April 21, 2022
Philip Morris International Inc. (PMI) Reports 2022 First-Quarter Results
DownloadDelivered Reported Diluted EPS of
Targets 2022 Full-Year Reported Diluted EPS* of
* Assumes the contribution of the company's operations in
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 |
|
|
|
|
|
- Growth |
(3.2)% |
|
14.0% |
(b) |
|
(a) On an organic basis |
|||||
(b) Excluding currency |
- Net revenues from smoke-free products accounted for 31.2% of total net revenues, or 30.4% on a pro forma basis
- Market share for heated tobacco units in IQOS markets, excluding the
U.S. , up by 1.1 points to 7.5% on a pro forma basis - Pro forma total IQOS users at quarter-end estimated at approximately 17.9 million (up by more than one million versus
December 31, 2021 ), of which 12.7 million had switched to IQOS and stopped smoking. As of year-end 2021, total IQOS users inRussia andUkraine were estimated at approximately 4.8 million - Declared regular quarterly dividend of
$1.25 per common share, representing an annualized rate of$5.00 - Repurchased approximately 2.0 million shares of common stock for
$199 million , at an average price of$100.95 per share, representing total repurchases of approximately$1 billion since the start of the current three-year program inJuly 2021 - On
March 11, 2022 , theU.S. Food and Drug Administration (FDA) authorized the marketing of the IQOS 3 tobacco heating system as a Modified Risk Tobacco Product
"The recent months have been an extremely challenging time for many in the PMI family given the war in
"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
"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
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
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
|
|
Quarters Ended |
||||||
|
|
2022 |
|
2021 |
|
Currency |
|
Var. excl. |
Reported Diluted EPS |
|
|
|
|
11.6% |
|||
Asset impairment and exit costs |
|
— |
0.02 |
|
|
|||
Charges related to the war in |
|
0.03 |
— |
|
|
|||
Fair value adj. for equity security investments (1) |
|
0.03 |
— |
|
|
|||
Adjusted Diluted EPS |
|
|
|
|
14.0% |
|||
Less: Net earnings attributable to |
|
0.10 |
0.13 |
(0.02) |
|
|||
Pro Forma Adjusted Diluted EPS |
|
|
|
|
16.0% |
1) Reflects the adjustment resulting from share price movements in PMI's investments in |
2022 FULL-YEAR FORECAST
|
Full-Year |
|||||||||
|
2022 |
|
2021 |
|
Growth |
|||||
|
|
|
|
|
|
|
|
|
|
|
Reported Diluted EPS |
|
- |
|
|
|
|
|
|
|
|
Asset impairment and exit costs |
— |
|
0.12 |
|
|
|
|
|||
Charges related to the war in |
0.03 |
|
— |
|
|
|
|
|||
|
— |
|
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 |
|
- |
|
|
|
|
|
|
|
|
Less: Net earnings attributable to |
0.10 |
|
0.60 |
|
|
|
|
|||
Pro Forma Adjusted Diluted EPS |
|
- |
|
|
|
|
|
|
|
|
Less: Pro Forma Currency |
(0.63) |
|
|
|
|
|
|
|||
Pro Forma Adjusted Diluted EPS, ex-currency |
|
- |
|
|
|
|
9% |
- |
11% |
1) Reflects the adjustment resulting from share price movements in PMI's investments in |
Reported diluted EPS forecast to be in a range of
2022 Full-Year Forecast Assumptions
This forecast assumes:
- The contribution of the company's operations in
Russia andUkraine for the first quarter of 2022 only, with no further contribution as ofApril 1, 2022 (note: pro forma assumptions exclude the contribution ofRussia andUkraine for the entire year); - No asset impairment costs or further charges related to the company's operations in
Russia orUkraine ; - Continuing uncertainty over the pace of the ongoing recovery from pandemic-related effects on the operating environment, notably in select geographies in PMI's South &
Southeast Asia Region ; - A continued gradual improvement in PMI's duty-free business outside
Asia , with no meaningful recovery inAsia ; - An improving IQOS device supply situation, with some remaining uncertainty on the timing of full IQOS availability;
- The impact on TEREA production capacity build-up of the decision to cancel manufacturing plans in
Russia ; - A pro forma estimated total international industry volume change, excluding
China and theU.S. , of approximately -1% to flat; - A pro forma total cigarette and heated tobacco unit shipment volume change for PMI of approximately flat to +1%;
- Pro forma heated tobacco unit shipment volume of 88 to 92 billion units (excluding 4.7 billion units in
Russia andUkraine during the first quarter of 2022), compared to pro forma shipment volume of 73.5 billion units in 2021; - Pro forma adjusted net revenue growth of approximately 4.5% to 6.5% on an organic basis (compared to 2021 pro forma adjusted net revenues of
$29.2 billion ), which includes the adverse full-year impact of moving to highly inflationary accounting inTurkey effectiveApril 1st (discussed on page 7) of approximately 0.5 points; - A pro forma adjusted operating income margin change of flat to +100 basis points on an organic basis, primarily reflecting:
- the continued favorable product mix shift from cigarettes to smoke-free products, coupled with the benefit of further operating leverage and accelerated operating efficiencies;
- the expectation of a lower gross margin primarily due to:
- the significant growth in IQOS device volumes (notably in the first-half) as device supply constraints ease, reflecting the replenishment of channel inventories for user acquisition and supply for the accelerated device replacement cycle driven by ILUMA;
- the higher initial cost of IQOS ILUMA devices and initial weight and cost of TEREA consumables, which are expected to reduce over time, as with previous innovations;
- higher logistics costs, including costs related to the use of air freight to support: (i) the strong up-take of IQOS ILUMA and TEREA consumables in
Japan , and (ii) the re-sourcing of select cigarette brands forJapan due to the war inUkraine ; - investments to grow production capacity across PMI's smoke-free platforms; and
- increased inflation in raw material and energy prices, and additional supply chain costs due to war-related disruptions;
- continued commercial reinvestment to support our growing portfolio of smoke-free alternatives;
- Other category net revenues of around
$350 million (including smoking cessation products), with an operating loss of around$150 million , primarily due to:- the amortization of intangibles related to acquisitions;
- investments in research and development; and
- expenses related to employee retention programs;
- Operating cash flow of around
$10 billion at prevailing exchange rates and subject to year-end working capital requirements; - Capital expenditures of approximately
$1.0 billion ; - An effective tax rate, excluding discrete tax events, of 21% to 22%;
- The impact on diluted EPS of first-quarter 2022 share repurchases; the impact of potential further 2022 share repurchases is not included in the forecast; and
- Pro forma second-quarter adjusted diluted EPS of
$1.19 to$1.24 , including an unfavorable currency impact of around$0.15 per share, reflecting:- Low single-digit pro forma net revenue growth, on an organic basis, notably including:
- an estimated two percentage point drag due to the delayed timing of shipments to
Japan , reflecting a temporary depletion of inventories (primarily due to the re-sourcing of supply chain flows driven by prevailing global disruptions in various materials and logistics services, as well as the effects of the war inUkraine ); - the adverse impact of the shift to hyperinflationary accounting in
Turkey ; and - the reversal of certain first-quarter 2022 timing benefits;
- an estimated two percentage point drag due to the delayed timing of shipments to
- A further contraction in pro forma adjusted operating income margin, on an organic basis, mainly due to:
- the adverse margin impact of the timing of shipments to
Japan , noted above for second-quarter net revenues; - the disproportionate impact of higher IQOS device volume; and
- the highest expected quarterly increase in air freight costs for the year.
