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Philip Morris International Inc. (PMI) Reports 2017 Results; Excluding Currency & Tax Items, Full-Ye

--(BUSINESS WIRE)--NEW YORK

2017 Full-Year

2017 Fourth-Quarter

2018 Full-Year Forecast

Impact of Tax ReformU.S.

In , the Tax Cuts and Jobs Act (the “Act”) was signed into law. The principal elements of the Act relevant to our consolidated financial statements for the year ended , were:December 2017December 31, 2017

In connection with these elements of the Act, PMI recognized a provisional expense of , which was included as a component of income tax expense as follows:$1.6 billion

While the impacts of the Act reduced net earnings by , there was no net impact on operating cash flows for the year, as the changes in deferred taxes and income taxes payable offset the net earnings impact. At , PMI recorded an income tax payable of representing the transition tax of , primarily offset by foreign tax credits related to foreign withholding taxes previously paid of . The income tax payable is due over an 8-year period beginning in 2018.$1.6 billion$1.7 billion$2.2 billion$0.5 billionDecember 31, 2017

Other provisions of the Act did not have a significant impact on PMI’s consolidated financial statements for the year ended , but may impact the effective tax rate in subsequent periods.December 31, 2017

The Act has significant complexity and our final tax liability may materially differ from these estimates, due to, among other things, changes in PMI's assumptions, guidance that may be issued by the and the and related interpretations and clarifications of tax law. For the transition tax, further information is required to finalize the estimated amount of accumulated foreign earnings as well as to validate the amount of earnings represented by the aggregate foreign cash position as defined in the Act. For the re-measurement of the deferred tax assets and liabilities, further analysis will be required to refine PMI's calculations and related account balances. PMI will complete the remaining elements of its analysis during 2018, and any adjustments to the provisional charges will be included in income tax expense or benefit in the appropriate period, in accordance with guidance provided by Staff Accounting Bulletin No. 118.U.S. Treasury DepartmentInternal Revenue Service

Following the enactment of the Act, PMI's 2018 full-year diluted earnings per share forecast -- based on the current interpretation of the legislation -- assumes a full-year effective tax rate of approximately 28%, subject to future regulatory developments and earnings mix by taxing jurisdiction. The difference between the 21% statutory rate under the new law and PMI's effective rate reflects the fact that PMI operates in markets outside of and is driven by three main factors: foreign tax rate differences, non-deductibility of interest expense and a partial disallowance of foreign tax credits related to the application of the rules for global intangible low-taxed income.the United States

2017 FULL-YEAR AND FOURTH-QUARTER CONSOLIDATED RESULTS

(/Euronext Paris: PM) today announced its 2017 full-year and fourth-quarter results.Philip Morris International Inc.NYSE

" ," said , Chief Executive Officer.A strong fourth-quarter performance helped drive robust full-year results, exemplified by currency-neutral, double-digit adjusted earnings per share growth, despite previously disclosed challenges in andRussiaSaudi ArabiaAndré Calantzopoulos

" ."The excellent performance of our flagship smoke-free product IQOS -- not only in , but also in the vast majority of our launch geographies -- underscored its great promise and the commitment of our employees to lead the transformation of our industry towards a smoke-free future. Continued investment behind IQOS in 2018 is expected to further drive its positive momentumAsia

" ."For the first time since 2011, we have entered the year with annual guidance that reflects a positive currency impact.Our combustible product portfolio provides us with a strong foundation.The confirmed potential of our smoke-free alternatives reinforces our strong determination to deploy all necessary resources to accelerate their growth, which will drive our business success and ability to generously reward our shareholders over the long term

Conference Call

A conference call, hosted by , Chief Executive Officer, and , Chief Financial Officer, with members of the investor community and news media, will be webcast at , on . Access is at . The audio webcast may also be accessed on iOS or Android devices by downloading PMI’s free Investor Relations Mobile Application at .André CalantzopoulosMartin King9:00 a.m., Eastern TimeFebruary 8, 2018www.pmi.com/2017Q4earningswww.pmi.com/irapp

Dividends

During 2017, PMI increased its regular quarterly dividend by 2.9%, from to , representing an annualized rate of per common share. Since its spin-off in , PMI has increased its regular quarterly dividend by 132.6% from the initial annualized rate of per common share, or a compound annual growth rate of 9.8%.$1.04$1.07$4.28$1.84March 2008

Key Terms, Definitions and Explanatory Notes

General

Financial

Reduced-Risk Products

SHIPMENT VOLUME

2017 Full-Year

Estimated international cigarette and heated tobacco unit volume, excluding and , of 2.8 trillion, down by 2.8%Chinathe United States

PMI's total shipment volume decreased by 2.7%, principally due to:

Excluding the favorable net impact of estimated cigarette and heated tobacco unit inventory movements of approximately 3.3 billion units, PMI's total shipment volume decreased by 3.1%. The favorable inventory movements were driven primarily by approximately 8.5 billion units net in reflecting: the increasing demand for , anticipated to further increase in the first quarter of 2018 following a planned lifting of the restriction on device sales; the establishment of appropriate distributor inventory levels of heated tobacco units, given the current high dependence on a single manufacturing center; and the transition from air freight to sea freight of heated tobacco units, largely completed in the fourth quarter of 2017. These favorable inventory movements were partly offset by a reduction of combustible product inventory levels, mainly in: the EU, notably and ; and EEMA, notably , and .JapanItalySpainNorth AfricaRussiaSaudi ArabiaHeatSticksIQOS

2017 Fourth-Quarter

PMI's total shipment volume increased by 3.8%, principally driven by:

The increase in PMI's total shipment volume was partly offset by lower cigarette shipment volume in:

Excluding the favorable net impact of estimated cigarette and heated tobacco unit inventory movements of approximately 5.0 billion units, driven primarily by , reflecting the same dynamics as for the full year, PMI's total shipment volume increased by 1.4%.Japan

PMI shipment volume by brand is shown in the table below.

2017 Full-Year

PMI's cigarette shipment volume of decreased in: the EU, mainly due to , and ; EEMA, predominantly due to , reflecting the impact of the new excise tax implemented in that resulted in the doubling of the retail price of from to per pack, partly offset by , notably and , and ; , mainly due to and , principally reflecting out-switching to heated tobacco products, partly offset by and ; and & , mainly due to and .MarlboroMarlboroGreeceItalySpainSaudi ArabiaNorth AfricaAlgeriaEgyptTurkeyAsiaJapanKoreaIndonesiathe PhilippinesLatin AmericaCanadaArgentinaBrazilJune 2017SAR 12SAR 24

PMI's cigarette shipment volume of the following brands decreased: , mainly due to , and , partly offset by , , and ; , mainly due to , and , partly offset by ; , mainly due to , and ; , principally due to ; and "Others," mainly due to low-price brands in , , , and .L&MParliamentBond StreetLarkRussiaSaudi ArabiaTurkeyAlgeriaArgentinaColombiaKazakhstanJapanRussiaSaudi ArabiaKazakhstanKazakhstanRussiaUkraineJapanIndonesiaPakistanthe PhilippinesRussiaUkraine

PMI's cigarette shipment volume of the following brands increased: notably driven by , , , , and , partly offset by and ; and , mainly driven by and , notably reflecting successful portfolio consolidation of local, low-price brands in "Others," partly offset by and .Chesterfield,Philip MorrisArgentinaBrazilColombiaSaudi ArabiaTurkeyVenezuelaItalyRussiaRussiaUkraineArgentinaItaly

2017 Fourth-Quarter

PMI's cigarette shipment volume of was essentially flat, with declines in: EEMA, predominantly due to , reflecting the same dynamic as for the full year, partly offset by , notably and ; and & , mainly due to and ; offset by growth in the EU, driven notably by , and . Cigarette shipment volume of was flat in , with growth in and offset by declines in and , principally reflecting out-switching to heated tobacco productsMarlboroMarlboro.Saudi ArabiaNorth AfricaAlgeriaEgyptLatin AmericaCanadaArgentinaBrazilFranceGermanyItalyAsiaIndonesiathe PhilippinesJapanKorea

PMI's cigarette shipment volume of the following brands decreased: , mainly due to and , partly offset by , and ; , mainly due to , and ; , principally due to , partly offset by ; and "Others," mainly due to local, low-price brands in , , and , partly offset by premium local brands in .L&MBond StreetLarkRussiaSaudi ArabiaAlgeriaGermanyKazakhstanKazakhstanRussiaUkraineJapanTurkeyIndonesiathe PhilippinesRussiaUkraineIndonesia

PMI's cigarette shipment volume of the following brands increased: , notably driven by and , partly offset by , and ; mainly driven by , , reflecting successful brand portfolio consolidation, , and , partly offset by and ; and , mainly driven by and , notably reflecting successful portfolio consolidation of local, low-price brands in "Others," partly offset by and .ParliamentChesterfield,Philip MorrisRussiaTurkeyJapanKoreaSaudi ArabiaArgentinaBrazilColombiaSaudi ArabiaTurkeyItalyRussiaRussiaUkraineArgentinaItaly

NET REVENUES (Excluding Excise Taxes)

Note: Sum of product categories or Regions might not foot to total PMI due to rounding.

2017 Full-Year

Net revenues, excluding excise taxes, of increased by 7.7%, as detailed above and in the attached Schedule 14. Excluding unfavorable currency of , net revenues, excluding excise taxes, increased by 9.4%, driven by a favorable pricing variance of from across all Regions, despite low price realization in , and favorable volume/mix of , driven by and despite unfavorable volume/mix in EEMA, mainly due to and .$28.7 billion$437 million$1.4 billion$1.1 billionRussiaAsiaRussiaSaudi Arabia

2017 Fourth-Quarter

Net revenues, excluding excise taxes, of increased by 19.0%, as detailed above and in the attached Schedule 10. Excluding favorable currency of , net revenues, excluding excise taxes, increased by 18.8%, driven by a favorable pricing variance of from across all Regions, despite low price realization in , and favorable volume/mix of , driven by the EU and and despite unfavorable volume/mix in EEMA, mainly due to .$8.3 billion$14 million$302 million$1.0 billionRussiaAsiaSaudi Arabia

OPERATING COMPANIES INCOME

2017 Full-Year

Operating companies income of increased by 6.0%. Excluding unfavorable currency of , operating companies income increased by 7.4%, reflecting a favorable pricing variance across all Regions, and favorable volume/mix of , partly offset by an unfavorable cost comparison, primarily reflecting increased investment behind reduced-risk products, predominantly in the EU and .$11.8 billion$155 million$7 millionAsia

Adjusted operating companies income and margin are shown in the table below and detailed in Schedule 16. Adjusted operating companies income, excluding unfavorable currency, increased by 7.4%. Adjusted operating companies income margin, excluding unfavorable currency, decreased by 0.8 points to 41.0%, reflecting the factors mentioned above, as detailed on Schedule 16.

2017 Fourth-Quarter

In the quarter, operating companies income of increased by 25.5%. Excluding favorable currency of , operating companies income increased by 18.2%, mainly driven by a favorable pricing variance across all Regions and favorable volume/mix of , driven by the EU and , partly offset by an unfavorable cost comparison, primarily reflecting increased investment behind reduced-risk products, predominantly in the EU.$3.4 billion$196 million$491 millionAsia

Adjusted operating companies income and margin are shown in the table below and detailed in Schedule 12. Adjusted operating companies income, excluding favorable currency, increased by 18.2%. Adjusted operating companies income margin, excluding favorable currency, decreased by 0.1 point to 38.5%, reflecting the factors mentioned above, as detailed on Schedule 12.

*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

EUROPEAN UNION REGION (EU)

2017 Full-Year

Net revenues, excluding excise taxes, of , increased by 1.9%. Excluding favorable currency of , net revenues, excluding excise taxes, increased by 1.4%, mainly reflecting a favorable pricing variance of , driven principally by , and the , partly offset by , and . The favorable pricing was partly offset by unfavorable volume/mix of , mainly driven by , and the , partly offset by and .$8.3 billion$45 million$156 million$45 millionGermanyPolandUnited KingdomFranceGreeceItalyGermanySpainUnited KingdomPolandRomania

Operating companies income of decreased by 5.5%. Excluding unfavorable currency of , operating companies income decreased by 4.4%, mainly due to: unfavorable volume/mix of , mainly in , and the , partly offset by and ; and increased investment behind reduced-risk products across the Region; partly offset by favorable pricing.$3.8 billion$43 million$119 millionGermanySpainUnited KingdomPolandRomania

Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 16. Adjusted operating companies income, excluding unfavorable currency, decreased by 4.4%. Adjusted operating companies income margin, excluding unfavorable currency, decreased by 2.7 points to 46.2%, reflecting the factors mentioned above, as detailed on Schedule 16.

