Revises and Narrows
2021 Full-Year Reported Diluted EPS Forecast to a Range of $5.77 to
$5.82, or $6.01 to $6.06 on an Adjusted Basis, Representing
Currency-Neutral Growth of 13% to 14%
Regulatory News:
Philip Morris International Inc. (NYSE: PM) today announces its
2021 third-quarter results. Growth rates presented in this press
release on an organic basis reflect currency-neutral underlying
results. Adjusted net revenues exclude the impact related to the
Saudi Arabia customs assessments. A glossary of key terms,
definitions and explanatory notes is included at the end of this
press release. Adjustments, other calculations and reconciliations
to the most directly comparable U.S. GAAP measures are included in
the schedules to this press release.
2021 THIRD-QUARTER & YEAR-TO-DATE
HIGHLIGHTS
2021 Third-Quarter
- Reported diluted EPS of $1.55, up by 4.7%; up by 2.0%,
excluding currency
- Adjusted diluted EPS of $1.58, up by 11.3%; up by 8.5%,
excluding currency
- Cigarette and heated tobacco unit shipment volume up by 2.1%
(reflecting cigarette shipment volume down by 0.4%, and heated
tobacco unit shipment volume up by 23.8% to 23.5 billion
units)
- Market share for heated tobacco units in IQOS markets,
excluding the U.S., up by 1.2 points to 6.8%
- Net revenues up by 9.1%; up by 7.6%, on an organic basis
- Net revenues from smoke-free products accounted for 28.6% of
total net revenues
- Operating income up by 6.5%; up by 4.5%, excluding
currency
- Adjusted operating income up by 7.4% on an organic basis
- Adjusted operating income margin up by 0.1 point; down by 0.1
point on an organic basis
- Total IQOS users at quarter-end estimated at approximately 20.4
million, of which approximately 14.9 million have switched to IQOS
and stopped smoking
- Increased its regular quarterly dividend by 4.2% to an
annualized rate of $5.00 per common share
- Repurchased 0.9 million shares of its common stock for $94
million, at an average price of $98.99 per share
2021 Nine Months Year-to-Date
- Reported diluted EPS of $4.48, up by 14.9%; up by 10.3%,
excluding currency
- Adjusted diluted EPS of $4.72, up by 20.4%; up by 15.8%
excluding currency
- Cigarette and heated tobacco unit shipment volume up by 1.5%
(reflecting cigarette shipment volume down by 1.6%, and heated
tobacco unit shipment volume up by 27.9% to 69.6 billion
units)
- Market share for heated tobacco units in IQOS markets,
excluding the U.S., up by 1.3 points to 6.9%
- Net revenues up by 9.7%; up by 6.1% excluding currency
- Adjusted net revenues up by 7.3% on an organic basis
- Net revenues from smoke-free products accounted for 28.6% of
total adjusted net revenues
- Operating income up by 14.4%; up by 10.1%, excluding
currency
- Adjusted operating income up by 14.5% on an organic basis
- Adjusted operating income margin up by 3.0 points; up by 2.8
points on an organic basis
"Our business delivered another strong quarterly performance,
coming ahead of our expectations with adjusted diluted EPS of
$1.58, representing growth of 8.5%, excluding currency," said Jacek
Olczak, Chief Executive Officer.
"The continued excellent performance of IQOS drove total
shipment volume and organic net revenue growth of 2.1% and 7.6%,
respectively, and was complemented by further sequential share
gains for our combustible products."
"Today, we are reaffirming our strong growth outlook for 2021,
with an adjusted diluted EPS forecast toward the upper-half of our
previous range and representing currency-neutral growth of 13% to
14%, despite ongoing tightness in device supplies due to the global
shortage of semiconductors, which impacts our ability to fulfill
consumer demand for IQOS."
"We confirm our confidence in our 2021 to 2023 growth targets,
despite device constraints that could persist into the first half
of 2022, with temporarily lower IQOS user growth rates."
2021 FULL-YEAR FORECAST
Full-Year
2021 Forecast
2020
Growth
Reported Diluted EPS
$5.77
-
$5.82
$ 5.16
Saudi Arabia customs assessments
0.14
—
Asset impairment and exit costs
0.09
0.08
Asset acquisition cost
0.03
—
Equity investee ownership dilution
(0.02)
—
Fair value adjustment for equity security
investments
0.04
Tax items
(0.06
)
Brazil indirect tax credit
(0.05
)
Adjusted Diluted EPS
$6.01
-
$6.06
$ 5.17
Currency
(0.17)
Adjusted Diluted EPS, excluding
currency
$5.84
-
$5.89
$ 5.17
13%
-
14%
PMI revises and narrows its full-year reported diluted EPS
forecast to a range of $5.77 to $5.82, at prevailing exchange
rates, from a range of $5.76 to $5.86 previously, primarily
reflecting:
- Asset impairment and exit costs of $0.09 per share, compared to
$0.07 per share previously, due to organizational design
optimization and product distribution restructuring in South
Korea;
- Asset acquisition cost of $0.03 per share, due to a $51 million
pre-tax charge related to the purchase of OtiTopic (see related
discussion under "Other" on page 28);
- A favorable impact related to equity ownership dilution in
Medicago, Inc. of $0.02 per share, following PMI's ownership
reduction in July 2021 to approximately 25%, from approximately 32%
previously; and
- A favorable currency impact of $0.17 at prevailing exchange
rates, compared to $0.18 per share, previously.
This forecast represents a projected currency-neutral increase
in adjusted diluted EPS of around 13% to 14% versus adjusted
diluted EPS of $5.17 in 2020, as outlined in the table above.
2021 Full-Year Forecast Assumptions
This forecast assumes:
- A continued gradual improvement in the general operating
environment, with potential volatility around the duration and
effects of pandemic-related mobility restrictions across PMI's key
markets;
- Constrained IQOS device supply due to the ongoing global
semiconductor shortage, with reduced device assortment and
availability, and therefore lower IQOS user growth rates as PMI
prioritizes devices for existing IQOS users; 2021 ILUMA launches in
certain markets now planned for the second half of 2022;
- A slight recovery in PMI's duty-free business during the fourth
quarter, following a modest improvement in the third quarter, with
intercontinental and Asia travel still very subdued;
- An estimated total international industry volume progression,
excluding China and the U.S., of approximately flat to +1%,
compared to approximately -1% to +1%, previously;
- A total cigarette and heated tobacco unit shipment volume
increase for PMI of approximately 1% to 2%, compared to a
progression of approximately flat to +2%, previously;
- Heated tobacco unit shipment volume of around 95 billion
units;
- Adjusted net revenue growth of approximately 6.5% to 7% on an
organic basis, compared to a range of 6% to 7%, previously;
- An increase in adjusted operating income margin of around 200
basis points on an organic basis;
- Incremental commercial investments in the second half of 2021
of approximately $300 million versus the first half, compared to a
range of approximately $300 to $400 million, previously;
- Operating cash flow of around $11 billion at prevailing
exchange rates and subject to year-end working capital
requirements;
- Capital expenditures of approximately $0.6 billion, compared to
approximately $0.8 billion, previously;
- An effective tax rate, excluding discrete tax events, of around
22%;
- No material impact of any share repurchases; and
- No material impact related to the acquisitions of Fertin Pharma
A/S or Vectura Group plc.
The foregoing is underpinned by the assumption that, even in the
event of prolonged pandemic-related restrictions, there will not be
a return to the depressed consumption levels of the second quarter
of 2020. This assumption is consistent with the less severe impact
on consumption levels observed in the second half of 2020 as
COVID-19 spread in a number of markets.
This forecast excludes the impact of any future acquisitions,
unanticipated or unquantifiable asset impairment and exit cost
charges, future changes in currency exchange rates, further
developments pertaining to the judgment in the two Québec Class
Action lawsuits and the Companies’ Creditors Arrangement Act (CCAA)
protection granted to PMI's Canadian subsidiary, Rothmans, Benson
& Hedges, Inc. (RBH), any unusual events, any intensification
of the global shortage of semiconductors and the related impact on
the supply of our electronic devices, and any COVID-19-related
developments different from the assumptions set forth in the
company's forecast.
Factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to
these projections.
IQOS Device Supply
As communicated in September, the global semiconductor shortage
is resulting in a tightness in IQOS device supply. This is
affecting the availability and assortment of IQOS devices in
certain markets, which is hampering the company’s ability to
operate at full commercial and competitive capacity to fully meet
demand. This has been reflected in lower IQOS user growth rates in
the third quarter.
At this stage, supply forecasting remains volatile. PMI
therefore assumes that the tight supply situation will persist into
the first half of 2022 and, where necessary, the company will
prioritize device replacements for existing IQOS users over device
sales targeting user acquisition. PMI is also adjusting its launch
timeline for IQOS ILUMA outside Japan, with additional major
launches now assumed for the second half of 2022.
PMI views this as a temporary phenomenon and expects IQOS user
growth to re-accelerate once shortages ease, as consumer demand
remains robust. PMI confirms its confidence in its 2021 to 2023
organic compound annual growth targets for net revenues and
adjusted diluted EPS (more than 5% and 9%, respectively), though
there are short-term shortage scenarios under which the transitory
IQOS device supply impact on user growth could result in full-year
2022 organic growth rates below the company's 2021 to 2023 growth
targets.
Acquisitions
On August 9, 2021, PMI acquired 100% of OtiTopic, Inc., a U.S.
respiratory drug development company with a late-stage dry powder
inhalation aspirin treatment for acute myocardial infarction. The
cost of the acquisition was $51 million, excluding potential
additional contingent payments related to the achievement of
certain milestones.
On September 15, 2021, PMI acquired 100% of Fertin Pharma A/S, a
Danish company that is a leading developer and manufacturer of
innovative pharmaceutical and well-being products based on oral and
intra-oral delivery systems, for a total consideration of DKK 5.2
billion (approximately $820 million).
As of September 30, 2021, PMI held a 96.86% controlling interest
in Vectura Group plc (Vectura), an inhaled therapeutics company
based in the United Kingdom, following a series of purchases of
Vectura shares and valid acceptances of PMI's offer at a price of
165 pence per share. The delisting and cancellation of trading of
Vectura shares was effective as of today. PMI intends to exercise
its right to compulsorily acquire the remaining shares of Vectura,
in accordance with applicable English law.
Conference Call
A conference call, hosted by Emmanuel Babeau, Chief Financial
Officer, will be webcast at 9:00 a.m., Eastern Time, on October 19,
2021. Access is at www.pmi.com/2021Q3earnings.
CONSOLIDATED SHIPMENT VOLUME & MARKET
SHARE
PMI Shipment Volume by Region
Third-Quarter
Nine Months
Year-to-Date
(million units)
2021
2020
Change
2021
2020
Change
Cigarettes
European Union
41,965
45,179
(7.1
)%
120,238
126,142
(4.7
)%
Eastern Europe
25,020
25,661
(2.5
)%
67,771
70,737
(4.2
)%
Middle East & Africa
35,166
30,903
13.8
%
93,155
88,087
5.8
%
South & Southeast Asia
35,578
37,238
(4.5
)%
105,787
108,179
(2.2
)%
East Asia & Australia
11,120
10,784
3.1
%
33,450
35,154
(4.8
)%
Americas
15,994
15,699
1.9
%
46,092
45,542
1.2
%
Total PMI
164,843
165,464
(0.4
)%
466,493
473,841
(1.6
)%
Heated Tobacco Units
European Union
7,058
5,181
36.2
%
20,405
14,069
45.0
%
Eastern Europe
6,119
4,882
25.3
%
18,594
14,374
29.4
%
Middle East & Africa
577
179
+100%
1,485
834
78.1
%
South & Southeast Asia
79
10
+100%
151
10
+100%
East Asia & Australia
9,435
8,601
9.7
%
28,478
24,799
14.8
%
Americas
221
114
93.9
%
466
316
47.5
%
Total PMI
23,489
18,967
23.8
%
69,579
54,402
27.9
%
Cigarettes and Heated Tobacco
Units
European Union
49,023
50,360
(2.7
)%
140,643
140,211
0.3
%
Eastern Europe
31,139
30,543
2.0
%
86,365
85,111
1.5
%
Middle East & Africa
35,743
31,082
15.0
%
94,640
88,921
6.4
%
South & Southeast Asia
35,657
37,248
(4.3
)%
105,938
108,189
(2.1
)%
East Asia & Australia
20,555
19,385
6.0
%
61,928
59,953
3.3
%
Americas
16,215
15,813
2.5
%
46,558
45,858
1.5
%
Total PMI
188,332
184,431
2.1
%
536,072
528,243
1.5
%
Third-Quarter
PMI's total shipment volume increased by 2.1%, driven by:
- Eastern Europe, reflecting higher heated tobacco unit shipment
volume across the Region, primarily in Russia and Ukraine, partly
offset by lower cigarette shipment volume, mainly in Russia and
Ukraine;
- Middle East & Africa, mainly reflecting higher cigarette
shipment volume, primarily in PMI Duty Free and Turkey, partly
offset by North Africa (particularly Egypt);
- East Asia & Australia, reflecting higher heated tobacco
unit shipment volume, primarily in Japan, and higher cigarette
shipment volume, mainly in Japan, partly offset by Australia and
South Korea; and
- Americas, mainly reflecting higher cigarette shipment volume,
notably in Mexico;
partly offset by
- the EU, reflecting lower cigarette shipment volume, mainly in
France, Italy and Spain, partly offset by higher heated tobacco
unit shipment volume across the Region, notably in Italy; and
- South & Southeast Asia, primarily reflecting lower
cigarette shipment volume, mainly in the Philippines, partly offset
by Indonesia.
Impact of Inventory Movements
Excluding the net favorable impact of estimated distributor
inventory movements of approximately 2.8 billion units, PMI’s total
in-market sales increased by 0.6%, driven by a 20.2% increase in
heated tobacco units, partly offset by a 1.8% decrease in
cigarettes.
The net favorable impact of approximately 2.8 billion units
reflected:
- A net favorable impact of 2.4 billion cigarettes, mainly driven
by 2020 movements in Japan and PMI Duty Free; and
- A net favorable impact of 0.4 billion heated tobacco units,
notably reflecting 2020 movements in PMI Duty Free.