- the adverse margin impact of the timing of shipments to
- Low single-digit pro forma net revenue growth, on an organic basis, notably including:
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
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
Since the onset of the war in
On
In 2021,
On
- the discontinuation of a number of cigarette products offered in the market (representing approximately one-quarter of the company's domestic cigarette SKUs, including
Marlboro andParliament SKUs) and the reduction of its manufacturing activities accordingly; - the suspension of its marketing activities in the country;
- the cancellation of all product launches planned for 2022 in the market, including the launch of its flagship heated tobacco product IQOS ILUMA, originally planned for
March 2022 ; and - the cancellation of its plans to manufacture TEREA heated tobacco units for IQOS ILUMA in
Russia (with an eventual annualized capacity of more than 20 billion units) and the related ongoing investment of$150 million .
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
In 2021,
IQOS 3 MRTP Authorization
On
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 IQOS System heats tobacco but does not burn it.
- This significantly reduces the production of harmful and potentially harmful chemicals.
- Scientific studies have shown that switching completely from conventional cigarettes to the IQOS system significantly reduces your body’s exposure to harmful or potentially harmful chemicals.
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
Following the categorization of
Conference Call
A conference call, hosted by
CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE
PMI Shipment Volume by Region |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
|
|
|
||
|
|
36,444 |
36,769 |
(0.9)% |
||
|
|
18,514 |
19,966 |
(7.3)% |
||
|
|
29,471 |
27,642 |
6.6% |
||
South & |
|
37,461 |
34,888 |
7.4% |
||
|
|
11,553 |
11,362 |
1.7% |
||
|
|
14,795 |
14,885 |
(0.6)% |
||
Total PMI |
|
148,238 |
145,512 |
1.9% |
||
|
|
|
|
|
||
Heated Tobacco Units |
|
|
|
|
||
|
|
8,566 |
6,426 |
33.3% |
||
|
|
5,866 |
5,635 |
4.1% |
||
|
|
897 |
396 |
+100% |
||
South & |
|
94 |
33 |
+100% |
||
|
|
9,288 |
9,139 |
1.6% |
||
|
|
108 |
105 |
2.9% |
||
Total PMI |
|
24,819 |
21,734 |
14.2% |
||
|
|
|
|
|
||
Cigarettes and Heated Tobacco Units |
|
|
|
|
||
|
|
45,010 |
43,195 |
4.2% |
||
|
|
24,380 |
25,601 |
(4.8)% |
||
|
|
30,368 |
28,038 |
8.3% |
||
South & |
|
37,555 |
34,921 |
7.5% |
||
|
|
20,841 |
20,501 |
1.7% |
||
|
|
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:
- the EU, reflecting higher heated tobacco unit shipment volume across the Region (primarily in
Germany ,Italy andPoland ), partly offset by lower cigarette shipment volume (mainly inGermany andItaly , partially offset byPoland andSpain ); Middle East &Africa , mainly reflecting higher cigarette shipment volume, primarily inEgypt and PMI Duty Free, partly offset byAlgeria ;- South &
Southeast Asia , primarily reflecting higher cigarette shipment volume, mainly inIndonesia andthe Philippines ; and East Asia &Australia , reflecting higher cigarette and heated tobacco unit shipment volume, primarily inJapan ;
partly offset by
Eastern Europe , reflecting lower cigarette shipment volume, primarily inRussia , partly offset by higher heated tobacco unit shipment volume, mainly inUkraine andSoutheast Europe , partially offset byRussia ; andAmericas , primarily reflecting lower cigarette shipment volume, mainly inArgentina , partly offset byBrazil .
On a pro forma basis, PMI's total shipment volume increased by 4.9%, reflecting an increase of 4.5% in the
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:
- A net favorable impact of 2.1 billion cigarettes, mainly driven by
Japan , PMI Duty Free andSpain ; partly offset by - A net unfavorable impact of 0.5 billion heated tobacco units, primarily due to
Russia .
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 |
|
|
|
|
||
|
|
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% |
||
|
|
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
PMI's cigarette shipment volume of the following brands increased:
Marlboro , mainly driven by PMI Duty Free,the Philippines ,Russia ,Spain andTurkey , partly offset byAlgeria andItaly ;- Chesterfield, primarily driven by
the Philippines andRussia ; - Sampoerna A in
Indonesia , primarily driven by premium A Mild; Parliament , mainly driven byTurkey , partly offset bySaudi Arabia ; and- Dji Sam Soe in
Indonesia , primarily driven by Dji Sam Soe Magnum Mild.
PMI's cigarette shipment volume of the following brands decreased:
- L&M, primarily due to
Germany andTurkey , partly offset byEgypt and the GCC; - Philip Morris, mainly due to
Russia , partly offset byJapan ; - Lark, primarily due to
Japan andTurkey ; and - "Others," mainly due to: mid-price Fortune (
Philippines ), Sampoerna Hijau (Indonesia ) and Sampoerna U (Indonesia ); and low-priceBond Street (primarily due toRussia ).
On a pro forma basis, PMI's cigarette shipment volume increased by: 5.1% for
International Share of Market
PMI's pro forma total international market share (excluding
- Market share for heated tobacco units of 3.5%, up by 0.6 points; and
- Market share for cigarettes of 23.3%, up by 0.2 points.
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
CONSOLIDATED FINANCIAL SUMMARY
Financial Summary - Quarters Ended |
|
|
|
|
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 |
|
|
(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 ( |
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
During the quarter,
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
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 |
|
|
|
|
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
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
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 |
|
|
|
|
|||||
|
|
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:
Italy , up by 5.3%, mainly reflecting the impact on adult smoker average daily consumption of the easing of pandemic-related measures; andPoland , up by 18.7%, primarily reflecting a lower estimated prevalence of illicit trade and higher border sales due to the easing of pandemic-related measures;
partly offset by
Germany , down by 7.5%, primarily reflecting the impact of excise tax-driven price increases and higher cross-border (non-domestic) purchases due to the easing of pandemic-related measures.
