
|
Price |
|
Vol/
|
|
Cost/
|
||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Revenues |
|
$ |
991 |
|
$ |
801 |
|
|
23.7 |
% |
42.3 |
% |
|
190 |
(149 |
) |
? |
163 |
165 |
11 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating Income |
|
$ |
521 |
|
$ |
335 |
|
|
55.5 |
% |
89.9 |
% |
|
186 |
(115 |
) |
? |
163 |
125 |
13 |
|||||||
Asset Impairment & Exit Costs (1) |
|
|
? |
|
|
(2 |
) |
|
+100 |
% |
+100 |
% |
|
2 |
? |
|
? |
? |
? |
2 |
|||||||
Adjusted Operating Income |
|
$ |
521 |
|
$ |
337 |
|
|
54.6 |
% |
88.7 |
% |
|
184 |
(115 |
) |
? |
163 |
125 |
11 |
|||||||
Adjusted Operating Income Margin |
|
|
52.6 |
% |
|
42.1 |
% |
|
10.5 |
pp |
13.7 |
pp |
|
|
|
|
|
|
|
||||||||
(1) Included in Marketing, Administration and Research Costs above. |
During the quarter, net revenues increased by 42.3% on an organic basis, primarily reflecting: favorable volume/mix, mainly driven by higher cigarette volume (primarily in Kuwait and PMI Duty Free, partly offset by Algeria) and higher heated tobacco unit volume (notably in Egypt); and a favorable pricing variance, driven by combustible pricing (mainly in Turkey).
Operating income increased by 89.9%, excluding currency and acquisitions, mainly reflecting: a favorable pricing variance; favorable volume/mix, mainly driven by the same factors and geographies as for net revenues noted above; and lower marketing, administration and research costs; partly offset by higher manufacturing costs (primarily due to inflationary impacts).
Adjusted operating income increased by 88.7% on an organic basis. Adjusted operating income margin increased by 13.7 points on the same basis.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in the Middle East & Africa decreased, mainly due to:
partly offset by
PMI Shipment Volume |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
29,471 |
27,642 |
6.6% |
||
Heated Tobacco Units |
|
897 |
396 |
+100% |
||
Total Middle East & Africa |
|
30,368 |
28,038 |
8.3% |
PMI's total shipment volume increased by 8.3% to 30.4 billion units, notably driven by:
partly offset by
Excluding the net favorable impact of estimated distributor inventory movements, PMI's total in-market sales volume increased by 4.3%.
SOUTH & SOUTHEAST ASIA REGION
Financial Summary - Quarters Ended March 31, |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
|||||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl.
|
|
Total |
|
Cur-
|
|
Acqui-
|
|
Price |
|
Vol/
|
|
Cost/
|
|||||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Net Revenues |
|
$ |
1,123 |
|
$ |
1,173 |
|
|
(4.3 |
)% |
(0.5 |
)% |
|
(50 |
) |
(44 |
) |
? |
(145 |
) |
139 |
? |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating Income |
|
$ |
445 |
|
$ |
529 |
|
|
(15.9 |
)% |
(11.2 |
)% |
|
(84 |
) |
(25 |
) |
? |
(145 |
) |
87 |
(1 |
) |
|||||||
Asset Impairment & Exit Costs (1) |
|
|
? |
|
|
(3 |
) |
|
+100 |
% |
+100 |
% |
|
3 |
|
? |
|
? |
? |
|
? |
3 |
|
|||||||
Adjusted Operating Income |
|
$ |
445 |
|
$ |
532 |
|
|
(16.4 |
)% |
(11.7 |
)% |
|
(87 |
) |
(25 |
) |
? |
(145 |
) |
87 |
(4 |
) |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted Operating Income Margin |
|
|
39.6 |
% |
|
45.4 |
% |
|
(5.8 |
)pp |
(5.1 |
)pp |
|
|
|
|
|
|
|
|||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
During the quarter, net revenues decreased by 0.5% on an organic basis, reflecting: an unfavorable pricing variance, due to combustible pricing (mainly in Indonesia and the Philippines); largely offset by favorable volume/mix, primarily driven by higher cigarette volume (mainly in Indonesia and the Philippines) and favorable cigarette mix (primarily in Indonesia, partly offset by the Philippines).
Operating income decreased by 11.2%, excluding currency and acquisitions, primarily reflecting: an unfavorable pricing variance; partly offset by favorable volume/mix, mainly driven by higher cigarette volume (primarily in Indonesia and the Philippines).
Adjusted operating income decreased by 11.7% on an organic basis. Adjusted operating income margin decreased by 5.1 points on the same basis.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in South & Southeast Asia increased, mainly driven by:
partly offset by
PMI Shipment Volume |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
37,461 |
34,888 |
7.4% |
||
Heated Tobacco Units |
|
94 |
33 |
+100% |
||
Total South & Southeast Asia |
|
37,555 |
34,921 |
7.5% |
PMI's total shipment volume increased by 7.5% to 37.6 billion units, mainly driven by:
EAST ASIA & AUSTRALIA REGION
Financial Summary - Quarters Ended March 31, |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
||||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl.
|
|
Total |
|
Cur-
|
|
Acqui-
|
|
Price |
|
Vol/
|
|
Cost/
|
||||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net Revenues |
|
$ |
1,404 |
|
$ |
1,472 |
|
|
(4.6 |
)% |
2.6 |
% |
|
(68 |
) |
(106 |
) |
? |
30 |
8 |
|
? |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating Income |
|
$ |
571 |
|
$ |
695 |
|
|
(17.8 |
)% |
(8.1 |
)% |
|
(124 |
) |
(68 |
) |
? |
30 |
(121 |
) |
35 |
|||||||
Asset Impairment & Exit Costs (1) |
|
|
? |
|
|
(31 |
) |
|
+100 |
% |
+100 |
% |
|
31 |
|
? |
|
? |
? |
? |
|
31 |
|||||||
Adjusted Operating Income |
|
$ |
571 |
|
$ |
726 |
|
|
(21.3 |
)% |
(12.0 |
)% |
|
(155 |
) |
(68 |
) |
? |
30 |
(121 |
) |
4 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Adjusted Operating Income Margin |
|
|
40.7 |
% |
|
49.3 |
% |
|
(8.6 |
)pp |
(7.0 |
)pp |
|
|
|
|
|
|
|
||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
During the quarter, net revenues increased by 2.6% on an organic basis, reflecting: a favorable pricing variance, primarily driven by higher combustible pricing (predominantly in Japan). Volume/mix was slightly favorable, mainly reflecting higher device and heated tobacco unit volume in Japan, largely offset by unfavorable cigarette mix (primarily in Japan) and unfavorable device mix in Japan.
Operating income decreased by 8.1%, excluding currency and acquisitions, mainly reflecting: unfavorable volume/mix, primarily due to unfavorable mix for cigarettes and devices in Japan; and higher manufacturing costs (mainly due to higher logistics costs); partly offset by lower marketing, administration and research costs (notably driven by a favorable comparison related to 2021 asset impairment and exit costs); and a favorable pricing variance.