PMI's total heated tobacco unit in-market sales volume in the
quarter was 24.6 billion units, reflecting sequential growth of
7.2% compared to the second quarter of 2021.
Nine Months Year-to-Date
PMI's total shipment volume increased by 1.5%, driven by:
- the EU, reflecting higher heated tobacco unit shipment volume
across the Region, particularly in Germany, Hungary, Italy and
Poland, partly offset by lower cigarette shipment volume, notably
in the Czech Republic, France, Germany and Hungary;
- Eastern Europe, reflecting higher heated tobacco unit shipment
volume, primarily in Russia and Ukraine, partly offset by lower
cigarette shipment volume, mainly in Russia and Ukraine;
- Middle East & Africa, reflecting higher cigarette shipment
volume (primarily in PMI Duty Free and Turkey, partly offset by
North Africa), as well as higher heated tobacco unit shipment
volume across the Region;
- East Asia & Australia, reflecting higher heated tobacco
unit shipment volume driven by Japan, partly offset by lower
cigarette shipment volume, predominantly in Japan and South Korea;
and
- Americas, mainly reflecting higher cigarette shipment volume,
primarily in Brazil and Mexico, partially offset by Argentina;
partly offset by
- South & Southeast Asia, primarily reflecting lower
cigarette shipment volume, mainly in the Philippines, partially
offset by Indonesia and Pakistan.
Impact of Inventory Movements
Excluding the net favorable impact of estimated distributor
inventory movements of approximately 5.0 billion units, PMI’s total
in-market sales increased by 0.5%, driven by a 23.3% increase in
heated tobacco units, partly offset by a 2.1% decrease in
cigarettes.
The net favorable impact of approximately 5.0 billion units
reflected:
- A net favorable impact of 2.8 billion cigarettes, mainly driven
by 2020 movements in Japan, PMI Duty Free and Russia; and
- A net favorable impact of 2.2 billion heated tobacco units,
primarily driven by 2020 movements in Japan.
PMI's total heated tobacco unit in-market sales volume in the
nine months year-to-date was 68.8 billion units.
PMI Shipment Volume by Brand
PMI Shipment Volume by Brand
Third-Quarter
Nine Months
Year-to-Date
(million units)
2021
2020
Change
2021
2020
Change
Cigarettes
Marlboro
65,139
61,581
5.8
%
177,287
175,638
0.9
%
L&M
21,564
24,189
(10.9
)%
64,028
69,215
(7.5
)%
Chesterfield
15,994
13,768
16.2
%
43,021
39,274
9.5
%
Philip Morris
11,107
12,254
(9.4
)%
31,881
34,823
(8.4
)%
Parliament
11,556
9,540
21.1
%
30,535
25,575
19.4
%
Sampoerna A
9,717
7,999
21.5
%
27,601
23,801
16.0
%
Dji Sam Soe
5,518
6,372
(13.4
)%
16,644
18,344
(9.3
)%
Bond Street
3,042
6,441
(52.8
)%
12,200
18,481
(34.0
)%
Lark
4,070
3,846
5.8
%
11,851
12,059
(1.7
)%
Next
2,388
2,327
2.7
%
6,556
6,703
(2.2
)%
Others
14,748
17,147
(14.0
)%
44,889
49,928
(10.1
)%
Total Cigarettes
164,843
165,464
(0.4
)%
466,493
473,841
(1.6
)%
Heated Tobacco Units
23,489
18,967
23.8
%
69,579
54,402
27.9
%
Total PMI
188,332
184,431
2.1
%
536,072
528,243
1.5
%
Note: Lark includes Lark Harmony; Next
includes Next Dubliss; Philip Morris includes Philip
Morris/Dubliss; and Sampoerna A includes Sampoerna.
Third-Quarter
The increase in PMI's heated tobacco unit shipment volume was
mainly driven by the EU (notably Italy), Eastern Europe (notably
Russia) and Japan.
PMI's cigarette shipment volume of the following brands
increased:
- Marlboro, mainly driven by PMI Duty Free, Russia and Turkey,
partly offset by Italy and the Philippines;
- Chesterfield, primarily driven by Russia;
- Parliament, mainly driven by Saudi Arabia and Turkey;
- Sampoerna A in Indonesia, primarily driven by premium A
Mild;
- Lark, mainly driven by Japan; and
- Next, primarily driven by Russia.
PMI's cigarette shipment volume of the following brands
decreased:
- L&M, primarily due to Egypt, Poland, Russia, Spain,
Thailand and Turkey;
- Philip Morris, mainly due to Russia, partly offset by
Japan;
- Dji Sam Soe in Indonesia, primarily due to Dji Sam Soe Magnum
Mild;
- Bond Street, mainly due to Russia; and
- "Others," primarily due to: mid-price Fortune (Philippines) and
Sampoerna U (Indonesia).
International Share of Market
PMI's total international market share (excluding China and the
U.S.), defined as PMI's cigarette and heated tobacco unit sales
volume as a percentage of total industry cigarette and heated
tobacco unit sales volume, was flat at 28.0%, reflecting:
- Total international market share for heated tobacco units of
3.6%, up by 0.6 points; and
- Total international market share for cigarettes of 24.4%, down
by 0.6 points.
PMI's total international cigarette sales volume as a percentage
of total industry cigarette sales volume was down by 0.4 points to
25.6%, mainly reflecting lower cigarette market share and/or an
unfavorable geographic mix impact, notably in Egypt, France, Japan,
the Philippines, Russia and Ukraine, partly offset by Indonesia,
PMI Duty-Free and Turkey.
Nine Months Year-to-Date
The increase in PMI's heated tobacco unit shipment volume was
mainly driven by the EU (notably Italy), Eastern Europe (notably
Russia and Ukraine) and Japan.
PMI's cigarette shipment volume of the following brands
increased:
- Marlboro, mainly driven by Mexico, PMI Duty Free, Russia and
Turkey, partly offset by France, the GCC, Japan and the
Philippines;
- Chesterfield, primarily driven by Brazil, the Philippines and
Russia, partly offset by Saudi Arabia;
- Parliament, mainly driven by Russia, Saudi Arabia and Turkey,
partly offset by Japan and South Korea; and
- Sampoerna A in Indonesia, primarily driven by premium A
Mild.
PMI's cigarette shipment volume of the following brands
decreased:
- L&M, mainly due to Egypt, Germany, Poland, Russia and
Turkey;
- Philip Morris, primarily due to Indonesia, Italy and Russia,
partly offset by Japan;
- Dji Sam Soe in Indonesia, mainly due to Dji Sam Soe Magnum
Mild;
- Bond Street, primarily due to Kazakhstan, Russia and
Ukraine;
- Lark, mainly due to Japan;
- Next, primarily due to Canada and Ukraine, partly offset by
Russia; and
- "Others," notably due to: mid-price Fortune (Philippines) and
Sampoerna U (Indonesia); and low-price Jackpot (Philippines) and
More (Philippines); partly offset by mid-price Sampoerna Hijau
(Indonesia) and low-price Morven (Pakistan).
International Share of Market
PMI's total international market share (excluding China and the
U.S.) decreased by 0.6 points to 27.3%, reflecting:
- Total international market share for cigarettes of 23.8%, down
by 1.1 points; and
- Total international market share for heated tobacco units of
3.5%, up by 0.6 points.
PMI's total international cigarette sales volume as a percentage
of total industry cigarette sales volume was down by 0.9 points to
24.9%, mainly reflecting lower cigarette market share and/or an
unfavorable geographic mix impact, notably in Japan, the
Philippines, Russia and Ukraine, partly offset by Indonesia and
Turkey.
CONSOLIDATED FINANCIAL SUMMARY
Third-Quarter
Financial Summary
-
Quarters Ended September 30
Change Fav./(Unfav.)
Variance Fav./(Unfav.)
(in millions)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
Net Revenues
$8,122
$7,446
9.1
%
7.6
%
676
107
2
158
439
(30
)
Cost of Sales
(2,596)
(2,416)
(7.5
)%
(5.8
)%
(180
)
(40
)
(1
)
—
(211
)
72
Marketing, Administration and Research Costs
(2,053)
(1,769)
(16.1)
%
(15.9)
%
(284
)
(2
)
(1
)
—
—
(281
)
Amortization of Intangibles
(18)
(18)
—
%
—
%
—
—
—
—
—
—
Operating Income
$3,455
$3,243
6.5
%
4.5
%
212
65
—
158
228
(239
)
Asset Impairment & Exit Costs (1)
(43)
—
—
%
—
%
(43
)
—
—
—
—
(43
)
Asset Acquisition Cost (1)
(51)
—
—
%
—
%
(51
)
—
—
—
—
(51
)
Adjusted Operating Income
$3,549
$3,243
9.4
%
7.4
%
306
65
—
158
228
(145
)
Adjusted Operating Income Margin
43.7
%
43.6
%
0.1 pp
(0.1
)pp
(1) Included in Marketing, Administration and Research Costs above.
Net revenues increased by 7.6% on an organic basis, mainly
reflecting: favorable volume/mix, primarily driven by higher heated
tobacco unit volume (notably in the EU, particularly Germany, Italy
and Poland, as well as Japan, PMI Duty Free and Russia) and higher
device volume (primarily in Japan, driven by the launch of IQOS
ILUMA), partly offset by lower cigarette volume (mainly in
Australia, France, Germany, Italy and the Philippines, partly
offset by Indonesia, Japan, PMI Duty Free and Turkey) and
unfavorable cigarette mix (mainly in Germany, Japan and Russia);
and a favorable pricing variance (notably driven by Japan, the
Philippines, Russia and Turkey, partly offset by Indonesia, Poland
and Ukraine).
Operating income increased by 4.5%, excluding currency,
primarily reflecting: favorable volume/mix, primarily driven by
higher heated tobacco unit volume, partly offset by lower cigarette
volume and unfavorable cigarette mix (each mainly reflecting the
same geographies as for net revenues noted above); a favorable
pricing variance; and lower manufacturing costs (driven by
productivity gains related to reduced-risk products); partly offset
by higher marketing, administration and research costs (due mainly
to investments behind reduced-risk products, asset acquisition
costs related to OtiTopic, and higher asset impairment and exit
costs due to organizational design optimization and product
distribution restructuring in South Korea).
Adjusted operating income increased by 7.4% on an organic basis.
Adjusted operating income margin decreased by 0.1 point on the same
basis, as detailed in Schedule 8.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 23,301
$ 21,250
9.7
%
6.1
%
2,051
752
2
590
983
(276
)
Saudi Arabia Customs Assessments
(246
)
—
—
%
—
%
(246
)
—
—
—
—
(246
)
Adjusted Net Revenues
$ 23,547
$ 21,250
10.8
%
7.3
%
2,297
752
2
590
983
(30
)
Net Revenues (1)
$ 23,301
$ 21,250
9.7
%
6.1
%
2,051
752
2
590
983
(276
)
Cost of Sales
(7,223
)
(6,997
)
(3.2
)%
0.5
%
(226
)
(260
)
(1
)
—
(329
)
364
Marketing, Administration and Research
Costs
(5,995
)
(5,435
)
(10.3
)%
(8.2
)%
(560
)
(112
)
(1
)
—
—
(447
)
Amortization of Intangibles
(55
)
(55
)
—
%
1.8
%
—
(1
)
—
—
—
1
Operating Income
$ 10,028
$ 8,763
14.4
%
10.1
%
1,265
379
—
590
654
(358
)
Asset Impairment & Exit Costs (2)
(170
)
(71
)
-(100
)%
-(100
)%
(99
)
—
—
—
—
(99
)
Saudi Arabia Customs Assessments (3)
(246
)
—
—
%
—
%
(246
)
—
—
—
—
(246
)
Asset Acquisition Cost (2)
(51
)
—
—
%
—
%
(51
)
—
—
—
—
(51
)
Adjusted Operating Income
$ 10,495
$ 8,834
18.8
%
14.5
%
1,661
379
—
590
654
38
Adjusted Operating Income
Margin
44.6
%
41.6
%
3.0
pp
2.8
pp
(1) Cost/Other variance includes a
reduction in net revenues of $246 million in 2021 related to the
Saudi Arabia customs assessments.
(2) Included in Marketing, Administration
and Research Costs above.
(3) Included in Net Revenues above.
Net revenues increased by 6.1%, excluding currency, mainly
reflecting: favorable volume/mix, primarily driven by higher heated
tobacco unit volume (notably in the EU, particularly Germany,
Hungary, Italy and Poland, as well as Japan and Russia), partly
offset by lower cigarette volume (mainly in the EU Region, notably
the Czech Republic, France and Germany, as well as Japan, Kuwait,
North Africa, the Philippines, Russia and Ukraine, partially offset
by Indonesia, PMI Duty Free, and Turkey); and a favorable pricing
variance (notably driven by the Czech Republic, Germany, Japan,
Kazakhstan, North Africa, the Philippines, Russia and Turkey,
partly offset by Indonesia, Poland and Ukraine); partially offset
by the unfavorable impact of the Saudi Arabia customs assessments
of $246 million, shown in "Cost/Other". Adjusted net revenues
increased by 7.3% on an organic basis, as detailed above and in
Schedule 5.
Operating income increased by 10.1%, excluding currency,
primarily reflecting: favorable volume/mix, mainly driven by the
same factors as for net revenues noted above; a favorable pricing
variance; and lower manufacturing costs (driven by productivity
gains related to reduced-risk and combustible products); partly
offset by the unfavorable impact of the Saudi Arabia customs
assessments (as noted above for net revenues); and higher
marketing, administration and research costs, including higher
asset impairment and exit costs (mainly related to organizational
design optimization, as well as product distribution restructuring
in South Korea) and asset acquisition costs related to
OtiTopic.
Adjusted operating income increased by 14.5% on an organic
basis. Adjusted operating income margin increased by 2.8 points on
the same basis, as detailed in Schedule 8.
EUROPEAN UNION REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl.
Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 3,192
$ 2,950
8.2
%
3.9
%
242
128
2
(5
)
117
—
Operating Income
$ 1,680
$ 1,588
5.8
%
0.8
%
92
79
—
(5
)
102
(84
)
Asset Impairment & Exit Costs (1)
(12
)
—
—
%
—
%
(12
)
—
—
—
—
(12
)
Adjusted Operating Income
$ 1,692
$ 1,588
6.5
%
1.6
%
104
79
—
(5
)
102
(72
)
Adjusted Operating Income
Margin
53.0
%
53.8
%
(0.8
)pp
(1.2
)pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues increased by 3.8% on an organic basis, as detailed
in Schedule 5, reflecting: favorable volume/mix, mainly driven by
higher heated tobacco unit volume (notably in Germany, Hungary,
Italy and Poland), partly offset by lower cigarette volume (notably
in France, Germany and Italy) and unfavorable cigarette mix
(primarily in Germany). Pricing variance was slightly unfavorable,
reflecting lower pricing for reduced-risk products (notably for
heated tobacco units in Poland and devices in Germany and Italy),
partly offset by higher combustible pricing (notably in Germany,
partially offset by Poland).
Operating income increased by 0.8%, excluding currency,
primarily reflecting: favorable volume/mix, driven by the same
factors as for net revenues noted above; and lower manufacturing
costs; partly offset by higher marketing, administration and
research costs.
Adjusted operating income increased by 1.6% on an organic basis.
Adjusted operating income margin decreased by 1.1 points on the
same basis, as detailed in Schedule 8.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 9,250
$ 7,960
16.2
%
8.0
%
1,290
651
2
67
570
—
Operating Income
$ 4,811
$ 3,924
22.6
%
12.1
%
887
413
—
67
507
(100
)
Asset Impairment & Exit Costs (1)
(56
)
(27
)
-(100
)%
-(100
)%
(29
)
—
—
—
—
(29
)
Adjusted Operating Income
$ 4,867
$ 3,951
23.2
%
12.7
%
916
413
—
67
507
(71
)
Adjusted Operating Income
Margin
52.6
%
49.6
%
3.0
pp
2.2
pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues increased by 8.0% on an organic basis, reflecting:
favorable volume/mix, mainly driven by higher heated tobacco unit
volume (notably in Germany, Hungary, Italy and Poland), partly
offset by lower cigarette volume (notably in the Czech Republic,
France and Germany) and unfavorable cigarette mix (primarily in
Germany and Poland); and a favorable pricing variance, driven by
higher combustible pricing (mainly in Germany and Portugal, partly
offset by France and Poland) and higher heated tobacco unit pricing
(notably in the Czech Republic, partially offset by Poland), partly
offset by lower device pricing (notably in Germany and Italy).
Operating income increased by 12.1%, excluding currency,
primarily reflecting: favorable volume/mix, driven by the same
factors as for net revenues noted above; lower manufacturing costs
(driven by combustible and reduced-risk products); and a favorable
pricing variance; partly offset by higher marketing, administration
and research costs (including higher asset impairment and exit
costs, mainly related to organizational design optimization).
Adjusted operating income increased by 12.7% on an organic
basis. Adjusted operating income margin increased by 2.2 points on
the same basis, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share
Commentaries
European Union Key Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2021
2020
% / pp
2021
2020
% / pp
Total Market (billion units)
132.4
132.6
(0.1
)%
360.5
358.1
0.7
%
PMI Shipment Volume (million
units)
Cigarettes
41,965
45,179
(7.1
)%
120,238
126,142
(4.7
)%
Heated Tobacco Units
7,058
5,181
36.2
%
20,405
14,069
45.0
%
Total EU
49,023
50,360
(2.7
)%
140,643
140,211
0.3
%
PMI Market Share
Marlboro
16.5%
17.5%
(1.0
)
16.7%
17.6%
(0.9
)
L&M
5.6%
6.0%
(0.4
)
5.7%
6.3%
(0.6
)
Chesterfield
5.5%
5.5%
—
5.5%
5.6%
(0.1
)
Philip Morris
2.2%
2.5%
(0.3
)
2.2%
2.5%
(0.3
)
HEETS
5.3%
3.9%
1.4
5.5%
3.9%
1.6
Others
3.1%
3.0%
0.1
3.0%
3.0%
—
Total EU
38.2%
38.4%
(0.2
)
38.6%
38.9%
(0.3
)
Note: HEETS includes HEETS Dimensions.
Third-Quarter
The estimated total market in the EU decreased by 0.1% to 132.4
billion units, mainly due to:
- Czech Republic, down by 9.0%, primarily reflecting the impact
of excise tax-driven price increases; and
- France, down by 8.0%, mainly reflecting the impact of excise
tax-driven price increases and higher cross-border (non-domestic)
purchases due to the easing of pandemic-related measures;
partly offset by
- Poland, up by 3.4%, primarily reflecting the impact on adult
smoker average daily consumption and border sales of the easing of
pandemic-related measures; and
- Romania, up by 7.1%, mainly reflecting the impact on adult
smoker average daily consumption of the easing of pandemic-related
measures, as well as increased in-bound travel.
PMI's total shipment volume decreased by 2.7% to 49.0 billion
units, primarily due to:
- Czech Republic, down by 9.5%, mainly reflecting the lower total
market;
- France, down by 10.8%, primarily reflecting the lower total
market and a lower market share of cigarettes;
- Italy, down by 3.1%. Excluding the net unfavorable impact of
estimated distributor inventory movements, total in-market sales
volume increased by 3.6%, reflecting a higher total market and a
higher market share driven by heated tobacco units; and
- Spain, down by 9.1%. Excluding the net unfavorable impact of
estimated distributor inventory movements, total in-market sales
volume increased by 3.0%, mainly reflecting a higher total
market;
partly offset by
- Poland, up by 3.8%, mainly reflecting the higher total
market.
Excluding the net unfavorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume decreased
by 0.5%.
Nine Months Year-to-Date
The estimated total market in the EU increased by 0.7% to 360.5
billion units, primarily driven by:
- Italy, up by 4.2%, notably reflecting the impact on adult
smoker average daily consumption of the easing of pandemic-related
measures; and
- Poland, up by 6.4%, primarily reflecting the impact on adult
smoker average daily consumption and border sales of the easing of
pandemic-related measures, as well as a lower prevalence of illicit
trade;
partly offset by
- Czech Republic, down by 10.1%, mainly reflecting the impact of
excise tax-driven price increases and the impact, in the first
quarter of 2021, of lower border sales due to pandemic-related
lockdown measures; and
- France, down by 6.1%, primarily reflecting the same factors as
in the quarter.
PMI's total shipment volume increased by 0.3% to 140.6 billion
units, primarily driven by:
- Italy, up by 8.1%, mainly reflecting the higher total market
and a higher market share driven by heated tobacco units;
partly offset by
- Czech Republic, down by 12.2%, mainly reflecting the same
factor as in the quarter; and
- France, down by 8.3%, mainly reflecting the same factors as in
the quarter.
Excluding the net favorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume was
essentially stable.
EASTERN EUROPE REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 941
$ 899
4.7
%
6.1
%
42
(13
)
—
22
33
—
Operating Income
$ 338
$ 245
38.0
%
25.7
%
93
30
—
22
27
14
Asset Impairment & Exit Costs (1)
(2
)
—
—
%
—
%
(2
)
—
—
—
—
(2
)
Adjusted Operating Income
$ 340
$ 245
38.8
%
26.5
%
95
30
—
22
27
16
Adjusted Operating Income
Margin
36.1
%
27.3
%
8.8
pp
5.2
pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues increased by 6.1% on an organic basis, reflecting:
favorable volume/mix, driven by higher heated tobacco unit volume
(primarily in Russia and Ukraine), partly offset by unfavorable
cigarette volume/mix (primarily in Russia); and a favorable pricing
variance, mainly driven by higher combustible pricing (notably in
Russia), partly offset by lower heated tobacco unit pricing
(primarily in Ukraine, partly offset by Russia).
Operating income increased by 25.7%, excluding currency,
primarily reflecting: favorable volume/mix, driven by the same
factors as for net revenues noted above; a favorable pricing
variance; and lower manufacturing costs (primarily related to
reduced-risk products, mainly in Russia).
Adjusted operating income increased by 26.5% on an organic
basis. Adjusted operating income margin increased by 5.2 points on
the same basis, as detailed in Schedule 8.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 2,632
$ 2,470
6.6
%
9.6
%
162
(74
)
—
68
168
—
Operating Income
$ 913
$ 610
49.7
%
50.0
%
303
(2
)
—
68
140
97
Asset Impairment & Exit Costs (1)
(11
)
(7
)
(57.1
)%
(57.1
)%
(4
)
—
—
—
—
(4
)
Adjusted Operating Income
$ 924
$ 617
49.8
%
50.1
%
307
(2
)
—
68
140
101
Adjusted Operating Income
Margin
35.1
%
25.0
%
10.1
pp
9.2
pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues increased by 9.6% on an organic basis, reflecting:
favorable volume/mix, driven by higher heated tobacco unit volume
(mainly in Russia and Ukraine), partly offset by unfavorable
cigarette volume (primarily in Russia and Ukraine) and unfavorable
cigarette mix (mainly in Russia); and a favorable pricing variance,
mainly driven by higher combustible pricing (primarily in
Kazakhstan, Russia and Ukraine), partially offset by lower device
pricing (mainly in Russia) and lower heated tobacco unit pricing
(primarily in Ukraine, partly offset by Russia).
Operating income increased by 50.0%, excluding currency,
primarily reflecting: favorable volume/mix, driven by the same
factors as for net revenues noted above; lower manufacturing costs
(mainly related to reduced-risk products, primarily in Russia); and
a favorable pricing variance.
Adjusted operating income increased by 50.1% on an organic
basis. Adjusted operating income margin increased by 9.2 points on
the same basis, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2021
2020
Change
2021
2020
Change
Cigarettes
25,020
25,661
(2.5)%
67,771
70,737
(4.2)%
Heated Tobacco Units
6,119
4,882
25.3%
18,594
14,374
29.4%
Total Eastern Europe
31,139
30,543
2.0%
86,365
85,111
1.5%
Third-Quarter
The estimated total market in Eastern Europe decreased, mainly
due to:
- Russia, down by 0.9%, or by 2.5% excluding the net favorable
impact of estimated distributor inventory movements, primarily
reflecting the impact of excise tax-driven price increases and a
higher prevalence of illicit trade; and
- Ukraine, down by 9.6%, mainly reflecting the impact of excise
tax-driven price increases and a higher prevalence of illicit
trade.
PMI's total shipment volume increased by 2.0% to 31.1 billion
units, notably driven by:
- Russia, up by 0.7%. Excluding the net favorable impact of
estimated distributor inventory movements, PMI's in-market sales
decreased by 0.3%, reflecting the lower total market, partly offset
by a higher market share driven by heated tobacco units; and
- Southeast Europe, up by 15.5%, primarily reflecting a higher
total market and a higher market share, driven by heated tobacco
units and cigarettes,
partly offset by
- Ukraine, down by 3.2%, mainly reflecting the lower total
market, partly offset by a higher market share driven by heated
tobacco units.
Nine Months Year-to-Date
The estimated total market in Eastern Europe decreased,
primarily due to:
- Ukraine, down by 9.6%, mainly reflecting the impact of excise
tax-driven price increases and a higher prevalence of illicit
trade.
PMI's total shipment volume increased by 1.5% to 86.4 billion
units, notably driven by:
- Russia, up by 0.9%. Excluding the net favorable impact of
estimated distributor inventory movements, PMI’s total in-market
sales volume was down by 2.1%, mainly reflecting a lower market
share (due to cigarettes, partly offset by heated tobacco units);
and
- Southeast Europe, up by 8.0%, primarily reflecting a higher
market share (driven by heated tobacco units and cigarettes) and a
higher total market;
partly offset by
- Ukraine, down by 2.0%, mainly reflecting the lower total
market, partly offset by a higher market share driven by heated
tobacco units.
Excluding the net favorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume decreased
by 0.5%.
MIDDLE EAST & AFRICA REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 945
$ 768
23.0
%
26.6
%
177
(27
)
—
64
169
(29
)
Operating Income
$ 388
$ 261
48.7
%
59.8
%
127
(29
)
—
64
135
(43
)
Asset Impairment & Exit Costs (1)
(3
)
—
—
%
—
%
(3
)
—
—
—
—
(3
)
Adjusted Operating Income
$ 391
$ 261
49.8
%
60.9
%
130
(29
)
—
64
135
(40
)
Adjusted Operating Income
Margin
41.4
%
34.0
%
7.4
pp
9.2
pp
(1) Included in Marketing, Administration
and Research Costs above.
Net revenues increased by 26.6% on an organic basis, primarily
reflecting: favorable volume/mix, mainly driven by higher cigarette
volume (primarily in PMI Duty Free and Turkey, partly offset by
North Africa), higher heated tobacco unit volume (mainly in PMI
Duty Free) and favorable cigarette mix (notably in PMI Duty Free);
and a favorable pricing variance, driven by combustible pricing
(mainly in Turkey); partly offset by lower fees for certain
distribution rights billed to customers in certain markets, shown
in "Cost/Other".
Operating income increased by 59.8%, excluding currency, mainly
reflecting: favorable volume/mix, mainly driven by the same factors
as for net revenues noted above; a favorable pricing variance; and
lower manufacturing costs; partly offset by lower fees for certain
distribution rights, as noted above for net revenues; and higher
marketing, administration and research costs.