PMI's total shipment volume increased by 4.2% to 45.0 billion units, mainly driven by:
Poland , up by 20.7%, mainly reflecting the higher total market, as well as a higher market share driven by heated tobacco units; andSpain , up by 23.1%, or by 1.7% excluding the net favorable impact of estimated distributor inventory movements, reflecting a higher total market, partly offset by a lower market share due to cigarettes.
Excluding the net unfavorable impact of estimated distributor inventory movements (notably in
Financial Summary - Quarters Ended |
|
|
|
|
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 |
|
|
(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 ( |
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
Operating income decreased by 21.8%, excluding currency and acquisitions, notably reflecting charges related to the war in
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
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
In the quarter, the pro forma estimated total market in
Kazakhstan , up by 6.2%, primarily reflecting a favorable comparison versus the prior year period due to the temporary supply chain impact of the introduction, inJanuary 2021 , of certain mandatory requirements related to the sale of tobacco products; andSoutheast Europe , up by 10.0%, mainly reflecting increased in-bound travel and the impact on adult smoker average daily consumption of the easing of pandemic-related measures.
The company's reported shipment volume, presented in the table below, includes
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 |
|
24,380 |
25,601 |
(4.8)% |
PMI's total shipment volume decreased by 4.8% to 24.4 billion units, primarily due to:
Russia , down by 9.9%, primarily reflecting a lower total market.
During the quarter,
Financial Summary - Quarters Ended |
|
|
|
|
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
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
Algeria , down by 37.5%, or by 8.2% excluding the net unfavorable impact of estimated trade inventory movements, primarily reflecting industry supply chain disruptions; andTurkey , down by 6.8%, mainly reflecting a higher estimated prevalence of illicit trade, partly offset by the impact on adult smoker average daily consumption of the easing of pandemic-related measures, coupled with increased in-bound tourism;
partly offset by
- International Duty Free, up by 40.2%, reflecting the impact of reduced government travel restrictions and increased passenger traffic in certain geographies.
PMI Shipment Volume |
|
First-Quarter |
||||
(million units) |
|
2022 |
2021 |
Change |
||
Cigarettes |
|
29,471 |
27,642 |
6.6% |
||
Heated Tobacco Units |
|
897 |
396 |
+100% |
||
Total |
|
30,368 |
28,038 |
8.3% |
PMI's total shipment volume increased by 8.3% to 30.4 billion units, notably driven by:
- PMI Duty Free, up by +100%, or by 50.8% excluding the net favorable impact of estimated distributor inventory movements, reflecting the higher total market and a higher market share; and
Egypt , up by 10.7%, primarily reflecting a higher market share, driven by cigarettes and heated tobacco units;
partly offset by
Algeria , down by 27.5%, mainly reflecting the lower total market, partly offset by a higher market share driven by cigarettes.
Excluding the net favorable impact of estimated distributor inventory movements, PMI's total in-market sales volume increased by 4.3%.
SOUTH &
Financial Summary - Quarters Ended |
|
|
|
|
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
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
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 &
India , up by 7.2%, primarily reflecting a favorable comparison versus the prior year period, during which pandemic-related restrictions impacted the movement of certain products, including tobacco;Indonesia , up by 5.8%, mainly reflecting impact on adult smoker consumption of the easing of pandemic-related measures, which drove growth in the tax-advantaged 'below tier one' segment; andthe Philippines , up by 19.2%, primarily reflecting the net favorable impact of estimated trade inventory movements related to first-quarter 2022 price increases;
partly offset by
Bangladesh , down by 12.9%, mainly reflecting the impact of pandemic-related restrictions on mobility duringFebruary 2022 ; andThailand , down by 13.3%, primarily reflecting the impact of excise tax-driven price increases.
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 & |
|
37,555 |
34,921 |
7.5% |
PMI's total shipment volume increased by 7.5% to 37.6 billion units, mainly driven by:
Indonesia , up by 5.2%, primarily reflecting the higher total market, partly offset by a lower market share (mainly due to adult smoker down-trading to the 'below tier one' segment as a result of significantly lower retail prices, partly offset by share growth for PMI's premium and hand-rolled portfolio); andthe Philippines , up by 18.4%, primarily reflecting the higher total market.
Financial Summary - Quarters Ended |
|
|
|
|
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
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
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
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in
Japan , down by 3.2%, primarily reflecting the impact of theOctober 2021 excise tax-driven price increase.
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 |
|
20,841 |
20,501 |
1.7% |
PMI's total shipment volume increased by 1.7% to 20.8 billion units, mainly driven by:
Japan , up by 3.2%. Excluding the net favorable impact of estimated distributor inventory movements, total in-market sales volume was essentially stable.
Excluding the net favorable impact of estimated distributor inventory movements, PMI's total in-market sales volume decreased by 1.0%.
Financial Summary - Quarters Ended |
|
|
|
|
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
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
Canada , down by 14.3%, notably reflecting the impact of price increases and out-switching from cigarettes to e-vapor products; andMexico , down by 3.8%. Excluding the net unfavorable impact of estimated trade inventory movements, the total market increased by 1.4%, mainly driven by the impact on adult smoker average daily consumption of the easing of pandemic-related measures, coupled with the impact of increased in-bound tourism;
partly offset by
Brazil , up by 4.1%, primarily reflecting a lower estimated prevalence of illicit trade.
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 |
|
14,903 |
14,990 |
(0.6)% |
PMI's total shipment volume decreased by 0.6% to 14.9 billion units, mainly due to:
Argentina , down by 7.1%, primarily reflecting a lower market share due to adult smoker down-trading to ultra-low-price brands produced by local manufacturers;
partly offset by
Brazil , up by 5.4%, mainly reflecting the higher total market and a higher market share driven by Chesterfield.