2017 Fourth-Quarter

Net revenues, excluding excise taxes, of , increased by 16.5%. Excluding favorable currency of , net revenues, excluding excise taxes, increased by 9.3%, mainly reflecting; a favorable pricing variance of , driven principally by and the , partly offset by , and ; and favorable volume/mix of across the Region, notably in and .$2.3 billion$139 million$34 million$147 millionGermanyUnited KingdomFranceGreeceItalyGermanyItaly

Operating companies income of increased by 10.5%. Excluding favorable currency of , operating companies income increased by 6.1%, mainly driven by: a favorable pricing variance and favorable volume/mix of across the Region, notably in and ; partly offset by increased investment behind reduced-risk products across the Region.$992 million$39 million$101 millionGermanyItaly

Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 12. Adjusted operating companies income, excluding favorable currency, increased by 6.1%. Adjusted operating companies income margin, excluding favorable currency, decreased by 1.4 points to 44.8%, reflecting the factors mentioned above, as detailed on Schedule 12.

*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

EU Total Market, PMI Shipment & Market Share Commentaries

2017 Full-Year

The estimated total market in the EU decreased by 1.9% to 492.1 billion units. market share was flat at 38.3%, with gains in , and offset by declines in and .PMI's RegionalFranceGermanyPolandItalySpain

PMI's total shipment volume decreased by 2.4% to 189.2 billion units, or by 1.9% excluding estimated net inventory movements, notably in and . The decrease in cigarette shipment volume of was mainly due to , and . The decrease in cigarette shipment volume of was mainly due to , and , partly offset by . The decrease in cigarette shipment volume of was mainly due to , and , partly offset by . The decrease in cigarette shipment volume of was mainly due to . The decrease in cigarette shipment volume of "Others" was due notably to in .ItalySpainGreeceItalySpainGermanyRomaniaSpainFranceItalyPortugalSpainPolandItalyItalyMarlboroL&MChesterfieldPhilip MorrisMuratti

2017 Fourth-Quarter

The estimated total market in the EU increased by 0.4% to 119.3 billion units. PMI's total shipment volume increased by 3.1% to 46.7 billion units, mainly driven by higher cigarette shipment volume in , and , partly offset by , as well as higher heated tobacco unit shipment volume. The increase in cigarette shipment volume of was notably driven by , and , partly offset by . The increase in cigarette shipment volume of was mainly driven by . The decrease in cigarette shipment volume of was mainly due to , partly offset by . The decrease in cigarette shipment volume of was mainly due to and , partly offset by . The increase in cigarette shipment volume of "Others" was driven mainly by in and local brands in .FranceGermanyPortugalSpainFranceGermanyItalySpainGermanyItalyPolandItalySpainFranceItalyPortugalMarlboroL&MChesterfieldPhilip MorrisMerit

PMI's total market share increased by 0.7 points to 38.9%, with gains in , and , partly offset by declines in and .FranceGermanyItalyPolandSpain

Key Market Commentaries

In , estimated industry size, PMI shipment volume and market share performance, shown in the table below, include cigarettes and PMI's heated tobacco units.France

*Includes heated tobacco units.

For the full year, the estimated total market decreased by 1.2%. The increase in PMI's shipment volume was driven by higher market share, notably of , reflecting the growth of both Red and Gold in 30s packs launched in .MarlboroMarlboroMarch 2017

In the quarter, the estimated total market decreased by 1.0%. The increase in PMI's shipment volume was driven by higher market share, reflecting the same dynamics as for the full year.

In , estimated industry size, PMI shipment volume and market share performance, shown in the table below, include cigarettes and PMI's heated tobacco units.Germany

*Includes heated tobacco units.

For the full year, the estimated total market decreased by 1.6%, or by 2.7% excluding the net impact of estimated trade inventory movements, mainly reflecting the impact of price increases in . The decrease in PMI's shipment volume was mainly due to the lower total market, partly offset by higher market share.March 2017

In the quarter, the estimated total market increased by 4.2%. Excluding the net impact of estimated trade inventory movements, the estimated total market was flat. The increase in PMI's total shipment volume and market share largely reflected the benefit of the trade inventory movements.

In , estimated industry size, PMI shipment volume and market share performance, shown in the table below, include cigarettes and PMI's heated tobacco units.Italy

For the full year, the estimated total market decreased by 3.2%, partly reflecting the implementation of the Tobacco Product Directive's ban on pack sizes of ten cigarettes at the end of 2016. The decline of PMI's shipments, down by 3.6% excluding the net impact of distributor inventory movements, mainly reflected the lower total market, as well as lower cigarette market share, principally due to , partly reflecting the ban on pack sizes of ten cigarettes, and low-price , impacted by the growth of the super-low price segment, partly offset by and in "Others."MarlboroPhilip MorrisHEETSMerit

In the quarter, the estimated total market increased by 0.7%, largely reflecting a favorable comparison with the fourth quarter of 2016 driven by estimated trade inventory movements associated with the implementation of the Tobacco Products Directive. Excluding these inventory movements, the estimated total market declined by 2.9%. The increase of PMI's shipments mainly reflected the higher total market and market share, principally driven by: , benefiting from a favorable comparison with the fourth quarter of 2016 following the aforementioned ban on pack sizes of ten cigarettes; ; and in "Others," partly offset by low-price , impacted by the growth of the super-low price segment.MarlboroHEETSMeritPhilip Morris

In , estimated industry size, PMI shipment volume and market share performance, shown in the table below, include cigarettes and PMI's heated tobacco units.Poland

For the full year, the estimated total market increased by 0.9%. The increase in PMI's shipment volume was primarily driven by the higher total market and higher market share, driven by , benefiting from brand support, partly offset by , reflecting pressure from competitive brands in the below premium segment.ChesterfieldMarlboro

In the quarter, the estimated total market increased by 4.8%. The increase in PMI's shipment volume primarily reflected the higher total market, partly offset by lower market share, notably of and impacted by the growth of the super-low price segment, partly offset by and .MarlboroL&M,ChesterfieldHEETS

In , estimated industry size, PMI shipment volume and market share performance, shown in the table below, include cigarettes and PMI's heated tobacco units.Spain

*Includes heated tobacco units.

For the full year, the estimated total market decreased by 3.5%, or by 2.5% excluding the net impact of estimated trade inventory movements. The decline of PMI's shipment volume, down by 8.0% excluding the net impact of distributor inventory movements, mainly reflected the lower total market, and lower market share, due to , reflecting the impact of price increases, particularly above the round €5.00 per pack price point in the vending channel, as well as a challenging comparison with 2016 in which the market share of grew by 1.0 point.MarlboroMarlboro

In the quarter, the estimated total market decreased by 4.4%, or by 1.4% excluding the net impact of estimated trade inventory movements. The decline of PMI's shipment volume, down by 8.7% excluding the net impact of distributor inventory movements, was mainly due to the lower total market and lower market share, principally due to , mainly reflecting the impact of price increases.Marlboro

, & (EEMA)EASTERN EUROPEMIDDLE EASTAFRICA REGION

2017 Full-Year

Net revenues, excluding excise taxes, of decreased by 4.3%. Excluding unfavorable currency of , net revenues, excluding excise taxes, decreased by 0.1%, principally due to unfavorable volume/mix of , primarily reflecting a lower total market in , and a lower total market and market share in , mainly resulting from the implementation of the new excise tax. The unfavorable volume/mix was partly offset by a favorable pricing variance of , despite low price realization in , driven notably by and .$6.7 billion$291 million$374 million$364 millionRussiaSaudi ArabiaRussiaEgyptUkraine

Operating companies income of decreased by 4.2%. Excluding favorable currency of , operating companies income decreased by 6.9%, principally due to: unfavorable volume/mix of , predominantly in and , partly offset by a favorable pricing variance.$2.9 billion$81 million$344 millionRussiaSaudi Arabia

Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 16. Adjusted operating companies income, excluding favorable currency, decreased by 6.9%. Adjusted operating companies income margin, excluding favorable currency, decreased by 2.9 points to 40.2%, reflecting the factors mentioned above, as detailed on Schedule 16.

2017 Fourth-Quarter

Net revenues, excluding excise taxes, of decreased by 1.9%. Excluding unfavorable currency of , net revenues, excluding excise taxes, decreased by 0.6%, principally due to unfavorable volume/mix of , primarily reflecting a lower total market in , and a lower total market and market share in , mainly resulting from the implementation of the new excise tax, partly offset by and . The unfavorable volume/mix was partly offset by a favorable pricing variance of , driven mainly by , notably , , despite low price realization, and , partly offset by .$1.8 billion$23 million$30 million$19 millionRussiaSaudi ArabiaTurkeyNorth AfricaNorth AfricaEgyptRussiaUkraineTurkey

Operating companies income of increased by 11.6%. Excluding favorable currency of , operating companies income decreased by 30.5%, principally due to unfavorable volume/mix of , and unfavorable costs compared to the fourth quarter of 2016 due to: increased investment behind reduced-risk products; investment income in ; and other operating costs, primarily in ; partly offset by a favorable pricing variance.$700 million$264 million$45 millionRussiaSaudi Arabia

Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 12. Adjusted operating companies income, excluding favorable currency, decreased by 30.5%. Adjusted operating companies income margin, excluding favorable currency, decreased by 10.5 points to 24.4%, reflecting the factors mentioned above, as detailed on Schedule 12.

*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

EEMA Total Market, PMI Shipment & Market Share Commentaries

2017 Full-Year

The estimated total market in EEMA decreased by 2.8% to 1.0 trillion units. market share decreased by 0.3 points to 24.9%.PMI's Regional

PMI's total shipment volume decreased by 5.1% to 257.7 billion units, mainly reflecting: lower cigarette shipment volume in , - where PMI's cigarette shipment volume declined by 35.8%, impacted by the new excise tax implemented in that resulted in the doubling of retail prices - and ; partly offset by higher cigarette shipment volume in , notably , and higher heated tobacco unit shipment volume. The decrease in cigarette shipment volume of was predominantly due to , reflecting the impact of the excise tax that resulted in the doubling of the brand's retail price from to per pack, partly offset by , mainly and , and . The decrease in cigarette shipment volume of was mainly due to , and , partly offset by and . The decrease in cigarette shipment volume of was mainly due to , and . The decrease in cigarette shipment volume of was mainly due to and , partly offset by . The increase in cigarette shipment volume of was driven mainly by and , largely reflecting successful portfolio consolidation of local, low-price brands in "Others."RussiaSaudi ArabiaUkraineNorth AfricaAlgeriaSaudi ArabiaNorth AfricaAlgeriaEgyptTurkeyRussiaSaudi ArabiaTurkeyAlgeriaKazakhstanKazakhstanRussiaUkraineRussiaSaudi ArabiaKazakhstanRussiaUkraineJune 2017MarlboroL&MBond StreetParliamentPhilip MorrisSAR 12SAR 24

2017 Fourth-Quarter

PMI's total shipment volume decreased by 1.0% to 67.2 billion units, mainly reflecting: lower cigarette shipment volume in , and - where PMI's cigarette shipment volume declined by 60.3%, reflecting the impact of the aforementioned excise tax - partly offset by , notably , and , as well as higher heated tobacco shipment volume. The decrease in cigarette shipment volume of was predominantly due to , reflecting the same dynamic as for the full year, partly offset by , notably , and . The decrease in cigarette shipment volume of was mainly due to and , partly offset by and . The decrease in cigarette shipment volume of was mainly due to , and . The increase in cigarette shipment volume of was mainly driven by and , partly offset by . The increase in cigarette shipment volume of was mainly driven by and , largely reflecting successful portfolio consolidation of local, low-price brands in "Others."RussiaSaudi ArabiaNorth AfricaAlgeriaTurkeySaudi ArabiaNorth AfricaAlgeriaTurkeyRussiaSaudi ArabiaAlgeriaKazakhstanKazakhstanRussiaUkraineRussiaTurkeySaudi ArabiaRussiaUkraineMarlboroL&MBond StreetParliamentPhilip Morris

Key Market Commentaries

In , estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance are shown in the table below.North Africa

For the full year, the estimated total cigarette market increased by 1.9%, mainly driven by , partially offset by . The increase in PMI's cigarette shipment volume was mainly driven by the higher cigarette market, as well as higher cigarette market share, notably of in , partly offset by in .EgyptTunisiaAlgeriaEgyptMarlboroL&M

In the quarter, the estimated total cigarette market increased by 8.3%, mainly driven by and , partially offset by . The increase in PMI's cigarette shipment volume mainly reflected higher cigarette market and market share, notably of in and and in .AlgeriaEgyptTunisiaAlgeriaEgyptAlgeriaMarlboroL&M

In , estimated industry size and PMI shipment volume, shown in the table below, include cigarettes and PMI's heated tobacco units. Market share performance, as measured by Nielsen and shown in the table below, reflects that of cigarettes.Russia

For the full year, the estimated total market decreased by 7.2%, reflecting the impact of excise tax-driven price increases and an increase in the prevalence of illicit trade. The decline of PMI's shipment volume was mainly due to the lower total market. PMI's market share decreased by 0.1 point. The decline of "Others" largely reflected the successful portfolio consolidation of local, low-price brands into .Philip Morris

In the quarter, the estimated total market decreased by 6.4%, reflecting the same dynamics as for the full-year. The decline of PMI's shipment volume was mainly due to the lower total market. The decrease in PMI's market share was mainly due to , largely reflecting the impact of competitive product offerings in the low price segment, partly offset by , as well as , reflecting the same dynamic as in the quarter.Bond StreetMarlboroPhilip Morris

In , estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance, as measured by Nielsen, are shown in the table below.Turkey

For the full year, the estimated total cigarette market increased by 0.7%. Excluding the net impact of estimated trade inventory movements, the estimated total cigarette market declined by 1.6%. The decrease in PMI's cigarette market share, as measured by Nielsen, was mainly due to , and and in "Others," partly offset by , principally reflecting competitive pressure from super-low price alternatives.LarkL&MMurattiChesterfield

In the quarter, the estimated total cigarette market increased by 9.8%. Excluding the net impact of estimated trade inventory movements ahead of speculated January 2018 price increases, the estimated total cigarette market increased by 6.3%. The increase in PMI's cigarette shipments was mainly due to the higher total market. The decrease in PMI's cigarette market share, as measured by Nielsen, was mainly due to and in "Others," partly offset by , reflecting competitive pressure from super-low price alternatives.L&MMurattiChesterfield

In , estimated industry size and PMI shipment volume, shown in the table below, include cigarettes and PMI's heated tobacco units. Market share performance, as measured by Nielsen and shown in the table below, reflects that of cigarettes.Ukraine

For the full year, the estimated total market decreased by 8.2%, mainly due to the impact of price increases and an increase in the prevalence of illicit trade. The decrease in PMI's shipment volume was primarily due to the lower total market, as well as lower cigarette market share, as measured by Nielsen, notably of low-price , reflecting competitive pressure from lower-priced alternatives, partly offset by and , following the successful portfolio consolidation of a local, low-price brand in "Others."Bond StreetParliamentPhilip Morris

In the quarter, the estimated total market decreased by 3.8%, or by 7.0% excluding the net impact of estimated trade inventory movements, mainly due to the impact of price increases. The decrease in PMI's cigarette market share, as measured by Nielsen, reflected the same dynamics as for the quarter.