Adjusted operating income increased by 60.9% on an organic
basis. Adjusted operating income margin increased by 9.2 points on
the same basis, as detailed in Schedule 8.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 2,306
$ 2,348
(1.8
)%
1.0
%
(42
)
(66
)
—
191
110
(277
)
Saudi Arabia Customs Assessments
(246
)
—
—
%
—
%
(246
)
—
—
—
—
(246
)
Adjusted Net Revenues
$ 2,552
$ 2,348
8.7
%
11.5
%
204
(66
)
—
191
110
(31
)
Net Revenues (1)
$ 2,306
$ 2,348
(1.8
)%
1.0
%
(42
)
(66
)
—
191
110
(277
)
Operating Income
$ 739
$ 819
(9.8
)%
(0.7
)%
(80
)
(74
)
—
191
70
(267
)
Asset Impairment & Exit Costs (2)
(13
)
(9
)
(44.4
)%
(44.4
)%
(4
)
—
—
—
—
(4
)
Saudi Arabia Customs Assessments (3)
(246
)
—
—
%
—
%
(246
)
—
—
—
—
(246
)
Adjusted Operating Income
$ 998
$ 828
20.5
%
29.5
%
170
(74
)
—
191
70
(17
)
Adjusted Operating Income
Margin
39.1
%
35.3
%
3.8
pp
5.6
pp
(1) Cost/Other variance includes a
reduction in net revenues of $246 million in 2021 related to the
Saudi Arabia customs assessments.
(2) Included in Marketing, Administration
and Research Costs above.
(3) Included in Net Revenues above.
Net revenues increased by 1.0%, excluding currency, despite the
unfavorable impact of the Saudi Arabia customs assessments of $246
million, shown in "Cost/Other".
Adjusted net revenues increased by 11.5% on an organic basis, as
detailed above and in Schedule 5, primarily reflecting: a favorable
pricing variance, mainly driven by combustible pricing (mainly in
Egypt and Turkey); and favorable volume/mix, primarily driven by
favorable cigarette mix (mainly in PMI Duty Free, Saudi Arabia and
Turkey), higher heated tobacco unit volume (mainly in Egypt, Jordan
and PMI Duty Free) and higher cigarette volume (primarily in PMI
Duty Free and Turkey, partly offset by Kuwait and North Africa);
partially offset by lower fees for certain distribution rights
billed to customers in certain markets, shown in "Cost/Other".
Operating income decreased by 0.7%, excluding currency,
predominantly due to the unfavorable impact of the Saudi Arabia
customs assessments, as noted above for net revenues.
Adjusted operating income increased by 29.5% on an organic
basis, mainly reflecting: a favorable pricing variance; favorable
volume/mix, driven by the same factors as for net revenues noted
above; and lower manufacturing costs (primarily related to
combustible products); partly offset by lower fees for certain
distribution rights, as noted above for net revenues; and higher
marketing, administration and research costs.
Adjusted operating income margin increased by 5.6 points on an
organic basis, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2021
2020
Change
2021
2020
Change
Cigarettes
35,166
30,903
13.8%
93,155
88,087
5.8%
Heated Tobacco Units
577
179
+100%
1,485
834
78.1%
Total Middle East & Africa
35,743
31,082
15.0%
94,640
88,921
6.4%
Third-Quarter
The estimated total market in the Middle East & Africa
increased, mainly driven by:
- International Duty Free, up by 15.4%, reflecting the impact of
reduced government travel restrictions and increased passenger
traffic in certain geographies; and
- Turkey, up by 12.5%, mainly reflecting the impact on adult
smoker average daily consumption of the easing of pandemic-related
measures, coupled with increased in-bound tourism (particularly by
Turkish expatriates);
partly offset by
- Tunisia, down by 30.1%, primarily reflecting an increased
prevalence of illicit trade (mainly due to market disruptions
impacting product availability and the impact of price increases in
July 2021).
PMI's total shipment volume increased by 15.0% to 35.7 billion
units, notably driven by:
- PMI Duty Free, up by +100%, or by 43.8% excluding the net
favorable impact of estimated distributor inventory movements,
reflecting a higher market share and the higher total market;
and
- Turkey, up by 18.4%, primarily reflecting the higher total
market and a higher market share, driven by adult smoker up-trading
(mainly benefiting Marlboro and Parliament);
partly offset by
- Egypt, down by 12.4%, primarily reflecting a lower market share
mainly due to adult smoker down-trading to products in the low-tax
tier.
Excluding the net favorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume increased
by 8.5%.
Nine Months Year-to-Date
The estimated total market in the Middle East & Africa
increased, mainly driven by:
- Egypt, up by 14.3%, primarily reflecting a favorable comparison
due to pandemic-related supply chain shortages for competitors'
products in 2020, as well as the favorable impact of adult smoker
in-switching to cigarettes (mainly in the low-tax tier) from other
combustible tobacco products;
- South Africa, up by 26.9%, mainly reflecting a favorable
comparison versus the second and third quarters of 2020, in which
the total market was impacted by the pandemic-related ban on all
tobacco sales from March 27th through August 17th, partly offset by
a higher estimated prevalence of illicit trade stemming from the
ban; and
- Turkey, up by 6.6%, primarily reflecting the same factors as
for the quarter, partly offset by a higher estimated prevalence of
illicit trade;
partly offset by
- International Duty Free, down by 17.2%, primarily reflecting
the impact of government travel restrictions and reduced passenger
traffic since the start of the pandemic in March 2020.
PMI's total shipment volume increased by 6.4% to 94.6 billion
units, notably driven by:
- PMI Duty Free, up by 25.1%. Excluding the net favorable impact
of estimated distributor inventory movements (principally due to
cigarettes), PMI in-market sales volume was down by 3.6%, primarily
reflecting the lower total market, partly offset by a higher market
share driven by Marlboro; and
- Turkey, up by 14.6%, mainly reflecting the same factors as in
the quarter;
partly offset by
- Egypt, down by 6.5%, mainly reflecting a lower market share
(due primarily to the same factor as in the quarter), partly offset
by the higher total market.
SOUTH & SOUTHEAST ASIA REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 1,065
$ 1,071
(0.6
)%
(1.1
)%
(6
)
6
—
14
(26
)
—
Operating Income
$ 348
$ 402
(13.4
)%
(14.4
)%
(54
)
4
—
14
(42
)
(30
)
Asset Impairment & Exit Costs (1)
(4
)
—
—
%
—
%
(4
)
—
—
—
—
(4
)
Adjusted Operating Income
$ 352
$ 402
(12.4
)%
(13.4
)%
(50
)
4
—
14
(42
)
(26
)
Adjusted Operating Income
Margin
33.1
%
37.5
%
(4.4
)pp
(4.6
)pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues decreased by 1.1% on an organic basis, reflecting:
unfavorable volume/mix, due to lower cigarette volume (primarily in
the Philippines, partly offset by Indonesia); partially offset by a
favorable pricing variance, driven by combustible pricing (mainly
in the Philippines, partly offset by Indonesia).
Operating income decreased by 14.4%, excluding currency,
primarily reflecting: unfavorable volume/mix, due to the same
factors as for net revenues noted above; and higher manufacturing
costs; partly offset by a favorable pricing variance.
Adjusted operating income decreased by 13.4% on an organic
basis. Adjusted operating income margin decreased by 4.6 points on
the same basis, as detailed in Schedule 8.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 3,284
$ 3,211
2.3
%
(0.9
)%
73
102
—
(4
)
(25
)
—
Operating Income
$ 1,208
$ 1,290
(6.4
)%
(9.1
)%
(82
)
36
—
(4
)
(81
)
(33
)
Asset Impairment & Exit Costs (1)
(17
)
(11
)
(54.5
)%
(54.5
)%
(6
)
—
—
—
—
(6
)
Adjusted Operating Income
$ 1,225
$ 1,301
(5.8
)%
(8.6
)%
(76
)
36
—
(4
)
(81
)
(27
)
Adjusted Operating Income
Margin
37.3
%
40.5
%
(3.2
)pp
(3.1
)pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues decreased by 0.9% on an organic basis, reflecting:
unfavorable volume/mix, mainly due to lower cigarette volume
(primarily the Philippines, partly offset by India and Indonesia),
partially offset by favorable cigarette mix (mainly in Indonesia
and the Philippines). Pricing variance was slightly unfavorable,
reflecting lower pricing for combustible products (notably in
Indonesia, largely offset by the Philippines).
Operating income decreased by 9.1%, excluding currency,
primarily reflecting: unfavorable volume/mix, due to the same
factors as for net revenues noted above; and higher marketing,
administration and research costs.
Adjusted operating income decreased by 8.6% on an organic basis.
Adjusted operating income margin decreased by 3.1 points on the
same basis, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2021
2020
Change
2021
2020
Change
Cigarettes
35,578
37,238
(4.5)%
105,787
108,179
(2.2)%
Heated Tobacco Units
79
10
+100%
151
10
+100%
Total South & Southeast
Asia
35,657
37,248
(4.3)%
105,938
108,189
(2.1)%
Third-Quarter
The estimated total market in South & Southeast Asia
increased, mainly driven by:
- Bangladesh, up by 29.9%, primarily reflecting a favorable
comparison versus the third quarter of 2020, during which
pandemic-related restrictions impacted tobacco product
availability;
- India, up by 8.3%, mainly reflecting a favorable comparison
versus the third quarter of 2020, during which pandemic-related
restrictions impacted the movement of certain products, including
tobacco;
- Indonesia, up by 6.0%, primarily reflecting the growth of the
tax-advantaged 'below tier one' segment and the impact on adult
smoker consumption of the easing of pandemic-related measures
compared to the prior year period; and
- Pakistan, up by 29.3%, or by 14.1% excluding the net favorable
impact of estimated trade inventory movements, notably reflecting a
lower prevalence of illicit trade (partly due to pandemic-related
supply disruptions for illicit products);
partly offset by
- the Philippines, down by 17.7%, or by 8.7% excluding the net
unfavorable impact of estimated trade inventory movements,
primarily reflecting the impact of industry-wide price increases in
the fourth quarter of 2020.
PMI's total shipment volume decreased by 4.3% to 35.7 billion
units, mainly due to:
- the Philippines, down by 23.8%, primarily reflecting the lower
total market and a lower market share (mainly due to mid-price
Fortune, reflecting the impact of price increases in the fourth
quarter of 2020, partly offset by Marlboro);
partly offset by
- Indonesia, up by 5.1%, primarily reflecting the higher total
market.
Nine Months Year-to-Date
The estimated total market in South & Southeast Asia
increased, mainly driven by:
- Bangladesh, up by 13.6%, primarily reflecting the same factor
as in the quarter;
- India, up by 13.8%, mainly reflecting the same factor as in the
quarter;
- Indonesia, up by 7.9%, primarily reflecting the same factors as
in the quarter;
- Pakistan, up by 18.9%, notably reflecting the same factor as in
the quarter; and
- Vietnam, up by 7.2%, mainly reflecting a lower prevalence of
illicit trade due to pandemic-related supply disruptions for
illicit products;
partly offset by:
- the Philippines, down by 12.3%, primarily reflecting the same
factor as in the quarter.
PMI's total shipment volume decreased by 2.1% to 105.9 billion
units, notably due to:
- the Philippines, down by 20.3%, mainly reflecting the same
factors as in the quarter;
partly offset by:
- Indonesia, up by 4.3%, primarily reflecting the higher total
market, partly offset by a lower market share (mainly due to adult
smoker down-trading to the 'below tier one' segment as a result of
significantly lower retail prices, partly offset by share growth
for PMI's premium and hand-rolled portfolio); and
- Pakistan, up by 14.2%, mainly reflecting the higher total
market, partly offset by a lower market share.
EAST ASIA & AUSTRALIA REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 1,523
$ 1,358
12.2
%
12.7
%
165
(7
)
—
47
125
—
Operating Income
$ 631
$ 637
(0.9
)%
2.7
%
(6
)
(23
)
—
47
3
(33
)
Asset Impairment & Exit Costs (1)
(21
)
—
—
%
—
%
(21
)
—
—
—
—
(21
)
Adjusted Operating Income
$ 652
$ 637
2.4
%
6.0
%
15
(23
)
—
47
3
(12
)
Adjusted Operating Income
Margin
42.8
%
46.9
%
(4.1
)pp
(2.8
)pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues increased by 12.7% on an organic basis, reflecting:
favorable volume/mix, mainly driven by higher heated tobacco unit
volume and favorable device volume/mix (predominantly in Japan,
driven by the launch of IQOS ILUMA), partly offset by unfavorable
cigarette mix (primarily in Japan) and lower cigarette volume
(particularly in Australia, partly offset by Japan); and a
favorable pricing variance, primarily driven by higher heated
tobacco, combustible and device pricing in Japan.
Operating income increased by 2.7%, excluding currency, mainly
reflecting: a favorable pricing variance; and lower manufacturing
costs (primarily related to reduced-risk products in Japan); partly
offset by higher marketing, administration and research costs
(notably due to the launch of IQOS ILUMA in Japan and higher asset
impairment and exit costs, mainly related to product distribution
restructuring in South Korea). Volume/mix was slightly favorable,
notably reflecting higher heated tobacco unit and cigarette volume
in Japan, largely offset by lower cigarette volume in Australia and
unfavorable cigarette mix in Japan.
Adjusted operating income increased by 6.0% on an organic basis.
Adjusted operating income margin decreased by 2.8 points on the
same basis, as detailed in Schedule 8.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl.
Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 4,509
$ 4,045
11.5
%
9.0
%
464
101
—
240
123
—
Operating Income
$ 2,041
$ 1,792
13.9
%
14.2
%
249
(6
)
—
240
21
(6
)
Asset Impairment & Exit Costs (1)
(67
)
(13
)
-(100
)%
-(100
)%
(54
)
—
—
—
—
(54
)
Adjusted Operating Income
$ 2,108
$ 1,805
16.8
%
17.1
%
303
(6
)
—
240
21
48
Adjusted Operating Income
Margin
46.8
%
44.6
%
2.2
pp
3.4
pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues increased by 9.0% on an organic basis, mainly
reflecting: a favorable pricing variance, primarily driven by
higher heated tobacco and combustible pricing in Japan, partly
offset by lower combustible pricing in Australia; and favorable
volume/mix, mainly driven by higher heated tobacco unit volume and
favorable device volume/mix in Japan (driven by the launch of IQOS
ILUMA), partly offset by lower cigarette volume (primarily in
Australia, Japan and South Korea) and unfavorable cigarette mix
(mainly in Australia and Japan).