OTHER
In the third quarter of 2021, PMI acquired
Financial Summary - Quarters Ended |
|
|
|
|
Change Fav./(Unfav.) |
|
Variance Fav./(Unfav.) |
|||||||||||||||||||||
|
2022 |
|
2021 |
|
Total |
|
Excl. |
|
Total |
|
Cur- |
|
Acqui- |
|
Price |
|
Vol/ |
|
Cost/ |
|||||||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Revenues |
|
$ |
66 |
|
$ |
— |
|
— |
% |
— |
% |
|
66 |
|
— |
66 |
|
— |
— |
— |
|
|||||||
|
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|
|||||||||||||||
Operating Income / (Loss) |
|
$ |
(31 |
) |
$ |
— |
|
— |
% |
— |
% |
|
(31 |
) |
— |
(24 |
) |
— |
— |
(7 |
) |
|||||||
Adjusted Operating Income / (Loss) |
|
$ |
(31 |
) |
$ |
— |
|
— |
% |
— |
% |
|
(31 |
) |
— |
(24 |
) |
— |
— |
(7 |
) |
|||||||
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|||||||||||||||
Adjusted Operating Income / (Loss) Margin |
|
|
(47.0 |
)% |
|
n/a |
|
— |
|
— |
|
|
|
|
|
|
|
|
During the quarter, PMI recorded net revenues of
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
In addition, PMI’s business risks also include risks and uncertainties related to PMI’s acquisitions of
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
Key Terms, Definitions and Explanatory Notes
General
- "PMI" refers to
Philip Morris International Inc. and its subsidiaries. Trademarks and service marks that are the registered property of, or licensed by, the subsidiaries of PMI, are italicized. - Comparisons are made to the same prior-year period unless otherwise stated.
- References to total industry, total market, PMI shipment volume and PMI market share performance reflect cigarettes and heated tobacco units, unless otherwise stated.
- As of the first quarter of 2022, total industry volume, PMI in-market sales volume and PMI market share for the following geographies include the cigarillo category in
Japan : the total international market,East Asia &Australia Region , and Japanese domestic market. - References to total international market, defined as worldwide cigarette and heated tobacco unit volume excluding the
U.S. , total industry, total market and market shares are PMI estimates for tax-paid products based on the latest available data from a number of internal and external sources and may, in defined instances, excludethe People's Republic of China and/or PMI's duty free business. - 2021 and 2022 estimates for total industry volume and market share in certain geographies reflect limitations on the availability and accuracy of industry data during pandemic-related restrictions.
- First-quarter 2022 estimates for total industry volume and market share in
the Philippines reflect limitations on the availability and accuracy of industry data. - "Combustible products" is the term PMI uses to refer to cigarettes and OTP, combined.
- In-market sales, or "IMS," is defined as sales to the retail channel, depending on the market and distribution model.
- "Total shipment volume" is defined as the combined total of cigarette shipment volume and heated tobacco unit shipment volume.
- "
Americas " refers to the formerLatin America &Canada segment, which was renamed as theAmericas segment as of the third quarter of 2021. References to "Americas " may, in defined instances, exclude theU.S. - "
North Africa " is defined asAlgeria ,Egypt ,Libya ,Morocco andTunisia . - "The GCC" (
Gulf Cooperation Council ) is defined asBahrain ,Kuwait ,Oman ,Qatar ,Saudi Arabia and theUnited Arab Emirates (UAE ). - "
Southeast Europe " is defined asAlbania ,Bosnia & Herzegovina ,Kosovo ,Montenegro ,North Macedonia andSerbia . - In the third quarter of 2021, PMI acquired
Fertin Pharma A/S , Vectura Group plc. andOtiTopic, Inc. OnMarch 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. - Following the deconsolidation of PMI's Canadian subsidiary,
Rothmans, Benson & Hedges, Inc. (RBH) onMarch 22, 2019 , PMI continues to report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owner. These include HEETS, Next, Philip Morris and Rooftop. - From time to time, PMI’s shipment volumes are subject to the impact of distributor inventory movements, and estimated total industry/market volumes are subject to the impact of inventory movements in various trade channels that include estimated trade inventory movements of PMI’s competitors arising from market-specific factors that significantly distort reported volume disclosures. Such factors may include changes to the manufacturing supply chain, shipment methods, consumer demand, timing of excise tax increases or other influences that may affect the timing of sales to customers. In such instances, in addition to reviewing PMI shipment volumes and certain estimated total industry/market volumes on a reported basis, management reviews these measures on an adjusted basis that excludes the impact of distributor and/or estimated trade inventory movements. Management also believes that disclosing PMI shipment volumes and estimated total industry/market volumes in such circumstances on a basis that excludes the impact of distributor and/or estimated trade inventory movements, such as on an IMS basis, improves the comparability of performance and trends for these measures over different reporting periods.
Financial
- Net revenues related to combustible products refer to the operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes. PMI recognizes revenue when control is transferred to the customer, typically either upon shipment or delivery of goods.
- Net revenues related to RRPs represent the sale of heated tobacco units, heat-not-burn devices and related accessories, and other nicotine-containing products, primarily e-vapor and oral nicotine products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes. PMI recognizes revenue when control is transferred to the customer, typically either upon shipment or delivery of goods.
- Net revenues in the Other category primarily consist of operating revenues generated from the sale of inhaled therapeutics and oral and intra-oral delivery systems that are included in the operating results of PMI's new Wellness and Healthcare business, Vectura Fertin Pharma.
- Adjusted net revenues exclude the impact related to the
Saudi Arabia customs assessments. - "Cost of sales" consists principally of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs; shipping and handling costs; and the cost of devices produced by third-party electronics manufacturing service providers. Estimated costs associated with device warranty programs are generally provided for in cost of sales in the period the related revenues are recognized.
- "Marketing, administration and research costs" include the costs of marketing and selling our products, other costs generally not related to the manufacture of our products (including general corporate expenses), and costs incurred to develop new products. The most significant components of our marketing, administration and research costs are marketing and sales expenses and general and administrative expenses.
- "Cost/Other" in the Consolidated Financial Summary table of total PMI and the six geographical segments of this release reflects the currency-neutral variances of: cost of sales (excluding the volume/mix cost component); marketing, administration and research costs (including asset impairment and exit costs); and amortization of intangibles. “Cost/Other” also includes the currency-neutral net revenue variance, unrelated to volume/mix and price components, attributable to: fees for certain distribution rights billed to customers in certain markets in the
ME&A Region and theSaudi Arabia customs assessment net revenue adjustment. - "Adjusted Operating Income Margin" is calculated as adjusted operating income, divided by adjusted net revenues.
- "Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization and equity (income)/loss in unconsolidated subsidiaries, excluding asset impairment and exit costs, and unusual items.
- "Net debt" is defined as total debt, less cash and cash equivalents.
- Figures and comparisons presented on a pro forma basis exclude PMI’s operations in
Russia andUkraine . - Growth rates presented on an organic basis reflect currency-neutral adjusted results, excluding acquisitions.
- Management reviews net revenues, operating income, operating income margin, operating cash flow and earnings per share, or "EPS," on an adjusted basis, which may exclude the impact of currency and other items such as acquisitions, asset impairment and exit costs, tax items and other special items. Currency-neutral and organic growth rates reflect the way management views underlying performance for these measures. PMI believes that such measures provide useful insight into underlying business trends and results. Management reviews these measures because they exclude changes in currency exchange rates and other factors that may distort underlying business trends, thereby improving the comparability of PMI’s business performance between reporting periods. Furthermore, PMI uses several of these measures in its management compensation program to promote internal fairness and a disciplined assessment of performance against company targets. PMI discloses these measures to enable investors to view the business through the eyes of management.
