We are a leading international tobacco company engaged in the manufacture and sale of cigarettes and other nicotine-containing products in more than 180 markets outside the United States of America. In 2017, our international market share, excluding the People’s Republic of China and the United States of America, stood at 28.0%.
We compete primarily
on the basis of product quality, brand recognition, brand loyalty, taste,
R&D, innovation, packaging, customer service, marketing, advertising and
retail price and, increasingly, adult smoker willingness to convert to our
RRPs.* Our competitors include three large international tobacco companies and
several regional and local tobacco companies and, in some instances, state-owned
Our portfolio comprises both international and local brands and is led by Marlboro, the world’s best-selling international cigarette, which accounted for approximately 35% of our total 2017 cigarette shipment volume. Marlboro is complemented in the premium-price category by Parliament. Our other leading international cigarette brands are Bond Street, Chesterfield, L&M, Lark and Philip Morris. These seven international cigarette brands contributed approximately 75% of our cigarette shipment volume in 2017. Our leading reduced-risk product* brand, IQOS, is typically marketed with heated tobacco units under the brand names HEETS or Marlboro HeatSticks.Read More
Based on the strength of our brand portfolio, we enjoy robust pricing power. Since becoming a public company in 2008, our annual average pricing variance has been approximately six percent of net revenues, excluding excise taxes.
With 46 manufacturing
facilities around the world, we have a well-balanced factory footprint. In
addition, we have agreements with 25 third-party manufacturers across 23
markets and 38 third-party cigarette hand-rolling operators in Indonesia, the
largest tobacco market outside of China.
Our largest factories are in Czech Republic, Germany, Indonesia, the Philippines, Poland, Russia, Ukraine.
We enjoy best-in-class operational efficiency, reinforced by strong cost control and productivity improvements. We purchase tobacco leaf of various types, grades, and styles throughout the world, mostly through independent tobacco suppliers. We also contract directly with more than 350,000 farmers in some 28 countries.
In addition, we purchase a wide variety of materials from about 450 suppliers. In 2017, our top ten suppliers of direct materials combined represented approximately 50% of our total direct materials purchases. The three most significant direct materials we purchase are printed board used in packaging, acetate tow used in filter making, and fine paper used in cigarette manufacturing.
One of our key strategic priorities is to develop, assess, and commercialize a portfolio of innovative tobacco and other nicotine-containing products. We draw on the expertise of a team of world-class scientists from a broad spectrum of disciplines. Our goal is to ensure that less harmful alternatives ultimately replace cigarettes, to the benefit of adult smokers, society, our company, and our shareholders.
A desire to maintain a single-A credit rating governs our capital structure. At the end of 2017, the weighted-average all-in financing cost of our total debt stood at 2.6%, and the weighted-average time-to-maturity of our total long-term debt was 9.4 years.
Dividends are currently the primary use of our free cash flow. Since becoming a public company in 2008, we have raised our dividend for eleven consecutive years, representing a total increase of 147.8%, or a compound annual growth rate of 9.5%.
Our sustainability work is focused on creating long-term value while continuously improving our understanding, management, and performance of the social, economic, and environmental impacts of our operations and our wider value chain.
Through our sustainability efforts we remain committed to the UN Sustainable Development Goals (SDGs). Our environmental
performance was again recognized in 2017, as PMI made the CDP Climate A list
for the fourth year in a row and achieved CDP A list status for both Water and
Our strong management and highly motivated and diverse workforce of some 81,000 people worldwide represent over 80 nationalities. Attracting, motivating, and retaining the best global talent is a critical component of our success.Read More