Provides 2020 Full-Year Reported Diluted EPS Forecast of
2020 SECOND-QUARTER & YEAR-TO-DATE HIGHLIGHTS
2020 Second-Quarter
2020 Six Months Year-to-Date
"Despite a very challenging quarter due to the pandemic, we delivered results above our previously communicated expectations for both net revenues and reported diluted EPS," said
"This primarily reflected favorable sequential performance in June, with a strong industry volume recovery -- notably in the higher margin
"We are particularly pleased by the excellent performance of IQOS, for which we continued to grow share across a broad range of markets. This is testament to the strength and agility of our commercial model, which increasingly leverages our digital assets."
"While further volatility and restrictions are clearly possible, and the pandemic's economic impact is difficult to quantify, we have improving visibility on the trajectory of our business for the remainder of the year. We are therefore providing a full-year 2020 forecast, which reflects like-for-like currency-neutral adjusted diluted EPS growth in the low-to-mid single digits."
"Importantly, we are very pleased with the
COVID-19: Business Continuity Update
Since the onset of COVID-19, PMI has undertaken a number of business continuity measures to mitigate potential disruption to its operations and route-to-market in order to preserve the availability of products to its customers and adult consumers.
Currently, PMI has sufficient access to the inputs for its products and is not facing any significant business continuity issues with respect to key suppliers.
The large majority of PMI's manufacturing facilities globally are currently operational, including all heated tobacco unit factories. Certain cigarette production facilities are temporarily impacted by government-mandated shutdowns or production limitations. Such facilities account for less than 5% of PMI's total cigarette production capacity worldwide.
Based on current sales trends, there are adequate inventories of PMI finished goods across all key markets for cigarettes and across all IQOS markets for heated tobacco units and tobacco heating devices. While government-related restrictions have led to complexities in the company's route-to-market in select geographies, PMI does not currently anticipate out-of-stock situations in any major operating income markets and generally expects consumers to have adequate access to its products.
PMI has ample liquidity through cash on hand, the ongoing cash generation of its business, and its access to the commercial paper and debt markets. As of
Organizational Design Optimization
As part of its transformation to a smoke-free future, PMI seeks to optimize its organizational design, which includes the elimination, relocation and outsourcing of certain activities. During the second quarter, PMI recorded pre-tax asset impairment and exit costs of
2020 FULL-YEAR FORECAST
On
PMI believes that it is now in a better position to provide a 2020 full-year forecast, primarily reflecting the benefit of an additional quarter of actual results, as well as improved visibility on the progression of pandemic-related government restrictions (including lockdowns) in many of its key international markets, and the impact of such restrictions on adult smoker and reduced-risk product user behavior, as well as the company's global operations.
Notwithstanding this improved visibility, uncertainty remains as to the risk and magnitude of COVID-19 resurgence, as well as the economic consequences of the pandemic.
|
Full-Year |
|||||||||||||
2020 EPS Forecast |
2020 Forecast |
|
2019 |
|
|
Adjusted |
||||||||
|
|
|
|
|
|
|
|
|
|
|||||
Reported Diluted EPS |
|
- |
|
|
|
|
|
|
|
|
||||
Tax items |
|
|
|
|
(0.04 |
) |
|
|
|
|
||||
Asset impairment and exit costs |
|
|
0.04 |
|
0.23 |
|
|
|
|
|
||||
Canadian tobacco litigation-related expense |
|
|
|
|
0.09 |
|
|
|
|
|
||||
Loss on deconsolidation of RBH |
|
|
|
|
0.12 |
|
|
|
|
|
||||
|
|
|
|
|
0.20 |
|
|
|
|
|
||||
Fair value adjustment for equity security investments |
|
|
0.04 |
|
(0.02 |
) |
|
|
|
|
||||
Adjusted Diluted EPS |
|
- |
|
|
|
|
|
|
|
|
||||
Net earnings attributable to RBH |
|
|
|
|
(0.06 |
) |
(a) |
|
|
|
||||
Adjusted Diluted EPS |
|
- |
|
|
|
|
(b) |
|
|
|
||||
Currency |
|
|
0.31 |
|
|
|
|
|
|
|||||
Adjusted Diluted EPS, excluding currency |
|
- |
|
|
|
|
(b) |
2 |
% |
- |
5 |
% |
||
|
|
|
|
|
|
|
|
|
|
|||||
(a) Net reported diluted EPS attributable to RBH from |
||||||||||||||
(b) Pro forma. |
Reported diluted earnings per share forecast to be in a range of
2020 Full-Year Forecast Assumptions
This forecast assumes:
This forecast excludes the impact of any future acquisitions, unanticipated asset impairment and exit cost charges, future changes in currency exchange rates, further developments related to the
Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.
FDA Authorizes Marketing of IQOS as a Modified Risk Tobacco Product
On
The FDA authorized the marketing of IQOS with the following information:
The agency concluded that the available scientific evidence demonstrates that IQOS 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.
The FDA’s decision further builds on the emerging independent international scientific consensus that IQOS is a better choice than continuing to smoke, and follows the FDA’s
The FDA’s decision provides an important example of how governments and public health organizations can regulate smoke-free alternatives to differentiate them from cigarettes in order to protect and promote the public health.
This decision follows a review of the extensive scientific evidence package PMI submitted to the FDA in
Conference Call
A conference call, hosted by
CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE
PMI Shipment Volume by Region |
|
Second-Quarter |
|
Six Months Year-to-Date |
||||
(million units) |
|
2020 |
2019 |
Change |
|
2020 |
2019 |
Change |
Cigarettes |
|
|
|
|
|
|
|
|
|
|
40,317 |
46,367 |
(13.0)% |
|
80,963 |
85,855 |
(5.7)% |
|
|
23,657 |
27,080 |
(12.6)% |
|
45,076 |
47,400 |
(4.9)% |
|
|
27,188 |
31,659 |
(14.1)% |
|
57,184 |
64,963 |
(12.0)% |
South & |
|
33,346 |
46,376 |
(28.1)% |
|
70,941 |
87,868 |
(19.3)% |
|
|
12,071 |
13,845 |
(12.8)% |
|
24,370 |
25,958 |
(6.1)% |
|
|
14,780 |
18,472 |
(20.0)% |
|
29,843 |
36,052 |
(17.2)% |
Total PMI |
|
151,359 |
183,799 |
(17.6)% |
|
308,377 |
348,096 |
(11.4)% |
|
|
|
|
|
|
|
|
|
Heated Tobacco Units |
|
|
|
|
|
|
|
|
|
|
4,227 |
3,043 |
38.9% |
|
8,888 |
5,336 |
66.6% |
|
|
5,126 |
2,807 |
82.6% |
|
9,492 |
4,355 |
+100% |
|
|
185 |
719 |
(74.3)% |
|
655 |
1,473 |
(55.5)% |
South & |
|
— |
— |
—% |
|
— |
— |
—% |
|
|
9,076 |
8,428 |
7.7% |
|
16,198 |
15,277 |
6.0% |
|
|
94 |
59 |
59.3% |
|
202 |
113 |
78.8% |
Total PMI |
|
18,708 |
15,056 |
24.3% |
|
35,435 |
26,554 |
33.4% |
|
|
|
|
|
|
|
|
|
Cigarettes and Heated Tobacco Units |
|
|
|
|
|
|
|
|
|
|
44,544 |
49,410 |
(9.8)% |
|
89,851 |
91,191 |
(1.5)% |
|
|
28,783 |
29,887 |
(3.7)% |
|
54,568 |
51,755 |
5.4% |
|
|
27,373 |
32,378 |
(15.5)% |
|
57,839 |
66,436 |
(12.9)% |
South & |
|
33,346 |
46,376 |
(28.1)% |
|
70,941 |
87,868 |
(19.3)% |
|
|
21,147 |
22,273 |
(5.1)% |
|
40,568 |
41,235 |
(1.6)% |
|
|
14,874 |
18,531 |
(19.7)% |
|
30,045 |
36,165 |
(16.9)% |
Total PMI |
|
170,067 |
198,855 |
(14.5)% |
|
343,812 |
374,650 |
(8.2)% |
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in |
Second-Quarter
PMI's total shipment volume decreased by 14.5%, principally due to:
Impact of Inventory Movements
Excluding the net unfavorable impact of estimated distributor inventory movements of approximately 2.3 billion units, PMI’s total in-market sales declined by 13.4%, due to a 16.4% decline in cigarettes, partly offset by a 24.0% increase in heated tobacco units.
The net unfavorable impact of estimated distributor inventory movements of approximately 2.3 billion units reflected a net unfavorable impact of 2.5 billion cigarettes, mainly due to
Six Months Year-to-Date
PMI's total shipment volume decreased by 8.2%, or by 8.0% on a like-for-like basis, due to:
partly offset by
Impact of Inventory Movements
On a like-for-like basis, excluding the net favorable impact of estimated distributor inventory movements of approximately 3.0 billion units, PMI’s total in-market sales declined by 8.8%, due to an 11.8% decline in cigarettes, partly offset by a 29.5% increase in heated tobacco units.