Adjusted operating income decreased by 12.0% on an organic basis. Adjusted operating income margin decreased by 7.0 points on the same basis. The margin decline notably reflects the impact of: higher device sales; the growth of IQOS ILUMA within the Region's smoke-free product portfolio mix, with its higher initial unit cost of devices and consumables; and higher logistics costs, including costs related to the use of air freight to Japan to support: (i) the strong up-take of IQOS ILUMA and TEREA consumables, and (ii) the re-sourcing of select cigarette brands due to the war in Ukraine.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in East Asia & Australia, excluding China, decreased, mainly due to:
PMI Shipment Volume |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
11,553 |
11,362 |
1.7% |
||
Heated Tobacco Units |
|
9,288 |
9,139 |
1.6% |
||
Total East Asia & Australia |
|
20,841 |
20,501 |
1.7% |
PMI's total shipment volume increased by 1.7% to 20.8 billion units, mainly driven by:
Excluding the net favorable impact of estimated distributor inventory movements, PMI's total in-market sales volume decreased by 1.0%.
AMERICAS REGION
Financial Summary - Quarters Ended March 31, |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
|||||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl.
|
|
Total |
|
Cur-
|
|
Acqui-
|
|
Price |
|
Vol/
|
|
Cost/
|
|||||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Net Revenues |
|
$ |
424 |
|
$ |
434 |
|
|
(2.3 |
)% |
0.7 |
% |
|
(10 |
) |
(13 |
) |
? |
19 |
(16 |
) |
? |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating Income |
|
$ |
121 |
|
$ |
134 |
|
|
(9.7 |
)% |
(8.2 |
)% |
|
(13 |
) |
(2 |
) |
? |
19 |
(9 |
) |
(21 |
) |
|||||||
Asset Impairment & Exit Costs (1) |
|
|
? |
|
|
(1 |
) |
|
+100 |
% |
+100 |
% |
|
1 |
|
? |
|
? |
? |
? |
|
1 |
|
|||||||
Adjusted Operating Income |
|
$ |
121 |
|
$ |
135 |
|
|
(10.4 |
)% |
(8.9 |
)% |
|
(14 |
) |
(2 |
) |
? |
19 |
(9 |
) |
(22 |
) |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted Operating Income Margin |
|
|
28.5 |
% |
|
31.1 |
% |
|
(2.6 |
)pp |
(3.0 |
)pp |
|
|
|
|
|
|
|
|||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
During the quarter, net revenues increased by 0.7% on an organic basis, reflecting: a favorable pricing variance, driven by combustible products (mainly in Argentina, Brazil and Mexico); partly offset by unfavorable volume/mix, mainly due to lower cigarette volume (primarily in Argentina) and unfavorable cigarette mix (primarily in Brazil).
Operating income decreased by 8.2%, excluding currency and acquisitions, mainly reflecting: higher manufacturing costs (primarily due to inflationary impacts); and unfavorable volume/mix (mainly due to the same factors and geographies as for net revenues noted above); partly offset by a favorable pricing variance.
Adjusted operating income decreased by 8.9% on an organic basis. Adjusted operating income margin decreased by 3.0 points on the same basis.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in Americas, excluding the U.S., decreased, primarily due to:
partly offset by
PMI Shipment Volume |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
14,795 |
14,885 |
(0.6)% |
||
Heated Tobacco Units |
|
108 |
105 |
2.9% |
||
Total Americas |
|
14,903 |
14,990 |
(0.6)% |
PMI's total shipment volume decreased by 0.6% to 14.9 billion units, mainly due to:
partly offset by
OTHER
In the third quarter of 2021, PMI acquired Fertin Pharma A/S, Vectura Group plc. and OtiTopic, Inc. On March 31, 2022, PMI launched a new Wellness and Healthcare business consolidating these entities, Vectura Fertin Pharma. The operating results of this new business are reported in the Other category. The business operations of PMI's Wellness and Healthcare business are managed and evaluated separately from the geographical segments.
Financial Summary - Quarters Ended March 31, |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
|||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl.
|
|
Total |
|
Cur-
|
|
Acqui-
|
|
Price |
|
Vol/
|
|
Cost/
|
|||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Revenues |
|
$ |
66 |
|
$ |
? |
|
? |
% |
? |
% |
|
66 |
|
? |
66 |
|
? |
? |
? |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating Income / (Loss) |
|
$ |
(31 |
) |
$ |
? |
|
? |
% |
? |
% |
|
(31 |
) |
? |
(24 |
) |
? |
? |
(7 |
) |
|||||||
Adjusted Operating Income / (Loss) |
|
$ |
(31 |
) |
$ |
? |
|
? |
% |
? |
% |
|
(31 |
) |
? |
(24 |
) |
? |
? |
(7 |
) |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Adjusted Operating Income / (Loss) Margin |
|
|
(47.0 |
)% |
|
n/a |
|
? |
|
? |
|
|
|
|
|
|
|
|
During the quarter, PMI recorded net revenues of $66 million, as well as an operating loss of $31 million, primarily reflecting the amortization of intangibles related to the acquisitions, investments in research and development, and expenses related to employee retention programs.
Philip Morris International: Delivering a Smoke-Free Future
Philip Morris International (PMI) is a leading international tobacco company working to deliver a smoke-free future and evolving its portfolio for the long-term to include products outside of the tobacco and nicotine sector. The company's current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor and oral nicotine products, which are sold in markets outside the U.S. Since 2008, PMI has invested more than USD 9 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. The U.S. Food and Drug Administration (FDA) has authorized the marketing of versions of PMI's IQOS Platform 1 devices and consumables as Modified Risk Tobacco Products (MRTPs), finding that exposure modification orders for these products are appropriate to promote the public health. As of March 31, 2022, PMI's smoke-free products were available for sale in 71 markets, and PMI estimates that approximately 12.7 million adults around the world, excluding Russia and Ukraine, had already switched to IQOS and stopped smoking. With a strong foundation and significant expertise in life-sciences, in February 2021 PMI announced its ambition to expand into wellness and healthcare areas and deliver innovative products and solutions that aim to address unmet consumer and patient needs. 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 in certain markets or countries; health concerns relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke; litigation related to tobacco use and intellectual property; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; the impact and consequences of Russia's invasion of Ukraine; 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, availability, and quality of tobacco and other agricultural products and raw materials, as well as components and materials for our electronic devices; 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, including women or diverse candidates. Future results are also subject to the lower predictability of our reduced-risk product category's performance.
In addition, PMI's business risks also include risks and uncertainties related to PMI's acquisitions of Fertin Pharma A/S ("Fertin"), OtiTopic, Inc. ("OtiTopic") and Vectura Group plc ("Vectura"), including, amongst other things: (1) the possibility that the integration of the operations of Fertin and Vectura with those of PMI may be more difficult and/or take longer than anticipated, and may not accelerate PMI's desired entry into additional smoke-free and beyond nicotine platforms as quickly as anticipated; (2) the possibility that the respective integrations of Fertin and Vectura into PMI may be more costly than anticipated and may have unanticipated adverse results relating to Fertin, Vectura or PMI's existing businesses; (3) the inability to gain access to or acquire differentiated proprietary assets, technology and/or pharmaceutical development expertise as anticipated by these acquisitions; (4) risks associated with third-party contracts containing consent and/or other contractual provisions that may be triggered by the acquisitions; (5) the success of the research and development efforts of Fertin, OtiTopic and Vectura, including the ability to obtain regulatory approval for new products, and the ability to commercialize or license these new products; (6) any unanticipated safety, quality or efficacy concerns and the impact of identified concerns associated with the products developed by Fertin, OtiTopic and Vectura; and (7) the ability of PMI to retain key personnel of Fertin and Vectura, or hire key talent to work in the Fertin and Vectura businesses due to their affiliation with PMI.