Operating income increased by 14.2%, excluding currency, mainly
reflecting: a favorable pricing variance; lower manufacturing costs
(primarily related to reduced-risk products in Japan); and
favorable volume/mix, driven by higher heated tobacco unit volume
in Japan, partly offset by lower cigarette volume (primarily in
Australia, Japan and South Korea), unfavorable cigarette mix
(mainly in Australia and Japan) and unfavorable heated tobacco unit
mix in Japan; partially offset by higher marketing, administration
and research costs (notably reflecting the same factors as in the
quarter).
Adjusted operating income increased by 17.1%, on an organic
basis. Adjusted operating income margin increased by 3.4 points on
the same basis, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2021
2020
Change
2021
2020
Change
Cigarettes
11,120
10,784
3.1%
33,450
35,154
(4.8)%
Heated Tobacco Units
9,435
8,601
9.7%
28,478
24,799
14.8%
Total East Asia & Australia
20,555
19,385
6.0%
61,928
59,953
3.3%
Third-Quarter
The estimated total market in East Asia & Australia,
excluding China, decreased, primarily due to:
- Australia, down by 28.0%, or by 18.3% excluding the net
unfavorable impact of estimated trade inventory movements, mainly
reflecting the impact of the ending of the pandemic-related wage
subsidy by the government, coupled with the impact of
pandemic-related restrictions in the quarter;
- Japan, down by 2.8%, primarily reflecting the impact of the
October 2020 excise tax-driven price increases;
- South Korea, down by 5.2%, or by 0.9% excluding the net
unfavorable impact of estimated trade inventory movements, mainly
reflecting the structural market trend; and
- Taiwan, down by 10.8%, primarily reflecting impact of
pandemic-related restrictions in the quarter.
PMI's total shipment volume increased by 6.0% to 20.6 billion
units, mainly driven by:
- Japan, up by 14.6%, or by 1.0% excluding the net favorable
impact of estimated distributor inventory movements, primarily
reflecting a higher market share (driven by heated tobacco units),
partly offset by the lower total market;
partly offset by
- South Korea, down by 5.9%, mainly reflecting the lower total
market and a lower market share (due to cigarettes).
Excluding the net favorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume declined by
1.7%.
Nine Months Year-to-Date
The estimated total market in East Asia & Australia,
excluding China, decreased, mainly due to:
- Australia, down by 14.5%, primarily reflecting the same factors
as in the quarter;
- Japan, down by 3.7%, mainly reflecting the same factor as in
the quarter; and
- South Korea, down by 1.4%, primarily reflecting the same factor
as in the quarter, partly offset by the impact of pandemic-related
subsidies on adult smoker average daily consumption.
PMI's total shipment volume increased by 3.3% to 61.9 billion
units, mainly driven by:
- Japan, up by 7.2%, or by 1.3% excluding the net favorable
impact of estimated distributor inventory movements, primarily
reflecting the same factors as in the quarter;
partly offset by
- South Korea, down by 5.3%, mainly reflecting the same factors
as in the quarter.
Excluding the net favorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume declined by
0.6%.
AMERICAS REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 456
$ 400
14.0
%
9.0
%
56
20
—
16
21
(1
)
Operating Income
$ 121
$ 110
10.0
%
6.4
%
11
4
—
16
3
(12
)
Asset Impairment & Exit Costs (1)
(1
)
—
—
%
—
%
(1
)
—
—
—
—
(1
)
Adjusted Operating Income
$ 122
$ 110
10.9
%
7.3
%
12
4
—
16
3
(11
)
Adjusted Operating Income
Margin
26.8
%
27.5
%
(0.7
)pp
(0.4
)pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues increased by 9.0% on an organic basis, reflecting:
favorable volume/mix, mainly driven by higher cigarette volume
(primarily in Colombia and Mexico) and higher device volume
(notably in Canada); and a favorable pricing variance driven by
combustible products (notably in Argentina and Mexico).
Operating income increased by 6.4%, excluding currency,
primarily reflecting: a favorable pricing variance; partly offset
by higher manufacturing costs; and higher marketing, administration
and research costs.
Adjusted operating income increased by 7.3% on an organic basis.
Adjusted operating income margin decreased by 0.4 points on the
same basis, as detailed in Schedule 8.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2021
2020
Total
Excl. Curr.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$ 1,320
$ 1,216
8.6
%
5.4
%
104
38
—
28
37
1
Operating Income
$ 367
$ 328
11.9
%
8.2
%
39
12
—
28
(3
)
2
Asset Impairment & Exit Costs (1)
(6
)
(4
)
(50.0
)%
(50.0
)%
(2
)
—
—
—
—
(2
)
Adjusted Operating Income
$ 373
$ 332
12.3
%
8.7
%
41
12
—
28
(3
)
4
Adjusted Operating Income
Margin
28.3
%
27.3
%
1.0
pp
0.9
pp
(1) Included in marketing, administration
and research costs at the consolidated operating income level.
Net revenues increased by 5.4% on an organic basis, mainly
reflecting: favorable volume/mix, primarily driven by higher
cigarette volume (mainly in Brazil and Mexico) and higher device
volume (notably in Canada); and a favorable pricing variance,
driven by higher combustible pricing (notably in Argentina and
Colombia).
Operating income increased by 8.2%, excluding currency,
primarily reflecting: a favorable pricing variance; and lower
marketing, administration and research costs; partly offset by
higher manufacturing costs.
Adjusted operating income increased by 8.7% on an organic basis.
Adjusted operating income margin increased by 0.9 points on the
same basis, as detailed in Schedule 8.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2021
2020
Change
2021
2020
Change
Cigarettes
15,994
15,699
1.9%
46,092
45,542
1.2%
Heated Tobacco Units
221
114
93.9%
466
316
47.5%
Total Americas
16,215
15,813
2.5%
46,558
45,858
1.5%
Third-Quarter
The estimated total market in Americas decreased, notably due
to:
- Argentina, down by 2.1%, primarily reflecting the impact of
price increases;
- Canada, down by 12.7%, notably reflecting the impact of price
increases and out-switching from cigarettes to e-vapor
products;
partly offset by
- Colombia, up by 13.4%, primarily reflecting the impact on adult
smoker average daily consumption of the easing of pandemic-related
measures.
PMI's total shipment volume increased by 2.5% to 16.2 billion
units, notably driven by:
- Colombia, up by 11.0%, primarily reflecting the higher total
market; and
- Mexico, up by 3.9%, mainly reflecting a higher market share
driven by Marlboro;
partly offset by
- Argentina, down by 2.5%, primarily reflecting the lower total
market.
Nine Months Year-to-Date
The estimated total market in Americas increased, mainly driven
by:
- Argentina, up by 7.5%, primarily reflecting a lower estimated
prevalence of illicit trade and a favorable comparison related to
retail out-of-stock in the second quarter of 2020 (due to temporary
factory shutdowns related to the pandemic), partly offset by the
impact of price increases;
- Brazil, up by 5.4%, mainly reflecting a lower estimated
prevalence of illicit trade due to: reduced price gaps with legal
products and the impact of border restrictions imposed as a result
of the pandemic; and
- Mexico, up by 3.0%, primarily reflecting the impact on adult
smoker average daily consumption of the easing of pandemic-related
measures coupled with the impact of increased in-bound
tourism;
partly offset by
- Canada, down by 8.5%, mainly reflecting the same factors as in
the quarter.
PMI's total shipment volume increased by 1.5% to 46.6 billion
units, primarily driven by:
- Brazil, up by 6.4%, mainly reflecting the higher total market
and a higher market share driven by Chesterfield; and
- Mexico, up by 3.9%, primarily reflecting the higher total
market and a higher market share driven by Marlboro;
partly offset by
- Argentina, down by 2.4%, mainly reflecting a lower market share
(primarily due to adult smoker down-trading to ultra-low-price
brands produced by local manufacturers).
OTHER
Third-Quarter and Nine Months Year-to-Date
Following the acquisitions of Fertin Pharma A/S, OtiTopic, Inc.
and Vectura Group plc., PMI added the "Other" category in the third
quarter of 2021. Business operations for the Other category are
evaluated separately from the geographical operating segments.
Due to the timing of the Fertin Pharma and Vectura acquisitions,
the company did not record the immaterial results of operations
from these two acquisitions in its consolidated statements of
earnings from the acquisition dates through September 30, 2021.
PMI accounted for the OtiTopic transaction as an asset
acquisition since the in-process research and development of the
dry power inhalation aspirin treatment represented substantially
all of the fair value of the gross assets acquired and had no
alternative future use. As a result, PMI recorded a pre-tax charge
of $51 million to research and development costs within marketing,
administration and research costs of the Other category for the
third quarter and the nine months year-to-date. The charge has been
excluded from adjusted results.
Philip Morris International: Delivering a Smoke-Free
Future
Philip Morris International (PMI) is leading a transformation in
the tobacco industry to create a smoke-free future and ultimately
replace cigarettes with smoke-free products to the benefit of
adults who would otherwise continue to smoke, society, the company,
its shareholders and other stakeholders. PMI is a leading
international tobacco company engaged in the manufacture and sale
of cigarettes, as well as smoke-free products, associated
electronic devices and accessories, and other nicotine-containing
products in markets outside the U.S. In addition, versions of PMI's
IQOS Platform 1 device and consumables have received marketing
authorizations from the U.S. Food and Drug Administration (FDA)
under the premarket tobacco product application (PMTA) pathway; the
FDA has also authorized the marketing of a version of IQOS and its
consumables as a Modified Risk Tobacco Product (MRTP), finding that
an exposure modification order for these products is appropriate to
promote the public health. PMI is building a future on a new
category of smoke-free products that, while not risk-free, are a
much better choice than continuing to smoke. Through
multidisciplinary capabilities in product development,
state-of-the-art facilities and scientific substantiation, PMI aims
to ensure that its smoke-free products meet adult consumer
preferences and rigorous regulatory requirements. PMI's smoke-free
product portfolio includes heat-not-burn, nicotine-containing vapor
products and oral nicotine products. As of September 30, 2021,
PMI's smoke-free products are available for sale in 70 markets in
key cities or nationwide, and PMI estimates that approximately 14.9
million adults around the world have already switched to IQOS and
stopped smoking. For more information, please visit www.pmi.com and
www.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 in certain markets or countries; health concerns relating
to the use of tobacco and other nicotine-containing products and
exposure to environmental tobacco smoke; litigation related to
tobacco use and intellectual property; intense competition; the
effects of global and individual country economic, regulatory and
political developments, natural disasters and conflicts; 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,
availability, and quality of tobacco and other agricultural
products and raw materials, as well as components and materials for
our electronic devices; and the integrity of its information
systems and effectiveness of its data privacy policies. PMI's
future profitability may also be adversely affected should it be
unsuccessful in its attempts to produce and commercialize
reduced-risk products or if regulation or taxation do not
differentiate between such products and cigarettes; if it is unable
to successfully introduce new products, promote brand equity, enter
new markets or improve its margins through increased prices and
productivity gains; if it is unable to expand its brand portfolio
internally or through acquisitions and the development of strategic
business relationships; or if it is unable to attract and retain
the best global talent. Future results are also subject to the
lower predictability of our reduced-risk product category's
performance.
In addition, PMI’s business risks also include risks and
uncertainties related to PMI’s acquisitions of Fertin Pharma A/S
(“Fertin”), OtiTopic, Inc. ("OtiTopic") and Vectura Group plc
(“Vectura”), including, amongst other things: (1) the possibility
that the integration of the operations of Fertin and Vectura with
those of PMI may be more difficult and/or take longer than
anticipated, and may not accelerate PMI’s desired entry into
additional smoke-free and beyond nicotine platforms as quickly as
anticipated; (2) the possibility that the respective integrations
of Fertin and Vectura into PMI may be more costly than anticipated
and may have unanticipated adverse results relating to Fertin,
Vectura or PMI’s existing businesses; (3) the inability to gain
access to or acquire differentiated proprietary assets, technology
and/or pharmaceutical development expertise as anticipated by these
acquisitions; (4) risks associated with third-party contracts
containing consent and/or other contractual provisions that may be
triggered by the acquisitions; (5) the success of the research and
development efforts of Fertin, OtiTopic and Vectura, including the
ability to obtain regulatory approval for new products, and the
ability to commercialize or license these new products; (6) any
unanticipated safety, quality or efficacy concerns and the impact
of identified concerns associated with the products developed by
Fertin, OtiTopic and Vectura; and (7) the ability of PMI to retain
key personnel of Fertin and Vectura, or hire key talent to work in
the Fertin and Vectura businesses due to their affiliation with
PMI.
The COVID-19 pandemic has created significant societal and
economic disruption, and resulted in closures of stores, factories
and offices, and restrictions on manufacturing, distribution and
travel, all of which will adversely impact our business, results of
operations, cash flows and financial position during the
continuation of the pandemic. Our business continuity plans and
other safeguards may not be effective to mitigate the impact of the
pandemic. Currently, significant risks include our diminished
ability to convert adult smokers to our reduced-risk products,
significant volume declines in our duty-free business and certain
other key markets, disruptions or delays in our manufacturing and
supply chain, increased currency volatility, and delays in certain
cost saving, transformation and restructuring initiatives. Our
business could also be adversely impacted if key personnel or a
significant number of employees or business partners become
unavailable due to the continuation of the COVID-19 pandemic. The
significant adverse impact of COVID-19 on the economic or political
conditions in markets in which we operate could result in changes
to the preferences of our adult consumers and lower demand for our
products, particularly for our mid-price or premium-price brands.
Continuation of the pandemic could disrupt our access to the credit
markets or increase our borrowing costs. Governments may
temporarily be unable to focus on the development of science-based
regulatory frameworks for the development and commercialization of
reduced-risk products or on the enforcement or implementation of
regulations that are significant to our business. In addition,
messaging about the potential negative impacts of the use of our
products on COVID-19 risks may lead to increasingly restrictive
regulatory measures on the sale and use of our products, negatively
impact demand for our products, the willingness of adult consumers
to switch to our reduced-risk products and our efforts to advocate
for the development of science-based regulatory frameworks for the
development and commercialization of reduced-risk products.