The net favorable impact of estimated distributor inventory movements of approximately 3.0 billion units reflected:
PMI Shipment Volume by Brand
PMI Shipment Volume by Brand |
|
Second-Quarter |
|
Six Months Year-to-Date |
||||
(million units) |
|
2020 |
2019 |
Change |
|
2020 |
2019 |
Change |
Cigarettes |
|
|
|
|
|
|
|
|
|
|
54,812 |
68,060 |
(19.5)% |
|
114,057 |
128,024 |
(10.9)% |
L&M |
|
22,385 |
23,522 |
(4.8)% |
|
45,025 |
45,337 |
(0.7)% |
Chesterfield |
|
12,604 |
14,202 |
(11.3)% |
|
25,507 |
28,501 |
(10.5)% |
Philip Morris |
|
11,106 |
12,950 |
(14.2)% |
|
22,569 |
23,673 |
(4.7)% |
|
|
8,462 |
9,847 |
(14.1)% |
|
16,035 |
18,677 |
(14.1)% |
Sampoerna A |
|
7,254 |
9,355 |
(22.5)% |
|
15,802 |
17,256 |
(8.4)% |
|
|
6,428 |
7,741 |
(17.0)% |
|
12,041 |
13,412 |
(10.2)% |
Dji Sam Soe |
|
5,797 |
7,839 |
(26.0)% |
|
11,972 |
14,490 |
(17.4)% |
Lark |
|
4,189 |
5,349 |
(21.7)% |
|
8,213 |
10,619 |
(22.7)% |
Fortune |
|
2,263 |
3,441 |
(34.2)% |
|
4,745 |
6,487 |
(26.8)% |
Others |
|
16,059 |
21,493 |
(25.3)% |
|
32,411 |
41,620 |
(22.1)% |
Total Cigarettes |
|
151,359 |
183,799 |
(17.6)% |
|
308,377 |
348,096 |
(11.4)% |
Heated Tobacco Units (1) |
|
18,708 |
15,056 |
24.3% |
|
35,435 |
26,554 |
33.4% |
Total PMI |
|
170,067 |
198,855 |
(14.5)% |
|
343,812 |
374,650 |
(8.2)% |
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in |
||||||||
Note: Sampoerna A includes Sampoerna; Philip Morris includes Philip Morris/Dubliss; and Lark includes Lark Harmony. |
Second-Quarter
PMI's cigarette shipment volume of the following brands decreased:
The increase in PMI's heated tobacco unit shipment volume was mainly driven by the EU,
International Share of Market
PMI's total international market share (excluding
PMI's total international cigarette sales volume as a percentage of total industry cigarette sales volume was down by 0.7 points to 26.0%, mainly reflecting: out-switching to heated tobacco units, as well as lower cigarette market share and/or an unfavorable geographic mix impact, notably in
Six Months Year-to-Date
PMI's cigarette shipment volume of the following brands decreased:
The increase in PMI's heated tobacco unit shipment volume was mainly driven by the EU (notably
International Share of Market
PMI's total international market share (excluding
PMI's total international cigarette sales volume as a percentage of total industry cigarette sales volume was down by 0.9 points to 25.8%, mainly reflecting: out-switching to heated tobacco units, as well as lower cigarette market share and/or an unfavorable geographic mix impact, notably in
CONSOLIDATED FINANCIAL SUMMARY
Second-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(13.6 |
)% |
(9.5 |
)% |
|
(1,048 |
) |
(317 |
) |
172 |
|
(904 |
) |
1 |
|
Cost of Sales |
|
(2,179 |
) |
(2,665 |
) |
|
18.2 |
% |
14.1 |
% |
|
486 |
|
111 |
|
— |
|
239 |
|
136 |
|
Marketing, Administration and Research Costs (1) |
|
(1,722 |
) |
(1,831 |
) |
|
6.0 |
% |
0.4 |
% |
|
109 |
|
101 |
|
— |
|
— |
|
8 |
|
Amortization of Intangibles |
|
(19 |
) |
(16 |
) |
|
(18.8 |
)% |
(25.0 |
)% |
|
(3 |
) |
1 |
|
— |
|
— |
|
(4 |
) |
Operating Income |
|
|
|
|
|
|
(14.3 |
)% |
(11.0 |
)% |
|
(456 |
) |
(104 |
) |
172 |
|
(665 |
) |
141 |
|
Asset Impairment & Exit Costs (2) |
|
(71 |
) |
(23 |
) |
|
-(100 |
)% |
-(100 |
)% |
|
(48 |
) |
— |
|
— |
|
— |
|
(48 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
(12.7 |
)% |
(9.5 |
)% |
|
(408 |
) |
(104 |
) |
172 |
|
(665 |
) |
189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
42.1 |
% |
41.7 |
% |
|
0.4 |
pp |
— |
pp |
|
|
|
|
|
|
|||||
(1) Favorable Cost/Other variance includes the 2019 and 2020 asset impairment and exit costs. |
|||||||||||||||||||||
(2) Included in Marketing, Administration and Research Costs above. |
|||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in |
Net revenues, excluding unfavorable currency, decreased by 9.5%, mainly reflecting: unfavorable volume/mix, primarily due to lower cigarette volume (mainly in
Operating income, excluding unfavorable currency, decreased by 11.0%, primarily reflecting: unfavorable volume/mix, reflecting the same factors as for net revenues noted above, partially offset by a favorable pricing variance, lower manufacturing costs (driven by productivity gains related to combustible and reduced-risk products), and lower marketing, administration and research costs (despite pandemic-related expenses in 2020 and the unfavorable net impact of asset impairment and exit costs).
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income decreased by 9.5%. Adjusted operating income margin, excluding currency, was flat at 41.7%, as detailed in Schedule 8.
Six Months Year-to-Date
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(4.5 |
)% |
(1.8 |
)% |
|
(646 |
) |
(391 |
) |
495 |
|
(523 |
) |
(227 |
) |
Cost of Sales |
|
(4,581 |
) |
(5,130 |
) |
|
10.7 |
% |
7.6 |
% |
|
549 |
|
160 |
|
— |
|
268 |
|
121 |
|
Marketing, Administration and Research Costs (2) |
|
(3,666 |
) |
(4,048 |
) |
|
9.4 |
% |
11.2 |
% |
|
382 |
|
(70 |
) |
— |
|
— |
|
452 |
|
Amortization of Intangibles |
|
(37 |
) |
(35 |
) |
|
(5.7 |
)% |
(8.6 |
)% |
|
(2 |
) |
1 |
|
— |
|
— |
|
(3 |
) |
Operating Income |
|
|
|
|
|
|
5.4 |
% |
11.1 |
% |
|
283 |
|
(300 |
) |
495 |
|
(255 |
) |
343 |
|
Asset Impairment & Exit Costs (3) |
|
(71 |
) |
(43 |
) |
|
(65.1 |
)% |
(65.1 |
)% |
|
(28 |
) |
— |
|
— |
|
— |
|
(28 |
) |
Canadian Tobacco Litigation-Related Expense (3) |
|
— |
|
(194 |
) |
|
+100 |
% |
+100 |
% |
|
194 |
|
— |
|
— |
|
— |
|
194 |
|
Loss on Deconsolidation of RBH (3) |
|
— |
|
(239 |
) |
|
+100 |
% |
+100 |
% |
|
239 |
|
— |
|
— |
|
— |
|
239 |
|
Adjusted Operating Income |
|
|
|
|
|
|
(2.1 |
)% |
3.1 |
% |
|
(122 |
) |
(300 |
) |
495 |
|
(255 |
) |
(62 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
40.5 |
% |
39.5 |
% |
|
1.0 |
pp |
2.0 |
pp |
|
|
|
|
|
|
|||||
(1) Cost/Other variance includes the impact of the RBH deconsolidation. |
|||||||||||||||||||||
(2) Favorable Cost/Other variance includes the 2019 Canadian tobacco litigation-related expense, the 2019 loss on deconsolidation of RBH, the 2019 and 2020 asset impairment and exit costs, and the impact of the RBH deconsolidation. |
|||||||||||||||||||||
(3) Included in Marketing, Administration and Research Costs above. |
|||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in |
Net revenues, excluding unfavorable currency, decreased by 1.8%, reflecting: unfavorable volume/mix, primarily due to lower cigarette volume (mainly in
Operating income, excluding unfavorable currency, increased by 11.1%, notably reflecting a favorable comparison, shown in "Cost/Other," of charges recorded in the first half of 2020 of
Excluding these charges and unfavorable currency, adjusted operating income increased by 3.1%, primarily reflecting: a favorable pricing variance; lower manufacturing costs (driven by productivity gains related to combustible and reduced-risk products); and lower marketing, administration and research costs (despite pandemic-related expenses in 2020); partially offset by unfavorable volume/mix, mainly due to lower cigarette volume (mainly in
Adjusted operating income margin, excluding currency, increased by 2.0 points to 41.5%, as detailed in Schedule 8, or by 2.3 points to 41.5% on a like-for-like basis, as detailed in Schedule 9.