PMI is further subject to other risks detailed from time to time in its publicly filed documents, including PMI's Annual Report on Form 10-K for the fourth quarter and year ended December 31, 2021 and the Form 10-Q for the quarter ended March 31, 2022, which will be filed in the coming days. 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
Note: The above IQOS user metrics reflect PMI estimates, which are based on consumer claims and sample-based statistical assessments with an average margin of error of +/-5% at a 95% Confidence Interval in key volume markets. The accuracy and reliability of IQOS user metrics may vary based on individual market maturity and availability of information.
As of December 2020, PMI heat-not-burn products and HTUs include licensed KT&G heat-not-burn products and HTUs, respectively.
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Appendix 1 |
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PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
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Key Market Data |
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Quarters Ended March 31, |
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Market |
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Total Market, bio units |
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PMI Shipments, bio units |
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PMI Market Share, %(2) |
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Total |
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Cigarette |
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HTU |
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Total |
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HTU |
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2022 |
2021 |
%
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2022 |
2021 |
%
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2022 |
2021 |
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2022 |
2021 |
%
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2022 |
2021 |
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2022 |
2021 |
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Total (1) |
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563.0 |
556.6 |
1.1 |
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173.1 |
167.2 |
3.5 |
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148.2 |
145.5 |
1.9 |
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24.8 |
21.7 |
14.2 |
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26.7 |
26.0 |
0.7 |
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3.5 |
2.9 |
0.6 |
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European Union |
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France |
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7.8 |
8.2 |
(4.3 |
) |
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3.5 |
3.8 |
(6.9 |
) |
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3.5 |
3.7 |
(6.8 |
) |
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0.1 |
0.1 |
(14.2 |
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45.0 |
43.6 |
1.4 |
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0.7 |
0.6 |
0.1 |
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Germany |
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16.1 |
17.4 |
(7.5 |
) |
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6.8 |
7.1 |
(4.2 |
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5.9 |
6.5 |
(9.6 |
) |
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0.9 |
0.6 |
52.5 |
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42.3 |
40.8 |
1.5 |
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5.9 |
3.6 |
2.3 |
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Italy |
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16.8 |
15.9 |
5.3 |
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9.7 |
9.6 |
1.0 |
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7.1 |
7.5 |
(5.0 |
) |
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2.6 |
2.2 |
21.6 |
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54.2 |
52.8 |
1.4 |
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14.8 |
11.3 |
3.5 |
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Poland |
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12.8 |
10.8 |
18.7 |
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4.8 |
4.0 |
20.7 |
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3.8 |
3.4 |
12.9 |
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1.0 |
0.6 |
65.7 |
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37.3 |
36.7 |
0.6 |
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7.6 |
5.4 |
2.2 |
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Spain |
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10.0 |
9.6 |
4.1 |
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3.3 |
2.7 |
23.1 |
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3.2 |
2.6 |
21.4 |
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0.2 |
0.1 |
67.2 |
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30.4 |
31.1 |
(0.7 |
) |
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1.5 |
1.2 |
0.3 |
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Eastern Europe |
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Russia |
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n/a |
49.1 |
n/a |
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14.1 |
15.7 |
(9.9 |
) |
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10.8 |
12.1 |
(11.0 |
) |
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3.4 |
3.6 |
(6.2 |
) |
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n/a |
31.0 |
n/a |
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n/a |
7.7 |
n/a |
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Middle East & Africa |
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Saudi Arabia |
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5.2 |
5.5 |
(5.4 |
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2.1 |
2.2 |
(4.8 |
) |
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2.1 |
2.2 |
(3.5 |
) |
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? |
? |
? |
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41.1 |
42.3 |
(1.2 |
) |
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0.8 |
0.8 |
? |
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Turkey |
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23.6 |
25.3 |
(6.8 |
) |
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11.0 |
11.0 |
0.6 |
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11.0 |
11.0 |
0.6 |
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? |
? |
? |
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46.9 |
43.4 |
3.5 |
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? |
? |
? |
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South & Southeast Asia |
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Indonesia |
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75.1 |
71.0 |
5.8 |
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20.9 |
19.9 |
5.2 |
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20.9 |