The impact of these risks also depends on factors beyond our
knowledge or control, including the duration and severity of the
pandemic, its recurrence in our key markets, actions taken to
contain its spread and to mitigate its public health effects, and
the ultimate economic consequences thereof.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including the Form 10-Q for the
quarter ended June 30, 2021. 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.
Key Terms, Definitions and Explanatory Notes
General
- "PMI" refers to Philip Morris International Inc. and its
subsidiaries. Trademarks and service marks that are the registered
property of, or licensed by, the subsidiaries of PMI, are
italicized.
- Comparisons are made to the same prior-year period unless
otherwise stated.
- References to total industry, total market, PMI shipment volume
and PMI market share performance reflect cigarettes and heated
tobacco units, unless otherwise stated.
- References to total international market, defined as worldwide
cigarette and heated tobacco unit volume excluding the U.S., total
industry, total market and market shares are PMI estimates for
tax-paid products based on the latest available data from a number
of internal and external sources and may, in defined instances,
exclude the People's Republic of China and/or PMI's duty free
business.
- 2020 and 2021 estimates for total industry volume and market
share in certain geographies reflect limitations on the
availability and accuracy of industry data during pandemic-related
restrictions.
- "Combustible products" is the term PMI uses to refer to
cigarettes and OTP, combined.
- In-market sales, or "IMS," is defined as sales to the retail
channel, depending on the market and distribution model.
- "Total shipment volume" is defined as the combined total of
cigarette shipment volume and heated tobacco unit shipment
volume.
- "Americas" refers to the former Latin America & Canada
segment, which was renamed as the Americas segment as of the third
quarter of 2021.
- "North Africa" is defined as Algeria, Egypt, Libya, Morocco and
Tunisia.
- "The GCC" (Gulf Cooperation Council) is defined as Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates
(UAE).
- "Southeast Europe" is defined as Albania, Bosnia &
Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.
- Following the acquisitions of Fertin Pharma A/S, OtiTopic, Inc.
and Vectura Group plc., PMI added the "Other" category in the third
quarter of 2021. Business operations for the Other category are
evaluated separately from the geographical operating segments.
- Following the deconsolidation of PMI's Canadian subsidiary,
Rothmans, Benson & Hedges, Inc. (RBH) on March 22, 2019, PMI
continues to report the volume of brands sold by RBH for which
other PMI subsidiaries are the trademark owner. These include
HEETS, Next, Philip Morris and Rooftop.
- From time to time, PMI’s shipment volumes are subject to the
impact of distributor inventory movements, and estimated total
industry/market volumes are subject to the impact of inventory
movements in various trade channels that include estimated trade
inventory movements of PMI’s competitors arising from
market-specific factors that significantly distort reported volume
disclosures. Such factors may include changes to the manufacturing
supply chain, shipment methods, consumer demand, timing of excise
tax increases or other influences that may affect the timing of
sales to customers. In such instances, in addition to reviewing PMI
shipment volumes and certain estimated total industry/market
volumes on a reported basis, management reviews these measures on
an adjusted basis that excludes the impact of distributor and/or
estimated trade inventory movements. Management also believes that
disclosing PMI shipment volumes and estimated total industry/market
volumes in such circumstances on a basis that excludes the impact
of distributor and/or estimated trade inventory movements, such as
on an IMS basis, improves the comparability of performance and
trends for these measures over different reporting periods.
Financial
- Net revenues related to combustible products refer to the
operating revenues generated from the sale of these products,
including shipping and handling charges billed to customers, net of
sales and promotion incentives, and excise taxes. PMI recognizes
revenue when control is transferred to the customer, typically
either upon shipment or delivery of goods.
- Net revenues related to RRPs represent the sale of heated
tobacco units, heat-not-burn devices and related accessories, and
other nicotine-containing products, primarily e-vapor and oral
nicotine products, including shipping and handling charges billed
to customers, net of sales and promotion incentives, and excise
taxes. PMI recognizes revenue when control is transferred to the
customer, typically either upon shipment or delivery of goods.
- Adjusted net revenues exclude the impact related to the Saudi
Arabia customs assessments.
- "Cost of sales" consists principally of: tobacco leaf,
non-tobacco raw materials, labor and manufacturing costs; shipping
and handling costs; and the cost of devices produced by third-party
electronics manufacturing service providers. Estimated costs
associated with device warranty programs are generally provided for
in cost of sales in the period the related revenues are
recognized.
- "Marketing, administration and research costs" include the
costs of marketing and selling our products, other costs generally
not related to the manufacture of our products (including general
corporate expenses), and costs incurred to develop new products.
The most significant components of our marketing, administration
and research costs are marketing and sales expenses and general and
administrative expenses.
- "Cost/Other" in the Consolidated Financial Summary table of
total PMI and the six geographical segments of this release
reflects the currency-neutral variances of: cost of sales
(excluding the volume/mix cost component); marketing,
administration and research costs (including asset impairment and
exit costs); and amortization of intangibles. “Cost/Other” also
includes the currency-neutral net revenue variance, unrelated to
volume/mix and price components, attributable to: fees for certain
distribution rights billed to customers in certain markets in the
ME&A Region and the Saudi Arabia customs assessment net revenue
adjustment.
- "Adjusted Operating Income Margin" is calculated as adjusted
operating income, divided by adjusted net revenues.
- "Adjusted EBITDA" is defined as earnings before interest,
taxes, depreciation, amortization and equity (income)/loss in
unconsolidated subsidiaries, excluding asset impairment and exit
costs, and unusual items.
- "Net debt" is defined as total debt, less cash and cash
equivalents.
- Growth rates presented on an organic basis reflect
currency-neutral underlying results.
- Management reviews net revenues, operating income, operating
income margin, operating cash flow and earnings per share, or
"EPS," on an adjusted basis, which may exclude the impact of
currency and other items such as acquisitions, asset impairment and
exit costs, tax items and other special items. Organic growth rates
reflect the way management views underlying performance for these
measures. PMI believes that such measures provide useful insight
into underlying business trends and results.
- Management reviews these measures because they exclude changes
in currency exchange rates and other factors that may distort
underlying business trends, thereby improving the comparability of
PMI’s business performance between reporting periods. Furthermore,
PMI uses several of these measures in its management compensation
program to promote internal fairness and a disciplined assessment
of performance against company targets. PMI discloses these
measures to enable investors to view the business through the eyes
of management.
- Non-GAAP measures used in this release should neither be
considered in isolation nor as a substitute for the financial
measures prepared in accordance with U.S. GAAP. For a
reconciliation of non-GAAP measures to the most directly comparable
U.S. GAAP measures, see the relevant schedules provided with this
press release.
- U.S. GAAP Treatment of Argentina as a Highly Inflationary
Economy. Following the categorization of Argentina by the
International Practices Task Force of the Center for Audit Quality
as a country with a three-year cumulative inflation rate greater
than 100%, the country is considered highly inflationary in
accordance with U.S. GAAP. Consequently, PMI began to account for
the operations of its Argentinian affiliates as highly
inflationary, and to treat the U.S. dollar as the functional
currency of the affiliates, effective July 1, 2018.
- "Fair value adjustment for equity security investments"
reflects the adjustment resulting from share price movements in
passive investments for publicly traded entities that are not
controlled or influenced by PMI. Under U.S. GAAP, such adjustments
are required, since January 1, 2018, to be reflected directly in
the income statement.
Reduced-Risk Products
- Reduced-risk products (“RRPs”) is the term PMI uses to refer to
products that present, are likely to present, or have the potential
to present less risk of harm to smokers who switch to these
products versus continuing smoking. PMI has a range of RRPs in
various stages of development, scientific assessment and
commercialization. PMI's RRPs are smoke-free products that contain
and/or generate far lower quantities of harmful and potentially
harmful constituents than found in cigarette smoke.
- "Heated tobacco units," or "HTUs," is the term PMI uses to
refer to heated tobacco consumables, which include the company's
HEETS, HEETS Creations, HEETS Dimensions, HEETS Marlboro and HEETS
FROM MARLBORO (defined collectively as HEETS), Marlboro Dimensions,
Marlboro HeatSticks, Parliament HeatSticks and TEREA, as well as
the KT&G-licensed brands, Fiit and Miix (outside of
Korea).
- Market share for HTUs is defined as the total sales volume for
HTUs as a percentage of the total estimated sales volume for
cigarettes and HTUs.
- Unless otherwise stated, all references to IQOS are to PMI's
Platform 1 IQOS devices and heated tobacco consumables.
- The IQOS heat-not-burn device is a precisely controlled heating
device into which a specially designed and proprietary tobacco unit
is inserted and heated to generate an aerosol.
- "PMI heat-not-burn products" include licensed KT&G
heat-not-burn products.
- "PMI HTUs" include licensed KT&G HTUs.
- “Total IQOS users” is defined as the estimated number of Legal
Age (minimum 18 years) users of PMI heat-not-burn products for
which PMI HTUs represented at least 5% of their daily tobacco
consumption over the past seven days. Note: as of December 2020,
PMI heat-not-burn products and HTUs include licensed KT&G
heat-not-burn products and HTUs, respectively.
- The estimated number of adults who have "switched to IQOS and
stopped smoking" reflects:
- for markets where there are no heat-not-burn products other
than PMI heat-not-burn products: daily individual consumption of
PMI HTUs represents the totality of their daily tobacco consumption
in the past seven days;
- for markets where PMI heat-not-burn products are among other
heat-not-burn products: daily individual consumption of HTUs
represents the totality of their daily tobacco consumption in the
past seven days, of which at least 70% is PMI HTUs.
Note: as of December 2020, PMI heat-not-burn products and HTUs
include licensed KT&G heat-not-burn products and HTUs,
respectively.
IQOS in the United States
- On April 30, 2019, the U.S. Food and Drug Administration (FDA)
announced that the marketing of a version of PMI's Platform 1
product, namely, IQOS 2.4, together with its heated tobacco units
(the term PMI uses to refer to heated tobacco consumables), is
appropriate for the protection of public health and authorized it
for sale in the U.S. The FDA’s decision followed its comprehensive
assessment of PMI’s premarket tobacco product applications (PMTAs)
submitted to the Agency in 2017.
- In the third quarter of 2019, PMI brought IQOS 2.4 and three
variants of its heated tobacco units to the U.S. through its
license with Altria Group, Inc., whose subsidiary, Philip Morris
USA Inc., is responsible for marketing the product and complying
with the provisions set forth in the FDA's marketing orders.
- On July 7, 2020, the FDA authorized the marketing of a version
of PMI's Platform 1 product, namely, IQOS 2.4, together with its
heated tobacco units, as a Modified Risk Tobacco Product (MRTP). In
doing so, the agency found that an IQOS exposure modification order
is appropriate to promote the public health. The decision followed
a review of the extensive scientific evidence package PMI submitted
to the FDA in December 2016 to support its MRTP applications.
- On December 7, 2020, the FDA confirmed that the marketing of a
version of PMI's Platform 1 product, namely, IQOS 3, is appropriate
for the protection of public health and authorized it for sale in
the U.S. The FDA’s decision followed an assessment of a PMI's PMTA
filed with the agency in March 2020.
- Shipment volume of heated tobacco units to the U.S. is included
in the heated tobacco unit shipment volume of the Americas segment.
Revenues from shipments of Platform 1 devices, heated tobacco units
and accessories to Altria Group, Inc. for sale under license in the
U.S. are included in Net Revenues of the Americas.
- In April 2020, affiliates of British American Tobacco plc (BAT)
filed a complaint against PMI, Philip Morris Products S.A., Altria
Group, Inc., and its subsidiaries before the International Trade
Commission (ITC). On May 14, 2021, the administrative law judge
issued an Initial and Recommended Determination (ID/RD) finding
that the IQOS Platform 1 product commercialized in the U.S.
infringes two of the three patents asserted by Plaintiffs,
recommending that the ITC issue a Limited Exclusion Order (LEO)
against infringing products and recommending against a
cease-and-desist order (CDO), as well as recommending against a
bond pending Presidential review of the ITC's Final Determination
(FD). On September 29, 2021, the ITC issued its FD, in which it
upheld the finding of infringement in the ID and found a subsequent
violation. The ITC issued a LEO prohibiting the importation of
infringing tobacco heating articles and components thereof and CDOs
against Philip Morris USA, Inc. and Altria Client Services, LLC.
The case is now in a 60-day Presidential Review Period. PMI will
appeal the patent and statutory issues at the appropriate time and
has contingency plans underway, including domestic production.
Furthermore, BAT lawsuits based on the same patent families have
repeatedly and universally failed in European courts and the
European Patent Office. The decision has no bearing outside the
United States.