EUROPEAN UNION REGION
Second-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(4.0 |
)% |
(0.1 |
)% |
|
(102 |
) |
(100 |
) |
44 |
|
(46 |
) |
— |
|
Operating Income |
|
|
|
|
|
|
(1.4 |
)% |
4.0 |
% |
|
(17 |
) |
(65 |
) |
44 |
|
(2 |
) |
6 |
|
Asset Impairment & Exit Costs (1) |
|
(27 |
) |
— |
|
|
— |
% |
— |
% |
|
(27 |
) |
— |
|
— |
|
— |
|
(27 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
0.8 |
% |
6.3 |
% |
|
10 |
|
(65 |
) |
44 |
|
(2 |
) |
33 |
|
Adjusted Operating Income Margin |
|
48.7 |
% |
46.4 |
% |
|
2.3 |
pp |
2.9 |
pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, decreased by 0.1%, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume (notably in
Operating income, excluding unfavorable currency, increased by 4.0%, mainly reflecting: a favorable pricing variance; and lower manufacturing costs (notably in
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income increased by 6.3%. Adjusted operating income margin, excluding currency, increased by 2.9 points to 49.3%, as detailed in Schedule 8.
Six Months Year-to-Date
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
5.8 |
% |
9.4 |
% |
|
274 |
|
(170 |
) |
60 |
|
384 |
|
— |
|
Operating Income |
|
|
|
|
|
|
11.7 |
% |
17.9 |
% |
|
245 |
|
(130 |
) |
60 |
|
376 |
|
(61 |
) |
Asset Impairment & Exit Costs (1) |
|
(27 |
) |
— |
|
|
— |
% |
— |
% |
|
(27 |
) |
— |
|
— |
|
— |
|
(27 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
13.0 |
% |
19.2 |
% |
|
272 |
|
(130 |
) |
60 |
|
376 |
|
(34 |
) |
Adjusted Operating Income Margin |
|
47.2 |
% |
44.2 |
% |
|
3.0 |
pp |
3.9 |
pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 9.4%, reflecting: favorable volume/mix, mainly driven by higher heated tobacco unit volume across the Region (notably in
Operating income, excluding unfavorable currency, increased by 17.9%, mainly reflecting: favorable volume/mix, driven by the same factors as for net revenues noted above; a favorable pricing variance; and lower manufacturing costs (notably in
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income increased by 19.2%. Adjusted operating income margin, excluding currency, increased by 3.9 points to 48.1%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
European Union Key Data |
Second-Quarter |
Six Months Year-to-Date |
||||||||||||||||
|
|
|
Change |
|
|
Change |
||||||||||||
|
2020 |
2019 |
% / pp |
2020 |
2019 |
% / pp |
||||||||||||
Total Market (billion units) |
115.5 |
124.5 |
(7.3 |
)% |
224.6 |
231.8 |
(3.1 |
)% |
||||||||||
|
|
|
|
|
|
|
||||||||||||
PMI Shipment Volume (million units) |
|
|
|
|
|
|
||||||||||||
Cigarettes |
40,317 |
46,367 |
(13.0 |
)% |
80,963 |
85,855 |
(5.7 |
)% |
||||||||||
Heated Tobacco Units |
4,227 |
3,043 |
38.9 |
% |
8,888 |
5,336 |
66.6 |
% |
||||||||||
Total EU |
44,544 |
49,410 |
(9.8 |
)% |
89,851 |
91,191 |
(1.5 |
)% |
||||||||||
|
|
|
|
|
|
|
||||||||||||
PMI Market Share |
|
|
|
|
|
|
||||||||||||
|
17.8 |
% |
18.0 |
% |
(0.2 |
) |
17.7 |
% |
18.1 |
% |
(0.4 |
) |
||||||
L&M |
6.5 |
% |
6.9 |
% |
(0.4 |
) |
6.5 |
% |
6.8 |
% |
(0.3 |
) |
||||||
Chesterfield |
5.6 |
% |
5.8 |
% |
(0.2 |
) |
5.6 |
% |
5.9 |
% |
(0.3 |
) |
||||||
Philip Morris |
2.6 |
% |
2.7 |
% |
(0.1 |
) |
2.6 |
% |
2.8 |
% |
(0.2 |
) |
||||||
HEETS |
3.9 |
% |
2.4 |
% |
1.5 |
|
3.9 |
% |
2.3 |
% |
1.6 |
|
||||||
Others |
3.0 |
% |
3.0 |
% |
— |
|
3.1 |
% |
3.0 |
% |
0.1 |
|
||||||
Total EU |
39.4 |
% |
38.8 |
% |
0.6 |
|
39.4 |
% |
38.9 |
% |
0.5 |
|
Second-Quarter
The estimated total market in the EU decreased by 7.3% to 115.5 billion units, mainly driven by:
partly offset by
PMI's total shipment volume decreased by 9.8% to 44.5 billion units, reflecting:
partly offset by
Excluding the net unfavorable impact of estimated distributor inventory movements, PMI's total in-market sales in the Region decreased by 6.0%.
Six Months Year-to-Date
The estimated total market in the EU decreased by 3.1% to 224.6 billion units, notably due to:
partly offset by
PMI's total shipment volume decreased by 1.5% to 89.9 billion units, reflecting:
partly offset by
Second-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(4.7 |
)% |
5.6 |
% |
|
(39 |
) |
(85 |
) |
27 |
|
19 |
|
— |
|
Operating Income |
|
|
|
|
|
|
3.9 |
% |
8.2 |
% |
|
10 |
|
(11 |
) |
27 |
|
10 |
|
(16 |
) |
Asset Impairment & Exit Costs (1) |
|
(7 |
) |
— |
|
|
— |
% |
— |
% |
|
(7 |
) |
— |
|
— |
|
— |
|
(7 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
6.6 |
% |
10.9 |
% |
|
17 |
|
(11 |
) |
27 |
|
10 |
|
(9 |
) |
Adjusted Operating Income Margin |
|
34.9 |
% |
31.1 |
% |
|
3.8 |
pp |
1.6 |
pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 5.6%, reflecting: a favorable pricing variance, driven by higher combustible pricing (predominantly in
Operating income, excluding unfavorable currency, increased by 8.2%, mainly reflecting: a favorable pricing variance; favorable volume/mix, reflecting the same drivers as for net revenues noted above; and lower manufacturing costs; partially offset by higher marketing, administration and research costs (largely related to increased investments behind reduced-risk products, notably in
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income increased by 10.9%. Adjusted operating income margin, excluding currency, increased by 1.6 points to 32.7%, as detailed in Schedule 8.
Six Months Year-to-Date
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
12.1 |
% |
17.8 |
% |
|
170 |
|
(79 |
) |
41 |
|
208 |
|
— |
|
Operating Income |
|
|
|
|
|
|
(5.2 |
)% |
21.6 |
% |
|
(20 |
) |
(103 |
) |
41 |
|
139 |
|
(97 |
) |
Asset Impairment & Exit Costs (1) |
|
(7 |
) |
— |
|
|
— |
% |
— |
% |
|
(7 |
) |
— |
|
— |
|
— |
|
(7 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
(3.4 |
)% |
23.4 |
% |
|
(13 |
) |
(103 |
) |
41 |
|
139 |
|
(90 |
) |
Adjusted Operating Income Margin |
|
23.7 |
% |
27.5 |
% |
|
(3.8 |
)pp |
1.3 |
pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 17.8%, reflecting: favorable volume/mix, predominantly driven by higher heated tobacco unit volume in
Operating income, excluding unfavorable currency, increased by 21.6%, mainly reflecting: favorable volume/mix, reflecting the same drivers as for net revenues noted above; and a favorable pricing variance; partly offset by higher manufacturing costs due to
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income increased by 23.4%. Adjusted operating income margin, excluding currency, increased by 1.3 points to 28.8%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Second-Quarter |
Six Months Year-to-Date |
||||||||||
(million units) |
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Cigarettes |
23,657 |
27,080 |
(12.6)% |
45,076 |
47,400 |
(4.9)% |
||||||
Heated Tobacco Units |
5,126 |
2,807 |
82.6% |
9,492 |
4,355 |
+100% |
||||||
Total |
28,783 |
29,887 |
(3.7)% |
54,568 |
51,755 |
5.4% |
Second-Quarter
The estimated total market in
PMI's total shipment volume decreased by 3.7% to 28.8 billion units, mainly due to:
Six Months Year-to-Date
The estimated total market in
PMI's total shipment volume increased by 5.4% to 54.6 billion units, mainly due to:
partly offset by
Second-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(29.9 |
)% |
(28.3 |
)% |
|
(300 |
) |
(16 |
) |
45 |
|
(335 |
) |
6 |
|
Operating Income |
|
|
|
|
|
|
(46.3 |
)% |
(47.4 |
)% |
|
(204 |
) |
5 |
|
45 |
|
(264 |
) |
10 |
|
Asset Impairment & Exit Costs (1) |
|
(9 |
) |
— |
|
|
— |
% |
— |
% |
|
(9 |
) |
— |
|
— |
|
— |
|
(9 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
(44.2 |
)% |
(45.4 |
)% |
|
(195 |
) |
5 |
|
45 |
|
(264 |
) |
19 |
|
Adjusted Operating Income Margin |
|
34.9 |
% |
43.9 |
% |
|
(9.0 |
)pp |
(10.4 |
)pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, decreased by 28.3%, primarily reflecting: unfavorable volume/mix, mainly due to lower cigarette volume (predominantly in
Operating income, excluding favorable currency, decreased by 47.4%, mainly reflecting: unfavorable volume/mix, due to the same factors as for net revenues noted above; partly offset by a favorable pricing variance.