- Non-GAAP measures used in this release should neither be considered in isolation nor as a substitute for the financial measures prepared in accordance with
U.S. GAAP. For a reconciliation of non-GAAP measures to the most directly comparableU.S. GAAP measures, see the relevant schedules provided with this press release. U.S. GAAP Treatment of a country as a Highly Inflationary Economy. Following the categorization of a country by theInternational Practices Task Force of theCenter for Audit Quality as having a three-year cumulative inflation rate greater than 100%, the country is considered highly inflationary in accordance withU.S. GAAP. For such countries, PMI accounts for the operations of its local affiliates as highly inflationary, and to treat theU.S. dollar as the functional currency of the affiliates. Such treatment was effectiveJuly 1, 2018 , forArgentina , andApril 1, 2022 , forTurkey .- "Fair value adjustment for equity security investments" reflects the adjustment resulting from share price movements in passive investments for publicly traded entities that are not controlled or influenced by PMI. Under
U.S. GAAP, such adjustments are required, sinceJanuary 1, 2018 , to be reflected directly in the income statement.
Reduced-Risk Products
- Reduced-risk products (“RRPs”) is the term PMI uses to refer to products that present, are likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continuing smoking. PMI has a range of RRPs in various stages of development, scientific assessment and commercialization. PMI's RRPs are smoke-free products that contain and/or generate far lower quantities of harmful and potentially harmful constituents than found in cigarette smoke.
- "Heated tobacco units," or "HTUs," is the term PMI uses to refer to heated tobacco consumables, which include the company's HEETS, HEETS Creations, HEETS Dimensions, HEETS Marlboro and HEETS FROM
MARLBORO (defined collectively as HEETS),Marlboro Dimensions,Marlboro HeatSticks, Parliament HeatSticks and TEREA, as well as the KT&G-licensed brands, Fiit and Miix (outside ofSouth Korea ). - Market share for HTUs is defined as the total sales volume for HTUs as a percentage of the total estimated sales volume for cigarettes and HTUs.
- Unless otherwise stated, all references to IQOS are to PMI's Platform 1 IQOS devices and heated tobacco consumables.
- IQOS heat-not-burn devices are precisely controlled heating devices into which a specially designed and proprietary tobacco units are inserted and heated to generate an aerosol.
- "PMI heat-not-burn products" include licensed KT&G heat-not-burn products.
- "PMI HTUs" include licensed KT&G HTUs.
- “Total IQOS users” is defined as the estimated number of Legal Age (minimum 18 years) users of PMI heat-not-burn products, for which PMI HTUs represented at least a portion of their daily tobacco consumption over the past seven days.
The estimated number of adults who have "switched to IQOS and stopped smoking" reflects:- for markets where there are no heat-not-burn products other than PMI heat-not-burn products: daily individual consumption of PMI HTUs represents the totality of their daily tobacco consumption in the past seven days;
- for markets where PMI heat-not-burn products are among other heat-not-burn products: daily individual consumption of HTUs represents the totality of their daily tobacco consumption in the past seven days, of which at least 70% is PMI HTUs.
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
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Appendix 1 |
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Key Market Data |
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Quarters Ended |
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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 |
|
HTU |
|
Total |
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HTU |
|||||||||||||||||||||
|
2022 |
2021 |
% |
|
2022 |
2021 |
% |
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2022 |
2021 |
% |
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2022 |
2021 |
% |
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2022 |
2021 |
pp |
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2022 |
2021 |
pp |
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Total (1) |
|
563.0 |
556.6 |
1.1 |
|
|
173.1 |
167.2 |
3.5 |
|
|
148.2 |
145.5 |
1.9 |
|
|
24.8 |
21.7 |
14.2 |
|
|
26.7 |
26.0 |
0.7 |
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3.5 |
2.9 |
0.6 |
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|||||||||||
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7.8 |
8.2 |
(4.3 |
) |
|
3.5 |
3.8 |
(6.9 |
) |
|
3.5 |
3.7 |
(6.8 |
) |
|
0.1 |
0.1 |
(14.2 |
) |
|
45.0 |
43.6 |
1.4 |
|
|
0.7 |
0.6 |
0.1 |
|
|
|
|
16.1 |
17.4 |
(7.5 |
) |
|
6.8 |
7.1 |
(4.2 |
) |
|
5.9 |
6.5 |
(9.6 |
) |
|
0.9 |
0.6 |
52.5 |
|
|
42.3 |
40.8 |
1.5 |
|
|
5.9 |
3.6 |
2.3 |
|
|
|
|
16.8 |
15.9 |
5.3 |
|
|
9.7 |
9.6 |
1.0 |
|
|
7.1 |
7.5 |
(5.0 |
) |
|
2.6 |
2.2 |
21.6 |
|
|
54.2 |
52.8 |
1.4 |
|
|
14.8 |
11.3 |
3.5 |
|
|
|
|
12.8 |
10.8 |
18.7 |
|
|
4.8 |
4.0 |
20.7 |
|
|
3.8 |
3.4 |
12.9 |
|
|
1.0 |
0.6 |
65.7 |
|
|
37.3 |
36.7 |
0.6 |
|
|
7.6 |
5.4 |
2.2 |
|