ASIA REGION

2017 Full-Year

Net revenues, excluding excise taxes, of $10.8 billion increased by 24.3%. Excluding unfavorable currency of $137 million, net revenues, excluding excise taxes, increased by 25.9%, reflecting: a favorable pricing variance of $559 million, driven principally by , , and ; and a favorable volume/mix of $1.7 billion, driven by heated tobacco unit volume in and , partly offset by unfavorable cigarette volume/mix, notably in , reflecting a lower total market impacted by excise tax-driven price increases, and .AustraliaIndonesiaJapanthe PhilippinesJapanKoreaAustraliaIndonesia

Operating companies income of $4.1 billion increased by 29.8%. Excluding unfavorable currency of $123 million, operating companies income increased by 33.7%, mainly driven by a favorable pricing variance and favorable volume/mix of $622 million, mainly in and , partly offset by and . The increase was partly offset by higher costs, principally related to increased investment behind reduced-risk products.JapanKoreaAustraliaIndonesia

Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 16. Adjusted operating companies income, excluding unfavorable currency, increased by 33.7%. Adjusted operating companies income margin, excluding unfavorable currency, increased by 2.3 points to 39.1%, reflecting the factors mentioned above, as detailed on Schedule 16.

2017 Fourth-Quarter

Net revenues, excluding excise taxes, of $3.4 billion increased by 40.5%. Excluding unfavorable currency of $104 million, net revenues, excluding excise taxes, increased by 44.8%, reflecting: a favorable pricing variance of $166 million, driven principally by , , and , partly offset by ; and a favorable volume/mix of $929 million, predominantly driven by heated tobacco unit volume in and , as well as cigarette volume in , partly offset by cigarette volume in , reflecting the same dynamic as for the full year, and .AustraliaIndonesiaJapanthe PhilippinesKoreaJapanKoreathe PhilippinesAustraliaIndonesia

Operating companies income of $1.4 billion increased by 53.7%. Excluding unfavorable currency of $97 million, operating companies income increased by 64.4%, mainly driven by a favorable pricing variance and favorable volume/mix of $471 million, mainly in , and , partly offset by and .JapanKoreathe PhilippinesAustraliaIndonesia

Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 12. Adjusted operating companies income, excluding unfavorable currency, increased by 64.4%. Adjusted operating companies income margin, excluding unfavorable currency, increased by 5.0 points to 42.2%, reflecting the factors mentioned above, as detailed on Schedule 12.

*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

Asia Total Market, PMI Shipment & Market Share Commentaries

2017 Full-Year

The estimated total market in , excluding , decreased by 3.1% to 1.1 trillion units. PMI's Regional market share, excluding , was flat at 23.8%.AsiaChinaChina

PMI's total shipment volume of 267.0 billion units was flat, mainly reflecting: lower cigarette shipment volume in , , , - impacted by excise tax-driven price increases in 2017 and an increase in the prevalence of illicit trade - and , fully offset by higher heated tobacco unit shipment volume, mainly in and . The decrease in cigarette shipment volume of was mainly due to and , primarily reflecting out-switching to heated tobacco products, partly offset by and . The decrease in cigarette shipment volume of was principally due to . The decrease in cigarette shipment volume of was mainly due to and . The decrease in cigarette shipment volume of "Others" was mainly due to local, low-price brands in , and .IndonesiaJapanKoreaPakistanthe PhilippinesJapanKoreaJapanKoreaIndonesiathe PhilippinesJapanJapanKoreaIndonesiaPakistanthe PhilippinesMarlboroLarkParliament

PMI's total shipment volume benefited from the favorable net impact of estimated combustible and heated tobacco unit inventory movements, which were driven by approximately 8.5 billion units net in , reflecting: the increasing demand for , anticipated to further increase in the first quarter of 2018 following a planned lifting of the restriction on device sales; the establishment of appropriate distributor inventory levels of heated tobacco units, given the current high dependence on a single manufacturing center; and the transition from air freight to sea freight of heated tobacco units, largely completed in the fourth quarter of 2017. Excluding the impact of total estimated net inventory movements, PMI's total shipment volume decreased by 3.1%.JapanHeatSticksIQOS

2017 Fourth-Quarter

PMI's total shipment volume increased by 11.8% to 75.3 billion units, principally reflecting: higher heated tobacco unit shipment volume, mainly in and , and higher cigarette shipment volume in and , partly offset by lower cigarette shipment volume in and . Cigarette shipment volume of was flat, with growth in and offset by declines in and , principally reflecting out-switching to heated tobacco products The decrease in cigarette shipment volume of was principally due to . The decrease in cigarette shipment volume of was principally due to and . The decrease in cigarette shipment volume of "Others" was mainly due to low-price brands in and .JapanKoreaIndonesiathe PhilippinesJapanKoreaIndonesiathe PhilippinesJapanKoreaJapanJapanKoreaIndonesiathe PhilippinesMarlboro.LarkParliament

PMI's total shipment volume benefited from the favorable net impact of estimated combustible and heated tobacco unit inventory movements, which were driven by approximately 5.0 billion units in , reflecting the same dynamics as for the full year. Excluding the impact of total estimated net inventory movements, PMI's total shipment volume increased by 4.7%.Japan

Key Market Commentaries

In , estimated cigarette industry size, PMI cigarette shipment volume, cigarette market share and segmentation performance are shown in the tables below.Indonesia

For the full year, the estimated total cigarette market decreased by 2.6%, reflecting a soft economic environment and the impact of above-inflation excise tax-driven price increases. The decrease in PMI's shipments was mainly due to the lower total market and lower cigarette market share, notably due to a decline of , reflecting the impact of price increases, partly offset by a growth of , driven by the variant .Sampoerna UDji Sam SoeMagnum Mild

In the quarter, the estimated total cigarette market increased by 1.3%, reflecting a favorable comparison with the fourth quarter of 2016, which declined by 3.1%. The increase in PMI's cigarette shipments was primarily driven by the higher estimated total cigarette market, partly offset by lower cigarette market share, largely reflecting the same dynamics as for the full year.

In , PMI shipments reflect cigarette and heated tobacco unit volume. The estimated total market and PMI’s market share reflect total industry cigarette and heated tobacco unit volume.Japan

For the full year, the estimated total market decreased by 4.2%. PMI's shipment volume increased by 13.1%, excluding the net impact of estimated cigarette and heated tobacco unit distributor inventory movements, driven by higher market share ofHeatSticks.

In the quarter, the estimated total market decreased by 4.1%. PMI's shipment volume increased by 11.9%, excluding the net impact of estimated cigarette and heated tobacco unit distributor inventory movements, driven by higher market share ofHeatSticks.

In , PMI shipments reflect cigarette and heated tobacco unit volume. The estimated total market and PMI’s market share reflect total industry cigarette and heated tobacco unit volume.Korea

For the full year, the estimated total market decreased by 4.1%, or by 3.3% excluding the net impact of estimated cigarette trade inventory movements. The decrease in PMI's shipment volume was due to the lower total market, partly offset by higher market share driven by the May 2017 launch of .HEETS

In the quarter, the estimated total market decreased by 9.1%, or by 3.0% excluding the net impact of estimated cigarette trade inventory movements notably related to inventory movements in the fourth quarter of 2016 ahead of the implementation of graphic health warnings. The increase in PMI's shipment volume mainly reflected higher market share, mainly driven by the same dynamics as for the full year, despite PMI's principal competitors' new product launches.

In the , estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance are shown in the table below.Philippines

For the full year, the decline of the estimated total cigarette market of 6.7%, excluding the net impact of estimated trade inventory movements, was mainly due to the impact of excise tax-driven price increases. The decline in PMI's cigarette shipment volume was due to the lower total cigarette market, as well as lower cigarette market share, particularly of PMI's low and super-low price brands as a result of the timing of competitors' price increases, which initially widened the price gaps to PMI's principal competitor's discounted brands, partly offset by , which benefited from in-switching from lower-priced brands.Marlboro

In the quarter, the estimated total cigarette market increased by 7.8%, or by 1.1% excluding the net impact of estimated trade inventory movements regarding an anticipated price increase in January 2018. The increase in PMI's cigarette shipment volume reflected the higher total cigarette market, as well as higher cigarette market share, particularly of , which benefited from in-switching from lower-priced brands following significant competitor price increases in the quarter.MarlboroMarlboro

& REGIONLATIN AMERICACANADA

2017 Full-Year

Net revenues, excluding excise taxes, of $2.9 billion increased by 3.5%. Excluding unfavorable currency of $54 million, net revenues, excluding excise taxes, increased by 5.4%, primarily reflecting a favorable pricing variance of $307 million across the Region, notably , and , partly offset by unfavorable volume/mix of $154 million, notably due to , , and .ArgentinaCanadaMexicoArgentinaBrazilCanadaMexico

Operating companies income of $1.0 billion increased by 6.8%. Excluding unfavorable currency of $70 million, operating companies income increased by 14.3%, primarily reflecting a favorable pricing variance, partly offset by unfavorable volume/mix of $152 million, notably due to , , and .ArgentinaBrazilCanadaMexico

Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 16. Adjusted operating companies income, excluding unfavorable currency, increased by 14.3%. Adjusted operating companies income margin, excluding unfavorable currency, increased by 2.8 points to 35.8%, principally driven by the factors mentioned above, as detailed on Schedule 16.

2017 Fourth-Quarter

Net revenues, excluding excise taxes, of $831 million increased by 5.9%. Excluding favorable currency of $2 million, net revenues, excluding excise taxes, increased by 5.6%, primarily reflecting a favorable pricing variance of $83 million across the Region, notably , and , partly offset by unfavorable volume/mix of $39 million, mainly due to and , partly offset by .ArgentinaCanadaMexicoBrazilCanadaMexico

Operating companies income of $293 million increased by 12.3%. Excluding unfavorable currency of $10 million, operating companies income increased by 16.1%, primarily reflecting a favorable pricing variance, partly offset by unfavorable volume/mix of $36 million, mainly due to and , partly offset by .BrazilCanadaMexico

Adjusted operating companies income and margin are shown in the table below and detailed on Schedule 12. Adjusted operating companies income, excluding unfavorable currency, increased by 16.1%. Adjusted operating companies income margin, excluding unfavorable currency, increased by 3.4 points to 36.6%, principally driven by the factors mentioned above, as detailed on Schedule 12.

*Margins are calculated as adjusted OCI, divided by net revenues, excluding excise taxes.