Excluding asset impairment, exit costs and favorable currency, adjusted operating income decreased by 45.4%. Adjusted operating income margin, excluding currency, decreased by 10.4 points to 33.5%, as detailed in Schedule 8.
Six Months Year-to-Date
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(18.2 |
)% |
(17.2 |
)% |
|
(351 |
) |
(18 |
) |
117 |
|
(411 |
) |
(39 |
) |
Operating Income |
|
|
|
|
|
|
(28.9 |
)% |
(27.1 |
)% |
|
(227 |
) |
(14 |
) |
117 |
|
(294 |
) |
(36 |
) |
Asset Impairment & Exit Costs (1) |
|
(9 |
) |
— |
|
|
— |
% |
— |
% |
|
(9 |
) |
— |
|
— |
|
— |
|
(9 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
(27.8 |
)% |
(26.0 |
)% |
|
(218 |
) |
(14 |
) |
117 |
|
(294 |
) |
(27 |
) |
Adjusted Operating Income Margin |
|
35.9 |
% |
40.7 |
% |
|
(4.8 |
)pp |
(4.3 |
)pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, decreased by 17.2%, reflecting: unfavorable volume/mix, mainly due lower cigarette volume (mainly in PMI Duty Free and
Operating income, excluding unfavorable currency, decreased by 27.1%, mainly reflecting: unfavorable volume/mix, predominantly due to lower cigarette and heated tobacco unit volume in PMI Duty Free; and unfavorable "Cost/Other," mainly due to lower fees for certain distribution rights, as noted above for net revenues; partially offset by a favorable pricing variance.
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income decreased by 26.0%. Adjusted operating income margin, excluding currency, decreased by 4.3 points to 36.4%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Second-Quarter |
Six Months Year-to-Date |
||||||||||
(million units) |
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Cigarettes |
27,188 |
31,659 |
(14.1)% |
57,184 |
64,963 |
(12.0)% |
||||||
Heated Tobacco Units |
185 |
719 |
(74.3)% |
655 |
1,473 |
(55.5)% |
||||||
Total |
27,373 |
32,378 |
(15.5)% |
57,839 |
66,436 |
(12.9)% |
Second-Quarter
The estimated total market in the
PMI's total shipment volume decreased by 15.5% to 27.4 billion units, notably due to:
partly offset by
Six Months Year-to-Date
The estimated total market in the
PMI's total shipment volume decreased by 12.9% to 57.8 billion units, notably due to:
SOUTH &
Second-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(28.8 |
)% |
(25.1 |
)% |
|
(359 |
) |
(46 |
) |
(15 |
) |
(298 |
) |
— |
|
Operating Income |
|
|
|
|
|
|
(41.3 |
)% |
(38.0 |
)% |
|
(203 |
) |
(16 |
) |
(15 |
) |
(218 |
) |
46 |
|
Asset Impairment & Exit Costs (1) |
|
(11 |
) |
— |
|
|
— |
% |
— |
% |
|
(11 |
) |
— |
|
— |
|
— |
|
(11 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
(39.0 |
)% |
(35.8 |
)% |
|
(192 |
) |
(16 |
) |
(15 |
) |
(218 |
) |
57 |
|
Adjusted Operating Income Margin |
|
33.7 |
% |
39.4 |
% |
|
(5.7 |
)pp |
(5.6 |
)pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, decreased by 25.1%, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume in
Operating income, excluding unfavorable currency, decreased by 38.0%, primarily reflecting: unfavorable volume/mix, due to the same factors as for net revenues noted above; and an unfavorable pricing variance; partly offset by lower marketing, administration and research costs; and lower manufacturing costs (mainly in
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income decreased by 35.8%. Adjusted operating income margin, excluding currency, decreased by 5.6 points to 33.8%, as detailed in Schedule 8.
Six Months Year-to-Date
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(9.4 |
)% |
(8.2 |
)% |
|
(221 |
) |
(27 |
) |
144 |
|
(338 |
) |
— |
|
Operating Income |
|
|
|
|
|
|
(4.7 |
)% |
(5.0 |
)% |
|
(44 |
) |
3 |
|
144 |
|
(236 |
) |
45 |
|
Asset Impairment & Exit Costs (1) |
|
(11 |
) |
(20 |
) |
|
45.0 |
% |
45.0 |
% |
|
9 |
|
— |
|
— |
|
— |
|
9 |
|
Adjusted Operating Income |
|
|
|
|
|
|
(5.6 |
)% |
(5.9 |
)% |
|
(53 |
) |
3 |
|
144 |
|
(236 |
) |
36 |
|
Adjusted Operating Income Margin |
|
42.0 |
% |
40.3 |
% |
|
1.7 |
pp |
1.0 |
pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, decreased by 8.2%, reflecting: unfavorable volume/mix, primarily due to lower cigarette volume in
Operating income, excluding favorable currency, decreased by 5.0%, mainly reflecting: unfavorable volume/mix, due to the same factors as for net revenues noted above; partially offset by a favorable pricing variance; lower marketing, administration and research costs; and lower manufacturing costs (notably in
Excluding asset impairment, exit costs and favorable currency, adjusted operating income decreased by 5.9%. Adjusted operating income margin, excluding currency, increased by 1.0 point to 41.3%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Second-Quarter |
Six Months Year-to-Date |
||||||||||
(million units) |
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Cigarettes |
33,346 |
46,376 |
(28.1)% |
70,941 |
87,868 |
(19.3)% |
||||||
Heated Tobacco Units |
— |
— |
—% |
— |
— |
—% |
||||||
Total South & |
33,346 |
46,376 |
(28.1)% |
70,941 |
87,868 |
(19.3)% |
Second-Quarter
The estimated total market in South &
PMI's total shipment volume decreased by 28.1% to 33.3 billion units, notably due to:
Six Months Year-to-Date
The estimated total market in South &
PMI's total shipment volume decreased by 19.3% to 70.9 billion units, notably due to:
Second-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(5.9 |
)% |
(5.1 |
)% |
|
(89 |
) |
(12 |
) |
30 |
|
(107 |
) |
— |
|
Operating Income |
|
|
|
|
|
|
4.2 |
% |
5.9 |
% |
|
27 |
|
(11 |
) |
30 |
|
(85 |
) |
93 |
|
Asset Impairment & Exit Costs (1) |
|
(13 |
) |
— |
|
|
— |
% |
— |
% |
|
(13 |
) |
— |
|
— |
|
— |
|
(13 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
6.2 |
% |
7.9 |
% |
|
40 |
|
(11 |
) |
30 |
|
(85 |
) |
106 |
|
Adjusted Operating Income Margin |
|
47.6 |
% |
42.2 |
% |
|
5.4 |
pp |
5.8 |
pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, decreased by 5.1%, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume (primarily in
Operating income, excluding unfavorable currency, increased by 5.9%, mainly reflecting: lower manufacturing costs (notably related to
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income increased by 7.9%. Adjusted operating income margin, excluding currency, increased by 5.8 points to 48.0%, as detailed in Schedule 8.