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|
|
10.0 |
9.6 |
4.1 |
|
|
3.3 |
2.7 |
23.1 |
|
|
3.2 |
2.6 |
21.4 |
|
|
0.2 |
0.1 |
67.2 |
|
|
30.4 |
31.1 |
(0.7 |
) |
|
1.5 |
1.2 |
0.3 |
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|||||||||||
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n/a |
49.1 |
n/a |
|
|
14.1 |
15.7 |
(9.9 |
) |
|
10.8 |
12.1 |
(11.0 |
) |
|
3.4 |
3.6 |
(6.2 |
) |
|
n/a |
31.0 |
n/a |
|
|
n/a |
7.7 |
n/a |
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5.2 |
5.5 |
(5.4 |
) |
|
2.1 |
2.2 |
(4.8 |
) |
|
2.1 |
2.2 |
(3.5 |
) |
|
— |
— |
— |
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41.1 |
42.3 |
(1.2 |
) |
|
0.8 |
0.8 |
— |
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23.6 |
25.3 |
(6.8 |
) |
|
11.0 |
11.0 |
0.6 |
|
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11.0 |
11.0 |
0.6 |
|
|
— |
— |
— |
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46.9 |
43.4 |
3.5 |
|
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— |
— |
— |
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South & |
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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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|
15.6 |
13.1 |
19.2 |
|
|
9.7 |
8.2 |
18.4 |
|
|
9.6 |
8.1 |
18.3 |
|
|
— |
— |
— |
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62.0 |
62.4 |
(0.4 |
) |
|
0.3 |
0.2 |
0.1 |
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2.2 |
2.4 |
(7.5 |
) |
|
0.8 |
0.8 |
(4.1 |
) |
|
0.8 |
0.8 |
(4.1 |
) |
|
— |
— |
— |
|
|
33.9 |
32.7 |
1.2 |
|
|
— |
— |
— |
|
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|
|
34.4 |
35.6 |
(3.2 |
) |
|
14.2 |
13.8 |
3.2 |
|
|
6.1 |
5.9 |
4.5 |
|
|
8.1 |
7.9 |
2.3 |
|
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37.2 |
36.1 |
1.1 |
|
|
22.9 |
21.5 |
1.4 |
|
|
|
|
16.8 |
16.8 |
0.2 |
|
|
3.3 |
3.4 |
(2.9 |
) |
|
2.2 |
2.2 |
(1.6 |
) |
|
1.1 |
1.1 |
(5.4 |
) |
|
19.6 |
20.1 |
(0.5 |
) |
|
6.5 |
6.8 |
(0.3 |
) |
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|||||||||||
|
|
7.7 |
7.7 |
(0.2 |
) |
|
4.9 |
5.3 |
(7.1 |
) |
|
4.9 |
5.3 |
(7.1 |
) |
|
— |
— |
— |
|
|
63.5 |
68.2 |
(4.7 |
) |
|
— |
— |
— |
|
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|
|
6.5 |
6.8 |
(3.8 |
) |
|
4.1 |
4.0 |
0.8 |
|
|
4.0 |
4.0 |
0.8 |
|
|
— |
— |
— |
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|
62.5 |
59.6 |
2.9 |
|
|
0.4 |
0.3 |
0.1 |
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||||||
(1) Total market and market share estimates exclude |
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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 |
||
|
||||||||
Reconciliation of Non-GAAP Measures |
||||||||
PMI Shipment Volume Adjusted for the Impact of |
||||||||
(in million units) / (Unaudited) |
||||||||
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|
Year Ended |
||
|
|
Quarters Ended |
|
|||||
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|
2022 |
|
2021 |
|
% Change |
|
2021 |
|
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||
Cigarettes |
|
|
|
|
|
|
||
Shipment Volume |
|
148,238 |
145,512 |
1.9% |
|
624,875 |
||
|
|
10,772 |
12,101 |
|
|
52,499 |
||
|
|
2,211 |
2,359 |
|
|
10,669 |
||
Pro Forma Shipment Volume |
|
135,255 |
131,052 |
3.2% |
|
561,707 |
||
|
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|
|
|
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||
Heated Tobacco Units |
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||
Shipment Volume |
|
24,819 |
21,734 |
14.2% |
|
94,976 |
||
|
|
3,359 |
3,582 |
|
|
16,309 |
||
|
|
1,383 |
1,193 |
|
|
5,168 |
||
Pro Forma Shipment Volume |
|
20,076 |
16,959 |
18.4% |
|
73,499 |
||
|
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|
|
|
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|
||
PMI |
|
|
|
|
|
|
||
Shipment Volume |
|
173,057 |
167,246 |
3.5% |
|
719,851 |
||
|
|
14,131 |
15,682 |
|
|
68,807 |
||
|
|
3,595 |
3,552 |
|
|
15,838 |
||
Pro Forma Shipment Volume |
|
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. |
|
|
|
|
Appendix 3 |
||
|
||||||
Reconciliation of Non-GAAP Measures |
||||||
Eastern Europe Shipment Volume Adjusted for the Impact of |
||||||
(in million units) / (Unaudited) |
||||||
|
|
|
|
|
||
|
|
Quarters Ended |
||||
|
|
2022 |
|
2021 |
|
% Change |
|
|
|
|
|
||
Cigarettes |
|
|
|
|
||
Shipment Volume |
|
18,514 |
19,966 |
(7.3)% |
||
|
|
10,772 |
12,101 |
|
||
|
|
2,211 |
2,359 |
|
||
Pro Forma Shipment Volume |
|
5,531 |
5,506 |
0.4% |
||
|
|
|
|
|
||
Heated Tobacco Units |
|
|
|
|
||
Shipment Volume |
|
5,866 |
5,635 |
4.1% |
||
|
|
3,359 |
3,582 |
|
||
|
|
1,383 |
1,193 |
|
||
Pro Forma Shipment Volume |
|
1,123 |
860 |
30.6% |
||
|
|
|
|
|
||
|
|
|
|
|
||
Shipment Volume |
|
24,380 |
25,601 |
(4.8)% |
||
|
|
14,131 |
15,682 |
|
||
|
|
3,595 |
3,552 |
|
||
Pro Forma Shipment Volume |
|
6,654 |
6,366 |
4.5% |
||
|
|
|
|
|
||
Note: Sum of product categories might not foot to total due to roundings. |
|
|
|
|
|
|
Schedule 1 |
|||
|
|||||
Diluted Earnings Per Share (EPS) |
|||||
($ in millions, except per share data) / (Unaudited) |
|||||
|
|
|
|||
Diluted EPS |
Quarters Ended |
||||
|
|||||
2022 Diluted Earnings Per Share (1) |
$ |
1.50 |
|
|
