INTERNATIONAL & USA PRESS INQUIRIES
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February 6, 2020
Philip Morris International Inc. Reports 2019 Fourth-Quarter & Full-Year Results
Download2019 Full-Year Reported Diluted EPS of
2019 FULL-YEAR & FOURTH-QUARTER HIGHLIGHTS
2019 Full-Year
- Reported diluted EPS of
$4.61 , down by 9.3%; down by 6.7%, excluding currency - Adjusted diluted EPS of
$5.19 , up by 1.8%; up by 9.9% on a like-for-like basis, excluding unfavorable currency of$0.13 per share - Cigarette and heated tobacco unit shipment volume down by 2.0%, reflecting cigarette shipment volume down by 4.5% and heated tobacco unit shipment volume up by 44.2% (to 59.7 billion units); down by 1.4% on a like-for-like basis
- Market share of heated tobacco units in IQOS markets, excluding the U.S., up by 1.4 points to 5.0%
- Net revenues up by 0.6%; up by 6.4% on a like-for-like basis, excluding currency
- Operating income down by 7.4%; down by 4.9%, excluding currency
- Adjusted operating income up by 11.2% on a like-for-like basis, excluding currency
- Adjusted operating income margin up by 1.7 points to 39.2% on a like-for-like basis, excluding currency
- Regular quarterly dividend increase of 2.6% to an annualized rate of
$4.68 per common share - Total IQOS users at year-end estimated at 13.6 million, of which 9.7 million have stopped smoking and switched to IQOS
- IQOS introduced for sale in the U.S. following its marketing order authorization by the
U.S. Food and Drug Administration - New IQOS 3 DUO device introduced in IQOS markets globally, excluding the U.S.
2019 Fourth-Quarter
- Reported diluted EPS of
$1.04 , down by 15.4%; also down by 15.4%, excluding currency - Adjusted diluted EPS of
$1.22 , down by 2.4%; up by 4.3% on a like-for-like basis, excluding currency - Cigarette and heated tobacco unit shipment volume down by 5.0%, reflecting cigarette shipment volume down by 8.0% and heated tobacco unit shipment volume up by 40.7% (to 17.1 billion units); down by 4.4% on a like-for-like basis
- Market share of heated tobacco units in IQOS markets, excluding the U.S., up by 1.7 points to 5.5%
- Asset impairment and exit costs of approximately
$0.20 per share, principally related to a plant closure inGermany as part of global manufacturing infrastructure optimization - Net revenues up by 2.9%; up by 6.3% on a like-for-like basis, excluding currency
- Operating income down by 7.3%; down by 8.3%, excluding currency
- Adjusted operating income up by 11.9% on a like-for-like basis, excluding currency
- Adjusted operating income margin up by 1.8 points to 36.7% on a like-for-like basis, excluding currency
"2019 marked a year of strong underlying business performance for PMI, driven by broad-based growth for IQOS and solid pricing for our combustible tobacco portfolio, with like-for-like adjusted diluted EPS up by 9.9%, excluding currency," said André Calantzopoulos, Chief Executive Officer.
"We continue to make significant progress in the transformation of our business, with smoke-free products now accounting for 8% of shipment volume and nearly one-fifth of net revenues, while further demonstrating our ability to maintain combustible tobacco leadership internationally, as evidenced by Marlboro’s full-year cigarette share of 10% -- an all-time high."
"Although we anticipate a few temporary headwinds, notably in
2020 FULL-YEAR FORECAST
|
Full-Year |
|||||||||
2020 EPS Forecast |
2020 |
|
2019 |
|
|
Adjusted |
||||
|
|
|
|
|
|
|
|
|||
Reported Diluted EPS |
≥ |
$5.50 |
|
$4.61 |
|
|
|
|||
2019 Tax items |
|
|
|
(0.04 |
) |
|
|
|
||
2019 Asset impairment and exit costs |
|
|
|
0.23 |
|
|
|
|
||
2019 Canadian tobacco litigation-related expense |
|
|
|
0.09 |
|
|
|
|
||
2019 Loss on deconsolidation of RBH |
|
|
|
0.12 |
|
|
|
|
||
2019 Russia excise and VAT audit charge |
|
|
|
0.20 |
|
|
|
|
||
2019 Fair value adjustment for equity security investments |
|
|
|
(0.02 |
) |
|
|
|
||
Adjusted Diluted EPS |
|
$5.50 |
|
$5.19 |
|
|
|
|||
Net earnings attributable to RBH |
|
|
|
(0.06 |
) |
(a) |
|
|
||
Adjusted Diluted EPS |
|
$5.50 |
|
$5.13 |
(b) |
|
|
|||
Currency |
|
(0.04 |
) |
|
|
|
|
|
||
Adjusted Diluted EPS, excluding currency |
≥ |
$5.54 |
|
$5.13 |
(b) |
≥ |
8% |
|||
|
|
|
|
|
|
|
|
|||
(a) Net reported diluted EPS attributable to RBH from January 1, 2019 through March 21, 2019. |
||||||||||
(b) Pro forma. |
Reported diluted earnings per share forecast to be at least
- Excluding an unfavorable currency impact, at prevailing exchange rates, of approximately
$0.04 per share, this forecast represents a projected increase of at least 8% versus pro forma adjusted diluted earnings per share of$5.13 in 2019, as detailed in the above table.
2020 Full-Year Forecast Assumptions
This forecast assumes:
- An estimated total international industry volume decline, excluding
China and the U.S., of approximately 3% to 4%, partly reflecting the impact of an above-inflation excise tax increase inIndonesia (following no increase in 2019) and further out-switching to the cigarillo category inJapan , which together account for approximately 100 basis points of the decline; - A total cigarette and heated tobacco unit shipment volume decline for PMI of approximately 2.5% to 3.5% on a like-for-like basis, partly reflecting the same factors as noted above for the total international industry volume decline;
- A full-year heated tobacco unit shipment volume that keeps PMI well on-track to reach its 2021 target of 90 to 100 billion units;
- Currency-neutral net revenue growth, on a like-for-like basis, of approximately 5%;
- An increase in full-year currency-neutral, like-for-like adjusted operating income margin of at least 150 basis points versus 2019, partly reflecting cost efficiencies that fully offset incremental net RRP investment;
- Operating cash flow of approximately
$10.5 billion , subject to year-end working capital requirements and currency movements; - Capital expenditures of approximately
$1.0 billion ; - An effective tax rate of approximately 23.0%; and
- No share repurchases.
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 U.S. Tax Cuts and Jobs Act, further developments pertaining to the judgment in the two Québec Class Action lawsuits and the Companies’ Creditors Arrangement Act (CCAA) protection granted to RBH, and any unusual events.
Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.
Global Collaboration Agreement with
On
The agreement, which will run for an initial period of three years, allows PMI to distribute current
Products sold under the agreement will be subject to careful assessment to ensure they meet the regulatory requirements in the markets where they are launched, as well as PMI’s high standards of quality and scientific substantiation of their harm reduction potential. PMI and
PMI will be responsible for the commercialization of smoke-free products supplied under the agreement. The agreement does not pertain to the South Korean market or combustible products. There are no current plans to commercialize
Conference Call
A conference call, hosted by André Calantzopoulos, Chief Executive Officer, and
CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE
PMI Shipment Volume by Region |
Fourth-Quarter |
Full-Year |
||||||||||||
(million units) |
2019 |
2018 |
Change |
2019 |
2018 |
Change |
||||||||
Cigarettes |
|
|
|
|
|
|
||||||||
European Union |
41,226 |
43,744 |
(5.8 |
)% |
174,319 |
179,622 |
(3.0 |
)% |
||||||
Eastern Europe |
25,865 |
28,424 |
(9.0 |
)% |
100,644 |
108,718 |
(7.4 |
)% |
||||||
Middle East & Africa |
32,611 |
35,774 |
(8.8 |
)% |
134,568 |
136,605 |
(1.5 |
)% |
||||||
South & Southeast Asia |
44,704 |
47,623 |
(6.1 |
)% |
174,934 |
178,469 |
(2.0 |
)% |
||||||
East Asia & Australia |
11,301 |
12,772 |
(11.5 |
)% |
49,951 |
56,163 |
(11.1 |
)% |
||||||
Latin America & Canada |
19,387 |
21,909 |
(11.5 |
)% |
72,293 |
80,738 |
(10.5 |
)% |
||||||
Total PMI |
175,094 |
190,246 |
(8.0 |
)% |
706,709 |
740,315 |
(4.5 |
)% |
||||||
|
|
|
|
|
|
|
|
|
||||||
Heated Tobacco Units |
|
|
|
|
|
|
|
|
||||||
European Union |
3,759 |
2,124 |
77.0 |
% |
12,569 |
5,977 |
+100 |
% |
||||||
Eastern Europe |
5,240 |
2,312 |
+100 |
% |
13,453 |
4,979 |
+100 |
% |
||||||
Middle East & Africa |
593 |
571 |
3.9 |
% |
2,654 |
3,403 |
(22.0 |
)% |
||||||
South & Southeast Asia |
— |
— |
— |
% |
— |
— |
— |
% |
||||||
East Asia & Australia |
7,424 |
7,111 |
4.4 |
% |
30,677 |
26,866 |
14.2 |
% |
||||||
Latin America & Canada (1) |
97 |
49 |
98.0 |
% |
299 |
147 |
+100 |
% |
||||||
Total PMI |
17,113 |
12,167 |
40.7 |
% |
59,652 |
41,372 |
44.2 |
% |
||||||
|
|
|
|
|
|
|
|
|
||||||
Cigarettes and Heated Tobacco Units |
|
|
|
|
|
|
|
|
||||||
European Union |
44,985 |
45,868 |
(1.9 |
)% |
186,888 |
185,599 |
0.7 |
% |
||||||
Eastern Europe |
31,105 |
30,736 |
1.2 |
% |
114,097 |
113,697 |
0.4 |
% |
||||||
Middle East & Africa |
33,204 |
36,345 |
(8.6 |
)% |
137,222 |
140,008 |
(2.0 |
)% |
||||||
South & Southeast Asia |
44,704 |
47,623 |
(6.1 |
)% |
174,934 |
178,469 |
(2.0 |
)% |
||||||
East Asia & Australia |
18,725 |
19,883 |
(5.8 |
)% |
80,628 |
83,029 |
(2.9 |
)% |
||||||
Latin America & Canada |
19,484 |
21,958 |
(11.3 |
)% |
72,592 |
80,885 |
(10.3 |
)% |
||||||
Total PMI |
192,207 |
202,413 |
(5.0 |
)% |
766,361 |
781,687 |
(2.0 |
)% |
||||||
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license. |
Full-Year
Estimated international industry cigarette and heated tobacco unit volume, excluding
PMI's total shipment volume decreased by 2.0%, or by 1.4% on a like-for-like basis, due to:
Middle East &Africa , primarily reflecting lower cigarette shipment volume, notably inTurkey , partly offset byEgypt andSaudi Arabia , and lower heated tobacco unit shipment volume in PMI Duty Free;- South &
Southeast Asia , reflecting lower cigarette shipment volume, primarily inIndonesia ,Pakistan andthe Philippines , partly offset byThailand ; East Asia &Australia , primarily reflecting lower cigarette shipment volume inJapan and lower cigarette and heated tobacco unit shipment volume inKorea , partly offset by higher heated tobacco unit shipment volume inJapan ; andLatin America &Canada , reflecting lower cigarette shipment volume, principally inArgentina ,Canada (primarily due to the impact of the deconsolidation of RBH) andVenezuela . On a like-for-like basis, PMI's total shipment volume in the Region decreased by 5.2%;
partly offset by
- the EU, reflecting higher heated tobacco unit shipment volume across the Region, notably in
Italy , partly offset by lower cigarette shipment volume, primarily inFrance ,Germany andItaly ; and Eastern Europe , reflecting higher heated tobacco unit shipment volume across the Region, notably inKazakhstan ,Russia andUkraine , partly offset by lower cigarette shipment volume, primarily inRussia andUkraine .