Six Months Year-to-Date
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(5.5 |
)% |
(4.7 |
)% |
|
(155 |
) |
(21 |
) |
43 |
|
(177 |
) |
— |
|
Operating Income |
|
|
|
|
|
|
8.0 |
% |
9.4 |
% |
|
86 |
|
(15 |
) |
43 |
|
(96 |
) |
154 |
|
Asset Impairment & Exit Costs (1) |
|
(13 |
) |
— |
|
|
— |
% |
— |
% |
|
(13 |
) |
— |
|
— |
|
— |
|
(13 |
) |
Adjusted Operating Income |
|
|
|
|
|
|
9.3 |
% |
10.7 |
% |
|
99 |
|
(15 |
) |
43 |
|
(96 |
) |
167 |
|
Adjusted Operating Income Margin |
|
43.5 |
% |
37.6 |
% |
|
5.9 |
pp |
6.1 |
pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, decreased by 4.7%, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume in
Operating income, excluding unfavorable currency, increased by 9.4%, mainly reflecting: lower marketing, administration and research costs (notably in
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income increased by 10.7%. Adjusted operating income margin, excluding currency, increased by 6.1 points to 43.7%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Second-Quarter |
Six Months Year-to-Date |
||||||||||
(million units) |
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Cigarettes |
12,071 |
13,845 |
(12.8)% |
24,370 |
25,958 |
(6.1)% |
||||||
Heated Tobacco Units |
9,076 |
8,428 |
7.7% |
16,198 |
15,277 |
6.0% |
||||||
Total |
21,147 |
22,273 |
(5.1)% |
40,568 |
41,235 |
(1.6)% |
Second-Quarter
The estimated total market in
partly offset by
PMI's total shipment volume decreased by 5.1% to 21.1 billion units, notably in:
Six Months Year-to-Date
The estimated total market in
partly offset by
PMI's total shipment volume decreased by 1.6% to 40.6 billion units, notably in:
Second-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(30.2 |
)% |
(19.2 |
)% |
|
(159 |
) |
(58 |
) |
41 |
|
(137 |
) |
(5 |
) |
Operating Income |
|
|
|
|
|
|
(42.9 |
)% |
(39.1 |
)% |
|
(69 |
) |
(6 |
) |
41 |
|
(106 |
) |
2 |
|
Asset Impairment & Exit Costs (1) |
|
(4 |
) |
(23 |
) |
|
82.6 |
% |
82.6 |
% |
|
19 |
|
— |
|
— |
|
— |
|
19 |
|
Adjusted Operating Income |
|
|
|
|
|
|
(47.8 |
)% |
(44.6 |
)% |
|
(88 |
) |
(6 |
) |
41 |
|
(106 |
) |
(17 |
) |
Adjusted Operating Income Margin |
|
26.1 |
% |
34.9 |
% |
|
(8.8 |
)pp |
(11.0 |
)pp |
|
|
|
|
|
|
|||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
|||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in |
Net revenues, excluding unfavorable currency, decreased by 19.2%, mainly reflecting: unfavorable volume/mix, primarily due to lower cigarette volume in
Operating income, excluding unfavorable currency, decreased by 39.1%, primarily reflecting: unfavorable volume/mix (mainly due to lower cigarette volume in
Excluding asset impairment, exit costs and unfavorable currency, adjusted operating income decreased by 44.6%. Adjusted operating income margin, excluding currency, decreased by 11.0 points to 23.9%, as detailed in Schedule 8.
Six Months Year-to-Date
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2020 |
2019 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
|
|
|
|
|
(30.8 |
)% |
(24.3 |
)% |
|
(363 |
) |
(76 |
) |
90 |
|
(189 |
) |
(188 |
) |
Operating Income (Loss) |
|
|
|
$ (25 |
) |
|
+100 |
% |
+100 |
% |
|
243 |
|
(41 |
) |
90 |
|
(144 |
) |
338 |
|
Asset Impairment & Exit Costs (2) |
|
(4 |
) |
(23 |
) |
|
82.6 |
% |
82.6 |
% |
|
19 |
|
— |
|
— |
|
— |
|
19 |
|
Canadian Tobacco Litigation-Related Expense (2) |
|
— |
|
(194 |
) |
|
+100 |
% |
+100 |
% |
|
194 |
|
— |
|
— |
|
— |
|
194 |
|
Loss on Deconsolidation of RBH (2) |
|
— |
|
(239 |
) |
|
+100 |
% |
+100 |
% |
|
239 |
|
— |
|
— |
|
— |
|
239 |
|
Adjusted Operating Income |
|
|
|
|
|
|
(48.5 |
)% |
(39.0 |
)% |
|
(209 |
) |
(41 |
) |
90 |
|
(144 |
) |
(114 |
) |
Adjusted Operating Income Margin |
|
27.2 |
% |
36.6 |
% |
|
(9.4 |
)pp |
(7.1 |
)pp |
|
|
|
|
|
|
|||||
(1) Cost/Other variance includes the impact of the RBH deconsolidation. |
|||||||||||||||||||||
(2) Included in marketing, administration and research costs at the consolidated operating income level. |
|||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in |
Net revenues, excluding unfavorable currency, decreased by 24.3%, reflecting: unfavorable volume/mix, due to lower cigarette volume, notably in
Operating income, excluding unfavorable currency, increased by +100%, notably reflecting a favorable comparison, shown in "Cost/Other," of charges recorded in the first half of 2020 of
Excluding these charges and unfavorable currency, adjusted operating income decreased by 39.0%, reflecting: unfavorable volume/mix, due to the same factor as for net revenues noted above; and the unfavorable impact of the deconsolidation of RBH, included in "Cost/Other"; partly offset by a favorable pricing variance. On a like-for-like basis, excluding unfavorable currency, adjusted operating income decreased by 14.7%, as detailed in Schedule 10.
Adjusted operating income margin, excluding currency, decreased by 7.1 points to 29.5%, as detailed in Schedule 8, or by 1.4 points to 29.2% on a like-for-like basis, as detailed in Schedule 10.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Second-Quarter |
Six Months Year-to-Date |
||||||||||
(million units) |
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Cigarettes |
14,780 |
18,472 |
(20.0)% |
29,843 |
36,052 |
(17.2)% |
||||||
Heated Tobacco Units |
94 |
59 |
59.3% |
202 |
113 |
78.8% |
||||||
Total |
14,874 |
18,531 |
(19.7)% |
30,045 |
36,165 |
(16.9)% |
Second-Quarter
The estimated total market in
partly offset by
PMI's total shipment volume decreased by 19.7% to 14.9 billion units, notably due to:
Six Months Year-to-Date
The estimated total market in
partly offset by
PMI's total shipment volume decreased by 16.9% to 30.0 billion units, or by 14.6% on a like-for-like basis, notably due to:
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; health concerns relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke; litigation related to tobacco use; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; changes in adult smoker behavior; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost and quality of tobacco and other agricultural products and raw materials; and the integrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful in its attempts to produce and commercialize reduced-risk products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce new products, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and the development of strategic business relationships; or if it is unable to attract and retain the best global talent. Future results are also subject to the lower predictability of our reduced-risk product category's performance.
The COVID-19 pandemic has created significant societal and economic disruption, and resulted in closures of stores, factories and offices, and restrictions on manufacturing, distribution and travel, all of which will adversely impact our business, results of operations, cash flows and financial position during the continuation of the pandemic. Our business continuity plans and other safeguards in place may not be effective to mitigate the impact of the pandemic. Currently, significant risks include our diminished ability to convert adult smokers to our RRPs, significant volume declines in our duty-free business and certain other key markets, disruptions or delays in our manufacturing and supply chain, increased currency volatility, and delays in certain cost saving, transformation and restructuring initiatives. Our business could also be adversely impacted if key personnel or a significant number of employees or business partners become unavailable due to the COVID-19 outbreak. The significant adverse impact of COVID-19 on the economic or political conditions in markets in which we operate could result in changes to the preferences of our adult consumers and lower demand for our products, particularly for our mid-price or premium-price brands. Continuation of the pandemic could disrupt our access to the credit markets or increase our borrowing costs. Governments may temporarily be unable to focus on the development of science-based regulatory frameworks for the development and commercialization of RRPs or on the enforcement or implementation of regulations that are significant to our business. In addition, messaging about the potential negative impacts of the use of our products on COVID-19 risks may lead to increasingly restrictive regulatory measures on the sale and use of our products, negatively impact demand for our products, the willingness of adult consumers to switch to our RRPs and our efforts to advocate for the development of science-based regulatory frameworks for the development and commercialization of RRPs.
The impact of these risks also depends on factors beyond our knowledge or control, including the duration and severity of the outbreak, its recurrence in our key markets, actions taken to contain its spread and to mitigate its public health effects, and the ultimate economic consequences thereof.
