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May 24, 2019
Philip Morris International Inc. Hosts Investor Day; Revises for Currency, and Narrows, 2016 Full-Year Reported Diluted EPS Forecast
“The core components of our business model hold great promise for our shareholders and our broader stakeholder base. We will continue to lead the combustible product category, leveraging the great strengths of our existing business to deliver against our current growth algorithm,” said André Calantzopoulos, Chief Executive Officer.
“We aim to become the undisputed leader of the Reduced-Risk Product category with the highly ambitious objective of having RRPs ultimately replace combustible products to the benefit of adult smokers, society and our company.”
“We are very well positioned to deliver against these two fundamental strategic engines given our innovation pipeline, commercial, regulatory and fiscal capabilities, manufacturing footprint and, above all, our organizational readiness and commitment.”
Presentations and Q&A sessions will be webcast live both days at www.pmi.com/2016InvestorDay
in a listen-only mode beginning on
2016 Full-Year Forecast
PMI revises for currency only, and narrows, its 2016 full-year
reported diluted EPS forecast to a range of
$4.53 to $4.58, at prevailing exchange rates, versus $4.42in 2015. Excluding an unfavorable currency impact, at prevailing exchange rates, of approximately $0.35for the full-year 2016, the diluted EPS range represents a projected increase of approximately 10.5% to 11.5% versus adjusted diluted EPS of $4.42in 2015.
- This forecast does not include any share repurchases in 2016.
The adjusted diluted EPS of
$4.42in 2015 is calculated as reported diluted EPS of $4.42, plus a $0.03per share charge related to asset impairment and exit costs, less a $0.03per share benefit related to discrete tax items.
- This forecast excludes the impact of any future acquisitions, unanticipated asset impairment and exit cost charges, future changes in currency exchange rates, and any unusual events. Factors described in the Forward-Looking and Cautionary Statements section at the end of this release represent continuing risks to these projections.
Presentations will be made by: André Calantzopoulos, Chief Executive
For the full-year 2016, PMI forecasts a total cigarette industry
volume decline of 2.0%-2.5%, excluding
Chinaand the U.S.; and
For the full-year 2016, PMI anticipates its cigarette shipment volume,
Chinaand the U.S., to decline in line with its August year-to-date decline of 3.9%.
Net Revenues, Operating Companies Income (“OCI”), EPS and Other Financial Measures:
- PMI expects its currency-neutral adjusted diluted EPS in the third quarter of 2016 to be flat to slightly up versus the third quarter of 2015;
- PMI continues to anticipate significant currency-neutral adjusted diluted EPS growth in the fourth quarter of 2016;
- PMI continues to anticipate a full-year 2016 pricing variance of around 6% of 2015 net revenues;
- Until 2018, PMI continues to target net revenues and adjusted OCI growth, excluding currency and acquisitions, of 4%-6% and 6%-8%, respectively, and, in the absence of share repurchases, annual currency-neutral EPS growth modestly above its target OCI results;
- For the full-year 2016, PMI expects its total cost base, including RRPs, to increase by approximately 1%, excluding currency;
- Going forward, PMI expects its total cost base, including incremental costs related to the continued roll-out of RRPs, to increase by approximately 1%-3%, excluding currency;
- For the full-year 2016, PMI expects to exceed its annual adjusted OCI growth target of 6%-8%, excluding currency;
- PMI envisages being able to revisit its currency-neutral net revenue and adjusted OCI growth targets once, as anticipated, RRPs become accretive to its bottom line in 2018;
PMI targets Regional annual average adjusted OCI growth, excluding
currency and RRPs, over the mid to long-term of:
- Mid single-digit in the EU;
- Low double-digits in EEMA;
- High single-digit in Asia; and
High single-digit in
Latin America& Canada;
To accelerate its RRP capacity, PMI increases its full-year 2016
anticipated capital expenditures by an
$100 million to $1.2 billionand anticipates cigarette-related capital expenditures to be at levels generally offset by depreciation;
Reflecting further incremental investment behind RRP capacity, PMI
anticipates capital expenditures of approximately
$1.5 billionin 2017; and
PMI expects its free cash flow in 2016 to be modestly above the
$6.9 billionlevel of 2015, calculated as net cash provided by operating activities of $7.9 billionless capital expenditures of $1.0 billion.
- PMI continues to expect RRPs to approach break-even OCI in 2017 and to start contributing positively to OCI in 2018;
PMI reconfirms its target of 30 to 50 billion units in incremental
volume from RRPs, net of switching of its existing adult consumers,
which would generate additional OCI of
$0.7 billion to $1.2 billionby 2020; and indicates its increasing confidence in reaching the upper end of this range;
- PMI announces that it is expanding its planned annual RRP production capacity to 50 billion units, up 20 billion units from its initial planned capacity of 30 billion units, by the end of 2017;
- PMI anticipates having approximately 7 billion units of heated tobacco stick capacity available for commercialization in 2016 and reaching installed annual capacity of approximately 15 billion units by the end of the year;
PMI announces that the estimated national market share of HeatSticks
Japanreached 3.3% August quarter-to-date;
- PMI confirms its plans to introduce iQOS into key cities in 20 markets by the end of 2016, and announces its expectation to be present in key cities in 30-35 markets by the end of 2017;
PMI remains on track to file with the U.S.
FDAits Modified Risk Tobacco Product Application by the end of 2016 and plans to file a Premarket Tobacco Application in early 2017;
- PMI is preparing to conduct a city test of its Platform 2 RRP in early 2017 and remains on track to conduct a city test of its Platform 3 RRP in the second half of 2017;
PMI announces the release of its first “next-generation” Platform 4
RRP, which leverages new proprietary vaporization technology (“MESH”),
and its plan to conduct a city test in the
United Kingdomat the end of 2016; and
- PMI introduces its new RRP product brand architecture, leveraging the leadership of iQOS to encompass all four RRP product platforms.
References to total international cigarette market, defined as worldwide
cigarette volume excluding
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 is further subject to other risks detailed from time to time in its
publicly filed documents, including the Form 10-Q for the quarter ended
PMI is the world’s leading international tobacco company, with six of
the world's top 15 international brands and products sold in more than
180 markets. In addition to the manufacture and sale of cigarettes,
Philip Morris International Inc.
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