Impact of Inventory Movements
On a like-for-like basis, excluding the net favorable impact of estimated distributor inventory movements of approximately 1.1 billion units, PMI’s total in-market sales declined by 1.5%, due to a 3.7% decline of cigarettes, partly offset by a 35.3% increase in heated tobacco units.
The net favorable impact of estimated distributor inventory movements of approximately 1.1 billion units reflected a 2.7 billion favorable impact from heated tobacco units (driven primarily by
Fourth-Quarter
PMI's total shipment volume decreased by 5.0%, or by 4.4% on a like-for-like basis, principally due to:
- the EU, reflecting lower cigarette shipment volume, primarily in
France ,Germany andItaly , partly offset by higher heated tobacco unit shipment volume across the Region, notably inItaly ; Middle East &Africa , reflecting lower cigarette shipment volume, notably inTurkey , partly offset bySaudi Arabia ;- South &
Southeast Asia , reflecting lower cigarette shipment volume, primarily inIndonesia ,Pakistan andthe Philippines , partly offset byThailand ; East Asia &Australia , reflecting lower cigarette shipment volume, notably inJapan , as well as lower heated tobacco unit shipment volume inKorea , partly offset by higher heated tobacco unit shipment volume inJapan ; andLatin America &Canada , reflecting lower cigarette shipment volume, primarily inArgentina andCanada (mainly due to the impact of the deconsolidation of RBH). On a like-for-like basis, PMI's total shipment volume in the Region decreased by 5.2%;
partly offset by
Eastern Europe , reflecting higher heated tobacco unit shipment volume across the Region, notably inKazakhstan ,Russia andUkraine , partly offset by lower cigarette shipment volume, mainly inRussia andUkraine .
Impact of Inventory Movements
On a like-for-like basis, excluding the net unfavorable impact of estimated distributor inventory movements of approximately 2.5 billion units, PMI’s total in-market sales declined by 3.1%, due to a 6.0% decline of cigarettes, partly offset by a 44.7% increase in heated tobacco units.
The net unfavorable impact of estimated distributor inventory movements of approximately 2.5 billion units reflected a 2.3 billion impact from cigarettes, due mainly to the EU Region,
PMI Shipment Volume by Brand
PMI Shipment Volume by Brand |
Fourth-Quarter |
Full-Year |
||||||||||||
(million units) |
2019 |
2018 |
Change |
2019 |
2018 |
Change |
||||||||
Cigarettes |
|
|
|
|
|
|
||||||||
Marlboro |
66,025 |
68,436 |
(3.5 |
)% |
262,908 |
264,423 |
(0.6 |
)% |
||||||
L&M |
23,107 |
23,038 |
0.3 |
% |
92,873 |
89,789 |
3.4 |
% |
||||||
Chesterfield |
13,683 |
14,831 |
(7.7 |
)% |
57,185 |
59,452 |
(3.8 |
)% |
||||||
Philip Morris |
12,216 |
13,177 |
(7.3 |
)% |
49,164 |
49,864 |
(1.4 |
)% |
||||||
Parliament |
9,639 |
10,656 |
(9.5 |
)% |
38,723 |
41,697 |
(7.1 |
)% |
||||||
Sampoerna A |
9,121 |
10,391 |
(12.2 |
)% |
35,133 |
39,522 |
(11.1 |
)% |
||||||
Dji Sam Soe |
9,346 |
8,044 |
16.2 |
% |
32,435 |
29,195 |
11.1 |
% |
||||||
Bond Street |
6,926 |
8,212 |
(15.7 |
)% |
28,025 |
32,173 |
(12.9 |
)% |
||||||
Lark |
4,027 |
5,417 |
(25.7 |
)% |
19,602 |
23,021 |
(14.9 |
)% |
||||||
Fortune |
3,129 |
4,805 |
(34.9 |
)% |
12,831 |
16,596 |
(22.7 |
)% |
||||||
Others |
17,875 |
23,239 |
(23.1 |
)% |
77,830 |
94,583 |
(17.7 |
)% |
||||||
Total Cigarettes |
175,094 |
190,246 |
(8.0 |
)% |
706,709 |
740,315 |
(4.5 |
)% |
||||||
Heated Tobacco Units (1) |
17,113 |
12,167 |
40.7 |
% |
59,652 |
41,372 |
44.2 |
% |
||||||
Total PMI |
192,207 |
202,413 |
(5.0 |
)% |
766,361 |
781,687 |
(2.0 |
)% |
||||||
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license. |
||||||||||||||
Note: Sampoerna A includes Sampoerna; Philip Morris includes Philip Morris/Dubliss; and Lark includes Lark Harmony. |
Full-Year
PMI's cigarette shipment volume of the following brands decreased:
Marlboro , mainly due toItaly andJapan , partly reflecting the impact of out-switching to heated tobacco units, as well asFrance , partially offset bythe Philippines ,Saudi Arabia andTurkey ;- Chesterfield, mainly due to
Argentina ,Italy ,Russia andVenezuela , partly offset byBrazil ; Philip Morris , notably due toArgentina , partly offset byIndonesia andRussia ;- Parliament, mainly due to
Japan ,Korea andRussia ; - Sampoerna A in
Indonesia , mainly reflecting the impact of retail price increases resulting in widened price gaps with competitors' products; Bond Street , mainly due toRussia andUkraine ;- Lark, mainly due to
Japan andTurkey ; - Fortune in
the Philippines , mainly reflecting up-trading toMarlboro resulting from narrowed price gaps with the below premium price segment; and - "Others," notably due to: the impact of the deconsolidation of RBH in
Canada ; mid-price Sampoerna U inIndonesia , partly reflecting the impact of above-inflation retail price increases; and low-price brands, notably Morven inPakistan and Next/Dubliss inRussia , partly offset by Jackpot inthe Philippines .
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:
- L&M, mainly driven by
Egypt andThailand , partly offset byRussia andTurkey ; and - Dji Sam Soe in
Indonesia , driven by the strong performance of the DSS Magnum Mild 16 variant and the introduction of 20s and 50s variants.
International Share of Market
PMI's total international market share (excluding
- Total international heated tobacco unit market share of 2.2%, up by 0.6 points; and
- Total international cigarette market share of 26.2%, down by 0.5 points.
PMI's total international cigarette market share, defined as PMI's cigarette sales volume as a percentage of total industry cigarette sales volume, was down by 0.3 points to 26.9%, mainly reflecting: out-switching to heated tobacco units, notably in the EU and
In 2019, PMI owned six of the world's top 15 international cigarette brands, with international cigarette market shares as follows:
Fourth-Quarter
PMI's cigarette shipment volume of the following brands decreased:
Marlboro , mainly due toItaly andJapan , partly reflecting the impact of out-switching to heated tobacco units, as well asFrance , the GCC andTurkey , partially offset by PMI Duty Free;- Chesterfield, mainly due to
Argentina ,Italy andTurkey , partly offset byBrazil ; Philip Morris , mainly due toArgentina andRussia , partly offset byIndonesia ;- Parliament, mainly due to
Russia andTurkey ; - Sampoerna A in
Indonesia , mainly reflecting the same factor as in the full year; Bond Street , mainly due toRussia ;- Lark, mainly due to
Japan andTurkey ; - Fortune in
the Philippines , mainly reflecting the same factor as in the full year; and - "Others," notably due to: the impact of the deconsolidation of RBH in
Canada ; mid-price Sampoerna U inIndonesia , partly reflecting the same factor as in the full year; and low-price Morven inPakistan .
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:
- L&M, mainly driven by
Egypt andThailand , partly offset byGermany andTurkey ; and - Dji Sam Soe in
Indonesia , driven by the same factors as in the full year.
International Share of Market
PMI's total international market share (excluding
- Total international cigarette market share of 25.9%, down by 1.1 point; and
- Total international heated tobacco unit market share of 2.4%, up by 0.8 points.