19.9 |
5.2 |
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? |
? |
? |
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27.8 |
28.0 |
(0.2 |
) |
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? |
? |
? |
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Philippines |
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15.6 |
13.1 |
19.2 |
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9.7 |
8.2 |
18.4 |
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9.6 |
8.1 |
18.3 |
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? |
? |
? |
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62.0 |
62.4 |
(0.4 |
) |
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0.3 |
0.2 |
0.1 |
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East Asia & Australia |
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Australia |
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2.2 |
2.4 |
(7.5 |
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0.8 |
0.8 |
(4.1 |
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0.8 |
0.8 |
(4.1 |
) |
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? |
? |
? |
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33.9 |
32.7 |
1.2 |
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? |
? |
? |
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Japan (3) |
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34.4 |
35.6 |
(3.2 |
) |
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14.2 |
13.8 |
3.2 |
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6.1 |
5.9 |
4.5 |
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8.1 |
7.9 |
2.3 |
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37.2 |
36.1 |
1.1 |
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22.9 |
21.5 |
1.4 |
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South Korea |
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16.8 |
16.8 |
0.2 |
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3.3 |
3.4 |
(2.9 |
) |
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2.2 |
2.2 |
(1.6 |
) |
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1.1 |
1.1 |
(5.4 |
) |
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19.6 |
20.1 |
(0.5 |
) |
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6.5 |
6.8 |
(0.3 |
) |
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Americas |
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Argentina |
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7.7 |
7.7 |
(0.2 |
) |
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4.9 |
5.3 |
(7.1 |
) |
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4.9 |
5.3 |
(7.1 |
) |
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? |
? |
? |
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63.5 |
68.2 |
(4.7 |
) |
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? |
? |
? |
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Mexico |
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6.5 |
6.8 |
(3.8 |
) |
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4.1 |
4.0 |
0.8 |
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4.0 |
4.0 |
0.8 |
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? |
? |
? |
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62.5 |
59.6 |
2.9 |
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0.4 |
0.3 |
0.1 |
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(1) Total market and market share estimates exclude Russia & Ukraine |
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(2) Market share estimates are calculated using IMS data |
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(3) Total market and market share estimates include cigarillos |
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Appendix 2 |
||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
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Reconciliation of Non-GAAP Measures |
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PMI Shipment Volume Adjusted for the Impact of Russia and Ukraine |
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(in million units) / (Unaudited) |
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Year Ended
|
||
|
|
Quarters Ended March 31, |
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|||||
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2022 |
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2021 |
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% Change |
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2021 |
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Cigarettes |
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Shipment Volume |
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148,238 |
145,512 |
1.9% |
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624,875 |
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Russia |
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10,772 |
12,101 |
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52,499 |
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Ukraine |
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2,211 |
2,359 |
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10,669 |
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Pro Forma Shipment Volume |
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135,255 |
131,052 |
3.2% |
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561,707 |
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Heated Tobacco Units |
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Shipment Volume |
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24,819 |
21,734 |
14.2% |
|
94,976 |
||
Russia |
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3,359 |
3,582 |
|
|
16,309 |
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Ukraine |
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1,383 |
1,193 |
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|
5,168 |
||
Pro Forma Shipment Volume |
|
20,076 |
16,959 |
18.4% |
|
73,499 |
||
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||
PMI |
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|
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|
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Shipment Volume |
|
173,057 |
167,246 |
3.5% |
|
719,851 |
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Russia |
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14,131 |
15,682 |
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|
68,807 |
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Ukraine |
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3,595 |
3,552 |
|
|
15,838 |
||
Pro Forma Shipment Volume |
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155,331 |
148,011 |
4.9% |
|
635,206 |
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Note: Sum of product categories might not foot to total due to roundings. |
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Appendix 3 |
||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||
Reconciliation of Non-GAAP Measures |
||||||
Eastern Europe Shipment Volume Adjusted for the Impact of Russia and Ukraine |
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(in million units) / (Unaudited) |