Appendix 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Key Market Data
Quarters Ended September
30,
Market
Total Market,
bio units
PMI Shipments, bio
units
PMI Market Share, %
(1)
Total
Cigarette
HTU
Total
HTU
2021
2020
% Change
2021
2020
% Change
2021
2020
% Change
2021
2020
% Change
2021
2020
pp Change
2021
2020
pp Change
Total
679.6
674.3
0.8
188.3
184.4
2.1
164.8
165.5
(0.4
)
23.5
19.0
23.8
28.0
28.0
—
3.6
3.0
0.6
European Union
France
9.0
9.8
(8.0
)
3.7
4.2
(10.8
)
3.6
4.1
(11.7
)
0.1
—
—
44.0
45.3
(1.3
)
0.6
0.5
0.1
Germany
20.5
20.4
0.7
7.3
7.4
(1.1
)
6.8
7.0
(3.8
)
0.6
0.4
50.0
35.8
36.4
(0.6
)
2.8
1.9
0.9
Italy
19.2
18.8
2.1
9.4
9.7
(3.1
)
7.3
8.2
(11.1
)
2.1
1.5
41.0
52.9
52.1
0.8
10.8
7.8
3.0
Poland
14.0
13.5
3.4
5.3
5.1
3.8
4.5
4.5
(0.3
)
0.8
0.6
32.7
38.0
37.8
0.2
6.0
4.7
1.3
Spain
12.1
11.7
3.1
3.4
3.7
(9.1
)
3.2
3.6
(10.1
)
0.1
0.1
25.3
32.1
32.2
(0.1
)
1.1
0.9
0.2
Eastern Europe
Russia
59.3
59.8
(0.9
)
18.8
18.6
0.7
15.0
15.5
(3.8
)
3.8
3.1
23.3
32.0
31.8
0.2
6.9
5.8
1.1
Middle East & Africa
Saudi Arabia
5.4
5.5
(1.6
)
2.3
2.4
(4.2
)
2.3
2.4
(5.0
)
—
—
—
40.8
36.9
3.9
1.1
0.4
0.7
Turkey
36.1
32.1
12.5
16.0
13.5
18.4
16.0
13.5
18.4
—
—
—
44.2
42.0
2.2
—
—
—
South & Southeast Asia
Indonesia
74.3
70.1
6.0
20.8
19.8
5.1
20.8
19.8
5.1
—
—
—
28.0
28.2
(0.2
)
—
—
—
Philippines
14.4
17.5
(17.7
)
8.9
11.7
(23.8
)
8.9
11.7
(24.1
)
—
—
—
61.9
66.8
(4.9
)
0.3
—
0.3
East Asia & Australia
Australia
2.3
3.2
(28.0
)
0.8
1.0
(19.0
)
0.8
1.0
(19.0
)
—
—
—
33.7
29.8
3.9
—
—
—
Japan
39.7
40.8
(2.8
)
13.6
11.9
14.6
5.4
4.6
18.4
8.2
7.3
12.2
38.3
36.9
1.4
22.9
20.4
2.5
South Korea
19.2
20.2
(5.2
)
3.7
3.9
(5.9
)
2.5
2.7
(7.1
)
1.2
1.2
(3.2
)
19.2
19.5
(0.3
)
6.1
6.0
0.1
Americas
Argentina
8.4
8.6
(2.1
)
4.8
4.9
(2.5
)
4.8
4.9
(2.5
)
—
—
—
56.6
56.8
(0.2
)
—
—
—
Mexico
7.8
7.7
0.8
5.0
4.8
3.9
5.0
4.8
3.8
—
—
—
64.6
62.7
1.9
0.3
0.2
0.1
(1) Market share estimates are calculated
using IMS data
Note: % change for Total Market and PMI
shipments is computed based on millions of units. "-" indicates
volume below 50 million units and market share below 0.1%
Appendix 2
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Key Market Data
Nine Months Ended September
30,
Market
Total Market,
bio units
PMI Shipments, bio
units
PMI Market Share, %
(1)
Total
Cigarette
HTU
Total
HTU
2021
2020
% Change
2021
2020
% Change
2021
2020
% Change
2021
2020
% Change
2021
2020
pp Change
2021
2020
pp Change
Total
1,946.1
1,897.3
2.6
536.1
528.2
1.5
466.5
473.8
(1.6
)
69.6
54.4
27.9
27.3
27.9
(0.6
)
3.5
2.9
0.6
European Union
France
26.3
28.0
(6.1
)
11.6
12.7
(8.3
)
11.4
12.5
(8.8
)
0.2
0.1
36.9
43.7
44.9
(1.2
)
0.6
0.5
0.1
Germany
56.5
56.4
0.1
21.6
22.0
(1.4
)
20.0
20.8
(4.0
)
1.7
1.2
44.2
38.3
38.9
(0.6
)
3.0
2.1
0.9
Italy
53.0
50.8
4.2
28.9
26.7
8.1
22.4
22.8
(1.5
)
6.5
4.0
62.8
52.9
52.0
0.9
11.1
7.6
3.5
Poland
37.2
35.0
6.4
13.9
13.6
2.3
11.7
12.1
(2.7
)
2.2
1.6
40.9
37.4
38.9
(1.5
)
5.9
4.5
1.4
Spain
32.2
31.7
1.4
10.2
10.1
1.1
9.8
9.8
0.5
0.4
0.3
18.0
31.5
31.5
—
1.2
1.0
0.2
Eastern Europe
Russia
163.7
163.4
0.2
52.0
51.6
0.9
40.4
42.3
(4.5
)
11.7
9.3
25.3
31.5
32.3
(0.8
)
7.2
6.1
1.1
Middle East & Africa
Saudi Arabia
16.2
15.8
2.0
6.6
6.2
5.3
6.4
6.2
3.5
0.2
—
—
41.5
38.5
3.0
0.9
0.2
0.7
Turkey
92.1
86.4
6.6
40.4
35.3
14.6
40.4
35.3
14.6
—
—
—
43.9
40.8
3.1
—
—
—
South & Southeast Asia
Indonesia
217.4
201.4
7.9
60.8
58.3
4.3
60.8
58.3
4.3
—
—
—
28.0
28.9
(0.9
)
—
—
—
Philippines
41.2
47.0
(12.3
)
25.6
32.1
(20.3
)
25.5
32.1
(20.6
)
0.1
—
—
62.2
68.4
(6.2
)
0.3
—
0.3
East Asia & Australia
Australia
7.1
8.3
(14.5
)
2.3
2.5
(6.4
)
2.3
2.5
(6.4
)
—
—
—
32.4
29.6
2.8
—
—
—
Japan
107.3
111.4
(3.7
)
41.6
38.8
7.2
16.8
17.7
(4.9
)
24.7
21.1
17.3
38.6
36.7
1.9
23.0
20.0
3.0
South Korea
54.1
54.8
(1.4
)
10.7
11.3
(5.3
)
7.2
7.8
(7.6
)
3.5
3.5
(0.3
)
19.7
20.7
(1.0
)
6.4
6.4
—
Americas
Argentina
26.1
24.3
7.5
14.6
14.9
(2.4
)
14.6
14.9
(2.4
)
—
—
—
55.8
61.5
(5.7
)
—
—
—
Mexico
22.6
21.9
3.0
14.1
13.6
3.9
14.1
13.6
3.7
0.1
—
—
62.5
62.0
0.5
0.3
0.2
0.1
(1) Market share estimates are calculated
using IMS data
Note: % change for Total Market and PMI
shipments is computed based on millions of units. "-" indicates
volume below 50 million units and market share below 0.1%
Schedule 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Diluted Earnings Per Share
(EPS)
($ in millions, except per share
data) / (Unaudited)
Quarters Ended
Diluted EPS
Nine Months Ended
September 30,
September 30,
$
1.55
2021 Diluted Earnings Per
Share (1)
$
4.48
$
1.48
2020 Diluted Earnings Per
Share (1)
$
3.90
$
0.07
Change
$
0.58
4.7
%
% Change
14.9
%
Reconciliation:
$
1.48
2020 Diluted Earnings Per
Share (1)
$
3.90
—
2020 Asset impairment and exit
costs
0.04
—
2020 Fair value adjustment for
equity security investments
0.04
(0.06
)
2020 Tax items
(0.06
)
(0.02
)
2021 Asset impairment and exit
costs
(0.09
)
—
2021 Saudi Arabia customs
assessments
(0.14
)
(0.03
)
2021 Asset acquisition cost
(0.03
)
0.02
2021 Equity investee ownership
dilution
0.02
—
2021 Tax items
—
0.04
Currency
0.18
0.01
Interest
(0.01
)
0.04
Change in tax rate
0.07
0.07
Operations (2)
0.56
$
1.55
2021 Diluted Earnings Per
Share (1)
$
4.48
(1) Basic and diluted EPS were calculated
using the following (in millions):
Quarters Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
$ 2,426
$ 2,307
Net Earnings attributable to
PMI
$ 7,016
$ 6,080
7
5
Less: Distributed and
undistributed earnings attributable to share-based payment
awards
21
15
$ 2,419
$ 2,302
Net Earnings for basic and
diluted EPS
$ 6,995
$ 6,065
1,558
1,558
Weighted-average shares for basic
EPS
1,558
1,557
2
—
Plus Contingently Issuable
Performance Stock Units
2
—
1,560
1,558
Weighted-average shares for
diluted EPS
1,560
1,557
(2) Includes the impact of shares
outstanding and share-based payments
Schedule 2
PHILIP MORRIS INTERNATIONAL INC.
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, excluding Currency
(Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2021
2020
% Change
2021
2020
% Change
$ 1.55
$ 1.48
4.7
%
Reported Diluted EPS
$ 4.48
$ 3.90
14.9
%
0.04
Less: Currency
0.18
$ 1.51
$ 1.48
2.0
%
Reported Diluted EPS,
excluding Currency
$ 4.30
$ 3.90
10.3
%
Quarters Ended September
30,
Nine Months Ended September
30,
Year Ended
2021
2020
% Change
2021
2020
% Change
2020
$ 1.55
$ 1.48
4.7
%
Reported Diluted EPS
$ 4.48
$ 3.90
14.9
%
$ 5.16
—
—
Saudi Arabia customs
assessments
0.14
—
—
0.02
—
Asset impairment and exit
costs
0.09
0.04
0.08
0.03
—
Asset acquisition cost
0.03
—
—
(0.02
)
—
Equity investee ownership
dilution
(0.02
)
—
—
—
—
Fair value adjustment for equity
security investments
—
0.04
0.04
—
(0.06
)
Tax items
—
(0.06
)
(0.06
)
—
—
Brazil indirect tax credit
—
—
(0.05
)
$ 1.58
$ 1.42
11.3
%
Adjusted Diluted EPS
$ 4.72
$ 3.92
20.4
%
$ 5.17
0.04
Less: Currency
0.18
$ 1.54
$ 1.42
8.5
%
Adjusted Diluted EPS,
excluding Currency
$ 4.54
$ 3.92
15.8
%
Schedule 3
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Net Revenues by Product
Category and Adjustments of Net Revenues for the Impact of Currency
and Acquisitions
($ in millions) / (Unaudited)
Net Revenues
Currency
Net Revenues
excluding Currency
Acquisitions
Net Revenues excluding
Currency & Acquisitions
Quarters Ended
September 30,
Net Revenues
Total
Excluding Currency
Excluding Currency &
Acquisitions
2021
Combustible Products
2020
% Change
$ 2,170
$ 88
$ 2,082
$ —
$ 2,082
European Union
$ 2,244
(3.3)%
(7.2)%
(7.2)%
635
(7)
641
—
641
Eastern Europe
636
(0.2)%
0.9%
0.9%
901
(28)
928
—
928
Middle East & Africa
768
17.3%
20.8%
20.8%
1,061
6
1,055
—
1,055
South & Southeast Asia
1,071
(0.9)%
(1.5)%
(1.5)%
591
4
587
—
587
East Asia & Australia
605
(2.2)%
(2.9)%
(2.9)%
438
19
418
—
418
Americas
393
11.4%
6.5%
6.5%
$ 5,796
$ 83
$ 5,713
$ —
$ 5,713
Total Combustible
$ 5,716
1.4%
(0.1)%
(0.1)%
2021
Reduced-Risk Products
2020
% Change
$ 1,022
$ 40
$ 982
$ 2
$ 979
European Union
$ 706
44.7%
39.0%
38.7%
306
(6)
313
—
313
Eastern Europe
263
16.4%
18.8%
18.8%
44
1
44
—
44
Middle East & Africa
—
—%
—%
—%
4
—
4
—
4
South & Southeast Asia
—
—%
—%
—%
932
(11)
943
—
943
East Asia & Australia
753
23.7%
25.1%
25.1%
18
1
18
—
18
Americas
7
+100%
+100%
+100%
$ 2,326
$ 24
$ 2,302
$ 2
$ 2,300
Total RRPs
$ 1,730
34.5%
33.1%
33.0%
2021
PMI
2020
% Change
$ 3,192
$ 128
$ 3,064
$ 2
$ 3,062
European Union
$ 2,950
8.2%
3.9%
3.8%
941
(13)
954
—
954
Eastern Europe
899
4.7%
6.1%
6.1%
945
(27)
972
—
972
Middle East & Africa
768
23.0%
26.6%
26.6%
1,065
6
1,059
—
1,059
South & Southeast Asia
1,071
(0.6)%
(1.1)%
(1.1)%
1,523
(7)
1,530
—
1,530
East Asia & Australia
1,358
12.2%
12.7%
12.7%
456
20
436
—
436
Americas
400
14.0%
9.0%
9.0%
$ 8,122
$ 107
$ 8,015
$ 2
$ 8,013
Total PMI
$ 7,446
9.1%
7.6%
7.6%
Note: Sum of product categories or Regions
might not foot to Total PMI due to roundings. "-" indicates amounts
between -$0.5 million and +$0.5 million
Schedule 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Net Revenues by Product
Category and Adjustments of Net Revenues for the Impact of Currency
and Acquisitions
($ in millions) / (Unaudited)
Net Revenues
Currency
Net Revenues
excluding Currency
Acquisitions
Net Revenues excluding
Currency & Acquisitions
Nine Months Ended
September 30,
Net Revenues
Total
Excluding Currency
Excluding Currency &
Acquisitions
2021
Combustible Products
2020
% Change
$ 6,283
$ 445
$ 5,838
$ —
$ 5,838
European Union
$ 6,099
3.0%
(4.3)%
(4.3)%
1,681
(29)
1,710
—
1,710
Eastern Europe
1,681
—%
1.7%
1.7%
2,208
(1)
(67)
2,275
—
2,275
Middle East & Africa
2,296
(3.9)%
(0.9)%
(0.9)%
3,277
102
3,175
—
3,175
South & Southeast Asia
3,211
2.1%
(1.1)%
(1.1)%
1,850
65
1,786
—
1,786
East Asia & Australia
1,876
(1.4)%
(4.8)%
(4.8)%
1,278
37
1,241
—
1,241
Americas