& Canada Total Market, PMI Shipment & Market Share CommentariesLatin America

2017 Full-Year

The estimated total market in & decreased by 3.8% to 213.0 billion units. PMI's Regional market share decreased by 0.1 point to 39.6%.Latin AmericaCanada

PMI's total shipment volume decreased by 4.2% to 84.3 billion units, mainly due to lower cigarette shipment volume in , , , and . The decrease in cigarette shipment volume of was mainly due to and . The decrease in cigarette shipment volume of was mainly due to . The increase in cigarette shipment volume of was driven by , , and , partly offset by . The decrease in cigarette shipment volume of "Others" was principally due to mainly local brands in , , and , largely reflecting successful brand portfolio consolidation, and .ArgentinaBrazilCanadaColombiaMexicoArgentinaBrazilArgentinaArgentinaBrazilColombiaVenezuelaMexicoArgentinaBrazilColombiaVenezuelaCanadaMexicoMarlboroPhilip MorrisChesterfield

2017 Fourth-Quarter

PMI's total shipment volume decreased by 3.6% to 22.9 billion units, mainly due to , and , partly offset by and . The decrease in cigarette shipment volume of was mainly due to and , partly offset by . The decrease in cigarette shipment volume of was mainly due to . The increase in cigarette shipment volume of was mainly driven by , , and . The decrease in cigarette shipment volume of "Others" was principally due to mainly local brands in and , reflecting successful brand portfolio consolidation.ArgentinaBrazilColombiaMexicoVenezuelaArgentinaBrazilMexicoArgentinaArgentinaBrazilColombiaVenezuelaBrazilColombiaMarlboroPhilip MorrisChesterfield

Key Market Commentaries

In , estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance are shown in the table below.Argentina

For the full year, the estimated total cigarette market increased by 0.2%, reflecting higher tax declarations by local manufacturers, as well as a favorable comparison to the full year 2016, which declined by 11.6% mainly due to the impact of tax-driven price increases. The decrease in PMI's cigarette shipment volume was mainly due to lower cigarette market share, reflecting the growth of the low price segment, where local manufacturers are exempt from paying minimum excise tax, resulting in widened price gaps with premium and mid-price , partly offset by low-price that benefited from successful brand portfolio consolidation of a low-price brand in "Others."MarlboroPhilip MorrisChesterfield

In the quarter, the estimated total cigarette market decreased by 2.5%, mainly due to the impact of excise-tax driven price increases. The decrease in PMI's cigarette shipment volume was mainly due to the lower total market and lower cigarette market share, largely reflecting the same dynamics as for the full year.

In , estimated industry size, PMI shipment volume and market share performance, shown in the table below, include cigarettes and PMI's heated tobacco units.Canada

*Includes heated tobacco units.

For the full year, the estimated total market decreased by 6.3%, mainly due to the impact of price increases. The decrease in PMI's shipment volume mainly reflected the lower total market, as well as lower cigarette market share, unfavorably impacted by estimated net trade inventory movements.

In the quarter, the estimated total market decreased by 2.6%, mainly reflecting the same dynamics as for the full year. The decrease in PMI's shipment volume and market share reflected the impact of estimated trade inventory movements.

In , estimated cigarette industry size, PMI cigarette shipment volume and cigarette market share performance are shown in the table below.Mexico

For the full year, the estimated total cigarette market decreased by 1.1%, or increased by 1.2% excluding the net impact of estimated trade inventory movements. The decrease in PMI's cigarette shipment volume mainly reflected the lower total cigarette market, as well as lower cigarette market share. The decrease of PMI's cigarette market share largely reflected the net impact of the estimated trade inventory movements, as well as lower share of , impacted by competitive pressure in the low price segment.Delicados

In the quarter, the estimated total cigarette market increased by 4.5%, or by 3.1% excluding the net impact of estimated trade inventory movements. The increase in PMI's cigarette shipment volume mainly reflected the higher total cigarette market. The decrease of PMI's cigarette market share largely reflected the same dynamics as for the full year.

: Who We ArePhilip Morris International

We are a leading international tobacco company engaged in the manufacture and sale of cigarettes and other nicotine-containing products in markets outside . We’re building our future on smoke-free products that are a much better consumer choice than continuing to smoke cigarettes. Through multidisciplinary capabilities in product development, state-of-the-art facilities and scientific substantiation, we aim to ensure that our smoke-free products meet adult consumer preferences and rigorous regulatory requirements. Our vision is that these products ultimately replace cigarettes to the benefit of adult smokers, society, our company and our shareholders. For more information, see and .the United States of Americawww.pmi.comwww.pmiscience.com

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. 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.

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 September 30, 2017. PMI cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations.

Investor Relations: : +1 (917) 663 2233 Lausanne: +41 (0)58 242 4666 or Media: Lausanne: +41 (0)58 242 4500Philip Morris International Inc.







New York[email protected][email protected]

Philip Morris International Inc.

Source:Philip Morris International Inc.

  • Reported diluted earnings per share of , down by or 13.4% versus in 2016, including the unfavorable impact of tax items of per share primarily related to the implementation of the Tax Cuts and Jobs Act, as detailed in the attached Schedule 17$3.88$0.60$4.48$0.84
  • Excluding unfavorable currency of , and the aforementioned tax items, adjusted diluted earnings per share of , up by or 10.0% versus in 2016, as detailed in the attached Schedule 17$0.21$4.93$0.45$4.48
  • Cigarette and heated tobacco unit shipment volume of 798.2 billion, down by 2.7%
  • International market share, excluding and , down by 0.1 point to 28.0%Chinathe United States
  • Reported net revenues of , up by 4.2%$78.1 billion
  • Net revenues, excluding excise taxes, of , up by 7.7%$28.7 billion
    • Excluding unfavorable currency of , net revenues, excluding excise taxes, up by 9.4% as detailed in the attached Schedule 14$437 million
  • Reported operating income of , up by 6.4%$11.5 billion
  • Operating companies income of , up by 6.0%$11.8 billion
    • Excluding unfavorable currency of , operating companies income up by 7.4% as detailed in the attached Schedule 14$155 million
  • Adjusted operating companies income, reflecting the items detailed in the attached Schedule 16, of , up by 6.0%$11.8 billion
    • Excluding unfavorable currency of , adjusted operating companies income up by 7.4% as detailed in the attached Schedule 16$155 million
  • Regular quarterly dividend increase of 2.9% to an annualized rate of per common share$4.28
  • Reported diluted earnings per share of , down by or 60.0% versus in 2016, including the unfavorable impact of tax items of per share primarily related to the implementation of the Tax Cuts and Jobs Act, as detailed in the attached Schedule 13$0.44$0.66$1.10$0.88
  • Excluding favorable currency of , and the aforementioned tax items, adjusted diluted earnings per share of , up by or 19.1% versus in 2016 as detailed in the attached Schedule 13$0.01$1.31$0.21$1.10
  • Cigarette and heated tobacco unit shipment volume of 212.1 billion, up by 3.8%
  • Reported net revenues of , up by 12.5%$21.6 billion
  • Net revenues, excluding excise taxes, of , up by 19.0%$8.3 billion
    • Excluding favorable currency of , net revenues, excluding excise taxes, up by 18.8% as detailed in the attached Schedule 10$14 million
  • Reported operating income of , up by 27.0%$3.3 billion
  • Operating companies income of , up by 25.5%$3.4 billion
    • Excluding favorable currency of , operating companies income up by 18.2% as detailed in the attached Schedule 10$196 million
  • Adjusted operating companies income, reflecting the items detailed in the attached Schedule 12, of , up by 25.5%$3.4 billion
    • Excluding favorable currency of , adjusted operating companies income up by 18.2% as detailed in the attached Schedule 12$196 million
  • Reported diluted earnings per share forecast to be in a range of to , at prevailing exchange rates, representing a projected increase of approximately 34% to 38% versus reported diluted earnings per share of in 2017.$5.20$5.35$3.88
    • Excluding a favorable currency impact, at prevailing exchange rates, of approximately , the forecast range represents a projected increase of approximately 7% to 10% versus adjusted diluted earnings per share of in 2017 as detailed in the attached Schedule 17.$0.16$4.72
  • This forecast assumes:
    • Net revenue growth, excluding excise taxes, of over 8.0%, excluding currency;
    • Operating cash flow of over ;$9.0 billion
    • Capital expenditures of approximately ; and$1.7 billion
    • 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 Tax Cuts and Jobs Act as discussed below, and any unusual events. Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.
  • A reduction of the federal corporate tax rate from 35% to 21%; andU.S.
  • The requirement to pay a one-time transition tax on accumulated foreign earnings, including 2017 earnings ("transition tax").
  • A provisional charge of , which represents the transition tax of , net of a reversal of of previously recorded deferred tax liabilities on part of the accumulated foreign earnings, and other items of ; and$1.4 billion$2.2 billion$0.7 billion$0.1 billion
  • Re-measurement of deferred tax assets and liabilities using a rate of 21%, which, under the Act, is expected to be in place when such deferred assets and liabilities reverse in the future. In connection with this re-measurement, we recorded a provisional charge of .U.S.$0.2 billion
  • “PMI” refers to and its subsidiaries. Trademarks and service marks that are the registered property of, or licensed by, the subsidiaries of PMI, are italicized.Philip Morris International Inc.
  • Comparisons are made to the same prior-year period unless otherwise stated.
  • Unless otherwise stated, references to total industry, total market, PMI 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 , 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 and/or PMI's duty free business.the United Statesthe People's Republic of China
  • "Combustible products" is the term PMI uses to refer to cigarettes and OTP, combined.
  • "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.
  • "Total shipment volume" is defined as the combined total of cigarette shipment volume and heated tobacco unit shipment volume.
  • "EEMA" is defined as , & and includes PMI's international duty free business.Eastern EuropeMiddle EastAfrica
  • "" is defined as , , , and .North AfricaAlgeriaEgyptLibyaMoroccoTunisia
  • Net revenues, excluding excise taxes, related to combustible products refer to the operating revenues generated from the sale of these products, net of sales and promotion incentives.
  • "Operating Companies Income," or "OCI," is defined as operating income, excluding general corporate expenses and the amortization of intangibles, plus equity (income)/loss in unconsolidated subsidiaries, net. Management evaluates business segment performance and allocates resources based on OCI.
  • “Adjusted EBITDA” is defined as earnings before interest, taxes, depreciation and amortization, excluding asset impairment and exit costs, and unusual items.
  • "Net debt" is defined as total debt, less cash and cash equivalents.
  • Management reviews OCI, OCI 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.
  • 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 GAAP. For a reconciliation of non-GAAP measures to the most directly comparable GAAP measures, see the relevant schedules provided with this press release.U.S.
  • "Reduced-risk products," or "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 continued smoking. PMI has a range of RRPs in various stages of development, scientific assessment and commercialization. Because PMI's RRPs do not burn tobacco, they produce far lower quantities of harmful and potentially harmful compounds than found in cigarette smoke.
  • "Heated tobacco units" is the term PMI uses to refer to heated tobacco consumables, which include the company's , and , defined collectively as , as well as and .HEETSHEETSMarlboroHEETS FROMMARLBOROHEETSMarlboroHeatSticksHeatSticksParliament
  • Net revenues, excluding excise taxes, related to RRPs represent the sale of heated tobacco units, devices and related accessories, and other nicotine-containing products, primarily e-vapor products, net of sales and promotion incentives.IQOS
  • the EU, notably reflecting lower cigarette shipment volume in , and , partly offset by higher heated tobacco unit shipment volume;GreeceItalySpain
  • EEMA, notably reflecting lower cigarette shipment volume in , - where PMI's cigarette shipment volume declined by 35.8%, impacted by the new excise tax implemented in that resulted in the doubling of retail prices - and ; partly offset by higher cigarette shipment volume in , notably , and higher heated tobacco unit shipment volume;RussiaSaudi ArabiaUkraineNorth AfricaAlgeriaJune 2017
  • , notably reflecting lower cigarette shipment volume in , , , - impacted by excise tax-driven price increases and an increase in the prevalence of illicit trade - and ; fully offset by higher heated tobacco unit shipment volume, mainly in and ; andAsiaIndonesiaJapanKoreaPakistanthe PhilippinesJapanKorea
  • & , notably reflecting lower cigarette shipment volume in , , , and .Latin AmericaCanadaArgentinaBrazilCanadaColombiaMexico
  • the EU, notably reflecting higher cigarette shipment volume in , and , partly offset by lower cigarette shipment volume in ; andFranceGermanyPortugalSpain
  • Higher heated tobacco unit shipment volume across all Regions, notably in driven by and .AsiaJapanKorea
  • EEMA, notably , as well as where PMI's cigarette shipment volume declined by 60.3%, reflecting the impact of the aforementioned new excise tax, partly offset by , notably , and ;RussiaSaudi ArabiaNorth AfricaAlgeriaTurkey
  • , notably and , partly offset by ; andAsiaJapanKoreathe Philippines
  • & , notably , and , partly offset by and .Latin AmericaCanadaArgentinaBrazilColombiaMexicoVenezuela

PMI Shipment Volume by Region

  

Fourth-Quarter

 

Full-Year

(million units)    
20172016Change20172016Change

Cigarettes

European Union45,88145,1931.5%187,293193,586(3.3)%
EEMA66,33267,763(2.1)%256,157271,393(5.6)%
Asia61,23463,815(4.0)%234,253260,029(9.9)%
&Latin AmericaCanada22,922 23,794 (3.7)%84,223 87,938 (4.2)%
Total PMI196,369200,565(2.1)%761,926812,946(6.3)%
 

Heated Tobacco Units

European Union849122+100.0%1,889224+100.0%
EEMA82063+100.0%1,581100+100.0%
Asia14,0323,510+100.0%32,7297,070+100.0%
&Latin AmericaCanada15  %27  %
Total PMI15,7163,695+100.0%36,2267,394+100.0%
 

Cigarettes and Heated Tobacco Units

European Union46,73045,3153.1%189,182193,810(2.4)%
EEMA67,15267,826(1.0)%257,738271,493(5.1)%
Asia75,26667,32511.8%266,982267,099%
&Latin AmericaCanada22,937 23,794 (3.6)%84,250 87,938 (4.2)%
Total PMI212,085204,2603.8%798,152820,340(2.7)%
 

PMI Shipment Volume by Brand

  

Fourth-Quarter

 

Full-Year

(million units)    
20172016Change20172016Change

Cigarettes

Marlboro70,25170,295(0.1)%270,366281,720(4.0)%
L&M21,72623,177(6.3)%90,81796,770(6.2)%
Chesterfield14,76412,08822.1%55,07546,29119.0%
Philip Morris12,3899,06936.6%48,52235,91435.1%
Parliament12,24311,4247.2%43,96545,671(3.7)%
Bond Street9,31211,775(20.9)%37,98744,567(14.8)%
Lark5,8386,540(10.7)%24,37327,571(11.6)%
Others49,846 56,197 (11.3)%190,821 234,442 (18.6)%
Total Cigarettes196,369200,565(2.1)%761,926812,946(6.3)%
Heated Tobacco Units15,716 3,695 +100.0%36,226 7,394 +100.0%
Total PMI212,085204,2603.8%798,152820,340(2.7)%
 

PMI Net Revenues(Excluding Excise Taxes)

  

Fourth-Quarter

 

Full-Year

(in millions)   Excl.   Excl.
20172016ChangeCurr.20172016ChangeCurr.