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|
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|
|
Quarters Ended March 31, |
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|
|
2022 |
|
2021 |
|
% Change |
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Cigarettes |
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|
|
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Shipment Volume |
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18,514 |
19,966 |
(7.3)% |
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Russia |
|
10,772 |
12,101 |
|
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Ukraine |
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2,211 |
2,359 |
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Pro Forma Shipment Volume |
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5,531 |
5,506 |
0.4% |
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Heated Tobacco Units |
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Shipment Volume |
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5,866 |
5,635 |
4.1% |
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Russia |
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3,359 |
3,582 |
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Ukraine |
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1,383 |
1,193 |
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Pro Forma Shipment Volume |
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1,123 |
860 |
30.6% |
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Eastern Europe |
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Shipment Volume |
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24,380 |
25,601 |
(4.8)% |
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Russia |
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14,131 |
15,682 |
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Ukraine |
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3,595 |
3,552 |
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Pro Forma Shipment Volume |
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6,654 |
6,366 |
4.5% |
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Note: Sum of product categories might not foot to total due to roundings. |
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Schedule 1 |
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PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
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Diluted Earnings Per Share (EPS) |
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($ in millions, except per share data) / (Unaudited) |
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Diluted EPS |
Quarters Ended |
||||
March 31, |
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2022 Diluted Earnings Per Share (1) |
$ |
1.50 |
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|
|
2021 Diluted Earnings Per Share (1) |
$ |
1.55 |
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|
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Change |
$ |
(0.05 |
) |
|
|
% Change |
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(3.2 |
)% |
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|
|||
Reconciliation: |
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|
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2021 Diluted Earnings Per Share (1) |
$ |
1.55 |
|
|
|
2021 Asset impairment and exit costs |
|
0.02 |
|
|
|
2021 Tax Items |
|
? |
|
|
|
2022 Asset impairment and exit costs |
|
? |
|
|
|
2022 Charges related to the war in Ukraine |
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(0.03 |
) |
|
|
2022 Fair value adjustment for equity security investments |
|
(0.03 |
) |
|
|
2022 Tax Items |
|
? |
|
|
|
Currency |
|
(0.23 |
) |
|
|
Interest |
|
0.01 |
|
|
|
Change in tax rate |
|
0.03 |
|
|
|
Operations (2) |
|
0.18 |
|
|
|
2022 Diluted Earnings Per Share (1) |
$ |
1.50 |
|
|
|
|
|
|
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(1) Basic and diluted EPS were calculated using the following (in millions): |
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|
|
|
|||
|
Quarters Ended |
||||
|
March 31, |
||||
|
|
2022 |
|
|
2021 |
Net Earnings attributable to PMI |
$ |
2,331 |
|
$ |
2,418 |
Less: Distributed and undistributed earnings
|
|
7 |
|
|
7 |
Net Earnings for basic and diluted EPS |
$ |
2,324 |
|
$ |
2,411 |
|
|
|
|||
Weighted-average shares for basic EPS |
|
1,550 |
|
|
1,558 |
Plus Contingently Issuable Performance Stock Units |
|
2 |
|
|
2 |
Weighted-average shares for diluted EPS |
|
1,552 |
|
|
1,560 |
|
|
|
|||
(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 March 31, |
|
||||||||||||
|
|
2022 |
|
|
2021 |
% Change |
|
|||||||
Reported Diluted EPS |
$ |
1.50 |
|
$ |
1.55 |
(3.2 |
)% |
|
||||||
Less: Currency |
|
(0.23 |
) |
|
|
|
||||||||
Reported Diluted EPS, excluding Currency |
$ |
1.73 |
|
$ |
1.55 |
11.6 |
% |
|
||||||
|
|
|
|
|
||||||||||
|
|
|
|
|
||||||||||
|
Quarters Ended March 31, |
Year Ended |
||||||||||||
|
|
2022 |
|
|
2021 |
% Change |
2021 |
|||||||
Reported Diluted EPS |
$ |
1.50 |
|
$ |
1.55 |
(3.2 |
)% |
$ |
5.83 |
|
||||
Asset impairment and exit costs |
|
? |
|
|
0.02 |
|
|
0.12 |
|
|||||
Charges related to the war in Ukraine |
|
0.03 |
|
|
? |
|
|
? |
|
|||||
Asset acquisition cost |
|
? |
|
|
? |
|
|
0.03 |
|
|||||
Equity investee ownership dilution |
|
? |
|
|
? |
|
|
(0.04 |
) |
|||||
Saudi Arabia customs assessments |
|
? |
|
|
? |
|
|
0.14 |
|
|||||
Fair value adjustment for equity security investments |
|
0.03 |
|
|
? |
|
|
? |
|
|||||
Tax items |
|
? |
|
|
? |
|
|
? |
|
|||||
Adjusted Diluted EPS |
$ |
1.56 |
|
$ |
1.57 |
(0.6 |
)% |
$ |
6.08 |
|
||||
Less: Currency |
|
(0.23 |
) |
|
|
|
||||||||
Adjusted Diluted EPS, excluding Currency |
$ |
1.79 |
|
$ |
1.57 |
14.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 3 |
|
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
|
Currency |
Net
|
Acquisitions |
Net
|
|
Quarters Ended
|
|
Net
|
|
Total |
Excluding
|
Excluding
Acquisitions |
2022 |
|
Combustible Products |
|
2021 |
|
% Change |
||||||
$ 1,810 |
$ (124) |
$ 1,934 |
$ ? |
$ 1,934 |
|
European Union |
|
$ 1,950 |
|
(7.2)% |
(0.9)% |
(0.9)% |
456 |
(46) |
503 |
? |
503 |
|
Eastern Europe |
|
492 |
|
(7.2)% |
2.3% |
2.3% |
929 |
(148) |
1,077 |
? |
1,077 |
|
Middle East & Africa |
|
780 |
|
19.1% |
38.1% |
38.1% |
1,118 |
(44) |
1,162 |
? |
1,162 |
|
South & Southeast Asia |
|
1,171 |
|
(4.6)% |
(0.8)% |
(0.8)% |
601 |
(40) |
641 |
? |
641 |
|
East Asia & Australia |
|
648 |
|
(7.3)% |
(1.1)% |
(1.1)% |
416 |
(13) |
429 |
? |
429 |
|
Americas |
|
422 |
|
(1.4)% |
1.6% |
1.6% |
$ 5,330 |
$ (415) |
$ 5,745 |
$ ? |
$ 5,745 |
|
Total Combustible |
|
$ 5,463 |
|
(2.4)% |
5.2% |
5.2% |
2022 |
|
Reduced-Risk Products |
|
2021 |
|
% Change |
||||||
$ 1,202 |
$ (82) |
$ 1,284 |
$ 4 |
$ 1,281 |
|
European Union |
|
$ 959 |
|
25.4% |
34.0% |
33.6% |
270 |
(26) |
295 |
? |
295 |
|
Eastern Europe |
|
304 |
|
(11.4)% |
(3.0)% |
(3.0)% |
62 |
(1) |
63 |
? |
63 |
|
Middle East & Africa |
|
21 |
|
+100% |
+100% |
+100% |
5 |
? |
5 |
? |
5 |
|
South & Southeast Asia |
|
2 |
|
+100% |
+100% |
+100% |
803 |
(66) |
869 |
? |
869 |
|
East Asia & Australia |
|