PMI's total international cigarette market share was down by 0.9 points to 26.7%, mainly reflecting: out-switching to heated tobacco units, notably in the EU Region and
CONSOLIDATED FINANCIAL SUMMARY
Full-Year
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 29,805 |
$ 29,625 |
|
0.6 |
% |
3.8 |
% |
|
180 |
|
(937 |
) |
1,483 |
|
397 |
|
(763 |
) |
||
Cost of Sales |
|
(10,513 |
) |
(10,758 |
) |
|
2.3 |
% |
(0.5 |
)% |
|
245 |
|
302 |
|
— |
|
(309 |
) |
252 |
|
Marketing, Administration and Research Costs (2) |
|
(8,695 |
) |
(7,408 |
) |
|
(17.4 |
)% |
(22.0 |
)% |
|
(1,287 |
) |
340 |
|
— |
|
— |
|
(1,627 |
) |
Amortization of Intangibles |
|
(66 |
) |
(82 |
) |
|
19.5 |
% |
15.9 |
% |
|
16 |
|
3 |
|
— |
|
— |
|
13 |
|
Operating Income |
|
$ 10,531 |
$ 11,377 |
|
(7.4 |
)% |
(4.9 |
)% |
|
(846 |
) |
(292 |
) |
1,483 |
|
88 |
|
(2,125 |
) |
||
Asset Impairment & Exit Costs (3) |
|
(422 |
) |
— |
|
|
— |
% |
— |
% |
|
(422 |
) |
— |
|
— |
|
— |
|
(422 |
) |
Canadian Tobacco Litigation-Related Expense (3) |
|
(194 |
) |
— |
|
|
— |
% |
— |
% |
|
(194 |
) |
— |
|
— |
|
— |
|
(194 |
) |
Loss on Deconsolidation of RBH (3) |
|
(239 |
) |
— |
|
|
— |
% |
— |
% |
|
(239 |
) |
— |
|
— |
|
— |
|
(239 |
) |
Russia Excise and VAT Audit Charge (3) |
|
(374 |
) |
— |
|
|
— |
% |
— |
% |
|
(374 |
) |
— |
|
— |
|
— |
|
(374 |
) |
Adjusted Operating Income |
|
$ 11,760 |
$ 11,377 |
|
3.4 |
% |
5.9 |
% |
|
383 |
|
(292 |
) |
1,483 |
|
88 |
|
(896 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
39.5 |
% |
38.4 |
% |
|
1.1pp |
0.8pp |
|
|
|
|
|
|
|||||||
(1) Cost/Other variance includes the impact of the RBH deconsolidation. |
|||||||||||||||||||||
(2) Unfavorable Cost/Other variance includes the 2019 Canadian tobacco litigation-related expense, the loss on deconsolidation of RBH, asset impairment and exit costs, the impact of the RBH deconsolidation and the Russia excise and VAT audit charge. |
|||||||||||||||||||||
(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 the United States. |
Net revenues, excluding unfavorable currency, increased by 3.8%, mainly reflecting: a favorable pricing variance, notably in
Operating income, excluding unfavorable currency, decreased by 4.9%. Excluding the loss on deconsolidation of RBH, the Canadian tobacco litigation-related expense, asset impairment and exit charges related to plant closures in
Adjusted operating income margin, excluding currency, increased by 0.8 points to 39.2%, as detailed in Schedule 8, or by 1.7 points to 39.2% on a like-for-like basis, as detailed in Schedule 9.
Fourth-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 7,713 |
$ 7,499 |
|
2.9 |
% |
2.9 |
% |
|
214 |
|
(6 |
) |
530 |
|
(60 |
) |
(250 |
) |
||
Cost of Sales |
|
(2,778 |
) |
(2,781 |
) |
|
0.1 |
% |
(0.9 |
)% |
|
3 |
|
28 |
|
— |
|
(54 |
) |
29 |
|
Marketing, Administration and Research Costs (2) |
|
(2,413 |
) |
(1,997 |
) |
|
(20.8 |
)% |
(21.2 |
)% |
|
(416 |
) |
7 |
|
— |
|
— |
|
(423 |
) |
Amortization of Intangibles |
|
(16 |
) |
(19 |
) |
|
15.8 |
% |
15.8 |
% |
|
3 |
|
— |
|
— |
|
— |
|
3 |
|
Operating Income |
|
$ 2,506 |
$ 2,702 |
|
(7.3 |
)% |
(8.3 |
)% |
|
(196 |
) |
29 |
|
530 |
|
(114 |
) |
(641 |
) |
||
Asset Impairment & Exit Costs (3) |
|
(357 |
) |
— |
|
|
— |
% |
— |
% |
|
(357 |
) |
— |
|
— |
|
— |
|
(357 |
) |
Adjusted Operating Income |
|
$ 2,863 |
$ 2,702 |
|
6.0 |
% |
4.9 |
% |
|
161 |
|
29 |
|
530 |
|
(114 |
) |
(284 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
37.1 |
% |
36.0 |
% |
|
1.1pp |
0.7pp |
|
|
|
|
|
|
|||||||
(1) Cost/Other variance includes the impact of the RBH deconsolidation. |
|||||||||||||||||||||
(2) Unfavorable Cost/Other variance includes 2019 asset impairment and exit costs. |
|||||||||||||||||||||
(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 the United States. |
Net revenues, excluding unfavorable currency, increased by 2.9%, mainly reflecting: a favorable pricing variance, driven notably by
Operating income, excluding favorable currency, decreased by 8.3%. Excluding asset impairment and exit charges related to plant closures, notably in
Adjusted operating income margin, excluding currency, increased by 0.7 points to 36.7%, as detailed in Schedule 8, or by 1.8 points to 36.7% on a like-for-like basis, as detailed in Schedule 9.
EUROPEAN
Full-Year
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 9,817 |
$ 9,298 |
|
5.6 |
% |
11.6 |
% |
|
519 |
|
(563 |
) |
288 |
|
794 |
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 3,970 |
$ 4,105 |
|
(3.3 |
)% |
4.8 |
% |
|
(135 |
) |
(330 |
) |
288 |
|
587 |
|
(680 |
) |
||
Asset Impairment & Exit Costs (1) |
|
(342 |
) |
— |
|
|
— |
% |
— |
% |
|
(342 |
) |
— |
|
— |
|
— |
|
(342 |
) |
Adjusted Operating Income |
|
$ 4,312 |
$ 4,105 |
|
5.0 |
% |
13.1 |
% |
|
207 |
|
(330 |
) |
288 |
|
587 |
|
(338 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
43.9 |
% |
44.1 |
% |
|
(0.2)pp |
0.6pp |
|
|
|
|
|
|
|||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 11.6%, reflecting a favorable pricing variance, driven principally by
Operating income, excluding unfavorable currency, increased by 4.8%. Excluding asset impairment and exit charges related to the plant closure in
Adjusted operating income margin, excluding currency, increased by 0.6 points to 44.7%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 2,436 |
|
$ 2,340 |
|
|
4.1 |
% |
8.6 |
% |
|
96 |
|
(106 |
) |
82 |
|
120 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 624 |
|
$ 1,009 |
|
|
(38.2 |
)% |
(31.3 |
)% |
|
(385 |
) |
(69 |
) |
82 |
|
69 |
|
(467 |
) |
Asset Impairment & Exit Costs (1) |
|
(342 |
) |
— |
|
— |
% |
— |
% |
|
(342 |
) |
— |
|
— |
|
— |
|
(342 |
) |
|
Adjusted Operating Income |
|
$ 966 |
|
$ 1,009 |
|
|
(4.3 |
)% |
2.6 |
% |
|
(43 |
) |
(69 |
) |
82 |
|
69 |
|
(125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
39.7 |
% |
43.1 |
% |
|
(3.4)pp |
(2.4)pp |
|
|
|
|
|
|
|||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 8.6%, reflecting a favorable pricing variance, driven principally by
Operating income, excluding unfavorable currency, decreased by 31.3%, due primarily to the unfavorable impact, shown in "Cost/Other," of the asset impairment and exit charges related to the plant closure in
Adjusted operating income margin, excluding currency, decreased by 2.4 points to 40.7%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
European Union Key Data |
|
Fourth-Quarter |
|
Full-Year |
|||||||||||||
|
|
|
|
|
|
Change |
|
|
|
|
|
|
Change |
||||
|
|
2019 |
|
2018 |
|
% / pp |
|
|
2019 |
|
2018 |
|
% / pp |
||||
Total Market (billion units) |
|
118.6 |
119.3 |
(0.6)% |
|
482.5 |
484.5 |
(0.4)% |
|||||||||
|
|
|
|
|
|
|
|
|
|||||||||
PMI Shipment Volume (million units) |
|
|
|
|
|
|
|
|
|||||||||
Cigarettes |
|
41,226 |
43,744 |
(5.8)% |
|
174,319 |
179,622 |
(3.0)% |
|||||||||
Heated Tobacco Units |
|
3,759 |
2,124 |
77.0% |
|
12,569 |
5,977 |
+100.0% |
|||||||||
Total EU |
|
44,985 |
45,868 |
(1.9)% |
|
186,888 |
185,599 |
0.7% |
|||||||||
|
|
|
|
|
|
|
|
|
|||||||||
PMI Market Share |
|
|
|
|
|
|
|
|
|||||||||
Marlboro |
|
17.8 |
% |
18.6 |
% |
(0.8) |
|
18.0 |
% |
18.5 |
% |
(0.5) |
|||||
L&M |
|
6.5 |
% |
6.8 |
% |
(0.3) |
|
6.7 |
% |
6.9 |
% |
(0.2) |
|||||
Chesterfield |
|
5.7 |
% |
5.8 |
% |
(0.1) |
|
5.8 |
% |
5.9 |
% |
(0.1) |
|||||
Philip Morris |
|
2.6 |
% |
2.8 |
% |
(0.2) |
|
2.7 |
% |
2.9 |
% |
(0.2) |
|||||
HEETS |
|
3.2 |
% |
1.7 |
% |
1.5 |
|
2.5 |
% |
1.2 |
% |
1.3 |
|||||
Others |
|
3.0 |
% |
3.2 |
% |
(0.2) |
|
3.1 |
% |
3.1 |
% |
— |
|||||
Total EU |
|
38.8 |
% |
38.9 |
% |
(0.1) |
|
38.8 |
% |
38.5 |
% |
0.3 |
Full-Year
The estimated total market in the EU decreased by 0.4% to 482.5 billion units, notably due to:
France , down by 7.4%, primarily reflecting the impact of significant excise tax-driven price increases and a higher prevalence of illicit trade;Germany , down by 2.5%, primarily reflecting the impact of price increases in 2018 andMarch 2019 ; andItaly , down by 1.5%, primarily reflecting the impact of price increases in 2018 and the first quarter of 2019;
partly offset by
Poland , up by 6.8%, primarily reflecting a lower prevalence of illicit trade; andSpain , up by 0.8%, partly reflecting a lower prevalence of illicit trade.