Combustible Products

 
European Union$2,140$1,91911.5%4.7%$8,048$8,105(0.7)%(1.2)%
EEMA1,6801,792(6.3)%(5.1)%6,5506,991(6.3)%(2.1)%
Asia2,0032,133(6.1)%(4.4)%7,5728,015(5.5)%(5.0)%
&Latin AmericaCanada828 785 5.5%5.3%2,937 2,841 3.4%5.3%
Total PMI$6,651$6,6280.3%(0.8)%$25,107$25,952(3.3)%(1.9)%
 

RRPs

 
European Union$124$25+100%+100%$269$57+100%+100%
EEMA856+100%+100%1499+100%+100%
Asia1,432312+100%+100%3,218666+100%+100%
&Latin AmericaCanada3  +100%+100%4 1 +100%+100%
Total PMI$1,643$343+100%+100%$3,640$733+100%+100%
 

Combustible Products and RRPs

 
European Union$2,264$1,94416.5%9.3%$8,318$8,1621.9%1.4%
EEMA1,7641,798(1.9)%(0.6)%6,6997,000(4.3)%(0.1)%
Asia3,4352,44440.5%44.8%10,7908,68124.3%25.9%
&Latin AmericaCanada831 785 5.9%5.6%2,941 2,842 3.5%5.4%
Total PMI$8,294$6,97119.0%18.8%$28,748$26,6857.7%9.4%
 

PMI OCI

  

Fourth-Quarter

 

Full-Year

(in millions)   Excl.   Excl.
20172016ChangeCurr.20172016ChangeCurr.
European Union$992$89810.5%6.1%$3,775$3,994(5.5)%(4.4)%
EEMA70062711.6%(30.5)%2,8883,016(4.2)%(6.9)%
Asia1,39690853.7%64.4%4,1493,19629.8%33.7%
&Latin AmericaCanada293 261 12.3%16.1%1,002 938 6.8%14.3%
Total PMI$3,381$2,69425.5%18.2%$11,814$11,1446.0%7.4%
 

PMI OCI

  

Fourth-Quarter

 

Full-Year

(in millions)   Excl.   Excl.
20172016ChangeCurr.20172016ChangeCurr.
OCI$3,381$2,69425.5%18.2%$11,814$11,1446.0%7.4%

Asset impairment & exit costs

    
Adjusted OCI$3,381$2,69425.5%18.2%$11,814$11,1446.0%7.4%
Adjusted OCI Margin*40.8%38.6%2.2(0.1)41.1%41.8%(0.7)(0.8)

 

EU OCI

  

Fourth-Quarter

 

Full-Year

(in millions)   Excl.   Excl.
20172016ChangeCurr.20172016ChangeCurr.
OCI$992$89810.5%6.1%$3,775$3,994(5.5)%(4.4)%

Asset impairment & exit costs

    
Adjusted OCI$992$89810.5%6.1%$3,775$3,994(5.5)%(4.4)%
Adjusted OCI Margin*43.8%46.2%(2.4)(1.4)45.4%48.9%(3.5)(2.7)

 

EU PMI Shipment Volume by Brand

  

Fourth-Quarter

Full-Year

(million units)    
20172016Change20172016Change

Cigarettes

Marlboro23,31722,6632.9%93,08896,245(3.3)%
L&M8,2698,0632.6%34,26134,691(1.2)%
Chesterfield6,8187,029(3.0)%29,08730,140(3.5)%
Philip Morris3,5233,668(4.0)%15,15816,290(6.9)%
Others3,954 3,770 4.9%15,699 16,220 (3.2)%
Total Cigarettes45,88145,1931.5%187,293193,586(3.3)%
Heated Tobacco Units849 122 +100.0%1,889 224 +100.0%
Total EU46,73045,3153.1%189,182193,810(2.4)%
 
 

EU Market Shares by Brand

Fourth-Quarter

Full-Year

 ChangeChange
20172016p.p.20172016p.p.
Marlboro19.2%19.0%0.218.8%19.0%(0.2)
L&M6.9%6.9%6.9%6.9%
Chesterfield5.9%5.9%6.0%5.9%0.1
Philip Morris3.0%3.1%(0.1)3.1%3.2%(0.1)
HEETS0.6%0.1%0.50.3%%0.3
Others3.3%3.2%0.1 3.2%3.3%(0.1)
Total EU38.9%38.2%0.738.3%38.3%
 

France Key Market Data

  

Fourth-Quarter

  

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)10.410.5(1.0)%44.444.9(1.2)%
 
PMI Shipments (million units)4,5854,3754.8%19,26419,2470.1%
 
PMI Market Share
Marlboro27.7%26.9%0.827.1%26.4%0.7
Philip Morris10.6%10.4%0.210.3%10.2%0.1
Chesterfield2.9%3.1%(0.2)3.0%3.1%(0.1)
Others*2.8%2.9%(0.1)2.8%2.7%0.1 
Total44.0%43.3%0.743.2%42.4%0.8

 

Germany Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)19.218.44.2%76.978.1(1.6)%
 
PMI Shipments (million units)7,5606,8909.7%28,57528,958(1.3)%
 
PMI Market Share
Marlboro24.4%22.9%1.522.7%22.5%0.2
L&M12.0%11.5%0.511.5%11.6%(0.1)
Chesterfield1.4%1.6%(0.2)1.5%1.6%(0.1)
Others*1.6%1.4%0.2 1.5%1.4%0.1 
Total39.4%37.4%2.037.2%37.1%0.1
 

Italy Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)16.716.60.7%69.872.1(3.2)%
 
PMI Shipments (million units)9,0298,8302.2%36,76738,744(5.1)%
 
PMI Market Share
Marlboro23.8%23.6%0.223.9%24.3%(0.4)
Chesterfield11.4%11.3%0.111.3%11.5%(0.2)
Philip Morris7.6%8.2%(0.6)7.7%8.5%(0.8)
HEETS1.2%0.3%0.90.7%0.1%0.6
Others8.6%8.2%0.4 8.6%8.1%0.5 
Total52.6%51.6%1.052.2%52.5%(0.3)
 

Poland Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)9.49.04.8%41.741.30.9%
 
PMI Shipments (million units)4,0893,9703.0%17,78417,4851.7%
 
PMI Market Share
Marlboro11.2%12.6%(1.4)10.7%11.6%(0.9)
L&M18.6%19.6%(1.0)18.4%18.5%(0.1)
Chesterfield10.0%9.3%0.710.4%9.1%1.3
HEETS0.6%%0.60.2%%0.2
Others3.0%2.7%0.3 3.0%3.1%(0.1)
Total43.4%44.2%(0.8)42.7%42.3%0.4
 

Spain Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)10.911.4(4.4)%45.046.7(3.5)%
 
PMI Shipments (million units)3,3253,734(10.9)%14,45616,374(11.7)%
 
PMI Market Share
Marlboro16.2%17.7%(1.5)16.5%18.0%(1.5)
L&M5.3%5.3%5.3%5.4%(0.1)
Chesterfield8.6%8.6%8.6%8.6%
Others*1.8%1.8% 1.9%1.9% 
Total31.9%33.4%(1.5)32.3%33.9%(1.6)
 

EEMA OCI

  

Fourth-Quarter

 

Full-Year

(in millions)   Excl.   Excl.
20172016ChangeCurr.20172016ChangeCurr.
OCI$700$62711.6%(30.5)%$2,888$3,016(4.2)%(6.9)%

Asset impairment & exit costs

    
Adjusted OCI$700$62711.6%(30.5)%$2,888$3,016(4.2)%(6.9)%
Adjusted OCI Margin*39.7%34.9%4.8(10.5)43.1%43.1%(2.9)
 

EEMA PMI Shipment Volume by Brand

  

Fourth-Quarter

 

Full-Year

(million units)    
20172016Change20172016Change

Cigarettes

Marlboro18,31418,813(2.7)%70,12273,818(5.0)%
L&M11,00412,672(13.2)%46,92352,183(10.1)%
Bond Street8,88611,243(21.0)%36,33642,553(14.6)%
Parliament9,7758,43915.8%33,29933,940(1.9)%
Philip Morris5,2731,235+100.0%19,0862,058+100.0%
Others13,080 15,361 (14.8)%50,391 66,841 (24.6)%
Total Cigarettes66,33267,763(2.1)%256,157271,393(5.6)%
Heated Tobacco Units820 63 +100.0%1,581 100 +100.0%
Total EEMA67,15267,826(1.0)%257,738271,493(5.1)%
 

North Africa Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Cigarette Market (billion units)38.735.78.3%144.9142.31.9%
 
PMI Cigarette Shipments (million units)9,1318,14112.2%35,08534,0353.1%
 
PMI Cigarette Market Share
Marlboro9.9%8.7%1.29.3%8.3%1.0
L&M11.3%11.5%(0.2)11.8%12.2%(0.4)
Others2.9%2.4%0.5 2.9%2.7%0.2 
Total24.1%22.6%1.524.0%23.2%0.8
 

Russia Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)66.571.0(6.4)%260.0280.0(7.2)%
 
PMI Shipments (million units)19,05220,574(7.4)%72,41779,706(9.1)%
 
PMI Cigarette Market Share
Marlboro1.7%1.3%0.41.5%1.4%0.1
Parliament3.5%3.7%(0.2)3.5%3.8%(0.3)
Bond Street8.0%8.9%(0.9)8.6%8.4%0.2
Philip Morris5.6%0.5%5.14.3%0.2%4.1
Others7.9%12.8%(4.9)9.2%13.4%(4.2)
Total26.7%27.2%(0.5)27.1%27.2%(0.1)
 

Turkey Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Cigarette Market (billion units)28.526.09.8%106.2105.50.7%
 
PMI Cigarette Shipments (million units)13,55512,07412.3%49,64949,6240.1%
 
PMI Cigarette Market Share
Marlboro10.4%10.3%0.110.2%10.2%
Parliament11.4%11.8%(0.4)11.5%11.7%(0.2)
Lark6.9%7.0%(0.1)6.9%7.4%(0.5)
Others14.7%15.3%(0.6)14.7%15.0%(0.3)
Total43.4%44.4%(1.0)43.3%44.3%(1.0)
 

Ukraine Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)16.417.1(3.8)%67.173.1(8.2)%
 
PMI Shipments (million units)4,8344,7970.8%19,35622,022(12.1)%
 
PMI Cigarette Market Share
Marlboro3.0%3.1%(0.1)3.0%3.1%(0.1)
Parliament3.3%3.0%0.33.2%2.9%0.3
Bond Street7.7%9.2%(1.5)8.4%10.0%(1.6)
Philip Morris4.0%%4.03.1%%3.1
Others8.9%12.4%(3.5)9.6%13.2%(3.6)
Total26.9%27.7%(0.8)27.3%29.2%(1.9)
 

Asia OCI

  

Fourth-Quarter

 

Full-Year

(in millions)   Excl.   Excl.
20172016ChangeCurr.20172016ChangeCurr.
OCI$1,396$90853.7%64.4%$4,149$3,19629.8%33.7%

Asset impairment & exit costs

    
Adjusted OCI$1,396$90853.7%64.4%$4,149$3,19629.8%33.7%
Adjusted OCI Margin*40.6%37.2%3.45.038.5%36.8%1.72.3

 

Asia PMI Shipment Volume by Brand

  

Fourth-Quarter

 

Full-Year

(million units)    
20172016Change20172016Change

Cigarettes

Marlboro19,19119,186%73,44676,463(3.9)%
Lark3,0784,178(26.3)%14,47417,600(17.8)%
Parliament2,0962,608(19.6)%9,22410,142(9.1)%
Others36,869 37,843 (2.6)%137,109 155,824 (12.0)%
Total Cigarettes61,23463,815(4.0)%234,253260,029(9.9)%
Heated Tobacco Units14,032 3,510 +100.0%32,729 7,070 +100.0%
TotalAsia75,26667,32511.8%266,982267,099%
 

Indonesia Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Cigarette Market (billion units)81.580.51.3%307.4315.6(2.6)%
 