824 |
|
(2.5)% |
5.5% |
5.5% |
8 |
? |
8 |
? |
8 |
|
Americas |
|
12 |
|
(35.3)% |
(32.5)% |
(32.5)% |
$ 2,350 |
$ (175) |
$ 2,525 |
$ 4 |
$ 2,521 |
|
Total RRPs |
|
$ 2,122 |
|
10.7% |
19.0% |
18.8% |
2022 |
|
Other |
|
2021 |
|
% Change |
||||||
$ 66 |
$ ? |
$66 |
$66 |
$ ? |
|
Other |
|
$ ? |
|
?% |
?% |
?% |
2022 |
|
PMI |
|
2021 |
|
% Change |
||||||
$ 3,012 |
$ (206) |
$ 3,218 |
$ 4 |
$ 3,214 |
|
European Union |
|
$ 2,909 |
|
3.5% |
10.6% |
10.5% |
726 |
(72) |
798 |
? |
798 |
|
Eastern Europe |
|
796 |
|
(8.8)% |
0.3% |
0.3% |
991 |
(149) |
1,140 |
? |
1,140 |
|
Middle East & Africa |
|
801 |
|
23.7% |
42.3% |
42.3% |
1,123 |
(44) |
1,167 |
? |
1,167 |
|
South & Southeast Asia |
|
1,173 |
|
(4.3)% |
(0.5)% |
(0.5)% |
1,404 |
(106) |
1,510 |
? |
1,510 |
|
East Asia & Australia |
|
1,472 |
|
(4.6)% |
2.6% |
2.6% |
424 |
(13) |
437 |
? |
437 |
|
Americas |
|
434 |
|
(2.3)% |
0.7% |
0.7% |
66 |
? |
66 |
66 |
? |
|
Other |
|
? |
|
?% |
?% |
?% |
$ 7,746 |
$ (590) |
$ 8,336 |
$70 |
$ 8,266 |
|
Total PMI |
|
$ 7,585 |
|
2.1% |
9.9% |
9.0% |
Note: Sum of product categories or Regions might not foot to Total PMI due to roundings. "-" indicates amounts between -$0.5 million and +$0.5 million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 4 |
|
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||||||||
Reconciliation of Net Revenues to Adjusted Net Revenues, excluding Currency and Acquisitions |
||||||||||||||||
($ in millions) / (Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
Special
|
Adjusted
|
Currency |
Adjusted
|
Acqui-
|
Adjusted
|
|
|
|
Net
|
Special
|
Adjusted
|
|
Total |
Excluding
|
Excluding
|
2022 |
|
Quarters Ended
|
2021 |
|
% Change |
|||||||||||
$ 3,012 |
$ ? |
$ 3,012 |
$ (206) |
$ 3,218 |
$ 4 |
$ 3,214 |
|
European Union |
|
$ 2,909 |
$ ? |
$ 2,909 |
|
3.5% |
10.6% |
10.5% |
726 |
? |
726 |
(72) |
798 |
? |
798 |
|
Eastern Europe |
|
796 |
? |
796 |
|
(8.8)% |
0.3% |
0.3% |
991 |
? |
991 |
(149) |
1,140 |
? |
1,140 |
|
Middle East & Africa |
|
801 |
? |
801 |
|
23.7% |
42.3% |
42.3% |
1,123 |
? |
1,123 |
(44) |
1,167 |
? |
1,167 |
|
South & Southeast Asia |
|
1,173 |
? |
1,173 |
|
(4.3)% |
(0.5)% |
(0.5)% |
1,404 |
? |
1,404 |
(106) |
1,510 |
? |
1,510 |
|
East Asia & Australia |
|
1,472 |
? |
1,472 |
|
(4.6)% |
2.6% |
2.6% |
424 |
? |
424 |
(13) |
437 |
? |
437 |
|
Americas |
|
434 |
? |
434 |
|
(2.3)% |
0.7% |
0.7% |
66 |
? |
66 |
? |
66 |
66 |
? |
|
Other |
|
? |
? |
? |
|
?% |
?% |
?% |
$ 7,746 |
$ ? |
$ 7,746 |
$ (590) |
$ 8,336 |
$ 70 |
$ 8,266 |
|
Total PMI |
|
$ 7,585 |
$ ? |
$ 7,585 |
|
2.1% |
9.9% |
9.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 5 |
|
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
|
Currency |
Operating
|
Acquisitions |
Operating
|
|
|
|
Operating
|
|
Total |
Excluding
|
Excluding
|
||
2022 |
|
Quarters Ended
|
|
2021 |
|
% Change |
||||||||
$ 1,527 |
|
$ (145) |
$ 1,672 |
$ (2) |
$ 1,674 |
|
European Union |
|
$ 1,490 |
(2) |
|
2.5% |
12.2% |
12.3% |
144 |
(1) |
(60) |
204 |
? |
204 |
|
Eastern Europe |
|
261 |
(2) |
|
(44.8)% |
(21.8)% |
(21.8)% |
521 |
|
(115) |
636 |
? |
636 |
|
Middle East & Africa |
|
335 |
(2) |
|
55.5% |
89.9% |
89.9% |
445 |
|
(25) |
470 |
? |
470 |
|
South & Southeast Asia |
|
529 |
(2) |
|
(15.9)% |
(11.2)% |
(11.2)% |
571 |
|
(68) |
639 |
? |
639 |
|
East Asia & Australia |
|
695 |
(2) |
|
(17.8)% |
(8.1)% |
(8.1)% |
121 |
|
(2) |
123 |
? |
123 |
|
Americas |
|
134 |
(2) |
|
(9.7)% |
(8.2)% |
(8.2)% |
(31) |
|
? |
(31) |
(24) |
(7) |
|
Other |
|
? |
|
|
?% |
?% |
?% |
$ 3,298 |
|
$ (415) |
$ 3,713 |
$ (26) |
$ 3,739 |
|
Total PMI |
|
$ 3,444 |
|
|
(4.2)% |
7.8% |
8.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes charges related to the war in Ukraine ($42 million) |
||||||||||||||
(2) Includes asset impairment and exit costs: EU ($9 million), EE ($2 million), ME&A ($2 million), S&SA ($3 million), EA&A ($31 million) and AMCS ($1 million) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 6 |
|
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
|||||||||||||||||
Reconciliation of Non-GAAP Measures |
|||||||||||||||||
Reconciliation of Operating Income to Adjusted Operating Income, excluding Currency and Acquisitions |
|||||||||||||||||
($ in millions) / (Unaudited) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
Asset
|
Adjusted
|
Currency |
Adjusted
|
Acqui-
|
Adjusted
|
|
|
|
Operating
|
Asset
|
Adjusted
|
|
Total |
Excluding
|
Excluding
|
|
2022 |
|
Quarters Ended
|
|
2021 |
|
% Change |
|||||||||||
$ 1,527 |
$ ? |
|
$ 1,527 |
$ (145) |
$ 1,672 |
$ (2) |
$ 1,674 |
|
European Union |
|
$ 1,490 |
$ (9) |
$ 1,499 |
|
1.9% |
11.5% |
11.7% |
144 |
(42) |
(1) |
186 |
(60) |
246 |
? |
246 |
|
Eastern Europe |
|
261 |
(2) |
263 |
|
(29.3)% |
(6.5)% |
(6.5)% |
521 |
? |
|
521 |
(115) |
636 |
? |
636 |
|
Middle East & Africa |
|
335 |
(2) |
337 |
|
54.6% |
88.7% |
88.7% |
445 |
? |
|
445 |
(25) |
470 |
? |
470 |
|
South & Southeast Asia |
|
529 |
(3) |
532 |
|
(16.4)% |
(11.7)% |
(11.7)% |
571 |
? |
|
571 |
(68) |
639 |
? |
639 |
|
East Asia & Australia |
|
695 |
(31) |
726 |
|
(21.3)% |
(12.0)% |
(12.0)% |
121 |
? |
|
121 |
(2) |
123 |
? |
123 |
|
Americas |
|
134 |
(1) |
135 |
|
(10.4)% |
(8.9)% |
(8.9)% |
(31) |
? |
|
(31) |
? |
(31) |
(24) |
(7) |
|
Other |
|
? |
? |
? |
|
?% |
?% |
?% |
$ 3,298 |
$ (42) |
|
$ 3,340 |
$ (415) |
$ 3,755 |
$ (26) |
$ 3,781 |
|
Total PMI |
|
$ 3,444 |
$ (48) |
$ 3,492 |
|
(4.4)% |
7.5% |
8.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents charges related to the war in Ukraine |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 7 |
|
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||||||||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||||||||||||
Reconciliation of Adjusted Operating Income Margin, excluding Currency and Acquisitions |
||||||||||||||||||||
($ in millions) / (Unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
Adjusted
|
Adjusted
|
|
Adjusted
|
Adjusted
|
Adjusted
|
|
Adjusted
|
Adjusted
|
Adjusted
|
|
|
|
Adjusted
|
Adjusted
|
Adjusted
|
|
Adjusted
|
Adjusted
|
Adjusted
|
2022 |
|
Quarters Ended
|
|
2021 |
|
% Points Change |
||||||||||||||
$ 1,527 |
$ 3,012 |
50.7% |
|
$ 1,672 |
$ 3,218 |
52.0% |
|
$ 1,674 |
$ 3,214 |
52.1% |
|
European Union |
|
$ 1,499 |
$ 2,909 |
51.5% |
|
(0.8) |
0.5 |
0.6 |
186 |
726 |
25.6% |
|
246 |
798 |
30.8% |
|
246 |
798 |
30.8% |
|
Eastern Europe |
|
263 |
796 |
33.0% |
|
(7.4) |
(2.2) |
(2.2) |
521 |
991 |
52.6% |
|
636 |
1,140 |
55.8% |
|
636 |
1,140 |
55.8% |
|
Middle East & Africa |
|
337 |
801 |
42.1% |
|
10.5 |
13.7 |
13.7 |
445 |
1,123 |
39.6% |
|
470 |
1,167 |
40.3% |
|
470 |
1,167 |
40.3% |
|
South & Southeast Asia |
|
532 |
1,173 |
45.4% |
|
(5.8) |
(5.1) |
(5.1) |
571 |
1,404 |
40.7% |
|
639 |
1,510 |
42.3% |
|
639 |
1,510 |
42.3% |
|
East Asia & Australia |
|
726 |
1,472 |
49.3% |
|
(8.6) |
(7.0) |
(7.0) |
121 |
424 |
28.5% |
|
123 |
437 |
28.1% |
|
123 |
437 |
28.1% |
|
Americas |
|
135 |
434 |
31.1% |
|
(2.6) |
(3.0) |
(3.0) |
$ (31) |
$ 66 |
(47.0)% |
|
$ (31) |
$ 66 |
(47.0)% |
|
$ (7) |
$ ? |
?% |
|
Other |
|
$ ? |
$ ? |
?% |
|
? |
? |
? |
$ 3,340 |
$ 7,746 |
43.1% |
|
$ 3,755 |
$ 8,336 |
45.0% |
|
$ 3,781 |
$ 8,266 |
45.7% |
|
Total PMI |
|
$ 3,492 |
$ 7,585 |
46.0% |
|
(2.9) |