|
2021 Diluted Earnings Per Share (1) |
$ |
1.55 |
|
|
|
Change |
$ |
(0.05 |
) |
|
|
% Change |
|
(3.2 |
)% |
|
|
|
|
|
|||
Reconciliation: |
|
|
|||
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 |
|
(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 |
|
|
|
|
|
|
|||
(1) Basic and diluted EPS were calculated using the following (in millions): |
|||||
|
|
|
|||
|
Quarters Ended |
||||
|
|
||||
|
|
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 |
||||||||||
|
||||||||||||||
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 |
|
||||||||||||
|
|
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 |
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 |
|
0.03 |
|
|
— |
|
|
— |
|
|||||
Asset acquisition cost |
|
— |
|
|
— |
|
|
0.03 |
|
|||||
Equity investee ownership dilution |
|
— |
|
|
— |
|
|
(0.04 |
) |
|||||
|
|
— |
|
|
— |
|
|
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 |
|
|
||||||||||||
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 |
||||||
|
|
|
$ — |
|
|
|
|
|
|
(7.2)% |
(0.9)% |
(0.9)% |
456 |
(46) |
503 |
— |
503 |
|
|
|
492 |
|
(7.2)% |
2.3% |
2.3% |
929 |
(148) |
1,077 |
— |
1,077 |
|
|
|
780 |
|
19.1% |
38.1% |
38.1% |
1,118 |
(44) |
1,162 |
— |
1,162 |
|
South & |
|
1,171 |
|
(4.6)% |
(0.8)% |
(0.8)% |
601 |
(40) |
641 |
— |
641 |
|
|
|
648 |
|
(7.3)% |
(1.1)% |
(1.1)% |
416 |
(13) |
429 |
— |
429 |
|
|
|
422 |
|
(1.4)% |
1.6% |
1.6% |
|
|
|
$ — |
|
|
Total Combustible |
|
|
|
(2.4)% |
5.2% |
5.2% |
2022 |
|
Reduced-Risk Products |
|
2021 |
|
% Change |
||||||
|
|
|
|
|
|
|
|
|
|
25.4% |
34.0% |
33.6% |
270 |
(26) |
295 |
— |
295 |
|
|
|
304 |
|
(11.4)% |
(3.0)% |
(3.0)% |
62 |
(1) |
63 |
— |
63 |
|
|
|
21 |
|
+100% |
+100% |
+100% |
5 |
— |
5 |
— |
5 |
|
South & |
|
2 |
|
+100% |
+100% |
+100% |
803 |
(66) |
869 |
— |
869 |
|
|
|
824 |
|
(2.5)% |
5.5% |
5.5% |
8 |
— |
8 |
— |
8 |
|
|
|
12 |
|
(35.3)% |
(32.5)% |
(32.5)% |
|
|
|
|
|
|
Total RRPs |
|
|
|
10.7% |
19.0% |
18.8% |
2022 |
|
Other |
|
2021 |
|
% Change |
||||||
|
$ — |
|
|
$ — |
|
Other |
|
$ — |
|
—% |
—% |
—% |
2022 |
|
PMI |
|
2021 |
|
% Change |
||||||
|
|
|
|
|
|
|
|
|
|
3.5% |
10.6% |
10.5% |
726 |
(72) |
798 |
— |
798 |
|
|
|
796 |
|
(8.8)% |
0.3% |
0.3% |
991 |
(149) |
1,140 |
— |
1,140 |
|
|
|
801 |
|
23.7% |
42.3% |
42.3% |
1,123 |
(44) |
1,167 |
— |
1,167 |
|
South & |
|
1,173 |
|
(4.3)% |
(0.5)% |
(0.5)% |
1,404 |
(106) |
1,510 |
— |
1,510 |
|
|
|
1,472 |
|
(4.6)% |
2.6% |
2.6% |
424 |
(13) |
437 |
— |
437 |
|
|
|
434 |
|
(2.3)% |
0.7% |
0.7% |
66 |
— |
66 |
66 |
— |
|
Other |
|
— |
|
—% |
—% |
—% |
|
|
|
|
|
|
Total PMI |
|
|
|
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 - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 4 |
|
|
||||||||||||||||
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 |
|||||||||||
|
$ — |
|
|
|
|
|
|
|
|
|
$ — |
|
|
3.5% |
10.6% |
10.5% |
726 |
— |
726 |
(72) |
798 |
— |
798 |
|
|
|
796 |
— |
796 |
|
(8.8)% |
0.3% |
0.3% |
991 |
— |
991 |
(149) |
1,140 |
— |
1,140 |
|
|
|
801 |
— |
801 |
|
23.7% |
42.3% |
42.3% |
1,123 |
— |
1,123 |
(44) |
1,167 |
— |
1,167 |
|
South & |
|
1,173 |
— |
1,173 |
|
(4.3)% |
(0.5)% |
(0.5)% |
1,404 |
— |
1,404 |
(106) |
1,510 |
— |
1,510 |
|
|
|
1,472 |
— |
1,472 |
|
(4.6)% |
2.6% |
2.6% |
424 |
— |
424 |
(13) |
437 |
— |
437 |
|
|
|
434 |
— |
434 |
|
(2.3)% |
0.7% |
0.7% |
66 |
— |
66 |
— |
66 |
66 |
— |
|
Other |
|
— |
— |
— |
|
—% |
—% |
—% |
|
$ — |
|
|
|
|
|
|
Total PMI |
|
|
$ — |
|
|
2.1% |
9.9% |
9.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 5 |
|
|
||||||||||||||
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 |
||||||||
|
|
|
|
|
|
|
|
|
|
(2) |
|
2.5% |
12.2% |
12.3% |
144 |
(1) |
(60) |
204 |
— |
204 |
|
|
|
261 |
(2) |
|
(44.8)% |
(21.8)% |
(21.8)% |
521 |
|
(115) |
636 |
— |
636 |
|
|
|
335 |
(2) |
|
55.5% |
89.9% |
89.9% |
445 |
|
(25) |
470 |
— |
470 |
|
South & |
|
529 |
(2) |
|
(15.9)% |
(11.2)% |
(11.2)% |
571 |
|
(68) |
639 |
— |
639 |
|
|
|
695 |
(2) |
|
(17.8)% |
(8.1)% |
(8.1)% |
121 |
|
(2) |
123 |
— |
123 |
|
|
|
134 |
(2) |
|
(9.7)% |
(8.2)% |
(8.2)% |
(31) |
|
— |
(31) |
(24) |
(7) |
|
Other |
|
— |
|
|
—% |
—% |
—% |
|
|
|
|
|
|
|
Total PMI |
|
|
|
|
(4.2)% |
7.8% |
8.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes charges related to the war in |
||||||||||||||
(2) Includes asset impairment and exit costs: EU ( |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 6 |
|
|
|||||||||||||||||
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 |
|||||||||||
|
$ — |
|
|
|
|
|
|
|
|
|
|
|
|
|
1.9% |
11.5% |
11.7% |
144 |
(42) |
(1) |
186 |
(60) |
246 |
— |
246 |
|
|
|
261 |
(2) |
263 |
|
(29.3)% |
(6.5)% |
(6.5)% |
521 |
— |
|
521 |
(115) |
636 |
— |
636 |
|
|
|
335 |
(2) |
337 |
|
54.6% |
88.7% |
88.7% |
445 |
— |
|
445 |
(25) |
470 |
— |
470 |
|
South & |
|
529 |
(3) |
532 |
|
(16.4)% |
(11.7)% |
(11.7)% |
571 |
— |
|
571 |
(68) |
639 |
— |
639 |
|
|
|
695 |
(31) |
726 |
|
(21.3)% |
(12.0)% |
(12.0)% |
121 |
— |
|
121 |
(2) |
123 |
— |
123 |
|
|
|
134 |
(1) |
135 |
|
(10.4)% |
(8.9)% |
(8.9)% |
(31) |
— |
|
(31) |
— |
(31) |
(24) |
(7) |
|
Other |
|
— |
— |
— |
|
—% |
—% |
—% |
|
|
|
|
|
|
|
|
|
Total PMI |
|
|
|
|
|
(4.4)% |
7.5% |