PMI Cigarette Shipments (million units)26,90326,7320.6%101,324105,524(4.0)%
 
PMI Cigarette Market Share
Sampoerna A14.3%14.0%0.313.8%14.0%(0.2)
Dji Sam Soe8.7%6.4%2.37.4%6.5%0.9
Sampoerna U2.6%5.2%(2.6)4.1%5.2%(1.1)
Others7.4%7.6%(0.2)7.7%7.7% 
Total33.0%33.2%(0.2)33.0%33.4%(0.4)
 

Indonesia Segmentation Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016p.p.20172016p.p.
Segment % of Total Market
Hand-Rolled Kretek (SKT)17.4%18.2%(0.8)17.6%18.2%(0.6)
Machine-Made Kretek (SKM)77.7%76.3%1.477.2%75.8%1.4
Whites (SPM)4.9%5.5%(0.6)5.2%6.0%(0.8)
Total100.0%100.0%100.0%100.0%
 
PMI % Share of Segment
Hand-Rolled Kretek (SKT)37.5%37.8%(0.3)37.5%37.3%0.2
Machine-Made Kretek (SKM)30.1%29.0%1.129.4%28.9%0.5
Whites (SPM)63.5%76.3%(12.8)70.2%79.5%(9.3)
 

Japan Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)43.445.3(4.1)%171.5179.0(4.2)%
 
PMI Shipments (million units)
Cigarettes7,68310,631(27.7)%34,85343,915(20.6)%
Heated Tobacco Units13,134 3,510 +100%31,291 7,069 +100%
Total20,81614,14147.2%66,14450,98529.7%
 
PMI Market Share
Marlboro8.1%10.2%(2.1)9.3%10.6%(1.3)
HeatSticks13.9%4.9%9.010.8%2.9%7.9
Parliament1.9%2.2%(0.3)2.1%2.3%(0.2)
Lark8.0%9.3%(1.3)8.6%9.6%(1.0)
Others1.3%1.7%(0.4)1.3%1.7%(0.4)
Total33.2%28.3%4.932.1%27.1%5.0
 

Korea Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)16.418.0(9.1)%70.673.6(4.1)%
 
PMI Shipments (million units)
Cigarettes3,0793,937(21.8)%13,49915,490(12.9)%
Heated Tobacco Units898  %1,438  %
Total3,9773,9371.0%14,93715,490(3.6)%
 
PMI Market Share
Marlboro8.6%10.0%(1.4)8.7%9.6%(0.9)
Parliament7.9%8.9%(1.0)8.0%7.9%0.1
HEETS5.5%%5.52.0%%2.0
Virginia S.2.0%2.4%(0.4)2.0%3.0%(1.0)
Others0.4%0.4% 0.5%0.5% 
Total24.4%21.7%2.721.2%21.0%0.2
 

Philippines Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Cigarette Market (billion units)20.719.27.8%74.979.3(5.6)%
 
PMI Cigarette Shipments (million units)14,31513,0539.7%50,61856,611(10.6)%
 
PMI Cigarette Market Share
Marlboro35.6%29.9%5.733.0%28.4%4.6
Fortune17.9%20.5%(2.6)18.0%23.4%(5.4)
Jackpot5.6%6.8%(1.2)6.1%7.9%(1.8)
Others10.2%11.0%(0.8)10.5%11.6%(1.1)
Total69.3%68.2%1.167.6%71.3%(3.7)
 

& Canada OCILatin America

  

Fourth-Quarter

 

Full-Year

(in millions)   Excl.   Excl.
20172016ChangeCurr.20172016ChangeCurr.
OCI$293$26112.3%16.1%$1,002$9386.8%14.3%

Asset impairment & exit costs

    
Adjusted OCI$293$26112.3%16.1%$1,002$9386.8%14.3%
Adjusted OCI Margin*35.3%33.2%2.13.434.1%33.0%1.12.8

 

& Canada PMI ShipmentLatin AmericaVolume by Brand

  

Fourth-Quarter

 

Full-Year

(million units)    
20172016Change20172016Change

Cigarettes

Marlboro9,4299,632(2.1)%33,71135,194(4.2)%
Philip Morris3,3353,912(14.8)%13,32016,463(19.1)%
Chesterfield3,3171,565+100.0%9,8522,626+100.0%
Others6,841 8,685 (21.2)%27,340 33,655 (18.8)%
Total Cigarettes22,92223,794(3.7)%84,22387,938(4.2)%
Heated Tobacco Units15  %27  %
Total &Latin AmericaCanada22,93723,794(3.6)%84,25087,938(4.2)%
 

Argentina Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Cigarette Market (billion units)9.29.4(2.5)%36.236.10.2%
 
PMI Cigarette Shipments (million units)6,8597,123(3.7)%27,00227,512(1.9)%
 
PMI Cigarette Market Share
Marlboro19.7%20.8%(1.1)20.0%22.4%(2.4)
Chesterfield17.2%11.3%5.915.9%5.5%10.4
Philip Morris32.0%37.3%(5.3)33.0%41.6%(8.6)
Others5.7%6.1%(0.4)5.8%6.8%(1.0)
Total74.6%75.5%(0.9)74.7%76.3%(1.6)
 

Canada Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Market (billion units)6.66.8(2.6)%24.626.3(6.3)%
 
PMI Shipments (million units)2,4772,584(4.1)%9,25910,049(7.9)%
 
PMI Market Share
Belmont4.3%3.8%0.54.1%3.7%0.4
Canadian Classics9.5%10.3%(0.8)9.5%10.2%(0.7)
Next11.6%11.6%11.5%11.3%0.2
Others*12.0%13.1%(1.1)12.2%13.2%(1.0)
Total37.4%38.8%(1.4)37.3%38.4%(1.1)

 

Mexico Key Market Data

  

Fourth-Quarter

 

Full-Year

  Change  Change
20172016% / p.p.20172016% / p.p.
Total Cigarette Market (billion units)10.29.74.5%35.836.2(1.1)%
 
PMI Cigarette Shipments (million units)7,2607,0662.7%24,35125,080(2.9)%
 
PMI Cigarette Market Share
Marlboro52.4%52.1%0.349.4%49.0%0.4
Delicados8.3%9.5%(1.2)8.3%9.7%(1.4)
Benson & Hedges5.1%5.0%0.15.0%4.7%0.3
Others5.5%5.9%(0.4)5.4%5.9%(0.5)
Total71.3%72.5%(1.2)68.1%69.3%(1.2)
 
    Schedule 1
and Subsidiaries Condensed Statements of Earnings ($ in millions, except per share data) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




For the Quarters Ended December 31,
 
2017 2016 % Change
Net Revenues$21,585$19,18912.5%
Cost of sales3,0012,49920.1%
Excise Taxes on products (1)13,291  12,218 8.8%
Gross profit5,2934,47218.4%
Marketing, administration and research costs1,9521,842
Asset impairment and exit costs
Amortization of intangibles23  18 
Operating Income (2)3,3182,61227.0%
Interest expense, net259  201 
Earnings before income taxes3,0592,41126.9%
Provision for income taxes2,265658100+%
Equity (income)/loss in unconsolidated subsidiaries, net(2) (22)
Net Earnings7961,775(55.2)%
Net Earnings attributable to noncontrolling interests102  64 
Net Earnings attributable to PMI$694  $1,711 (59.4)%
 
Per share data (3):
Basic Earnings Per Share$0.44  $1.10 (60.0)%
Diluted Earnings Per Share$0.44  $1.10 (60.0)%
 
 
 

(1) The segment detail of Excise Taxes on products sold for the quarters ended December 31, 2017 and 2016 is shown on Schedule 2.

 

(2) PMI's management evaluates segment performance and allocates resources based on operating companies income, which PMI defines as operating income, excluding general corporate expenses and amortization of intangibles, plus equity (income)/loss in unconsolidated subsidiaries, net. The reconciliation from operating income to operating companies income is as follows:


 
20172016% Change
Operating Income$3,318$2,61227.0%

Excluding:

- Amortization of intangibles2318

- General corporate expenses (included in marketing, administration and research costs above)

3842
Plus: Equity (income)/loss in unconsolidated subsidiaries, net(2)(22)
Operating Companies Income$3,381 $2,694 25.5%
 

(3) Net Earnings and weighted-average shares used in the basic and diluted earnings per share computations for the quarters ended December 31, 2017 and 2016 are shown on Schedule 4, Footnote 1.

 
    
  Schedule 2
and Subsidiaries Selected Financial Data by Business Segment ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




For the Quarters Ended December 31,
 
 
Net Revenues excluding Excise Taxes

EuropeanUnion

 EEMA Asia 

LatinAmerica &Canada

 Total
 
2017Net Revenues (1)$7,424$4,868$6,584$2,709$21,585
Excise Taxes on products(5,160) (3,104) (3,149) (1,878) (13,291)
Net Revenues excluding Excise Taxes2,2641,7643,4358318,294
 
2016Net Revenues$6,465$4,636$5,517$2,571$19,189
Excise Taxes on products(4,521) (2,838) (3,073) (1,786) (12,218)
Net Revenues excluding Excise Taxes1,9441,7982,4447856,971
 
VarianceCurrency139(23)(104)214
Acquisitions
Operations181  (11) 1,095  44  1,309 
Variance Total320(34)991461,323
Variance Total (%)16.5%(1.9)%40.5%5.9%19.0%
 
Variance excluding Currency181(11)1,095441,309
Variance excluding Currency (%)9.3%(0.6)%44.8%5.6%18.8%
 
Variance excluding Currency & Acquisitions181(11)1,095441,309
Variance excluding Currency & Acquisitions (%)9.3%(0.6)%44.8%5.6%18.8%
 
 
 
(1) 2017 Currency increased / (decreased) Net Revenues as follows:
European Union$455
EEMA(293)
Asia(141)
&Latin AmericaCanada(78)
$(57)
 
       Schedule 3
and Subsidiaries Selected Financial Data by Business Segment ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




For the Quarters Ended December 31,
 
Operating Companies Income
 

EuropeanUnion

 EEMA Asia 

LatinAmerica&Canada

 Total
2017Operating Companies Income$992$700$1,396$293$3,381
2016Operating Companies Income8986279082612,694
 
Variance
2016 Asset impairment and exit costs
2017 Asset impairment and exit costs
Currency39264(97)(10)196
Acquisitions
Operations55  (191) 585  42  491 
Variance Total947348832687
Variance Total (%)10.5%11.6%53.7%12.3%25.5%
 
Variance excluding Currency55(191)58542491
Variance excluding Currency (%)6.1%(30.5)%64.4%16.1%18.2%
 
Variance excluding Currency & Acquisitions55(191)58542491
Variance excluding Currency & Acquisitions (%)6.1%(30.5)%64.4%16.1%18.2%
 
   Schedule 4
and Subsidiaries Diluted Earnings Per Share ($ in millions, except per share data) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




For the Quarters Ended December 31,
 
Diluted
E.P.S.
 
2017 Diluted Earnings Per Share$0.44(1)
2016 Diluted Earnings Per Share$1.10(1)
Change$(0.66)
% Change(60.0)%
 

Reconciliation:

2016 Diluted Earnings Per Share$1.10(1)
 

Special Items:

2016 Asset impairment and exit costs
2016 Tax items
2017 Asset impairment and exit costs
2017 Tax items(0.88)
 
Currency0.01
Interest(0.02)
Change in tax rate(0.04)
Operations0.27 (2)
2017 Diluted Earnings Per Share$0.44 (1)
 
 
(1) Basic and diluted EPS were calculated using the following (in millions):
 
Q42017
Q42016
 
Net Earnings attributable to PMI$694$1,711
Less distributed and undistributed earnings attributable
to share-based payment awards4 5 
Net Earnings for basic and diluted EPS$690 $1,706 
 
Weighted-average shares for basic EPS1,5531,552
Plus Contingently Issuable Performance Stock Units (PSUs)1  
Weighted-average shares for diluted EPS1,554 1,552 
 
(2) Includes the impact of shares outstanding and share-based payments
 
   Schedule 5
and Subsidiaries Condensed Statements of Earnings ($ in millions, except per share data) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




For the Years Ended December 31,
 
20172016% Change
Net Revenues$78,098$74,9534.2%
Cost of sales10,4329,39111.1%
Excise Taxes on products (1)49,350 48,268 2.2%
Gross profit18,31617,2945.9%
Marketing, administration and research costs6,7256,405
Asset impairment and exit costs
Amortization of intangibles88 74 
Operating Income (2)11,50310,8156.4%
Interest expense, net914 891 
Earnings before income taxes10,5899,9246.7%
Provision for income taxes4,3072,76855.6%
Equity (income)/loss in unconsolidated subsidiaries, net(59)(94)
Net Earnings6,3417,250(12.5)%
Net Earnings attributable to noncontrolling interests306 283 
Net Earnings attributable to PMI$6,035 $6,967 (13.4)%
 
Per share data (3):
Basic Earnings Per Share$3.88 $4.48 (13.4)%
Diluted Earnings Per Share$3.88 $4.48 (13.4)%
 
 
 

(1) The segment detail of Excise Taxes on products sold for the year ended December 31, 2017 and 2016 is shown on Schedule 6.