(1.0) |
(0.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to Schedule 6 |
||||||||||||||||||||
(2) For the calculation of Adjusted Net Revenues excluding currency and acquisitions refer to Schedule 4 |
|
|
Schedule 8 |
||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||||||
Condensed Statements of Earnings |
||||||||||
($ in millions, except per share data) / (Unaudited) |
||||||||||
|
|
|
|
|||||||
|
Quarters Ended March 31, |
|||||||||
|
2022 |
2021 |
Change
|
|||||||
Revenues including Excise Taxes |
$ |
19,341 |
$ |
19,355 |
|
(0.1 |
)% |
|||
Excise Taxes on products |
|
11,595 |
|
11,770 |
|
1.5 |
% |
|||
Net Revenues |
|
7,746 |
|
7,585 |
|
2.1 |
% |
|||
Cost of sales (1) |
|
2,608 |
|
2,274 |
|
(14.7 |
)% |
|||
Gross profit |
|
5,138 |
|
5,311 |
|
(3.3 |
)% |
|||
Marketing, administration and research costs (2) |
|
1,802 |
|
1,849 |
|
2.5 |
% |
|||
Amortization of intangibles |
|
38 |
|
18 |
|
|
||||
Operating Income |
|
3,298 |
|
3,444 |
|
(4.2 |
)% |
|||
Interest expense, net |
|
154 |
|
167 |
|
7.8 |
% |
|||
Pension and other employee benefit costs |
|
4 |
|
28 |
|
85.7 |
% |
|||
Earnings before income taxes |
|
3,140 |
|
3,249 |
|
(3.4 |
)% |
|||
Provision for income taxes |
|
619 |
|
697 |
|
11.2 |
% |
|||
Equity investments and securities (income)/loss, net |
|
56 |
|
(43 |
) |
|
||||
Net Earnings |
|
2,465 |
|
2,595 |
|
(5.0 |
)% |
|||
Net Earnings attributable to noncontrolling interests |
|
134 |
|
177 |
|
|
||||
Net Earnings attributable to PMI |
$ |
2,331 |
$ |
2,418 |
|
(3.6 |
)% |
|||
|
|
|
|
|||||||
Per share data (3): |
|
|
|
|||||||
Basic Earnings Per Share |
$ |
1.50 |
$ |
1.55 |
|
(3.2 |
)% |
|||
Diluted Earnings Per Share |
$ |
1.50 |
$ |
1.55 |
|
(3.2 |
)% |
(1) Quarter ended March 31, 2022 includes charges related to the war in Ukraine ($26 million) |
(2) Quarter ended March 31, 2022 includes charges related to the war in Ukraine ($16 million). Quarter ended March 31, 2021 includes asset impairment and exit costs ($48 million). |
(3) Net Earnings and weighted-average shares used in the basic and diluted Earnings Per Share computations for the quarters ended March 31, 2022 and 2021 are shown on Schedule 1, Footnote 1 |
|
|
|
|
Schedule 9 |
|||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
|||||||||||||
Reconciliation of Non-GAAP Measures |
|||||||||||||
Adjustments for the Impact of Russia and Ukraine, excluding Currency |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
|
|
||||||||
|
|
Quarters Ended March 31, |
|||||||||||
|
|
2022 |
|
2021 |
|
Currency |
|
Variance
|
|||||
Adjusted Diluted EPS (1) |
|
$ |
1.56 |
$ |
1.57 |
$ |
(0.23 |
) |
14.0 |
% |
|||
Net Earnings attributable to Russia and Ukraine |
|
|
0.10 |
|
0.13 |
|
(0.02 |
) |
|
||||
Pro Forma Adjusted Diluted EPS |
|
$ |
1.46 |
$ |
1.44 |
$ |
(0.21 |
) |
16.0 |
% |
|||
|
|
|
|
|
|
||||||||
(1) For the calculation of Adjusted Diluted EPS, see Schedule 2 |
|
|
|
|
|
|
Schedule 10 |
||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||
PMI & EE Region - Adjustments for the Impact of Russia and Ukraine, excluding Currency and Acquisitions |
||||||||||
($ in millions) / (Unaudited) |
||||||||||
|
|
|
|
|
|
|
||||
|
|
Quarters Ended March 31, |
||||||||
|
|
2022 |
2021 |
Currency |
Acqui-
|
Variance
|
||||
PMI |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
Adjusted Net Revenues (1) |
|
$ 7,746 |
$ 7,585 |
$ (590) |
$ 70 |
9.0% |
||||
Net Revenues attributable to Russia and Ukraine |
|
474 |
561 |
(63) |
? |
|
||||
Pro Forma Adjusted Net Revenues |
|
$ 7,272 |
$ 7,024 |
$ (527) |
$ 70 |
10.0% |
||||
|
|
|
|
|
|
|
||||
Adjusted Operating Income (2) |
|
$ 3,340 |
$ 3,492 |
$ (415) |
$ (26) |
8.3% |
||||
Operating Income attributable to Russia and Ukraine |
|
181 |
227 |
(38) |
? |
|
||||
Pro Forma Adjusted Operating Income |
|
$ 3,159 |
$ 3,265 |
$ (377) |
$ (26) |
9.1% |
||||
|
|
|
|
|
|
|
||||
Adjusted Operating Income Margin |
|
43.1% |
46.0% |
(1.9)pp |
(0.7)pp |
(0.3)pp |
||||
Adjusted Operating Income margin attributable to Russia and Ukraine |
|
(0.3)pp |
(0.5)pp |
|
|
|
||||
Pro Forma Adjusted Operating Income Margin |
|
43.4% |
46.5% |
(1.9)pp |
(0.8)pp |
(0.4)pp |
||||
|
|
|
|
|
|
|
||||
Eastern Europe |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
Adjusted Net Revenues (1) |
|
$ 726 |
$ 796 |
$ (72) |
$ ? |
0.3% |
||||
Net Revenues attributable to Russia and Ukraine |
|
474 |
561 |
(63) |
? |
|
||||
Pro Forma Adjusted Net Revenues |
|
$ 252 |
$ 235 |
$ (9) |
$ ? |
11.1% |
||||
|
|
|
|
|
|
|
||||
Adjusted Operating Income (2) |
|
$ 186 |
$ 263 |
$ (60) |
$ ? |
(6.5)% |
||||
Operating Income attributable to Russia and Ukraine |
|
181 |
227 |
(38) |
? |
|
||||
Corporate expenses apportioned to Russia and Ukraine |
|
(61) |
(50) |
3 |
? |
|
||||
Pro Forma Adjusted Operating Income |
|
$ 66 |
$ 86 |
$ (25) |
$ ? |
6.1% |
||||
|
|
|
|
|
|
|
||||
Adjusted Operating Income Margin |
|
25.6% |
33.0% |
(5.2)pp |
?pp |
(2.2)pp |
||||
Adjusted Operating Income margin attributable to Russia and Ukraine (3) |
|
(0.6)pp |
(3.6)pp |
|
|
|
||||
Pro Forma Adjusted Operating Income Margin |
|
26.2% |
36.6% |
(8.8)pp |
?pp |
(1.6)pp |
||||
|
|
|
|
|
|
|
||||
(1) For the calculation of Adjusted Net Revenues, see Schedule 4 |
||||||||||
(2) For the calculation of Adjusted Operating Income, see Schedule 6 |
||||||||||
(3) Includes also impact of corporate expenses apportioned to Russia and Ukraine |
|
|
|
|
|
|
|
|
Schedule 11 |
||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||||
Net Revenues by Product Category and Adjustments for the Impact of Russia and Ukraine |
||||||||||||
($ in millions) / (Unaudited) |
||||||||||||
|
|
|
|
|
|
|
|
Year Ended
|
||||
|
|
Quarters Ended March 31, |
|
|||||||||
|
|
2022 |
|
2021 |
|
Currency |
|
Acqui-
|
|
Variance
|
|
2021 |
Combustible Products |
|
|
|
|
|
|
|
|
||||
Adjusted Net Revenues |
|
$ 5,330 |
$ 5,463 |
$ (415) |
$ ? |
5.2% |
|
$ 22,436 |
||||
Net Revenues attributable to Russia and Ukraine |
|
269 |
308 |
(41) |
? |
|
|
1,399 |
||||
Pro Forma Adjusted Net Revenues |
|
$ 5,062 |
$ 5,155 |
$ (374) |
$ ? |
5.5% |
|
$ 21,037 |
||||
|
|
|
|
|
|
|
|
|
||||
Reduced-Risk Products |
|
|
|
|
|
|
|
|
||||
Adjusted Net Revenues |
|
$ 2,350 |
$ 2,122 |
$ (175) |
$ 4 |
18.8% |
|
$ 9,115 |
||||
Net Revenues attributable to Russia and Ukraine |
|
205 |
253 |
(23) |
? |
|
|
1,072 |
||||
Pro Forma Adjusted Net Revenues |
|
$ 2,145 |
$ 1,869 |
$ (153) |
$ 4 |
22.8% |
|
$ 8,042 |
||||
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
||||
Adjusted Net Revenues |
|
$ 66 |
$ ? |
$ ? |
$ 66 |
+100% |
|
$ 101 |
||||
Net Revenues attributable to Russia and Ukraine |
|
? |
? |
? |
? |
|
|
? |
||||
Pro Forma Adjusted Net Revenues |
|
$ 66 |
$ ? |
$ ? |
$ 66 |
+100% |
|
$ 101 |
||||
|
|
|
|
|
|
|
|
|
||||
PMI |
|
|
|
|
|
|
|
|
||||
Adjusted Net Revenues |
|
$ 7,746 |
$ 7,585 |
$ (590) |
$ 70 |
9.0% |
|
$ 31,651 |
||||
Net Revenues attributable to Russia and Ukraine |
|
474 |
561 |
(63) |
? |
|
|
2,471 |
||||
Pro Forma Adjusted Net Revenues |
|
$ 7,272 |
$ 7,024 |
$ (527) |
$ 70 |
10.0% |
|
$ 29,180 |
||||
|
|
|
|
|
|
|
|
|
||||
Note: Sum of product categories might not foot to Total PMI due to roundings. "-" indicates amounts between -$0.5 million and +$0.5 million.