PMI's total shipment volume increased by 0.7% to 186.9 billion units, reflecting:
- higher heated tobacco unit shipment volume across the Region (notably
Italy ), driven by higher market share;
partly offset by
- lower cigarette shipment volume, mainly in
France , due to the lower total market and lower cigarette market share, as well asGermany andItaly , partly reflecting out-switching to heated tobacco units.
PMI's Regional market share increased by 0.3 points to 38.8%, with gains in the
Fourth-Quarter
The estimated total market in the EU decreased by 0.6% to 118.6 billion units, mainly driven by:
France , down by 10.3%, reflecting the same factors as in the full year; andGermany , down by 4.5%, primarily reflecting the impact of estimated trade inventory movements of competitors' products and the impact of price increases inMarch 2019 ;
partly offset by
Poland , up by 7.3%, reflecting the same factor as in the full year.
PMI's total shipment volume decreased by 1.9% to 45.0 billion units, reflecting:
- lower cigarette shipment volume, mainly in
France ,Germany andItaly , reflecting the same factors as in the full year;
partly offset by:
- higher heated tobacco unit shipment volume across the Region (notably
Italy ), driven by higher market share.
PMI's Regional market share decreased by 0.1 point to 38.8%, with declines in
Full-Year
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 3,282 |
|
$ 2,921 |
|
|
12.4 |
% |
16.1 |
% |
|
361 |
|
(108 |
) |
85 |
|
384 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 547 |
|
$ 902 |
|
|
(39.4 |
)% |
(41.9 |
)% |
|
(355 |
) |
23 |
|
85 |
|
109 |
|
(572 |
) |
Asset Impairment & Exit Costs |
|
— |
|
— |
|
|
— |
% |
— |
% |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Russia Excise and VAT Audit Charge (1) |
|
(374 |
) |
— |
|
|
— |
% |
— |
% |
|
(374 |
) |
— |
|
— |
|
— |
|
(374 |
) |
Adjusted Operating Income |
|
$ 921 |
|
$ 902 |
|
|
2.1 |
% |
(0.4 |
)% |
|
19 |
|
23 |
|
85 |
|
109 |
|
(198 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
28.1 |
% |
30.9 |
% |
|
(2.8)pp |
(4.4)pp |
|
|
|
|
|
|
|||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 16.1%, reflecting a favorable pricing variance, mainly driven by
Operating income, excluding favorable currency, decreased by 41.9%, primarily due to the unfavorable impact of the
Adjusted operating income margin, excluding currency, decreased by 4.4 points to 26.5%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 982 |
$ 816 |
|
20.3 |
% |
16.8 |
% |
|
166 |
|
29 |
|
35 |
|
102 |
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 263 |
$ 220 |
|
19.5 |
% |
4.5 |
% |
|
43 |
|
33 |
|
35 |
|
36 |
|
(61 |
) |
||
Asset Impairment & Exit Costs |
|
— |
|
— |
|
|
— |
% |
— |
% |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Adjusted Operating Income |
|
$ 263 |
$ 220 |
|
19.5 |
% |
4.5 |
% |
|
43 |
|
33 |
|
35 |
|
36 |
|
(61 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
26.8 |
% |
27.0 |
% |
|
(0.2)pp |
(2.9)pp |
|
|
|
|
|
|
Net revenues, excluding favorable currency, increased by 16.8%, mainly reflecting: a favorable pricing variance, driven mainly by
Operating income, excluding favorable currency, increased by 4.5%, mainly reflecting: a favorable pricing variance; favorable volume/mix, predominantly driven by heated tobacco unit volume in
Adjusted operating income margin, excluding currency, decreased by 2.9 points to 24.1%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Fourth-Quarter |
Full-Year |
|||||||||||||
(million units) |
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||
Cigarettes |
25,865 |
28,424 |
(9.0 |
)% |
100,644 |
108,718 |
(7.4 |
)% |
|||||||
Heated Tobacco Units |
5,240 |
2,312 |
+100.0 |
% |
13,453 |
4,979 |
+100.0 |
% |
|||||||
Total Eastern Europe |
31,105 |
30,736 |
1.2 |
% |
114,097 |
113,697 |
0.4 |
% |
Full-Year
The estimated total market in
Russia , down by 5.2%, primarily reflecting the impact of price increases, as well as an increase in the prevalence of illicit trade; andUkraine , down by 12.0%, primarily reflecting the impact of excise tax-driven price increases, as well as an increase in the prevalence of illicit trade;
partly offset by
Kazakhstan , up by 5.7%, partly reflecting a lower prevalence of illicit trade.
PMI's Regional market share increased by 1.6 points to 28.7%.
PMI's total shipment volume increased by 0.4% to 114.1 billion units, notably reflecting:
Kazakhstan , up by 11.6%, reflecting the higher total market and a higher market share of heated tobacco units;
partly offset by
Ukraine , down by 3.0%, reflecting the lower total market, partly offset by a higher market share of heated tobacco units.
Fourth-Quarter
The estimated total market in
Russia , down by 5.3%, reflecting the same factors as in the full year; andUkraine , down by 9.3%, reflecting the same factors as in the full year;
partly offset by
Kazakhstan , up by 6.0%, reflecting the same factor as in the full year.
PMI's total shipment volume increased by 1.2% to 31.1 billion units, driven by:
Kazakhstan , up by 14.6%, reflecting the same factors as in the full year;
partly offset by
Russia , down by 0.5%, mainly reflecting the lower total market, partially offset by a higher market share of heated tobacco units; andUkraine , down by 2.5%, reflecting the same factors as in the full year.
Full-Year
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 4,042 |
$ 4,114 |
|
(1.8 |
)% |
2.2 |
% |
|
(72 |
) |
(162 |
) |
207 |
|
(113 |
) |
(4 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 1,684 |
$ 1,627 |
|
3.5 |
% |
6.8 |
% |
|
57 |
|
(53 |
) |
207 |
|
(128 |
) |
31 |
|
||
Asset Impairment & Exit Costs |
|
— |
|
— |
|
|
— |
% |
— |
% |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Adjusted Operating Income |
|
$ 1,684 |
$ 1,627 |
|
3.5 |
% |
6.8 |
% |
|
57 |
|
(53 |
) |
207 |
|
(128 |
) |
31 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
41.7 |
% |
39.5 |
% |
|
2.2pp |
1.8pp |
|
|
|
|
|
|
Net revenues, excluding unfavorable currency, increased by 2.2%, mainly reflecting: a favorable pricing variance, primarily driven by
Operating income, excluding unfavorable currency, increased by 6.8%, mainly reflecting a favorable pricing variance; lower manufacturing costs; and lower marketing, administration and research costs, notably in the GCC; partly offset by unfavorable volume/mix, mainly due to the same factors as for net revenues noted above.
Adjusted operating income margin, excluding currency, increased by 1.8 points to 41.3%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 984 |
$ 988 |
|
(0.4 |
)% |
(1.6 |
)% |
|
(4 |
) |
12 |
|
53 |
|
(68 |
) |
(1 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 380 |
$ 359 |
|
5.8 |
% |
1.7 |
% |
|
21 |
|
15 |
|
53 |
|
(47 |
) |
— |
|
||
Asset Impairment & Exit Costs |
|
— |
|
— |
|
|
— |
% |
— |
% |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Adjusted Operating Income |
|
$ 380 |
$ 359 |
|
5.8 |
% |
1.7 |
% |
|
21 |
|
15 |
|
53 |
|
(47 |
) |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
38.6 |
% |
36.3 |
% |
|
2.3pp |
1.3pp |
|
|
|
|
|
|
Net revenues, excluding favorable currency, decreased by 1.6%, reflecting unfavorable volume/mix, notably due to cigarette volume in
Operating income, excluding favorable currency, increased by 1.7%, mainly reflecting a favorable pricing variance and lower marketing, research and administration costs, partly offset by unfavorable volume/mix, mainly reflecting the same drivers as for net revenues noted above, and higher manufacturing costs.
Adjusted operating income margin, excluding currency, increased by 1.3 points to 37.6%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Fourth-Quarter |
Full-Year |
||||||||||||
(million units) |
2019 |
2018 |
Change |
2019 |
2018 |
Change |
||||||||
Cigarettes |
32,611 |
35,774 |
(8.8 |
)% |
134,568 |
136,605 |
(1.5 |
)% |
||||||
Heated Tobacco Units |
593 |
571 |
3.9 |
% |
2,654 |
3,403 |
(22.0 |
)% |
||||||
Total Middle East & Africa |
33,204 |
36,345 |
(8.6 |
)% |
137,222 |
140,008 |
(2.0 |
)% |
Full-Year
The estimated total market in the
Algeria , up by 7.0%, partly reflecting the timing of estimated trade inventory movements in 2019 compared to 2018; andEgypt , up by 1.6%, mainly due to the timing of estimated trade inventory movements in 2019 related to anticipated price increases;
offset by
- Duty Free, down by 1.6%, mainly reflecting lower purchases by travelers to
China ; and Morocco , down by 16.0%, primarily reflecting the impact of significant excise tax-driven price increases in 2019.
PMI's Regional market share decreased by 0.2 points to 23.5%.
PMI's total shipment volume decreased by 2.0% to 137.2 billion units, notably in:
- PMI Duty Free, down by 7.0%. Excluding the net unfavorable impact of estimated distributor inventory movements of 0.4 billion units, PMI's in-market sales decline was 4.6%, mainly reflecting lower market share and the lower total market; and
Turkey , down by 5.6%, mainly reflecting lower market share, primarily driven by the timing of retail price increases inApril 2019 compared to competition;
partly offset by
Egypt , up by 12.2%, primarily reflecting higher market share, driven by L&M, as well as the higher total market; andSaudi Arabia , up by 24.9%. Excluding the net favorable impact of estimated distributor inventory movements of 1.5 billion units, mainly attributable to the timing of shipments compared to 2018, PMI's in-market sales grew by 4.1%, primarily reflecting higher market share.
Fourth-Quarter
The estimated total market in the
Morocco , down by 24.2%, reflecting the same factor as in the full year;Saudi Arabia , down by 14.9%, notably reflecting sales disruptions of competitors' products related to the implementation of digital tax stamps and plain packaging; andTurkey , down by 15.9%, mainly reflecting a higher prevalence of illicit trade related to cut tobacco, following two price increases in 2019;
partly offset by
Algeria , up by 9.8%, partly reflecting the same factor as in the full year.