 

(2) PMI's management evaluates segment performance and allocates resources based on operating companies income, which PMI defines as operating income, excluding general corporate expenses and amortization of intangibles, plus equity (income)/loss in unconsolidated subsidiaries, net. The reconciliation from operating income to operating companies income is as follows:


 
20172016% Change
Operating Income$11,503$10,8156.4%

Excluding:

- Amortization of intangibles8874

- General corporate expenses (included in marketing, administration and research costs above)

164161
Plus: Equity (income)/loss in unconsolidated subsidiaries, net(59)(94)
Operating Companies Income$11,814 $11,144 6.0%
 

(3) Net Earnings and weighted-average shares used in the basic and diluted Earnings Per Share computations for the year ended December 31, 2017 and 2016 are shown on Schedule 8, Footnote 1.

 
       Schedule 6
and Subsidiaries Selected Financial Data by Business Segment ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




For the Years Ended December 31,
 
 
 Net Revenues excluding Excise Taxes
 

EuropeanUnion

 EEMA Asia 

LatinAmerica &Canada

 Total
 
2017Net Revenues (1)$27,580$18,045$22,635$9,838$78,098
Excise Taxes on products (19,262) (11,346) (11,845) (6,897) (49,350)
Net Revenues excluding Excise Taxes8,3186,69910,7902,94128,748
 
2016Net Revenues$27,129$18,286$20,531$9,007$74,953
Excise Taxes on products (18,967) (11,286) (11,850) (6,165) (48,268)
Net Revenues excluding Excise Taxes8,1627,0008,6812,84226,685
 
VarianceCurrency45(291)(137)(54)(437)
Acquisitions
Operations 111  (10) 2,246  153  2,500 
Variance Total156(301)2,109992,063
Variance Total (%)1.9%(4.3)%24.3%3.5%7.7%
 
Variance excluding Currency111(10)2,2461532,500
Variance excluding Currency (%)1.4%(0.1)%25.9%5.4%9.4%
 
Variance excluding Currency & Acquisitions111(10)2,2461532,500
Variance excluding Currency & Acquisitions (%)1.4%(0.1)%25.9%5.4%9.4%
 
 
 
(1) 2017 Currency increased / (decreased) Net Revenues as follows:
European Union$139
EEMA(1,925)
Asia(165)
&Latin AmericaCanada(404)
$(2,355)
 
       Schedule 7
and Subsidiaries Selected Financial Data by Business Segment ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




For the Years Ended December 31,
 
 
Operating Companies Income

EuropeanUnion

 EEMA Asia 

LatinAmerica&Canada

 Total
2017Operating Companies Income$3,775$2,888$4,149$1,002$11,814
2016Operating Companies Income3,9943,0163,19693811,144
 
Variance
2016 Asset impairment and exit costs
2017 Asset impairment and exit costs
Currency(43)81(123)(70)(155)
Acquisitions
Operations(176) (209) 1,076  134  825 
Variance Total(219)(128)95364670
Variance Total (%)(5.5)%(4.2)%29.8%6.8%6.0%
 
Variance excluding Currency(176)(209)1,076134825
Variance excluding Currency (%)(4.4)%(6.9)%33.7%14.3%7.4%
 
Variance excluding Currency & Acquisitions(176)(209)1,076134825
Variance excluding Currency & Acquisitions (%)(4.4)%(6.9)%33.7%14.3%7.4%
 
   Schedule 8
and Subsidiaries Diluted Earnings Per Share ($ in millions, except per share data) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




For the Years Ended December 31,
 
Diluted
E.P.S.
 
2017 Diluted Earnings Per Share$3.88(1)
2016 Diluted Earnings Per Share$4.48(1)
Change$(0.60)
% Change(13.4)%
 

Reconciliation:

2016 Diluted Earnings Per Share$4.48(1)
 

Special Items:

2016 Asset impairment and exit costs
2016 Tax items
2017 Asset impairment and exit costs
2017 Tax items(0.84)
 
Currency(0.21)
Interest0.01
Change in tax rate(0.03)
Operations0.47 (2)
2017 Diluted Earnings Per Share$3.88 (1)
 
 
(1) Basic and diluted EPS were calculated using the following (in millions):
 

YTDDecember2017

YTDDecember2016

 
Net Earnings attributable to PMI$6,035$6,967
Less distributed and undistributed earnings attributable
to share-based payment awards14 19 
Net Earnings for basic and diluted EPS$6,021 $6,948 
 
Weighted-average shares for basic EPS1,5521,551
Plus Contingently Issuable Performance Stock Units (PSUs)1  
Weighted-average shares for diluted EPS1,553 1,551 
 
(2) Includes the impact of shares outstanding and share-based payments
 
 
  Schedule 9
and Subsidiaries ($ in millions, except ratios) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.



Condensed Balance Sheets
 
December 31,December 31,
20172016

Assets

Cash and cash equivalents$8,447$4,239
All other current assets13,14713,369
Property, plant and equipment, net7,2716,064
Goodwill7,6667,324
Other intangible assets, net2,4322,470
Investments in unconsolidated subsidiaries1,0741,011
Other assets2,931 2,374 
Total assets$42,968 $36,851 

 

Liabilities and Stockholders' (Deficit) Equity

Short-term borrowings$499$643
Current portion of long-term debt2,5062,573
All other current liabilities12,95713,251
Long-term debt31,33425,851
Deferred income taxes7991,897
Other long-term liabilities5,103 3,536 
Total liabilities53,19847,751
 
Total PMI stockholders' deficit(12,086)(12,688)
Noncontrolling interests1,856 1,788 
Total stockholders' deficit(10,230)(10,900)
Total liabilities and stockholders' (deficit) equity$42,968 $36,851 
 
Total debt$34,339$29,067
Total debt to Adjusted EBITDA2.77(1)2.51(1)
Net debt to Adjusted EBITDA2.09(1)2.15(1)
 

(1) For the calculation of Total Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA ratios, refer to Schedule 18.

 
             Schedule 10
and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.





For the Quarters Ended December 31,
 
20172016% Change in Net Revenuesexcluding Excise Taxes

NetRevenues

LessExciseTaxes

NetRevenuesexcludingExciseTaxes



LessCurrency

NetRevenuesexcludingExciseTaxes &Currency




LessAcquisitions

NetRevenuesexcludingExciseTaxes,Currency &Acquisitions





NetRevenues

LessExciseTaxes

NetRevenuesexcludingExciseTaxes




Total
 

ExcludingCurrency

 

ExcludingCurrency &Acquisitions

 
$7,424$5,160$2,264$139$2,125$$2,125European Union$6,465$4,521$1,94416.5%9.3%9.3%
4,8683,1041,764(23)1,7871,787EEMA4,6362,8381,798(1.9)%(0.6)%(0.6)%
6,5843,1493,435(104)3,5393,539Asia5,5173,0732,44440.5%44.8%44.8%
2,709 1,878 831 2 829  829 &Latin AmericaCanada2,571 1,786 785 5.9%5.6%5.6%
$21,585 $13,291 $8,294 $14 $8,280 $ $8,280 PMI Total$19,189 $12,218 $6,971 19.0%18.8%18.8%
 
 
20172016% Change inOperating Companies Income

OperatingCompaniesIncome

LessCurrency

OperatingCompaniesIncomeexcludingCurrency



LessAcquisitions

OperatingCompaniesIncomeexcludingCurrency &Acquisitions




OperatingCompaniesIncome


Total
 

ExcludingCurrency

 

ExcludingCurrency &Acquisitions

 
$992$39$953$$953European Union$89810.5%6.1%6.1%
700264436436EEMA62711.6%(30.5)%(30.5)%
1,396(97)1,4931,493Asia90853.7%64.4%64.4%
293 (10)303  303 &Latin AmericaCanada261 12.3%16.1%16.1%
$3,381 $196 $3,185 $ $3,185 PMI Total$2,694 25.5%18.2%18.2%
 
             Schedule 11
and Subsidiaries Reconciliation of Non-GAAP Measures Selected Financial Data by Product Category ($ in millions) / (Unaudited)PHILIP MORRIS INTERNATIONAL INC.



For the Quarters Ended December 31,
 
20172016

% Change in Combustible ProductsNet Revenues excluding ExciseTaxes

NetRevenues (1)

LessExciseTaxes (3)

NetRevenuesexcludingExciseTaxes



LessCurrency

NetRevenuesexcludingExciseTaxes &Currency




LessAcquisitions

NetRevenuesexcludingExciseTaxes,Currency &Acquisitions





Combustible Products

NetRevenues (1)

LessExciseTaxes (3)

NetRevenuesexcludingExciseTaxes




Total
 

ExcludingCurrency

 

ExcludingCurrency &Acquisitions

 
$7,278$5,138$2,140$130$2,009$$2,009European Union$6,437$4,518$1,91911.5%4.7%4.7%
4,7783,0981,680(22)1,7021,702EEMA4,6302,8381,792(6.3)%(5.1)%(5.1)%
5,0933,0892,003(36)2,0392,039Asia5,2053,0722,133(6.1)%(4.4)%(4.4)%
2,706 1,878 828 2 826  826 &Latin AmericaCanada2,571 1,786 785 5.5% 5.3% 5.3%
$19,855 $13,204 $6,651 $75 $6,576 $ $6,576 

Total CombustibleProducts

$18,843 $12,215 $6,628 0.3% (0.8)% (0.8)%
 
20172016

% Change in Reduced-RiskProducts Net Revenues excludingExcise Taxes

NetRevenues (2)

LessExciseTaxes (3)

NetRevenuesexcludingExciseTaxes



LessCurrency

NetRevenuesexcludingExciseTaxes &Currency




LessAcquisitions

NetRevenuesexcludingExciseTaxes,Currency &Acquisitions





Reduced-RiskProducts

NetRevenues (2)

LessExciseTaxes (3)

NetRevenuesexcludingExciseTaxes




Total
 

ExcludingCurrency

 

ExcludingCurrency &Acquisitions

 
$147$23$124$7$116$$116European Union$273$25+100%+100%+100%
905858585EEMA66+100%+100%+100%
1,491591,432(68)1,5001,500Asia312312+100%+100%+100%
3 3 3 

3

&Latin AmericaCanada

   +100% +100% +100%
$1,730 $87 $1,643 $(60)$1,704 $ $1,704 

Total Reduced-RiskProducts

$345 $3 $343 +100% +100% +100%
                
$21,585 $13,291 $8,294 $14 $8,280 $ $8,280 PMI Total$19,189 $12,218 $6,971 19.0% 18.8% 18.8%
 

(1) Net revenue amounts for our combustible products refer to the operating revenues generated from the sale of these products, net of sales and promotion incentives. These net revenue amounts consist of the sale of our cigarettes and other tobacco products combined. Other tobacco products primarily include tobacco for roll-your-own and make-your-own cigarettes, pipe tobacco, cigars and cigarillos and do not include reduced-risk products.

 

(2) Net revenue amounts for our reduced-risk products refer to the operating revenues generated from the sale of these products, net of sales and promotion incentives. These net revenue amounts consist of the sale of our heated tobacco units, our devices and related accessories, and other nicotine-containing products, which primarily include our e-vapor products. Reduced-risk products is the term we use 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 continued smoking. We have a range of reduced- risk products in various stages of development, scientific assessment and commercialization. Because our reduced-risk products do not burn tobacco, they produce far lower quantities of harmful and potentially harmful compounds than found in cigarette smoke.



IQOS

 

(3) PMI often collects excise taxes from its customers and then remits them to governments, and, in those circumstances, PMI includes the excise taxes in its net revenues and in excise taxes on products. In some jurisdictions, including , PMI is not responsible for collecting excise taxes.
Japan

 

Sum of product categories or Regions might not foot to PMI total due to rounding.Note:

 
             Schedule 12
and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Operating Companies Income to Adjusted Operating Companies Income & Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.






For the Quarters Ended December 31,
 
20172016

% Change in AdjustedOperating Companies Income

OperatingCompaniesIncome

LessAssetImpairment& ExitCosts



AdjustedOperatingCompaniesIncome


LessCurrency

AdjustedOperatingCompaniesIncomeexcludingCurrency




LessAcquisitions

AdjustedOperatingCompaniesIncomeexcludingCurrency &Acquisitions





OperatingCompaniesIncome

LessAssetImpairment& ExitCosts



AdjustedOperatingCompaniesIncome



Adjusted
 

AdjustedexcludingCurrency

 

AdjustedexcludingCurrency &Acquisitions


 
$992$$992$39$953$$

953

European Union

$898$$89810.5%6.1%6.1%
700700264436436EEMA62762711.6%(30.5)%(30.5)%
1,3961,396(97)1,4931,493Asia90890853.7%64.4%64.4%
293  293 (10)303  303 

&Latin AmericaCanada

261  261 12.3%16.1%16.1%
$3,381 $ $3,381 $196 $3,185 $ $3,185 PMI Total$2,694 $ $2,694 25.5%18.2%18.2%
 
20172016% Points Change

AdjustedOperatingCompaniesIncomeexcludingCurrency




NetRevenuesexcludingExciseTaxes &Currency(1)




AdjustedOperatingCompaniesIncomeMarginexcludingCurrency





AdjustedOperatingCompaniesIncomeexcludingCurrency &Acquisitions





Net RevenuesexcludingExcise Taxes,Currency &Acquisitions(1)



AdjustedOperatingCompaniesIncomeMarginexcludingCurrency &Acquisitions






AdjustedOperatingCompaniesIncome


NetRevenuesexcludingExciseTaxes(1)



AdjustedOperatingCompaniesIncomeMargin



 

AdjustedOperatingCompaniesIncomeMarginexcludingCurrency





 

AdjustedOperatingCompaniesIncomeMarginexcludingCurrency &Acquisitions






 
$953$2,12544.8%$953$2,12544.8%

European Union

$898$1,94446.2%(1.4)(1.4)
4361,78724.4%4361,78724.4%EEMA6271,79834.9%(10.5)(10.5)
1,4933,53942.2%1,4933,53942.2%Asia9082,44437.2%5.05.0
303 829 36.6%303 829 36.6%

&Latin AmericaCanada

261 785 33.2%3.43.4
$3,185 $8,280 38.5%$3,185 $8,280 38.5%PMI Total$2,694 $6,971 38.6%(0.1)(0.1)
 
(1) For the calculation of Net Revenues excluding Excise Taxes, currency and acquisitions, refer to Schedule 10.
 