|
|
|
|
|
|
|
|
Schedule 12 |
|||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||||||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||||||||||
Reconciliation of Reported Diluted EPS to Pro Forma Adjusted Diluted EPS |
||||||||||||||||||
(Unaudited) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
Quarter |
|
Quarter |
|
Six Months |
|
Quarter |
|
Nine Months |
|
Quarter |
|
Year |
|||||
Ended |
|
Ended |
|
Ended |
|
Ended |
|
Ended |
|
Ended |
|
Ended |
||||||
|
March 31, |
|
June 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
December 31, |
|
December 31, |
|||||
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|||||
Reported Diluted EPS |
$ 1.55 |
$ 1.39 |
$ 2.93 |
$ 1.55 |
|
$ 4.48 |
|
$ 1.34 |
|
$ 5.83 |
|
|||||||
Asset impairment and exit costs |
0.02 |
0.04 |
0.07 |
0.02 |
|
0.09 |
|
0.02 |
|
0.12 |
|
|||||||
Asset acquisition cost |
? |
? |
? |
0.03 |
|
0.03 |
|
? |
|
0.03 |
|
|||||||
Equity investee ownership dilution |
? |
? |
? |
(0.02 |
) |
(0.02 |
) |
(0.01 |
) |
(0.04 |
) |
|||||||
Saudi Arabia customs assessments |
? |
0.14 |
0.14 |
? |
|
0.14 |
|
? |
|
0.14 |
|
|||||||
Tax items |
? |
? |
? |
? |
|
? |
|
? |
|
? |
|
|||||||
Adjusted Diluted EPS |
1.57 |
1.57 |
3.14 |
1.58 |
|
4.72 |
|
1.35 |
|
6.08 |
|
|||||||
Net Earnings attributable to Russia & Ukraine |
0.13 |
0.15 |
0.28 |
0.15 |
|
0.43 |
|
0.17 |
|
0.60 |
|
|||||||
Pro Forma Adjusted Diluted EPS |
1.44 |
1.42 |
2.86 |
1.43 |
|
4.29 |
|
1.18 |
|
5.48 |
|
|||||||
|
|
|
|
|
|
|
|
|||||||||||
Weighted-average shares for diluted EPS |
1,560 |
1,560 |
1,560 |
1,560 |
|
1,560 |
|
1,557 |
|
1,559 |
|
|||||||
|
|
|
|
|
|
|
|
|||||||||||
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 |
|
|
Schedule 13 |
||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||||
Condensed Balance Sheets |
||||||||
($ in millions) / (Unaudited) |
||||||||
|
|
|
||||||
|
March 31, |
|
December 31, |
|||||
|
2022 |
|
2021 |
|||||
Assets |
|
|
||||||
Cash and cash equivalents |
$ |
4,622 |
|
$ |
4,496 |
|
||
All other current assets |
|
14,102 |
|
|
13,221 |
|
||
Property, plant and equipment, net |
|
6,004 |
|
|
6,168 |
|
||
Goodwill |
|
6,632 |
|
|
6,680 |
|
||
Other intangible assets, net |
|
2,786 |
|
|
2,818 |
|
||
Equity investments |
|
4,312 |
|
|
4,463 |
|
||
Other assets |
|
3,275 |
|
|
3,444 |
|
||
Total assets |
$ |
41,733 |
|
$ |
41,290 |
|
||
|
|
|
||||||
Liabilities and Stockholders' (Deficit) Equity |
|
|
||||||
Short-term borrowings |
$ |
2,441 |
|
$ |
225 |
|
||
Current portion of long-term debt |
|
2,897 |
|
|
2,798 |
|
||
All other current liabilities |
|
15,079 |
|
|
16,232 |
|
||
Long-term debt |
|
24,019 |
|
|
24,783 |
|
||
Deferred income taxes |
|
751 |
|
|
726 |
|
||
Other long-term liabilities |
|
4,749 |
|
|
4,734 |
|
||
Total liabilities |
|
49,936 |
|
|
49,498 |
|
||
|
|
|
||||||
Total PMI stockholders' deficit |
|
(10,098 |
) |
|
(10,106 |
) |
||
Noncontrolling interests |
|
1,895 |
|
|
1,898 |
|
||
Total stockholders' (deficit) equity |
|
(8,203 |
) |
|
(8,208 |
) |
||
Total liabilities and stockholders' (deficit) equity |
$ |
41,733 |
|
$ |
41,290 |
|
|
|
|
|
Schedule 14 |
|||||||||||
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 March 31, 2022 |
|
Year Ended
|
||||||||||||
|
April ~ December |
|
January ~ March |
|
12 months |
|
|||||||||
|
2021 |
|
2022 |
|
rolling |
|
|||||||||
Net Earnings |
$ |
7,115 |
|
$ |
2,465 |
$ |
9,580 |
|
$ |
9,710 |
|
||||
Equity investments and securities (income)/loss, net |
|
(106 |
) |
|
56 |
|
(50 |
) |
|
(149 |
) |
||||
Provision for income taxes |
|
1,974 |
|
|
619 |
|
2,593 |
|
|
2,671 |
|
||||
Interest expense, net |
|
461 |
|
|
154 |
|
615 |
|
|
628 |
|
||||
Depreciation and amortization |
|
753 |
|
|
253 |
|
1,006 |
|
|
998 |
|
||||
Asset impairment and exit costs and Others (1) |
|
465 |
|
|
42 |
|
507 |
|
|
513 |
|
||||
Adjusted EBITDA |
$ |
10,662 |
|
$ |
3,589 |
$ |
14,251 |
|
$ |
14,371 |
|
||||
|
|
|
|
|
|||||||||||
|
|
|
March 31, |
December 31, |
|||||||||||
|
|
|
2022 |
2021 |
|||||||||||
Short-term borrowings |
|
|
$ |
2,441 |
|
$ |
225 |
|
|||||||
Current portion of long-term debt |
|
|
|
2,897 |
|
|
2,798 |
|
|||||||
Long-term debt |
|
|
|
24,019 |
|
|
24,783 |
|
|||||||
Total Debt |
|
|
$ |
29,357 |
|
$ |
27,806 |
|
|||||||
Cash and cash equivalents |
|
|
|
4,622 |
|
|
4,496 |
|
|||||||
Net Debt |
|
|
$ |
24,735 |
|
$ |
23,310 |
|
|||||||
|
|
|
|
|
|||||||||||
Ratios: |
|
|
|
|
|||||||||||
Total Debt to Adjusted EBITDA |
|
|
|
2.06 |
|
|
1.93 |
|
|||||||
Net Debt to Adjusted EBITDA |
|
|
|
1.74 |
|
|
1.62 |
|
(1) For the period January 2022 to March 2022 "Others" includes $42 million of charges related to the war in Ukraine. For the period April 2021 to December 2021 and for the year ended December 31, 2021 "Others" includes a reduction in net revenues of $246 million related to the Saudi Arabia customs assessments that was recorded in the second quarter of 2021 and asset acquisition cost of $51 million related to OtiTopic Inc. in August 2021. |
|
|
Schedule 15 |
|||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
|||||||
Reconciliation of Non-GAAP Measures |
|||||||
Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding Currency |
|||||||
($ in millions) / (Unaudited) |
|||||||
|
|
|
|
||||
|
Quarters Ended March 31, |
||||||
|
2022 |
|
2021 |
% Change |
|||
Net cash provided by operating activities (1) |
$ 1,118 |
|
$ 435 |
+100% |
|||
Less: Currency |
(433 |
) |
|
|
|||
Net cash provided by operating activities, excluding currency |
$ 1,551 |
|
$ 435 |
+100% |
|||
|
|
|
|
||||
(1) Operating cash flow |
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