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
Key Terms, Definitions and Explanatory Notes
General
Financial
Reduced-Risk Products
IQOS in
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
Appendix 1 |
|||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||
Key Market Data |
|||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Quarters Ended |
|||||||||||||||||||||||||||||||||||||||||||
Market |
|
Total Market, |
|
PMI Shipments, bio units |
|
PMI Market Share, % (1) |
|||||||||||||||||||||||||||||||||||||
|
|
Total |
|
Cigarette |
|
HTU |
|
Total |
|
HTU |
|||||||||||||||||||||||||||||||||
|
2020 |
2019 |
% |
|
2020 |
2019 |
% |
|
2020 |
2019 |
% |
|
2020 |
2019 |
% |
|
2020 |
2019 |
pp |
|
2020 |
2019 |
pp |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
|
609.2 |
|
700.3 |
|
(13.0 |
) |
|
170.1 |
|
198.9 |
|
(14.5 |
) |
|
151.4 |
|
183.8 |
|
(17.6 |
) |
|
18.7 |
|
15.1 |
|
24.3 |
|
|
28.0 |
|
28.1 |
|
(0.1 |
) |
|
3.0 |
|
2.1 |
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
9.8 |
|
9.8 |
|
0.7 |
|
|
4.5 |
|
4.5 |
|
0.3 |
|
|
4.4 |
|
4.5 |
|
(0.4 |
) |
|
— |
|
— |
|
— |
|
|
44.9 |
|
44.7 |
|
0.2 |
|
|
0.5 |
|
0.2 |
|
0.3 |
|
|
|
|
20.0 |
|
18.9 |
|
5.9 |
|
|
7.8 |
|
7.3 |
|
6.9 |
|
|
7.4 |
|
7.1 |
|
4.4 |
|
|
0.4 |
|
0.2 |
|
89.4 |
|
|
38.9 |
|
38.5 |
|
0.4 |
|
|
2.0 |
|
1.1 |
|
0.9 |
|
|
|
|
16.3 |
|
17.2 |
|
(4.8 |
) |
|
7.9 |
|
9.3 |
|
(15.5 |
) |
|
6.8 |
|
8.5 |
|
(20.1 |
) |
|
1.1 |
|
0.8 |
|
32.3 |
|
|
52.1 |
|
51.7 |
|
0.4 |
|
|
7.7 |
|
4.6 |
|
3.1 |
|
|
|
|
10.6 |
|
12.3 |
|
(13.6 |
) |
|
4.2 |
|
5.0 |
|
(16.8 |
) |
|
3.7 |
|
4.8 |
|
(22.2 |
) |
|
0.5 |
|
0.3 |
|
85.9 |
|
|
39.3 |
|
40.8 |
|
(1.5 |
) |
|
4.4 |
|
2.0 |
|
2.4 |
|
|
|
|
9.6 |
|
11.6 |
|
(17.2 |
) |
|
2.7 |
|
3.9 |
|
(29.5 |
) |
|
2.7 |
|
3.8 |
|
(29.7 |
) |
|
0.1 |
|
0.1 |
|
(23.9 |
) |
|
31.3 |
|
31.2 |
|
0.1 |
|
|
1.0 |
|
0.7 |
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
57.2 |
|
59.6 |
|
(4.1 |
) |
|
17.9 |
|
17.7 |
|
0.8 |
|
|
14.3 |
|
15.9 |
|
(10.1 |
) |
|
3.6 |
|
1.8 |
|
95.5 |
|
|
32.4 |
|
29.6 |
|
2.8 |
|
|
5.9 |
|
2.9 |
|
3.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
6.0 |
|
5.4 |
|
12.0 |
|
|
2.7 |
|
0.8 |
|
+100 |
|
|
2.7 |
|
0.8 |
|
+100 |
|
|
— |
|
— |
|
— |
|
|
38.6 |
|
38.9 |
|
(0.3 |
) |
|
0.2 |
|
— |
|
0.2 |
|
|
|
|
|
29.9 |
|
32.1 |
|
(6.8 |
) |
|
11.7 |
|
12.5 |
|
(6.6 |
) |
|
11.7 |
|
12.5 |
|
(6.6 |
) |
|
— |
|
— |
|
— |
|
|
38.9 |
|
38.9 |
|
— |
|
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
South & |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
64.0 |
|
77.6 |
|
(17.5 |
) |
|
18.0 |
|
24.9 |
|
(27.7 |
) |
|
18.0 |
|
24.9 |
|
(27.7 |
) |
|
— |
|
— |
|
— |
|
|
28.2 |
|
32.2 |
|
(4.0 |
) |
|
— |
|
— |
|
— |
|
|
|
|
14.0 |
|
18.6 |
|
(24.6 |
) |
|
9.7 |
|
13.1 |
|
(25.7 |
) |
|
9.7 |
|
13.1 |
|
(25.7 |
) |
|
— |
|
— |
|
— |
|
|
69.5 |
|
70.6 |
|
(1.1 |
) |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
2.6 |
|
2.9 |
|
(11.2 |
) |
|
0.8 |
|
0.9 |
|
(12.0 |
) |
|
0.8 |
|
0.9 |
|
(12.0 |
) |
|
— |
|
— |
|
— |
|
|
30.8 |
|
31.0 |
|
(0.2 |
) |
|
— |
|
— |
|
— |
|
|
|
|
35.4 |
|
40.6 |
|
(12.7 |
) |
|
14.1 |
|
15.1 |
|
(6.4 |
) |
|
6.3 |
|
8.0 |
|
(20.9 |
) |
|
7.8 |
|
7.1 |
|
10.0 |
|
|
36.5 |
|
34.0 |
|
2.5 |
|
|
20.0 |
|
16.6 |
|
3.4 |
|
|
|
|
18.4 |
|
17.7 |
|
3.9 |
|
|
3.8 |
|
4.1 |
|
(6.2 |
) |
|
2.6 |
|
2.8 |
|
(6.1 |
) |
|
1.2 |
|
1.3 |
|
(6.4 |
) |
|
21.1 |
|
23.1 |
|
(2.0 |
) |
|
6.6 |
|
7.3 |
|
(0.7 |
) |
|
|
|
|
|
|
|
|
|
|
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|
|
|
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||||||||||||||||||
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
7.3 |
|
7.8 |
|
(7.4 |
) |
|
4.8 |
|
5.6 |
|
(15.2 |
) |
|
4.8 |
|
5.6 |
|
(15.2 |
) |
|
— |
|
— |
|
— |
|
|
65.4 |
|
71.8 |
|
(6.4 |
) |
|
— |
|
— |
|
— |
|
|
|
|
7.6 |
|
10.0 |
|
(24.4 |
) |
|
4.7 |
|
7.0 |
|
(32.5 |
) |
|
4.7 |
|
7.0 |
|
(32.7 |
) |
|
— |
|
— |
|
— |
|
|
62.1 |
|
69.5 |
|
(7.4 |
) |
|
0.2 |
|
— |
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
(1) Market share estimates are calculated using IMS data |
|||||||||||||||||||||||||||||||||||||||||||
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Appendix 2 |
|||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||
Key Market Data |
|||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
||||||||||||||||||
Six Months Ended |
|||||||||||||||||||||||||||||||||||||||||||
Market |
|
Total Market, |
|
PMI Shipments, bio units |
|
PMI Market Share, % (1) |
|||||||||||||||||||||||||||||||||||||
|
|
Total |
|
Cigarette |
|
HTU |
|
Total |
|
HTU |
|||||||||||||||||||||||||||||||||
|
2020 |
2019 |
% |
|
2020 |
2019 |
% |
|
2020 |
2019 |
% |
|
2020 |
2019 |
% |
|
2020 |
2019 |
pp |
|
2020 |
2019 |
pp |
||||||||||||||||||||
|
|
|
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|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
||||||||||||||||||
Total |
|
1,224.1 |
|
1,325.0 |
|
(7.6 |
) |
|
343.8 |
|
374.7 |
|
(8.2 |
) |
|
308.4 |
|
348.1 |
|
(11.4 |
) |
|
35.4 |
|
26.6 |
|
33.4 |
|
|
27.7 |
|
28.1 |
|
(0.4 |
) |
|
2.9 |
|
2.1 |
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
18.2 |
|
18.9 |
|
(3.9 |
) |
|
8.5 |
|
8.6 |
|
(1.3 |
) |
|
8.4 |
|
8.6 |
|
(2.1 |
) |
|
0.1 |
|
— |
|
— |
|
|
44.7 |
|
44.9 |
|
(0.2 |
) |
|
0.4 |
|
0.2 |
|
0.2 |
|
|
|
|
36.0 |
|
34.3 |
|
4.9 |
|
|
14.5 |
|
13.4 |
|
8.7 |
|
|
13.7 |
|
13.0 |
|
5.7 |
|
|
0.8 |
|
0.4 |
|
+100 |
|
|
40.4 |
|
38.9 |
|
1.5 |
|
|
2.2 |
|
1.1 |
|
1.1 |
|
|
|
|
32.0 |
|
32.8 |
|
(2.2 |
) |
|
17.1 |
|
17.0 |
|
0.2 |
|
|
14.6 |
|
15.6 |
|
(6.9 |
) |
|
2.5 |
|
1.4 |
|
78.6 |
|
|
52.0 |
|
51.4 |
|
0.6 |
|
|
7.5 |
|
4.2 |
|
3.3 |
|
|
|
|
21.4 |
|
22.9 |
|
(6.4 |
) |
|
8.5 |
|
9.2 |
|
(8.0 |
) |
|
7.6 |
|
8.8 |
|
(14.0 |
) |
|
0.9 |
|
0.4 |
|
+100 |
|
|
39.7 |
|
40.4 |
|
(0.7 |
) |
|
4.3 |
|
1.9 |
|
2.4 |
|
|
|
|
20.0 |
|
21.8 |
|
(8.2 |
) |
|
6.4 |
|
7.5 |
|
(14.4 |
) |
|
6.2 |
|
7.3 |
|
(15.5 |
) |
|
0.2 |
|
0.1 |
|
39.8 |
|
|
31.1 |
|
31.4 |
|
(0.3 |
) |
|
1.0 |
|
0.6 |
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
104.1 |
|
106.3 |
|
(2.1 |
) |