PMI's total shipment volume decreased by 8.6% to 33.2 billion units, notably due to:
Turkey , down by 19.5%, mainly reflecting the lower total market and lower market share;
partly offset by
- PMI Duty Free, up by 8.5%. Excluding the net favorable impact of estimated distributor inventory movements, primarily of cigarettes, PMI's in-market sales declined by 3.9%, mainly reflecting lower market share; and
Saudi Arabia , up by 21.9%. Excluding the net favorable impact of estimated distributor inventory movements of 0.4 billion cigarettes, mainly attributable to the same factor as in the full year, PMI's in-market sales grew by 2.9%, mainly driven by higher market share (partly reflecting sales disruptions of competitors' products), partially offset by the lower total market.
SOUTH &
Full-Year
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 5,094 |
$ 4,656 |
|
9.4 |
% |
9.6 |
% |
|
438 |
|
(10 |
) |
583 |
|
(135 |
) |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 2,163 |
$ 1,747 |
|
23.8 |
% |
22.8 |
% |
|
416 |
|
17 |
|
583 |
|
(99 |
) |
(85 |
) |
||
Asset Impairment & Exit Costs (1) |
|
(20 |
) |
— |
|
|
— |
% |
— |
% |
|
(20 |
) |
— |
|
— |
|
— |
|
(20 |
) |
Adjusted Operating Income |
|
$ 2,183 |
$ 1,747 |
|
25.0 |
% |
24.0 |
% |
|
436 |
|
17 |
|
583 |
|
(99 |
) |
(65 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
42.9 |
% |
37.5 |
% |
|
5.4pp |
4.9pp |
|
|
|
|
|
|
|||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Net revenues, excluding unfavorable currency, increased by 9.6%, reflecting: a favorable pricing variance, principally driven by
Operating income, excluding favorable currency, increased by 22.8%. Excluding asset impairment and exit costs related to a plant closure in
Adjusted operating income margin, excluding currency, increased by 4.9 points to 42.4%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 1,487 |
$ 1,222 |
|
21.7 |
% |
16.1 |
% |
|
265 |
|
68 |
|
270 |
|
(73 |
) |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 692 |
$ 423 |
|
63.6 |
% |
53.7 |
% |
|
269 |
|
42 |
|
270 |
|
(58 |
) |
15 |
|
||
Asset Impairment & Exit Costs |
|
— |
|
— |
|
|
— |
% |
— |
% |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Adjusted Operating Income |
|
$ 692 |
$ 423 |
|
63.6 |
% |
53.7 |
% |
|
269 |
|
42 |
|
270 |
|
(58 |
) |
15 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
46.5 |
% |
34.6 |
% |
|
11.9pp |
11.2pp |
|
|
|
|
|
|
Net revenues, excluding favorable currency, increased by 16.1%, reflecting a favorable pricing variance, principally driven by
Operating income, excluding favorable currency, increased by 53.7%, reflecting a favorable pricing variance and lower manufacturing costs, partly offset by unfavorable volume/mix, principally due to
Adjusted operating income margin, excluding currency, increased by 11.2 points to 45.8%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Fourth-Quarter |
Full-Year |
|||||||||||||
(million units) |
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||
Cigarettes |
44,704 |
47,623 |
(6.1 |
)% |
174,934 |
178,469 |
(2.0 |
)% |
|||||||
Heated Tobacco Units |
— |
|
— |
|
— |
% |
|
— |
|
— |
|
— |
% |
||
Total South & Southeast Asia |
44,704 |
47,623 |
(6.1 |
)% |
174,934 |
178,469 |
(2.0 |
)% |
Full-Year
The estimated total market in South &
Pakistan , down by 14.0%, mainly reflecting the impact of excise tax-driven price increases;the Philippines , down by 3.7%, primarily reflecting the impact of price increases in the below premium segment in the fourth quarter of 2018, as well as price increases in the third quarter of 2019; andVietnam , down by 5.2%, mainly reflecting the impact of excise tax-driven price increases;
partly offset by
Indonesia , up by 1.1%, reflecting the absence of an excise tax increase in 2019; andThailand , up by 5.8%, primarily reflecting on-going recovery from theSeptember 2017 excise tax reform.
PMI's Regional market share decreased by 0.1 point to 23.7%.
PMI's total shipment volume decreased by 2.0% to 174.9 billion units, notably due to:
Indonesia , down by 2.9%, mainly reflecting lower market share, primarily due to the widened retail price gap of Sampoerna A to competitive brands following its price increase inOctober 2018 , partly offset by the higher total market;Pakistan , down by 8.6%, mainly reflecting the lower total market, partly offset by higher market share driven by favorable retail price gaps with competitors' brands; andthe Philippines , down by 2.9%, mainly reflecting the lower total market, partly offset by higher market share, notably ofMarlboro ;
partly offset by
Thailand , up by 18.0%, mainly reflecting higher market share, driven by the continued strong performance of L&M 7.1 and the favorable impact of distribution expansion in 2018, as well as the higher total market.
Fourth-Quarter
The estimated total market in South &
Pakistan , down by 26.2%, mainly due to the same factor as in the full year; andthe Philippines , down by 13.5%, mainly due to the same factor as in the full year;
partly offset by
Indonesia , up by 3.1%, partly reflecting estimated trade inventory movements in anticipation of theJanuary 2020 excise tax increase.
PMI's total shipment volume decreased by 6.1% to 44.7 billion units, notably due to:
Indonesia , down by 2.0%, mainly reflecting the same factors as in the full year;Pakistan , down by 29.2%, mainly reflecting the lower total market; andthe Philippines , down by 14.0%, mainly reflecting the lower total market;
partly offset by
Thailand , up by 11.7%, mainly reflecting higher market share, driven by the continued strong performance of L&M 7.1 and the favorable impact of distribution expansion in 2018.
Full-Year
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 5,364 |
$ 5,580 |
|
(3.9 |
)% |
(3.4 |
)% |
|
(216 |
) |
(26 |
) |
230 |
|
(420 |
) |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 1,932 |
$ 1,851 |
|
4.4 |
% |
2.4 |
% |
|
81 |
|
37 |
|
230 |
|
(292 |
) |
106 |
|
||
Asset Impairment & Exit Costs |
|
— |
|
— |
|
|
— |
% |
— |
% |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Adjusted Operating Income |
|
$ 1,932 |
$ 1,851 |
|
4.4 |
% |
2.4 |
% |
|
81 |
|
37 |
|
230 |
|
(292 |
) |
106 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
36.0 |
% |
33.2 |
% |
|
2.8pp |
2.0pp |
|
|
|
|
|
|
Net revenues, excluding unfavorable currency, decreased by 3.4%, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume in
Operating income, excluding favorable currency, increased by 2.4%, mainly reflecting: a favorable pricing variance and lower manufacturing costs, primarily related to
Adjusted operating income margin, excluding currency, increased by 2.0 points to 35.2%, as detailed in Schedule 8.
Fourth-Quarter
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 1,270 |
$ 1,345 |
|
(5.6 |
)% |
(5.6 |
)% |
|
(75 |
) |
— |
|
44 |
|
(119 |
) |
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 412 |
$ 412 |
|
— |
% |
(1.0 |
)% |
|
— |
|
4 |
|
44 |
|
(102 |
) |
54 |
|
||
Asset Impairment & Exit Costs |
|
— |
|
— |
|
|
— |
% |
— |
% |
|
— |
|
— |
|
— |
|
— |
|
— |
|
Adjusted Operating Income |
|
$ 412 |
$ 412 |
|
— |
% |
(1.0 |
)% |
|
— |
|
4 |
|
44 |
|
(102 |
) |
54 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
32.4 |
% |
30.6 |
% |
|
1.8pp |
1.5pp |
|
|
|
|
|
|
Net revenues, excluding currency, decreased by 5.6%, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume in
Operating income, excluding favorable currency, decreased by 1.0%, mainly reflecting unfavorable volume/mix, mainly due to lower cigarette volume in
Adjusted operating income margin, excluding currency, increased by 1.5 points to 32.1%, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Fourth-Quarter |
Full-Year |
|||||||||||||
(million units) |
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||
Cigarettes |
11,301 |
12,772 |
(11.5 |
)% |
49,951 |
56,163 |
(11.1 |
)% |
|||||||
Heated Tobacco Units |
7,424 |
7,111 |
4.4 |
% |
30,677 |
26,866 |
14.2 |
% |
|||||||
Total East Asia & Australia |
18,725 |
19,883 |
(5.8 |
)% |
80,628 |
83,029 |
(2.9 |
)% |
Full-Year
The estimated total market in
Australia , down by 5.9%, or by 8.9% excluding the impact of estimated trade inventory movements, mainly reflecting the impact of excise tax-driven retail price increases;Japan , down by 5.6%, mainly reflecting the impact of theOctober 1, 2018 excise tax-driven retail price increases, as well as out-switching to the cigarillo category;Korea , down by 1.4%, reflecting the secular decline of the cigarette category, partly offset by the growth of the heat-not-burn category; andTaiwan , down by 1.9%, continuing to reflect the impact of significant excise tax-driven retail price increases inJune 2017 , as well as an increase in the prevalence of illicit trade.
PMI's Regional market share, excluding
PMI's total shipment volume decreased by 2.9% to 80.6 billion units, notably in:
Korea , down by 11.1%, principally due to lower cigarette and heated tobacco unit market share, as well as the lower total market;
partly offset by
Japan , up by 0.3%, reflecting the net favorable impact of estimated distributor inventory movements of approximately 2.6 billion units (comprised of approximately 3.4 billion heated tobacco units, partially offset by approximately 0.8 billion cigarettes), mainly due to a favorable comparison with 2018 in which IQOS consumable inventories inJapan were reduced. Excluding the impact of these inventory movements, PMI's in-market sales declined by 4.2%, primarily reflecting the lower total market, partly offset by higher heated tobacco unit market share.
Fourth-Quarter
The estimated total market in
Japan , up by 2.4%. Excluding the impact of estimated trade inventory movements, the total market was down by 6.5%, mainly reflecting out-switching to the cigarillo category, as well as the impact of tax-driven retail price increases; andTaiwan , up by 8.0%. Excluding the impact of estimated trade inventory movements, the total market was down by 8.7%, reflecting the same factors as in the full year;
partly offset by
Australia , down by 11.0%, or by 7.3% excluding the impact of estimated trade inventory movements, mainly reflecting the same factor as in the full year; andKorea , down by 1.4%, or essentially flat excluding the net unfavorable impact of estimated trade inventory movements.