8.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents charges related to the war in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 7 |
|
|
||||||||||||||||||||
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 |
||||||||||||||
|
|
50.7% |
|
|
|
52.0% |
|
|
|
52.1% |
|
|
|
|
|
51.5% |
|
(0.8) |
0.5 |
0.6 |
186 |
726 |
25.6% |
|
246 |
798 |
30.8% |
|
246 |
798 |
30.8% |
|
|
|
263 |
796 |
33.0% |
|
(7.4) |
(2.2) |
(2.2) |
521 |
991 |
52.6% |
|
636 |
1,140 |
55.8% |
|
636 |
1,140 |
55.8% |
|
|
|
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 & |
|
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% |
|
|
|
726 |
1,472 |
49.3% |
|
(8.6) |
(7.0) |
(7.0) |
121 |
424 |
28.5% |
|
123 |
437 |
28.1% |
|
123 |
437 |
28.1% |
|
|
|
135 |
434 |
31.1% |
|
(2.6) |
(3.0) |
(3.0) |
|
|
(47.0)% |
|
|
|
(47.0)% |
|
|
$ — |
—% |
|
Other |
|
$ — |
$ — |
—% |
|
— |
— |
— |
|
|
43.1% |
|
|
|
45.0% |
|
|
|
45.7% |
|
Total PMI |
|
|
|
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 |
||||||||
|
||||||||||
Condensed Statements of Earnings |
||||||||||
($ in millions, except per share data) / (Unaudited) |
||||||||||
|
|
|
|
|||||||
|
Quarters Ended |
|||||||||
|
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 |
(2) Quarter ended |
(3) Net Earnings and weighted-average shares used in the basic and diluted Earnings Per Share computations for the quarters ended |
|
|
|
|
Schedule 9 |
|||||||||
|
|||||||||||||
Reconciliation of Non-GAAP Measures |
|||||||||||||
Adjustments for the Impact of |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
|
|
||||||||
|
|
Quarters Ended |
|||||||||||
|
|
2022 |
|
2021 |
|
Currency |
|
Variance |
|||||
Adjusted Diluted EPS (1) |
|
$ |
1.56 |
$ |
1.57 |
$ |
(0.23 |
) |
14.0 |
% |
|||
Net Earnings attributable to |
|
|
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 |
||||
|
||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||
PMI & |
||||||||||
($ in millions) / (Unaudited) |
||||||||||
|
|
|
|
|
|
|
||||
|
|
Quarters Ended |
||||||||
|
|
2022 |
2021 |
Currency |
Acqui- |
Variance |
||||
PMI |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
Adjusted Net Revenues (1) |
|
|
|
|
|
9.0% |
||||
Net Revenues attributable to |
|
474 |
561 |
(63) |
— |
|
||||
Pro Forma Adjusted Net Revenues |
|
|
|
|
|
10.0% |
||||
|
|
|
|
|
|
|
||||
Adjusted Operating Income (2) |
|
|
|
|
|
8.3% |
||||
Operating Income attributable to |
|
181 |
227 |
(38) |
— |
|
||||
Pro Forma Adjusted Operating Income |
|
|
|
|
|
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 |
|
(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 |
||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
Adjusted Net Revenues (1) |
|
|
|
|
$ — |
0.3% |
||||
Net Revenues attributable to |
|
474 |
561 |
(63) |
— |
|
||||
Pro Forma Adjusted Net Revenues |
|
|
|
|
$ — |
11.1% |
||||
|
|
|
|
|
|
|
||||
Adjusted Operating Income (2) |
|
|
|
|
$ — |
(6.5)% |
||||
Operating Income attributable to |
|
181 |
227 |
(38) |
— |
|
||||
Corporate expenses apportioned to |
|
(61) |
(50) |
3 |
— |
|
||||
Pro Forma Adjusted Operating Income |
|
|
|
|
$ — |
6.1% |
||||
|
|
|
|
|
|
|
||||
Adjusted Operating Income Margin |
|
25.6% |
33.0% |
(5.2)pp |
—pp |
(2.2)pp |
||||
Adjusted Operating Income margin attributable to |
|
(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 |
|
|
|
|
|
|
|
|
Schedule 11 |
||||
|
||||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||||
Net Revenues by Product Category and Adjustments for the Impact of |
||||||||||||
($ in millions) / (Unaudited) |
||||||||||||
|
|
|
|
|
|
|
|
Year Ended |
||||
|
|
Quarters Ended |
|
|||||||||
|
|
2022 |
|
2021 |
|
Currency |
|
Acqui- |
|
Variance |
|
2021 |
Combustible Products |
|
|
|
|
|
|
|
|
||||
Adjusted Net Revenues |
|
|
|
|
$ — |
5.2% |
|
|
||||
Net Revenues attributable to |
|
269 |
308 |
(41) |
— |
|
|
1,399 |
||||
Pro Forma Adjusted Net Revenues |
|
|
|
|
$ — |
5.5% |
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Reduced-Risk Products |
|
|
|
|
|
|
|
|
||||
Adjusted Net Revenues |
|
|
|
|
|
18.8% |
|
|
||||
Net Revenues attributable to |
|
205 |
253 |
(23) |
— |
|
|
1,072 |
||||
Pro Forma Adjusted Net Revenues |
|
|
|
|
|
22.8% |
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
||||
Adjusted Net Revenues |
|
|
$ — |
$ — |
|
+100% |
|
|
||||
Net Revenues attributable to |
|
— |
— |
— |
— |
|
|
— |
||||
Pro Forma Adjusted Net Revenues |
|
|
$ — |
$ — |
|
+100% |
|
|
||||
|
|
|
|
|
|
|
|
|
||||
PMI |
|
|
|
|
|
|
|
|
||||
Adjusted Net Revenues |
|
|
|
|
|
9.0% |
|
|
||||
Net Revenues attributable to |
|
474 |
561 |
(63) |
— |
|
|
2,471 |
||||
Pro Forma Adjusted Net Revenues |
|
|
|
|
|
10.0% |
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Note: Sum of product categories might not foot to Total PMI due to roundings. "-" indicates amounts between - |
|
|
|
|
|
|
|
Schedule 12 |
|||||||||||
|
||||||||||||||||||
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 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|
2021 |
|||||
Reported Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|||||||
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 |
) |
|||||||
|
— |
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 |
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 |
|