|
32.9 |
|
29.9 |
|
10.3 |
|
|
26.7 |
|
27.2 |
|
(1.8 |
) |
|
6.2 |
|
2.7 |
|
+100 |
|
|
32.4 |
|
29.1 |
|
3.3 |
|
|
6.2 |
|
3.0 |
|
3.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
10.3 |
|
10.6 |
|
(2.9 |
) |
|
3.8 |
|
4.7 |
|
(19.0 |
) |
|
3.8 |
|
4.7 |
|
(19.6 |
) |
|
— |
|
— |
|
— |
|
|
39.4 |
|
40.3 |
|
(0.9 |
) |
|
0.1 |
|
— |
|
0.1 |
|
|
|
|
|
55.9 |
|
61.6 |
|
(9.3 |
) |
|
21.8 |
|
26.4 |
|
(17.4 |
) |
|
21.8 |
|
26.4 |
|
(17.4 |
) |
|
— |
|
— |
|
— |
|
|
38.9 |
|
42.9 |
|
(4.0 |
) |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
South & |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
131.4 |
|
145.2 |
|
(9.5 |
) |
|
38.5 |
|
47.1 |
|
(18.2 |
) |
|
38.5 |
|
47.1 |
|
(18.2 |
) |
|
— |
|
— |
|
— |
|
|
29.3 |
|
32.4 |
|
(3.1 |
) |
|
— |
|
— |
|
— |
|
|
|
|
29.3 |
|
35.3 |
|
(17.1 |
) |
|
20.5 |
|
24.9 |
|
(17.7 |
) |
|
20.5 |
|
24.9 |
|
(17.7 |
) |
|
— |
|
— |
|
— |
|
|
69.9 |
|
70.4 |
|
(0.5 |
) |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
5.1 |
|
6.0 |
|
(15.3 |
) |
|
1.5 |
|
1.7 |
|
(9.8 |
) |
|
1.5 |
|
1.7 |
|
(9.8 |
) |
|
— |
|
— |
|
— |
|
|
29.4 |
|
27.6 |
|
1.8 |
|
|
— |
|
— |
|
— |
|
|
|
|
70.9 |
|
78.2 |
|
(9.4 |
) |
|
26.9 |
|
27.2 |
|
(1.0 |
) |
|
13.1 |
|
14.4 |
|
(9.1 |
) |
|
13.8 |
|
12.7 |
|
8.1 |
|
|
36.4 |
|
34.2 |
|
2.2 |
|
|
19.6 |
|
16.8 |
|
2.8 |
|
|
|
|
34.6 |
|
33.3 |
|
3.8 |
|
|
7.4 |
|
7.7 |
|
(4.6 |
) |
|
5.1 |
|
5.3 |
|
(3.8 |
) |
|
2.3 |
|
2.4 |
|
(6.3 |
) |
|
21.4 |
|
23.2 |
|
(1.8 |
) |
|
6.6 |
|
7.3 |
|
(0.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
15.3 |
|
16.3 |
|
(6.3 |
) |
|
10.0 |
|
11.7 |
|
(14.2 |
) |
|
10.0 |
|
11.7 |
|
(14.2 |
) |
|
— |
|
— |
|
— |
|
|
65.7 |
|
72.1 |
|
(6.4 |
) |
|
— |
|
— |
|
— |
|
|
|
|
14.2 |
|
17.4 |
|
(18.4 |
) |
|
8.8 |
|
11.7 |
|
(25.0 |
) |
|
8.7 |
|
11.7 |
|
(25.2 |
) |
|
— |
|
— |
|
— |
|
|
61.6 |
|
67.0 |
|
(5.4 |
) |
|
0.2 |
|
— |
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
(1) Market share estimates are calculated using IMS data |
|||||||||||||||||||||||||||||||||||||||||||
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands. |
|
|
|
|
|
|
|
Appendix 3 |
|||||||
|
||||||||||||||
Reconciliation of Non-GAAP Measures |
||||||||||||||
Shipment Volume Adjusted for the Impact of RBH Deconsolidation |
||||||||||||||
(in million units) / (Unaudited) |
||||||||||||||
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Total PMI |
Quarters Ended |
Six Months Ended |
||||||||||||
|
2020 |
2019 |
% Change |
2020 |
2019 |
% Change |
||||||||
Total Shipment Volume |
170,067 |
198,855 |
(14.5 |
)% |
343,812 |
374,650 |
|
(8.2 |
)% |
|||||
Shipment Volume for RBH-owned brands (1) |
|
— |
|
|
(1,008) |
(2) |
|
|||||||
Total Shipment Volume |
170,067 |
198,855 |
(14.5 |
)% |
343,812 |
373,642 |
(3) |
(8.0 |
)% |
|||||
|
|
|
|
|
|
|
|
|||||||
Total Cigarette Shipment Volume |
151,359 |
183,799 |
(17.6 |
)% |
308,377 |
348,096 |
|
(11.4 |
)% |
|||||
Shipment Volume for RBH-owned brands (1) |
|
— |
|
|
(1,008) |
(2) |
|
|||||||
Total Cigarette Shipment Volume |
151,359 |
183,799 |
(17.6 |
)% |
308,377 |
347,088 |
(3) |
(11.2 |
)% |
|||||
|
|
|
|
|
|
|
|
|||||||
Total HTU Shipment Volume |
18,708 |
15,056 |
24.3 |
% |
35,435 |
26,554 |
|
33.4 |
% |
|||||
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Total Shipment Volume |
14,874 |
18,531 |
(19.7 |
)% |
30,045 |
36,165 |
|
(16.9 |
)% |
|||||
Shipment Volume for RBH-owned brands |
|
— |
|
|
(995) |
(2) |
|
|||||||
Total Shipment Volume |
14,874 |
18,531 |
(19.7 |
)% |
30,045 |
35,170 |
(3) |
(14.6 |
)% |
|||||
|
|
|
|
|
|
|
|
|||||||
(1) Includes Duty Free sales in |
||||||||||||||
(2) Represents volume for RBH-owned brands from |
||||||||||||||
(3) Pro forma |
||||||||||||||
Note: Shipment Volume includes Cigarettes and Heated Tobacco Units; following the deconsolidation of RBH, we report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 1 |
|||||||||||
|
|||||||||||||||||||||||||
Diluted Earnings Per Share (EPS) |
|||||||||||||||||||||||||
($ in millions, except per share data) / (Unaudited) |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Quarters Ended |
|
Diluted EPS |
|
Six Months Ended |
|||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
$ |
1.25 |
|
|
|
|
2020 Diluted Earnings Per Share (1) |
|
|
|
$ |
2.42 |
|
|
|
|||||||
|
|
|
|
$ |
1.49 |
|
|
|
|
2019 Diluted Earnings Per Share (1) |
|
|
|
$ |
2.36 |
|
|
|
|||||||
|
|
|
|
$ |
(0.24 |
) |
|
|
|
Change |
|
|
|
$ |
0.06 |
|
|
|
|||||||
|
|
|
|
(16.1 |
)% |
|
|
|
% Change |
|
|
|
2.5 |
% |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
Reconciliation: |
|
|
|
|
|
|
|||||||||||
|
|
|
|
$ |
1.49 |
|
|
|
|
2019 Diluted Earnings Per Share (1) |
|
|
|
$ |
2.36 |
|
|
|
|||||||
|
|
|
|
0.01 |
|
|
|
|
2019 Asset impairment and exit costs |
|
|
|
0.02 |
|
|
|
|||||||||
|
|
|
|
— |
|
|
|
|
2019 Canadian tobacco litigation-related expense |
|
|
|
0.09 |
|
|
|
|||||||||
|
|
|
|
— |
|
|
|
|
2019 Loss on deconsolidation of RBH |
|
|
|
0.12 |
|
|
|
|||||||||
|
|
|
|
(0.04 |
) |
|
|
|
2019 Tax items |
|
|
|
(0.04 |
) |
|
|
|||||||||
|
|
|
|
(0.04 |
) |
|
|
|
2020 Asset impairment and exit costs |
|
|
|
(0.04 |
) |
|
|
|||||||||
|
|
|
|
— |
|
|
|
|
2020 Fair value adjustment for equity security investments |
|
|
|
(0.04 |
) |
|
|
|||||||||
|
|
|
|
— |
|
|
|
|
2020 Tax items |
|
|
|
— |
|
|
|
|||||||||
|
|
|
|
(0.06 |
) |
|
|
|
Currency |
|
|
|
(0.19 |
) |
|
|
|||||||||
|
|
|
|
(0.01 |
) |
|
|
|
Interest |
|
|
|
— |
|
|
|
|||||||||
|
|
|
|
0.03 |
|
|
|
|
Change in tax rate |
|
|
|
0.02 |
|
|
|
|||||||||
|
|
|
|
(0.13 |
) |
|
|
|
Operations (2) |
|
|
|
0.12 |
|
|
|
|||||||||
|
|
|
|
$ |
1.25 |
|
|
|
|
2020 Diluted Earnings Per Share (1) |
|
|
|
$ |
2.42 |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
(1) Basic and diluted EPS were calculated using the following (in millions): |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Quarters Ended |
|
|
|
Six Months Ended |
|||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
2020 |
|
2019 |
|
|
|
2020 |
|
2019 |
|||||||||||||||
|
|
|
|
|
|
Net Earnings attributable to PMI |