PMI's total shipment volume decreased by 5.8% to 18.7 billion units, notably in:
Japan , down by 3.0%, reflecting the net unfavorable impact of estimated distributor inventory movements of approximately 1.4 billion units (comprised of approximately 1.0 billion cigarettes and approximately 0.4 billion heated tobacco units), mainly due to lower cigarette demand related to adult smoker out-switching to heated tobacco and the cigarillo category. Excluding the impact of these inventory movements, PMI's in-market sales increased by 8.3%, driven by higher heated tobacco unit market share; andKorea , down by 14.5%, mainly due to the same factors as in the full year.
Full-Year
Financial Summary - |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 2,206 |
$ 3,056 |
|
(27.8 |
)% |
(25.6 |
)% |
|
(850 |
) |
(68 |
) |
90 |
|
(113 |
) |
(759 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 235 |
$ 1,145 |
|
(79.5 |
)% |
(80.7 |
)% |
|
(910 |
) |
14 |
|
90 |
|
(89 |
) |
(925 |
) |
||
Asset Impairment & Exit Costs (2) |
|
(60 |
) |
— |
|
|
— |
% |
— |
% |
|
(60 |
) |
— |
|
— |
|
— |
|
(60 |
) |
Canadian Tobacco Litigation-Related Expense (2) |
|
(194 |
) |
— |
|
|
— |
% |
— |
% |
|
(194 |
) |
— |
|
— |
|
— |
|
(194 |
) |
Loss on Deconsolidation of RBH (2) |
|
(239 |
) |
— |
|
|
— |
% |
— |
% |
|
(239 |
) |
— |
|
— |
|
— |
|
(239 |
) |
Adjusted Operating Income |
|
$ 728 |
$ 1,145 |
|
(36.4 |
)% |
(37.6 |
)% |
|
(417 |
) |
14 |
|
90 |
|
(89 |
) |
(432 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
33.0 |
% |
37.5 |
% |
|
(4.5)pp |
(6.1)pp |
|
|
|
|
|
|
|||||||
(1) Unfavorable 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 the United States. |
Net revenues, excluding unfavorable currency, decreased by 25.6%, predominantly due to the unfavorable impact of the deconsolidation of RBH, shown in "Cost/Other." On a like-for-like basis, net revenues, excluding unfavorable currency, decreased by 1.9%, as detailed in Schedule 10, reflecting: unfavorable volume/mix, mainly due to lower cigarette volume in
Operating income, excluding favorable currency, decreased by 80.7%, predominantly due to the unfavorable impact of the deconsolidation of RBH and reporting adjustments, shown in "Cost/Other." Excluding asset impairment and exit costs related to plant closures in
Adjusted operating income margin, excluding currency, decreased by 6.1 points to 31.4%, as detailed in Schedule 8, or increased by 5.3 points to 31.4% on a like-for-like basis, as detailed in Schedule 10.
Fourth-Quarter
Financial Summary - December 31, |
|
|
|
|
Change |
|
Variance |
||||||||||||||
|
2019 |
2018 |
|
Total |
Excl. |
|
Total |
Cur- |
Price |
Vol/ |
Cost/ |
||||||||||
(in millions) |
|
|
|
||||||||||||||||||
Net Revenues |
|
$ 554 |
$ 788 |
|
(29.7 |
)% |
(28.6 |
)% |
|
(234 |
) |
(9 |
) |
46 |
|
(22 |
) |
(249 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
$ 135 |
$ 279 |
|
(51.6 |
)% |
(53.0 |
)% |
|
(144 |
) |
4 |
|
46 |
|
(12 |
) |
(182 |
) |
||
Asset Impairment & Exit Costs (2) |
|
(15 |
) |
— |
|
|
— |
% |
— |
% |
|
(15 |
) |
— |
|
— |
|
— |
|
(15 |
) |
Adjusted Operating Income |
|
$ 150 |
$ 279 |
|
(46.2 |
)% |
(47.7 |
)% |
|
(129 |
) |
4 |
|
46 |
|
(12 |
) |
(167 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Operating Income Margin |
|
27.1 |
% |
35.4 |
% |
|
(8.3)pp |
(9.5)pp |
|
|
|
|
|
|
|||||||
(1) Unfavorable 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 the United States. |
Net revenues, excluding unfavorable currency, decreased by 28.6%, almost entirely due to the unfavorable impact of the deconsolidation of RBH shown in "Cost/Other." On a like-for-like basis, net revenues, excluding unfavorable currency, increased by 1.4%, as detailed in Schedule 10, reflecting a favorable pricing variance, driven by
Operating income, excluding favorable currency, decreased by 53.0%, predominantly due to the unfavorable impact of the deconsolidation of RBH, shown in "Cost/Other." Excluding asset impairment and exit costs related to a plant closure in
Adjusted operating income margin, excluding currency, decreased by 9.5 points to 25.9%, as detailed in Schedule 8, or increased by 6.0 points to 26.2% on a like-for-like basis, as detailed in Schedule 10.
Total Market, PMI Shipment & Market Share Commentaries
PMI Shipment Volume |
Fourth-Quarter |
Full-Year |
||||||||||||
(million units) |
2019 |
2018 |
Change |
2019 |
2018 |
Change |
||||||||
Cigarettes |
19,387 |
21,909 |
(11.5 |
)% |
72,293 |
80,738 |
(10.5 |
)% |
||||||
Heated Tobacco Units |
97 |
49 |
98.0 |
% |
299 |
147 |
+100.0 |
% |
||||||
Total Latin America & Canada |
19,484 |
21,958 |
(11.3 |
)% |
72,592 |
80,885 |
(10.3 |
)% |
Full-Year
The estimated total market in
Argentina , down by 4.6%, primarily due to the impact of cumulative price increases and the impact of the economic downturn as of the second half of 2018;Canada , down by 7.7%, primarily due to the impact of cumulative price increases, as well as the growing prevalence of e-vapor products; andVenezuela , down by 61.6%, mainly reflecting the deterioration of the socioeconomic environment and the impact of inflation-driven price increases.
PMI's Regional market share decreased by 0.4 points to 36.9%.
PMI's total shipment volume decreased by 10.3% to 72.6 billion units, or by 5.2% on a like-for-like basis, notably due to:
Argentina , down by 9.4%, primarily reflecting the lower total market, as well as lower market share; andVenezuela , down by 74.8%, primarily reflecting the lower total market.
Fourth-Quarter
The estimated total market in
Argentina , down by 4.8%, primarily due to the same factors as in the full year;Canada , down by 4.5%, primarily due to the same factors as in the full year, partly offset by the favorable impact of estimated trade inventory movements for the competition ahead of the implementation of plain packaging onNovember 9, 2019 ; andVenezuela , down by 75.9%, mainly reflecting the same factors as in the full year.
PMI's total shipment volume decreased by 11.3% to 19.5 billion units, or by 5.2% on a like-for-like basis, notably due to:
Argentina , down by 13.1%, primarily reflecting the same factors as in the full year.
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 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.
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
- "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.
- Unless otherwise stated, references to total industry, total market, PMI shipment volume and PMI market share performance reflect cigarettes and heated tobacco units.
- 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, exclude
the People's Republic of China and/or PMI's duty free business. In addition, to reflect the deconsolidation of PMI's Canadian subsidiary,Rothmans, Benson & Hedges, Inc. (RBH), effectiveMarch 22, 2019 , PMI's total market share has been restated for previous periods. - "OTP" is defined as "other tobacco products," primarily roll-your-own and make-your-own cigarettes, pipe tobacco, cigars and cigarillos, and does not include reduced-risk products.
- "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.
- "
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 ). - Following the deconsolidation of PMI's Canadian subsidiary,
Rothmans, Benson & Hedges, Inc. (RBH), PMI will continue 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, which accounted for approximately 40% of RBH's total shipment volume in 2018. - 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, IQOS devices and related accessories, and other nicotine-containing products, primarily e-vapor 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.
- "Cost of sales" consists principally of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs; shipping and handling costs; and the cost of IQOS devices produced by third-party electronics manufacturing service providers. Estimated costs associated with IQOS 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 operating 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, the Canadian tobacco litigation-related expense and the charge related to the deconsolidation of RBH in
Canada , and theRussia excise & VAT audit charge); 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, as well as the impact of the deconsolidation in RBH. - "Adjusted Operating Income Margin" is calculated as adjusted operating income, divided by 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.
- Management reviews net revenues, OI, OI margins, 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. For example, PMI’s adjusted diluted EPS and other impacted results reflect the loss on deconsolidation of RBH and the Canadian tobacco litigation-related expense, recorded in the first quarter of 2019, and the
Russia excise & VAT charge, recorded in the third quarter of 2019. PMI believes that the adjusted measures, including pro forma measures, will provide useful insight into underlying business trends and results, and will provide a more meaningful performance comparison for the period during which RBH remains under CCAA protection. For PMI's 2018 pro forma adjusted diluted EPS by quarter and year-to-date, see Schedule 3 in PMI's fourth-quarter 2019 earnings release. - 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 comparable U.S. GAAP measures, see the relevant schedules provided with this press release.
- U.S. GAAP Treatment of
Argentina as a Highly Inflationary Economy. Following the categorization ofArgentina by theInternational Practices Task Force of theCenter for Audit Quality as a country with a three-year cumulative inflation rate greater than 100%, the country is considered highly inflationary in accordance with U.S. GAAP. Consequently, PMI began to account for the operations of its Argentinian affiliates as highly inflationary, and to treat the U.S. dollar as the functional currency of the affiliates, effectiveJuly 1, 2018 . - "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, since
January 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 produce an aerosol that contains 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 Marlboro and HEETS FROM MARLBORO, defined collectively as HEETS, as well as
Marlboro HeatSticks and Parliament HeatSticks. - Unless otherwise stated, all references to IQOS are to PMI's heat-not-burn products.
- The IQOS heat-not-burn device is a precisely controlled heating device into which a specially designed and proprietary tobacco unit is inserted and heated to generate an aerosol.
- “Total IQOS users” is defined as the estimated number of Legal Age (minimum 18 years) IQOS users that used PMI HTUs for at least 5% of their daily tobacco consumption over the past seven days.