    
Schedule 13
and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency, and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency (Unaudited)PHILIP MORRIS INTERNATIONAL INC.





For the Quarters Ended December 31,
 
 
20172016% Change
 
Reported Diluted EPS$0.44$1.10(60.0)%
 
Less:
Currency impact0.01  
 
Reported Diluted EPS, excluding Currency$0.43 $1.10 (60.9)%
 
 
20172016% Change
 
Reported Diluted EPS$0.44$1.10(60.0)%
 
Adjustments:
Asset impairment and exit costs
Tax items0.88  
 
Adjusted Diluted EPS$1.32$1.1020.0%
 
Less:
Currency impact0.01  
 
Adjusted Diluted EPS, excluding Currency$1.31 $1.10 19.1%
 
             Schedule 14
and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of Currency and Acquisitions ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.





For the Years Ended December 31,
 
20172016

% Change in Net Revenuesexcluding Excise Taxes

NetRevenues

LessExciseTaxes

NetRevenuesexcludingExciseTaxes



LessCurrency

NetRevenuesexcludingExciseTaxes &Currency




LessAcquisitions

NetRevenuesexcludingExciseTaxes,Currency &Acquisitions





NetRevenues

LessExciseTaxes

NetRevenuesexcludingExciseTaxes




Total
 

ExcludingCurrency

 

ExcludingCurrency &Acquisitions

$27,580$19,262$8,318$45$8,273$$8,273European Union$27,129$18,967$8,1621.9%1.4%1.4%
18,04511,3466,699(291)6,9906,990EEMA18,28611,2867,000(4.3)%(0.1)%(0.1)%
22,63511,84510,790(137)10,92710,927Asia20,53111,8508,68124.3%25.9%25.9%
9,838 6,897 2,941 (54)2,995  2,995 &Latin AmericaCanada9,007 6,165 2,842 3.5%5.4%5.4%
$78,098 $49,350 $28,748 $(437)$29,185 $ $29,185 PMI Total$74,953 $48,268 $26,685 7.7%9.4%9.4%
 
20172016

% Change inOperating Companies Income

OperatingCompaniesIncome

LessCurrency

OperatingCompaniesIncomeexcludingCurrency



LessAcquisitions

OperatingCompaniesIncomeexcludingCurrency &Acquisitions




OperatingCompaniesIncome


Total
 

ExcludingCurrency

 

ExcludingCurrency &Acquisitions

 
$3,775$(43)$3,818$$3,818European Union$3,994(5.5)%(4.4)%(4.4)%
2,888812,8072,807EEMA3,016(4.2)%(6.9)%(6.9)%
4,149(123)4,2724,272Asia3,19629.8%33.7%33.7%
1,002 (70)1,072  1,072 &Latin AmericaCanada938 6.8%14.3%14.3%
$11,814 $(155)$11,969 $ $11,969 PMI Total$11,144 6.0%7.4%7.4%
 
             Schedule 15
and Subsidiaries Reconciliation of Non-GAAP Measures Selected Financial Data by Product Category ($ in millions) / (Unaudited)PHILIP MORRIS INTERNATIONAL INC.



For the Years Ended December 31,
 
20172016

% Change in Combustible ProductsNet Revenues excluding ExciseTaxes

NetRevenues (1)

LessExciseTaxes (3)

NetRevenuesexcludingExciseTaxes



LessCurrency

NetRevenuesexcludingExciseTaxes &Currency




LessAcquisitions

NetRevenuesexcludingExciseTaxes,Currency &Acquisitions





Combustible Products

NetRevenues (1)

LessExciseTaxes (3)

NetRevenuesexcludingExciseTaxes




Total
 

ExcludingCurrency

 

ExcludingCurrency &Acquisitions

 
$27,261

$

19,213$8,048$39$8,009$$8,009European Union$27,067$18,962$8,105(0.7)%(1.2)%(1.2)%
17,88611,3366,550(290)6,8406,840EEMA18,27611,2866,991(6.3)%(2.1)%(2.1)%
19,32511,7537,572(43)7,6157,615Asia19,86511,8508,015(5.5)%(5.0)%(5.0)%
9,833 6,896 2,937 (54)2,991  2,991 &Latin AmericaCanada9,006 6,164 2,841 3.4% 5.3% 5.3%
$74,305 $49,198 $25,107 $(348)$25,456 $ $25,456 Total Combustible Products$74,214 $48,262 $25,952 (3.3)% (1.9

)%

 (1.9)%
 
20172016

% Change in Reduced-RiskProducts Net Revenues excludingExcise Taxes

NetRevenues (2)

LessExciseTaxes (3)

NetRevenuesexcludingExciseTaxes



LessCurrency

NetRevenuesexcludingExciseTaxes &Currency




LessAcquisitions

NetRevenuesexcludingExciseTaxes,Currency &Acquisitions





Reduced-Risk Products

NetRevenues (2)

LessExciseTaxes (3)

NetRevenuesexcludingExciseTaxes




Total
 

ExcludingCurrency

 

ExcludingCurrency &Acquisitions

 
$320$51$269$5$264$$264European Union$625$57+100%+100%+100%
15810149149149EEMA99+100%+100%+100%
3,310923,218(94)3,3123,312Asia666666+100%+100%+100%
5  4  4  4&Latin AmericaCanada2 1 1 +100% +100% +100%
$3,793 $153 $3,640 $(89)$3,729 $ $3,729 

Total Reduced-RiskProducts

$739 $6 $733 +100% +100% +100%
                
$78,098 $49,350 $28,748 $(437)$29,185 $ $29,185 PMI Total$74,953 $48,268 $26,685 7.7% 9.4% 9.4%
 

(1) Net revenue amounts for our combustible products refer to the operating revenues generated from the sale of these products, net of sales and promotion incentives. These net revenue amounts consist of the sale of our cigarettes and other tobacco products combined. Other tobacco products primarily include tobacco for roll-your-own and make-your-own cigarettes, pipe tobacco, cigars and cigarillos and do not include reduced-risk products.

 

(2) Net revenue amounts for our reduced-risk products refer to the operating revenues generated from the sale of these products, net of sales and promotion incentives. These net revenue amounts consist of the sale of our heated tobacco units, our devices and related accessories, and other nicotine-containing products, which primarily include our e-vapor products. Reduced-risk products is the term we use 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 continued smoking. We have a range of reduced- risk products in various stages of development, scientific assessment and commercialization. Because our reduced-risk products do not burn tobacco, they produce far lower quantities of harmful and potentially harmful compounds than found in cigarette smoke.



IQOS

 

(3) PMI often collects excise taxes from its customers and then remits them to governments, and, in those circumstances, PMI includes the excise taxes in its net revenues and in excise taxes on products. In some jurisdictions, including , PMI is not responsible for collecting excise taxes.
Japan

 

Sum of product categories or Regions might not foot to PMI total due to rounding.Note:

 
             Schedule 16
and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Operating Companies Income to Adjusted Operating Companies Income & Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.






For the Years Ended December 31,
 
20172016% Change in AdjustedOperating Companies Income

OperatingCompaniesIncome

LessAssetImpairment &Exit Costs


AdjustedOperatingCompaniesIncome


LessCurrency

AdjustedOperatingCompaniesIncomeexcludingCurrency




LessAcquisitions

AdjustedOperatingCompaniesIncomeexcludingCurrency &Acquisitions





OperatingCompaniesIncome

LessAssetImpairment& ExitCosts



AdjustedOperatingCompaniesIncome



Adjusted
 

AdjustedexcludingCurrency

 

AdjustedexcludingCurrency &Acquisitions


 
$3,775$$3,775$(43)$3,818$$3,818European Union$3,994$$3,994(5.5)%(4.4)%(4.4)%
2,8882,888812,8072,807EEMA3,0163,016(4.2)%(6.9)%(6.9)%
4,1494,149(123)4,2724,272Asia3,1963,19629.8%33.7%33.7%
1,0021,002(70)1,0721,072

&Latin AmericaCanada

9389386.8%14.3%14.3%
           
$11,814 $ $11,814 $(155)$11,969 $ $11,969 PMI Total$11,144 $ $11,144 6.0%7.4%7.4%
 
20172016% Points Change

AdjustedOperatingCompaniesIncomeexcludingCurrency




Net RevenuesexcludingExcise Taxes& Currency(1)


AdjustedOperatingCompaniesIncomeMarginexcludingCurrency





AdjustedOperatingCompaniesIncomeexcludingCurrency &Acquisitions





Net RevenuesexcludingExcise Taxes,Currency &Acquisitions(1)



AdjustedOperatingCompaniesIncomeMarginexcludingCurrency &Acquisitions






AdjustedOperatingCompaniesIncome


NetRevenuesexcludingExciseTaxes(1)



AdjustedOperatingCompaniesIncomeMargin



 

AdjustedOperatingCompaniesIncomeMarginexcludingCurrency





 

AdjustedOperatingCompaniesIncomeMarginexcludingCurrency &Acquisitions






 
$3,818$8,27346.2%$3,818$8,27346.2%European Union$3,994$8,16248.9%(2.7)(2.7)
2,8076,99040.2%2,8076,99040.2%EEMA3,0167,00043.1%(2.9)(2.9)
4,27210,92739.1%4,27210,92739.1%

Asia

3,1968,68136.8%2.32.3
1,0722,99535.8%1,0722,99535.8%

&Latin AmericaCanada

9382,84233.0%2.82.8
       
$11,969 $29,185 41.0%$11,969 $29,185 41.0%PMI Total$11,144 $26,685 41.8%(0.8)(0.8)
 
(1) For the calculation of Net Revenues excluding Excise Taxes, currency and acquisitions, refer to Schedule 14.
 
   
 Schedule 17
and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency, and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding Currency (Unaudited)PHILIP MORRIS INTERNATIONAL INC.





For the Years Ended December 31,
 
 
 
 
20172016% Change
 
Reported Diluted EPS$3.88$4.48(13.4)%
 
Less:
Currency impact(0.21) 
 
Reported Diluted EPS, excluding Currency$4.09 $4.48 (8.7)%
 
 
 
20172016% Change
 
Reported Diluted EPS$3.88$4.48(13.4)%
 
Adjustments:
Asset impairment and exit costs
Tax items0.84  
 
Adjusted Diluted EPS$4.72$4.485.4%
 
Less:
Currency impact(0.21) 
 
Adjusted Diluted EPS, excluding Currency$4.93 $4.48 10.0%
 
  
Schedule 18
and Subsidiaries Reconciliation of Non-GAAP Measures Calculation of Total Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA Ratios ($ in millions, except ratios) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.




 
For the Year EndedDecember 31,2017

 For the Year EndedDecember 31,2016

 
 
 
Net Earnings$6,341$7,250
Equity (income)/loss in unconsolidated subsidiaries, net(59)(94)
Provision for Income Taxes4,3072,768
Interest expense, net914891
Depreciation and amortization875743
Asset impairment and exit costs  
Adjusted EBITDA$12,378$11,558
 
 
December 31,2017
 December 31,2016
 
Short-term borrowings$499$643
Current portion of long-term debt2,5062,573
Long-term debt31,334  25,851 
Total Debt$34,339$29,067
Less: Cash and cash equivalents8,447  4,239 
Net Debt$25,892$24,828
 

Ratios:

Total Debt to Adjusted EBITDA2.77  2.51 
Net Debt to Adjusted EBITDA2.09  2.15 
 
       Schedule 19
and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding Currency ($ in millions) (Unaudited)PHILIP MORRIS INTERNATIONAL INC.





For the Years Ended December 31,
 
 
 
For the Quarters EndedDecember 31,
For the Years EndedDecember 31,
20172016% Change20172016% Change
 
Net cash provided by operating activities (1)$2,921$2,14935.9%$8,912$8,07710.3%
 
Less:
Currency impact194  392  
 
Net cash provided by operating activities,excluding currency
$2,727 $2,149 26.9%$8,520 $8,077 5.5%
 
(1) Operating cash flow.
 

Quick facts: Philip Morris International

Price: 70.04

Market: NYSE
Market Cap: $109.07 billion
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