|
|
|
|
|||||||||||||||
|
|
5 |
|
5 |
|
Less: Distributed and undistributed earnings |
|
10 |
|
8 |
|||||||||||||||
|
|
|
|
|
|
Net Earnings for basic and diluted EPS |
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
1,558 |
|
1,556 |
|
Weighted-average shares for basic EPS |
|
1,557 |
|
1,556 |
|||||||||||||||
|
|
— |
|
— |
|
Plus Contingently Issuable Performance Stock Units |
|
— |
|
— |
|||||||||||||||
|
|
1,558 |
|
1,556 |
|
Weighted-average shares for diluted EPS |
|
1,557 |
|
1,556 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
(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 |
|
Six Months Ended |
|
|||||||
2020 |
2019 |
% Change |
|
2020 |
2019 |
% Change |
|
|||
|
|
(16.1 |
)% |
Reported Diluted EPS |
|
|
2.5 |
% |
|
|
(0.06) |
|
|
Less: Currency |
(0.19) |
|
|
|
|||
|
|
(12.1 |
)% |
Reported Diluted EPS, excluding Currency |
|
|
10.6 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Quarters Ended |
|
Six Months Ended |
Year Ended |
|||||||
2020 |
2019 |
% Change |
|
2020 |
2019 |
% Change |
2019 |
|||
|
|
(16.1 |
)% |
Reported Diluted EPS |
|
|
2.5 |
% |
|
|
0.04 |
0.01 |
|
Asset impairment and exit costs |
0.04 |
0.02 |
|
0.23 |
|||
— |
— |
|
Canadian tobacco litigation-related expense |
— |
0.09 |
|
0.09 |
|||
— |
— |
|
Loss on deconsolidation of RBH |
— |
0.12 |
|
0.12 |
|||
— |
— |
|
|
— |
— |
|
0.20 |
|||
— |
— |
|
Fair value adjustment for equity security investments |
0.04 |
— |
|
(0.02) |
|||
— |
(0.04) |
|
Tax items |
— |
(0.04) |
|
(0.04) |
|||
|
|
(11.6 |
)% |
Adjusted Diluted EPS |
|
|
(2.0 |
)% |
|
|
(0.06) |
|
|
Less: Currency |
(0.19) |
|
|
|
|||
|
|
(7.5 |
)% |
Adjusted Diluted EPS, excluding Currency |
|
|
5.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Schedule 3 |
|||||
|
|||||||||||||||
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 |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
2019 |
2019 |
2019 |
2019 |
2019 |
2019 |
2019 |
|||||||
Reported Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
||||
Asset impairment and exit costs |
|
0.01 |
0.01 |
0.02 |
|
0.01 |
0.03 |
|
0.20 |
0.23 |
|
||||
Canadian tobacco litigation-related expense |
|
0.09 |
— |
0.09 |
|
— |
0.09 |
|
— |
0.09 |
|
||||
Loss on deconsolidation of RBH |
|
0.12 |
— |
0.12 |
|
— |
0.12 |
|
— |
0.12 |
|
||||
|
|
— |
— |
— |
|
0.20 |
0.20 |
|
— |
0.20 |
|
||||
Fair value adjustment for equity security investments |
|
— |
— |
— |
|
— |
— |
|
(0.02) |
(0.02) |
|
||||
Tax items |
|
— |
(0.04) |
(0.04) |
|
— |
(0.04) |
|
— |
(0.04) |
|
||||
Adjusted Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings attributable to RBH |
|
(0.06) |
(1) |
— |
(0.06) |
(1) |
— |
(0.06) |
(1) |
— |
(0.06) |
(1) |
|||
Pro Forma Adjusted Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1) Represents the impact of net earnings attributable to RBH from |
|||||||||||||||
Note: EPS is computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may not agree to the total for the year. |
|
|
|
|
|
|
|
|
|
|
|
Schedule 4 |
|
|
||||||||||||
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 |
2020 |
|
Combustible Products |
|
2019 |
|
% Change |
||||||
|
|
|
$ — |
|
|
|
|
|
|
(9.5)% |
(6.0)% |
(6.0)% |
522 |
(52) |
575 |
— |
575 |
|
|
|
640 |
|
(18.3)% |
(10.1)% |
(10.1)% |
696 |
(16) |
712 |
— |
712 |
|
|
|
918 |
|
(24.2)% |
(22.4)% |
(22.4)% |
889 |
(46) |
935 |
— |
935 |
|
South & |
|
1,248 |
|
(28.8)% |
(25.1)% |
(25.1)% |
630 |
(15) |
645 |
— |
645 |
|
|
|
756 |
|
(16.7)% |
(14.7)% |
(14.7)% |
363 |
(57) |
420 |
— |
420 |
|
|
|
522 |
|
(30.5)% |
(19.6)% |
(19.6)% |
|
|
|
$ — |
|
|
Total Combustible |
|
|
|
(19.1)% |
(14.9)% |
(14.9)% |
2020 |
|
Reduced-Risk Products |
|
2019 |
|
% Change |
||||||
|
|
|
$ — |
|
|
|
|
|
|
23.9% |
29.7% |
29.7% |
261 |
(33) |
293 |
— |
293 |
|
|
|
182 |
|
42.9% |
60.8% |
60.8% |
8 |
— |
8 |
— |
8 |
|
|
|
86 |
|
(90.6)% |
(90.7)% |
(90.7)% |
— |
— |
— |
— |
— |
|
South & |
|
— |
|
—% |
—% |
—% |
802 |
3 |
799 |
— |
799 |
|
|
|
765 |
|
4.9% |
4.5% |
4.5% |
5 |
(1) |
6 |
— |
6 |
|
|
|
5 |
|
7.9% |
24.4% |
24.4% |
|
|
|
$ — |
|
|
Total RRPs |
|
|
|
9.5% |
13.3% |
13.3% |
2020 |
|
PMI |
|
2019 |
|
% Change |
||||||
|
|
|
$ — |
|
|
|
|
|
|
(4.0)% |
(0.1)% |
(0.1)% |
783 |
(85) |
868 |
— |
868 |
|
|
|
822 |
|
(4.7)% |
5.6% |
5.6% |
704 |
(16) |
720 |
— |
720 |
|
|
|
1,004 |
|
(29.9)% |
(28.3)% |
(28.3)% |
889 |
(46) |
935 |
— |
935 |
|
South & |
|
1,248 |
|
(28.8)% |
(25.1)% |
(25.1)% |
1,432 |
(12) |
1,444 |
— |
1,444 |
|
|
|
1,521 |
|
(5.9)% |
(5.1)% |
(5.1)% |
368 |
(58) |
426 |
— |
426 |
|
|
|
527 |
|
(30.2)% |
(19.2)% |
(19.2)% |
|
|
|
$ — |
|
|
Total PMI |
|
|
|
(13.6)% |
(9.5)% |
(9.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in |
||||||||||||
Note: Sum of product categories or Regions might not foot to Total PMI due to roundings. “-“ indicates amounts between - |
|
|
|
|
|
|
|
|
|
|
|
Schedule 5 |
|
|
||||||||||||
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 |
|
Six Months Ended |
|
Net |
|
Total |
Excluding |
Excluding |
2020 |
|
Combustible Products |
|
2019 |
|
% Change |
||||||
|
|
|
$ — |
|
|
|
|
|
|
(2.7)% |
0.6% |
0.6% |
1,045 |
(56) |
1,101 |
— |
1,101 |
|
|
|
1,110 |
|
(5.9)% |
(0.8)% |
(0.8)% |
1,528 |
(18) |
1,547 |
— |
1,547 |
|
|
|
1,746 |
|
(12.5)% |
(11.4)% |
(11.4)% |
2,140 |
(27) |
2,167 |
— |
2,167 |
|
South & |
|
2,361 |
|
(9.4)% |
(8.2)% |
(8.2)% |
1,272 |
(22) |
1,294 |
— |
1,294 |
|
|
|
1,394 |
|
(8.8)% |
(7.2)% |
(7.2)% |
803 |
(75) |
878 |
— |
878 |
|
|
|
1,168 |
|
(31.3)% |
(24.9)% |
(24.9)% |
|
|
|
$ — |
|
|
Total Combustible |
|
|
|
(9.4)% |
(6.6)% |
(6.6)% |
2020 |
|
Reduced-Risk Products |
|
2019 |
|
% Change |
||||||
|
|
|
$ — |
|
|
|
|
|
|
49.0% |
54.4% |
54.4% |
526 |
(23) |
549 |
— |
549 |
|
|
|
291 |
|
81.0% |
88.9% |
88.9% |
52 |
— |
51 |
— |
51 |
|
|
|
185 |
|
(72.0)% |
(72.2)% |
(72.2)% |
— |
— |
— |
— |
— |
|
South & |
|
— |
|
—% |
—% |
—% |
1,415 |
1 |
1,414 |
— |
1,414 |
|
|
|
1,448 |
|
(2.3)% |
(2.3)% |
(2.3)% |
13 |
(1) |
14 |
— |
14 |
|
|
|
11 |
|
24.4% |
33.5% |
33.5% |
|
|
|
$ — |
|
|
Total RRPs |
|
|
|
16.7% |
19.1% |
19.1% |
2020 |
|