- The estimated number of people who have "stopped smoking and switched to IQOS" is defined as: for markets where IQOS is the only heat-not-burn product, daily individual consumption of PMI HTUs represents the totality of their daily tobacco consumption in the past seven days; for markets where IQOS is one 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% are PMI HTUs.
IQOS in
- On
April 30, 2019 , theU.S. Food and Drug Administration (FDA ) announced that the marketing of a version of IQOS, PMI's heat-not-burn product, together with its heated tobacco units (the term PMI uses to refer to heated tobacco consumables), is appropriate for the protection of public health and authorized it for sale in the U.S. The FDA’s decision follows its comprehensive assessment of PMI’s premarket tobacco product applications (PMTAs) submitted to the Agency in 2017. In the third quarter of 2019, PMI brought a version of its IQOS Platform 1 device and three variants of its heated tobacco units to the U.S. through its license withAltria Group, Inc. , whose subsidiary,Philip Morris USA Inc. , is responsible for marketing the product and complying with the provisions set forth in theFDA's marketing order. - Shipment volume of heated tobacco units to the U.S. is included in the heated tobacco unit shipment volume of the
Latin America &Canada segment. Revenues from shipments of Platform 1 devices, heated tobacco units and accessories toAltria Group, Inc. for sale under license in the U.S. are included in Net Revenues of theLatin America &Canada segment.
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Appendix 1 |
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PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
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Key Market Data |
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Quarters Ended December 31, |
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Market |
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Total Market, |
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PMI Shipments, bio units |
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PMI Market Share, % (1) |
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Total |
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Cigarette |
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HTU |
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Total |
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HTU |
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2019 |
2018 |
% |
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2019 |
2018 |
% |
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2019 |
2018 |
% |
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2019 |
2018 |
% |
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2019 |
2018 |
pp |
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2019 |
2018 |
pp |
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Total |
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684.8 |
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701.0 |
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(2.3 |
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192.2 |
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202.4 |
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(5.0 |
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175.1 |
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190.2 |
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(8.0 |
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17.1 |
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12.2 |
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40.7 |
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28.4 |
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28.6 |
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(0.2 |
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2.4 |
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1.6 |
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0.8 |
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European Union |
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France |
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8.8 |
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9.8 |
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(10.3 |
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3.9 |
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4.4 |
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(12.2 |
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3.8 |
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4.4 |
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(12.7 |
) |
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— |
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— |
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— |
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45.1 |
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46.3 |
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(1.2 |
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0.3 |
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0.2 |
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0.1 |
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Germany |
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18.2 |
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19.0 |
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(4.5 |
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7.1 |
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7.5 |
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(5.5 |
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6.8 |
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7.4 |
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(7.6 |
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0.3 |
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0.1 |
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+100 |
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39.0 |
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39.4 |
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(0.4 |
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1.6 |
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0.8 |
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0.8 |
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Italy |
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16.8 |
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16.9 |
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(0.5 |
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8.3 |
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8.7 |
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(4.0 |
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7.2 |
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8.1 |
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(10.2 |
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1.1 |
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0.6 |
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80.9 |
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52.3 |
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52.0 |
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0.3 |
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6.1 |
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3.3 |
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2.8 |
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Poland |
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10.8 |
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10.1 |
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7.3 |
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4.5 |
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4.2 |
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7.9 |
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4.1 |
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4.0 |
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1.8 |
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0.4 |
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0.1 |
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+100 |
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41.5 |
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41.3 |
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0.2 |
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3.8 |
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1.5 |
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2.3 |
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Spain |
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10.9 |
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10.9 |
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0.2 |
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3.1 |
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3.0 |
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3.4 |
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3.0 |
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3.0 |
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1.8 |
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0.1 |
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0.1 |
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97.2 |
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30.7 |
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31.8 |
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(1.1 |
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0.8 |
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0.5 |
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0.3 |
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Eastern Europe |
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Russia |
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58.4 |
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61.7 |
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(5.3 |
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19.2 |
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19.3 |
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(0.5 |
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15.4 |
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17.5 |
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(12.2 |
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3.8 |
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1.8 |
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+100 |
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31.2 |
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29.6 |
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1.6 |
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5.0 |
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1.7 |
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3.3 |
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Middle East & Africa |
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Saudi Arabia |
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4.6 |
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5.4 |
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(14.9 |
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2.6 |
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2.1 |
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21.9 |
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2.6 |
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2.1 |
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21.9 |
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— |
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— |
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— |
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51.6 |
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42.7 |
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8.9 |
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— |
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— |
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— |
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Turkey |
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25.5 |
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30.3 |
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(15.9 |
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11.4 |
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14.1 |
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(19.5 |
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11.4 |
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14.1 |
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(19.5 |
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— |
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— |
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— |
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44.9 |
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46.6 |
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(1.7 |
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— |
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— |
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— |
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South & Southeast Asia |
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Indonesia |
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83.4 |
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80.9 |
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3.1 |
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26.4 |
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26.9 |
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(2.0 |
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26.4 |
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26.9 |
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(2.0 |
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— |
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— |
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— |
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31.6 |
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33.3 |
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(1.7 |
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— |
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— |
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— |
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Philippines |
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17.8 |
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20.6 |
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(13.5 |
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12.5 |
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14.5 |
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(14.0 |
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12.5 |
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14.5 |
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(14.0 |
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— |
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— |
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— |
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69.9 |
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70.3 |
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(0.4 |
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— |
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— |
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— |
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East Asia & Australia |
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Australia |
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2.8 |
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3.1 |
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(11.0 |
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0.8 |
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1.0 |
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(21.8 |
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0.8 |
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1.0 |
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(21.8 |
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— |
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— |
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— |
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27.2 |
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31.0 |
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(3.8 |
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— |
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— |
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— |
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Japan |
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37.8 |
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36.9 |
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2.4 |
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11.9 |
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12.3 |
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(3.0 |
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5.7 |
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6.7 |
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(15.2 |
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6.3 |
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5.7 |
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11.4 |
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34.9 |
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33.0 |
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1.9 |
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17.6 |
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15.2 |
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2.4 |
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Korea |
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16.9 |
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17.1 |
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(1.4 |
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3.7 |
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4.3 |
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(14.5 |
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2.6 |
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2.8 |
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(8.4 |
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1.1 |
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1.4 |
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(26.4 |
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21.7 |
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25.3 |
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(3.6 |
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6.3 |
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8.5 |
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(2.2 |
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Latin America & Canada |
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Argentina |
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8.7 |
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9.1 |
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(4.8 |
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5.8 |
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6.6 |
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(13.1 |
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5.8 |
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6.6 |
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(13.1 |
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— |
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— |
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— |
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66.4 |
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73.2 |
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(6.8 |
) |
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— |
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— |
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— |
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Mexico |
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10.4 |
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10.1 |
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2.5 |
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7.3 |
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7.3 |
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(0.1 |
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7.3 |
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7.3 |
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(0.2 |
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— |
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— |
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— |
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70.0 |
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71.8 |
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(1.8 |
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0.1 |
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— |
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0.1 |
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(1) Market share estimates are calculated using IMS data |
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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. |
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Appendix 2 |
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PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
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Key Market Data |
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Years Ended December 31, |
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Market |
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Total Market, |
|
PMI Shipments, bio units |
|
PMI Market Share, % (1) |
|||||||||||||||||||||||||||||||||||||
|
|
Total |
|
Cigarette |
|
HTU |
|
Total |
|
HTU |
|||||||||||||||||||||||||||||||||
|
2019 |
2018 |
% |
|
2019 |
2018 |
% |
|
2019 |
2018 |
% |
|
2019 |
2018 |
% |
|
2019 |
2018 |
pp |
|
2019 |
2018 |
pp |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Total |
|
2,703.6 |
|
2,757.7 |
|
(2.0 |
) |
|
766.4 |
|
781.7 |
|
(2.0 |
) |
|
706.7 |
|
740.3 |
|
(4.5 |
) |
|
59.7 |
|
41.4 |
|
44.2 |
|
|
28.4 |
|
28.3 |
|
0.1 |
|
|
2.2 |
|
1.6 |
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
European Union |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
France |
|
37.9 |
|
40.9 |
|
(7.4 |
) |
|
17.0 |
|
18.5 |
|
(7.9 |
) |
|
16.9 |
|
18.4 |
|
(8.2 |
) |
|
0.1 |
|
— |
|
— |
|
|
45.0 |
|
45.5 |
|
(0.5 |
) |
|
0.2 |
|
0.1 |
|
0.1 |
|
|
Germany |
|
73.3 |
|
75.2 |
|
(2.5 |
) |
|
27.9 |
|
28.1 |
|
(0.7 |
) |
|
27.0 |
|
27.7 |
|
(2.5 |
) |
|
0.9 |
|
0.4 |
|
+100 |
|
|
38.0 |
|
37.3 |
|
0.7 |
|
|
1.2 |
|
0.5 |
|
0.7 |
|
|
Italy |
|
67.9 |
|
69.0 |
|
(1.5 |
) |
|
34.9 |
|
35.2 |
|
(1.1 |
) |
|
31.4 |
|
33.5 |
|
(6.5 |
) |
|
3.5 |
|
1.7 |
|
+100 |
|
|
51.8 |
|
51.8 |
|
— |
|
|
4.8 |
|
2.2 |
|
2.6 |
|
|
Poland |
|
46.2 |
|
43.2 |
|
6.8 |
|
|
19.0 |
|
17.9 |
|
6.1 |
|
|
17.9 |
|
17.6 |
|
1.8 |
|
|
1.1 |
|
0.4 |
|
+100 |
|
|
41.2 |
|
41.5 |
|
(0.3 |
) |
|
2.5 |
|
0.9 |
|
1.6 |
|
|
Spain |
|
45.3 |
|
45.0 |
|
0.8 |
|
|
14.5 |
|
14.1 |
|
2.7 |
|
|
14.1 |
|
13.9 |
|
1.6 |
|
|
0.3 |
|
0.2 |
|
84.4 |
|
|
31.3 |
|
32.1 |
|
(0.8 |
) |
|
0.7 |
|
0.4 |
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Eastern Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Russia |
|
|
226.5 |
|
238.9 |
|
(5.2 |
) |
|
68.0 |
|
68.0 |
|
— |
|
|
58.8 |
|
64.6 |
|
(9.0 |
) |
|
9.2 |
|
3.4 |
|
+100 |
|
|
30.1 |
|
28.3 |
|
1.8 |
|
|
3.8 |
|
1.0 |
|
2.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Middle East & Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Saudi Arabia |
|
20.8 |
|
20.6 |
|
0.7 |
|
|
9.2 |
|
7.4 |
|
24.9 |
|
|
9.2 |
|
7.4 |
|
24.9 |
|
|
— |
|
— |
|
— |
|
|
43.0 |
|
41.5 |
|
1.5 |
|
|
— |
|
— |
|
— |
|
|
Turkey |
|
|
118.9 |
|
118.5 |
|
0.3 |
|
|
51.9 |
|
55.0 |
|
(5.6 |
) |
|
51.9 |
|
55.0 |
|
(5.6 |
) |
|
— |
|
— |
|
— |
|
|
43.7 |
|
46.4 |
|
(2.7 |
) |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
South & Southeast Asia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Indonesia |
|
306.8 |
|
303.6 |
|
1.1 |
|
|
98.5 |
|
101.4 |
|
(2.9 |
) |
|
98.5 |
|
101.4 |
|
(2.9 |
) |
|
— |
|
— |
|
— |
|
|
32.1 |
|
33.4 |
|
(1.3 |
) |
|
— |
|
— |
|
— |
|
|
Philippines |
|
70.5 |
|
73.2 |
|
(3.7 |
) |
|
49.7 |
|
51.2 |
|
(2.9 |
) |
|
49.7 |
|
51.2 |
|
(2.9 |
) |
|
— |
|
— |
|
— |
|
|
70.5 |
|
69.9 |
|
0.6 |
|
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
East Asia & Australia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Australia |
|
12.0 |
|
12.8 |
|
(5.9 |
) |
|
3.3 |
|
3.8 |
|
(12.7 |
) |
|
3.3 |
|
3.8 |
|
(12.7 |
) |
|
— |
|
— |
|
— |
|
|
27.5 |
|
29.7 |
|
(2.2 |
) |
|
— |
|
— |
|
— |
|
|
Japan |
|
158.0 |
|
167.3 |
|
(5.6 |
) |
|
52.4 |
|
52.3 |
|
0.3 |
|
|
26.6 |
|
30.8 |
|
(13.7 |
) |
|
25.8 |
|
21.4 |
|
20.6 |
|
|
34.5 |
|
34.0 |
|
0.5 |
|
|
17.1 |
|
15.5 |
|
1.6 |
|
|
Korea |
|
68.6 |
|
69.5 |
|
(1.4 |
) |
|
15.5 |
|
17.4 |
|
(11.1 |
) |
|
10.8 |
|
12.0 |
|
(9.7 |
) |
|
4.6 |
|
5.4 |
|
(14.3 |
) |
|
22.6 |
|
25.0 |
|
(2.4 |
) |
|
6.8 |
|
7.8 |
|
(1.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Latin America & Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Argentina |
|
33.4 |
|
35.0 |
|
(4.6 |
) |
|
23.3 |
|
25.8 |
|
(9.4 |
) |
|
23.3 |
|
25.8 |
|
(9.4 |
) |
|
— |
|
— |
|
— |
|
|
70.0 |
|
73.8 |
|
(3.8 |
) |
|
— |
|
— |
|
— |
|
|
Mexico |
|
35.5 |
|
35.5 |
|
(0.1 |
) |
|
23.8 |
|
24.2 |
|
(1.4 |
) |
|
23.8 |
|
24.2 |
|
(1.4 |
) |
|
— |
|
— |
|
— |
|
|
67.1 |
|
68.0 |
|
(0.9 |
) |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
(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 |
|||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
|||||||||||||||||
Reconciliation of Non-GAAP Measures |
|||||||||||||||||
Shipment Volume Adjusted for the Impact of RBH Deconsolidation |
|||||||||||||||||
(in million units) / (Unaudited) |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total PMI |
|
Quarters Ended December 31, |
|
Years Ended December 31, |
||||||||||||
|
|
|
2019 |
2018 |
|
% Change |
|
2019 |
2018 |
|
% Change |
||||||
|
Total Shipment Volume |
|
192,207 |
|
202,413 |
|
|
(5.0 |
)% |
|
766,361 |
|
781,687 |
|
|
(2.0 |
)% |
|
Shipment Volume for RBH-owned brands (1) |
|
|
|
(1,413 |
) |
|
|
|
|
|
(4,335 |
) |
(2) |
|
||
|
Total Shipment Volume |
|
192,207 |
|
201,000 |
|
(3) |
(4.4 |
)% |
|
766,361 |
|
777,352 |
|
(3) |
(1.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Latin America & Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total Shipment Volume |
|
19,484 |
|
21,958 |
|
|
(11.3 |
)% |
|
72,592 |
|
80,885 |
|
|
(10.3 |
)% |
|
Shipment Volume for RBH-owned brands |
|
|
|
(1,399 |
) |
|
|
|
|
|
(4,295 |
) |
(2) |
|
||
|
Total Shipment Volume |
|
19,484 |
|
20,559 |
|
(3) |
(5.2 |
)% |
|
72,592 |
|
76,590 |
|
(3) |
(5.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
(1) Includes Duty Free sales in Canada |
||||||||||||||||
|
(2) Represents volume for RBH-owned brands from March 22, 2018 through end of period date |
||||||||||||||||
|
(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 |
||||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
||||||||||||||||||||||||
Diluted Earnings Per Share (EPS) |
||||||||||||||||||||||||
($ in millions, except per share data) / (Unaudited) |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Quarters Ended |
|
Diluted EPS |
|
Years Ended |
||||||||||||||||||
|
|
December 31, |
|
|
December 31, |
|||||||||||||||||||
|
|
|
|
$ |
1.04 |
|
|
|
|
2019 Diluted Earnings Per Share (1) |
|
|
|
$ |
4.61 |
|
|
|
||||||
|
|
|
|
$ |
1.23 |
|
|
|
|
2018 Diluted Earnings Per Share (1) |
|
|
|
$ |
5.08 |
|
|
|
||||||
|
|
|
|
$ |
(0.19 |
) |
|
|
|
Change |
|
|
|
$ |
(0.47 |
) |
|
|
||||||
|
|
|
|
(15.4 |
)% |
|
|
|
% Change |
|
|
|
(9.3 |
)% |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
Reconciliation: |
|
|
|
|
|
|
||||||||||
|
|
|
|
$ |
1.23 |
|
|
|
|
2018 Diluted Earnings Per Share (1) |
|
|
|
$ |
5.08 |
|
|
|
||||||
|
|
|
|
— |
|
|
|
|
2018 Asset impairment and exit costs |
|
|
|
— |
|
|
|
||||||||
|
|
|
|
0.02 |
|
|
|
|
2018 Tax items |
|
|
|
0.02 |
|
|
|
||||||||
|
|
|
|
(0.20 |
) |
|
|
|
2019 Asset impairment and exit costs |
|
|
|
(0.23 |
) |
|
|
||||||||
|
|
|
|
— |
|
|
|
|
2019 Canadian tobacco litigation-related expense |
|
|
|
(0.09 |
) |
|
|
||||||||
|
|
|
|
— |
|
|
|
|
2019 Loss on deconsolidation of RBH |
|
|
|
(0.12 |
) |
|
|
||||||||
|
|
|
|
— |
|
|
|
|
2019 Russia excise and VAT audit charge |
|
|
|
(0.20 |
) |
|
|
||||||||
|
|
|
|
0.02 |
|
|
|
|
2019 Fair value adjustment for equity security investments |
|
|
|
0.02 |
|
|
|
||||||||
|
|
|
|
— |
|
|
|
|
2019 Tax items |
|
|
|
0.04 |
|
|
|
||||||||
|
|
|
|
— |
|
|
|
|
Currency |
|
|
|
(0.13 |
) |
|
|
||||||||
|
|
|
|
(0.01 |
) |
|
|
|
Interest |
|
|
|
0.04 |
|
|
|
||||||||
|
|
|
|
(0.07 |
) |
|
|
|
Change in tax rate |
|
|
|
(0.04 |
) |
|
|
||||||||
|
|
|
|
0.05 |
|
|
|
|
Operations (2) |
|
|
|
0.22 |
|
|
|
||||||||
|
|
|
|
$ |
1.04 |
|
|
|
|
2019 Diluted Earnings Per Share (1) |
|
|
|
$ |
4.61 |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(1) Basic and diluted EPS were calculated using the following (in millions): |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Quarters Ended |
|
|
|
Years Ended |
||||||||||||||||||
|
|
December 31, |
|
|
|
December 31, |
||||||||||||||||||
|
|
2019 |
|
2018 |
|
|
|
2019 |
|
2018 |
||||||||||||||
|
|
$ 1,616 |
|
$ 1,910 |
|
Net Earnings attributable to PMI |
|
$ 7,185 |
|
$ 7,911 |
||||||||||||||
|
|
4 |
|
3 |
|
Less distributed and undistributed earnings attributable |
|
17 |
|
16 |
||||||||||||||
|
|
$ 1,612 |
|
$ 1,907 |
|
Net Earnings for basic and diluted EPS |
|
$ 7,168 |
|
$ 7,895 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
1,556 |
|
1,555 |
|
Weighted-average shares for basic EPS |
|
1,555 |
|
1,555 |
||||||||||||||
|
|
1 |
|
— |
|
Plus Contingently Issuable Performance Stock Units |
|
1 |
|
— |
||||||||||||||
|
|
1,557 |
|
1,555 |
|
Weighted-average shares for diluted EPS |
|
1,556 |
|
1,555 |
||||||||||||||
|
|
|
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(2) Includes the impact of shares outstanding and share-based payments |
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Schedule 2 |
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PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries |
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Reconciliation of Non-GAAP Measures |
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Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency, |
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and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency |
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(Unaudited) |
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Quarters Ended December 31, |
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Years Ended December 31, |
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2019 |
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2018 |
% Change |
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2019 |
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2018 |
% Change |
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$ |
1.04 |
$ |
1.23 |
(15.4 |
)% |
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Reported Diluted EPS |
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$ |
4.61 |
$ |
5.08 |
(9.3 |
)% |
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— |
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Currency |
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(0.13) |
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$ |
1.04 |
$ |
1.23 |
(15.4 |
)% |
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Reported Diluted EPS, excluding Currency |
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$ |
4.74 |
$ |
5.08 |
(6.7 |
)% |
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