1,196
6.9%
3.8%
3.8%
$ 16,577
$ 552
$ 16,025
$ —
$ 16,025
Total Combustible
$ 16,360
1.3%
(2.0)%
(2.0)%
2021
Reduced-Risk Products
2020
% Change
$ 2,967
$ 206
$ 2,761
$ 2
$ 2,759
European Union
$ 1,861
59.5%
48.4%
48.3%
951
(45)
996
—
996
Eastern Europe
789
20.5%
26.2%
26.2%
98
1
97
—
97
Middle East & Africa
52
90.2%
87.7%
87.7%
7
—
7
—
7
South & Southeast Asia
—
—%
—%
—%
2,659
36
2,622
—
2,622
East Asia & Australia
2,169
22.6%
20.9%
20.9%
42
1
41
—
41
Americas
20
+100%
+100%
+100%
$ 6,724
$ 200
$ 6,524
$ 2
$ 6,522
Total RRPs
$ 4,890
37.5%
33.4%
33.4%
2021
PMI
2020
% Change
$ 9,250
$ 651
$ 8,599
$ 2
$ 8,597
European Union
$ 7,960
16.2%
8.0%
8.0%
2,632
(74)
2,706
—
2,706
Eastern Europe
2,470
6.6%
9.6%
9.6%
2,306
(1)
(66)
2,372
—
2,372
Middle East & Africa
2,348
(1.8)%
1.0%
1.0%
3,284
102
3,182
—
3,182
South & Southeast Asia
3,211
2.3%
(0.9)%
(0.9)%
4,509
101
4,408
—
4,408
East Asia & Australia
4,045
11.5%
9.0%
9.0%
1,320
38
1,282
—
1,282
Americas
1,216
8.6%
5.4%
5.4%
$ 23,301
$ 752
$ 22,549
$ 2
$ 22,547
Total PMI
$ 21,250
9.7%
6.1%
6.1%
(1) Includes a reduction in net revenues
of $246 million related to the Saudi Arabia customs assessments
Note: Sum of product categories or Regions
might not foot to Total PMI due to roundings. "-" indicates amounts
between -$0.5 million and +$0.5 million
Schedule 5
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Net Revenues
to Adjusted Net Revenues, excluding Currency and
Acquisitions
($ in millions) / (Unaudited)
Net Revenues
Special Items
Adjusted Net
Revenues
Currency
Adjusted Net Revenues
excluding Currency
Acqui- sitions
Adjusted Net Revenues
excluding Currency & Acqui- sitions
Net Revenues
Special Items
Adjusted Net
Revenues
Total
Excluding Currency
Excluding Currency
& Acqui- sitions
2021
Quarters Ended
September 30,
2020
% Change
$ 3,192
$ —
$ 3,192
$ 128
$ 3,064
$ 2
$ 3,062
European Union
$ 2,950
$ —
$ 2,950
8.2%
3.9%
3.8%
941
—
941
(13)
954
—
954
Eastern Europe
899
—
899
4.7%
6.1%
6.1%
945
—
945
(27)
972
—
972
Middle East & Africa
768
—
768
23.0%
26.6%
26.6%
1,065
—
1,065
6
1,059
—
1,059
South & Southeast Asia
1,071
—
1,071
(0.6)%
(1.1)%
(1.1)%
1,523
—
1,523
(7)
1,530
—
1,530
East Asia & Australia
1,358
—
1,358
12.2%
12.7%
12.7%
456
—
456
20
436
—
436
Americas
400
—
400
14.0%
9.0%
9.0%
$ 8,122
$ —
$ 8,122
$ 107
$ 8,015
$ 2
$ 8,013
Total PMI
$ 7,446
$ —
$ 7,446
9.1%
7.6%
7.6%
2021
Nine Months Ended
September 30,
2020
% Change
$ 9,250
$ —
$ 9,250
$ 651
$ 8,599
$ 2
$ 8,597
European Union
$ 7,960
$ —
$ 7,960
16.2%
8.0%
8.0%
2,632
—
2,632
(74)
2,706
—
2,706
Eastern Europe
2,470
—
2,470
6.6%
9.6%
9.6%
2,306
(246)
(1)
2,552
(66)
2,618
—
2,618
Middle East & Africa
2,348
—
2,348
8.7%
11.5%
11.5%
3,284
—
3,284
102
3,182
—
3,182
South & Southeast Asia
3,211
—
3,211
2.3%
(0.9)%
(0.9)%
4,509
—
4,509
101
4,408
—
4,408
East Asia & Australia
4,045
—
4,045
11.5%
9.0%
9.0%
1,320
—
1,320
38
1,282
—
1,282
Americas
1,216
—
1,216
8.6%
5.4%
5.4%
$ 23,301
$ (246)
$ 23,547
$ 752
$ 22,795
$ 2
$ 22,793
Total PMI
$ 21,250
$ —
$ 21,250
10.8%
7.3%
7.3%
(1) Represents the Saudi Arabia customs
assessments
Schedule 6
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Adjustments of Operating
Income for the Impact of Currency and Acquisitions
($ in millions) / (Unaudited)
Operating Income
Currency
Operating Income excluding
Currency
Acquisitions
Operating Income excluding
Currency & Acquisitions
Operating Income
Total
Excluding Currency
Excluding Currency &
Acquisitions
2021
Quarters Ended
September 30,
2020
% Change
$ 1,680
(1)
$ 79
$ 1,601
$ —
$ 1,601
European Union
$ 1,588
5.8%
0.8%
0.8%
338
(1)
30
308
—
308
Eastern Europe
245
38.0%
25.7%
25.7%
388
(1)
(29)
417
—
417
Middle East & Africa
261
48.7%
59.8%
59.8%
348
(1)
4
344
—
344
South & Southeast Asia
402
(13.4)%
(14.4)%
(14.4)%
631
(1)
(23)
654
—
654
East Asia & Australia
637
(0.9)%
2.7%
2.7%
121
(1)
4
117
—
117
Americas
110
10.0%
6.4%
6.4%
(51)
(2)
—
(51)
—
(51)
Other
—
—%
—%
—%
$ 3,455
$ 65
$ 3,390
$ —
$ 3,390
Total PMI
$ 3,243
6.5%
4.5%
4.5%
2021
Nine Months Ended
September 30,
2020
% Change
$ 4,811
(3)
$ 413
$ 4,398
$ —
$ 4,398
European Union
$ 3,924
(5)
22.6%
12.1%
12.1%
913
(3)
(2)
915
—
915
Eastern Europe
610
(5)
49.7%
50.0%
50.0%
739
(4)
(74)
813
—
813
Middle East & Africa
819
(5)
(9.8)%
(0.7)%
(0.7)%
1,208
(3)
36
1,172
—
1,172
South & Southeast Asia
1,290
(5)
(6.4)%
(9.1)%
(9.1)%
2,041
(3)
(6)
2,047
—
2,047
East Asia & Australia
1,792
(5)
13.9%
14.2%
14.2%
367
(3)
12
355
—
355
Americas
328
(5)
11.9%
8.2%
8.2%
(51)
(2)
—
(51)
—
(51)
Other
—
—%
—%
—%
$ 10,028
$ 379
$ 9,649
$ —
$ 9,649
Total PMI
$ 8,763
14.4%
10.1%
10.1%
(1) Includes asset impairment and exit
costs: EU ($12 million), EE ($2 million), ME&A ($3 million),
S&SA ($4 million), EA&A ($21 million) and AMCS ($1
million)
(2) Includes asset acquisition cost ($51
million) related to OtiTopic Inc. in August 2021
(3) Includes asset impairment and exit
costs: EU ($56 million), EE ($11 million), S&SA ($17 million),
EA&A ($67 million) and AMCS ($6 million)
(4) Includes the Saudi Arabia customs
assessments ($246 million) and asset impairment and exit costs ($13
million)
(5) Includes asset impairment and exit
costs: EU ($27 million), EE ($7 million), ME&A ($9 million),
S&SA ($11 million), EA&A ($13 million) and AMCS ($4
million)
Schedule 7
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Operating
Income to Adjusted Operating Income, excluding Currency and
Acquisitions
($ in millions) / (Unaudited)
Operating Income
Asset Impairment &
Exit Costs and Others
Adjusted Operating
Income
Currency
Adjusted Operating Income
excluding Currency
Acqui- sitions
Adjusted Operating Income
excluding Currency & Acqui- sitions
Operating Income
Asset Impairment &
Exit Costs
Adjusted Operating
Income
Total
Excluding Currency
Excluding Currency
& Acqui- sitions
2021
Quarters Ended
September 30,
2020
% Change
$ 1,680
$ (12)
(1)
$ 1,692
$ 79
$ 1,613
$ —
$ 1,613
European Union
$ 1,588
$ —
$ 1,588
6.5%
1.6%
1.6%
338
(2)
(1)
340
30
310
—
310
Eastern Europe
245
—
245
38.8%
26.5%
26.5%
388
(3)
(1)
391
(29)
420
—
420
Middle East & Africa
261
—
261
49.8%
60.9%
60.9%
348
(4)
(1)
352
4
348
—
348
South & Southeast Asia
402
—
402
(12.4)%
(13.4)%
(13.4)%
631
(21)
(1)
652
(23)
675
—
675
East Asia & Australia
637
—
637
2.4%
6.0%
6.0%
121
(1)
(1)
122
4
118
—
118
Americas
110
—
110
10.9%
7.3%
7.3%
(51)
(51)
(2)
—
—
—
—
—
Other
—
—
—
—%
—%
—%
$ 3,455
$ (94)
$ 3,549
$ 65
$ 3,484
$ —
$ 3,484
Total PMI
$ 3,243
$ —
$ 3,243
9.4%
7.4%
7.4%
2021
Nine Months Ended
September 30,
2020
% Change
$ 4,811
$ (56)
(1)
$ 4,867
$ 413
$ 4,454
$ —
$ 4,454
European Union
$ 3,924
$ (27)
(1)
$ 3,951
23.2%
12.7%
12.7%
913
(11)
(1)
924
(2)
926
—
926
Eastern Europe
610
(7)
(1)
617
49.8%
50.1%
50.1%
739
(259)
(3)
998
(74)
1,072
—
1,072
Middle East & Africa
819
(9)
(1)
828
20.5%
29.5%
29.5%
1,208
(17)
(1)
1,225
36
1,189
—
1,189
South & Southeast Asia
1,290
(11)
(1)
1,301
(5.8)%
(8.6)%
(8.6)%
2,041
(67)
(1)
2,108
(6)
2,114
—
2,114
East Asia & Australia
1,792
(13)
(1)
1,805
16.8%
17.1%
17.1%
367
(6)
(1)
373
12
361
—
361
Americas
328
(4)
(1)
332
12.3%
8.7%
8.7%
(51)
(51)
(2)
—
—
—
—
—
Other
—
—
—
—%
—%
—%
$ 10,028
$ (467)
$ 10,495
$ 379
$ 10,116
$ —
$ 10,116
Total PMI
$ 8,763
$ (71)
$ 8,834
18.8%
14.5%
14.5%
(1) Represents asset impairment and exit
costs
(2) Represents asset acquisition cost
related to OtiTopic Inc. in August 2021
(3) Includes the Saudi Arabia customs
assessments ($246 million) and asset impairment and exit costs ($13
million)
Schedule 8
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Adjusted
Operating Income Margin, excluding Currency and
Acquisitions
($ in millions) / (Unaudited)
Adjusted Operating Income
(1)
Adjusted Net
Revenues (2)
Adjusted Operating Income
Margin
Adjusted Operating Income
excluding Currency (1)
Adjusted Net Revenues
excluding Currency (2)
Adjusted Operating Income
Margin excluding Currency
Adjusted Operating Income
excluding Currency & Acqui- sitions (1)
Adjusted Net Revenues
excluding Currency & Acqui- sitions (2)
Adjusted Operating Income
Margin excluding Currency & Acqui- sitions
Adjusted Operating
Income (1)
Adjusted Net
Revenues (2)
Adjusted Operating Income
Margin
Adjusted Operating Income
Margin
Adjusted Operating Income
Margin excluding Currency
Adjusted Operating Income
Margin excluding Currency & Acqui- sitions
2021
Quarters Ended
September 30,
2020
% Points Change
$ 1,692
$ 3,192
53.0
%
$ 1,613
$ 3,064
52.6
%
$ 1,613
$ 3,062
52.7
%
European Union
$ 1,588
$ 2,950
53.8
%
(0.8)
(1.2)
(1.1)
340
941
36.1
%
310
954
32.5
%
310
954
32.5
%
Eastern Europe
245
899
27.3
%
8.8
5.2
5.2
391
945
41.4
%
420
972
43.2
%
420
972
43.2
%
Middle East & Africa
261
768
34.0
%
7.4
9.2
9.2
352
1,065
33.1
%
348
1,059
32.9
%
348
1,059
32.9
%
South & Southeast Asia
402
1,071
37.5
%
(4.4)
(4.6)
(4.6)
652
1,523
42.8
%
675
1,530
44.1
%
675
1,530
44.1
%
East Asia & Australia
637
1,358
46.9
%
(4.1)
(2.8)
(2.8)
122
456
26.8
%
118
436
27.1
%
118
436
27.1
%
Americas
110
400
27.5
%
(0.7)
(0.4)
(0.4)
$ 3,549
$ 8,122
43.7
%
$ 3,484
$ 8,015
43.5
%
$ 3,484
$ 8,013
43.5
%
Total PMI
$ 3,243
$ 7,446
43.6
%
0.1
(0.1)
(0.1)
2021
Nine Months Ended
September 30,
2020
% Points Change
$ 4,867
$ 9,250
52.6
%
$ 4,454
$ 8,599
51.8
%
$ 4,454
$ 8,597
51.8
%
European Union
$ 3,951
$ 7,960
49.6
%
3.0
2.2
2.2
924
2,632
35.1
%
926
2,706
34.2
%
926
2,706
34.2
%
Eastern Europe
617
2,470
25.0
%
10.1
9.2
9.2
998
2,552
39.1
%
1,072
2,618
40.9
%
1,072
2,618
40.9
%
Middle East & Africa
828
2,348
35.3
%
3.8
5.6
5.6
1,225
3,284
37.3
%
1,189
3,182
37.4
%
1,189
3,182
37.4
%
South & Southeast Asia
1,301
3,211
40.5
%
(3.2)
(3.1)
(3.1)
2,108
4,509
46.8
%
2,114
4,408
48.0
%
2,114
4,408
48.0
%
East Asia & Australia
1,805
4,045
44.6
%
2.2
3.4
3.4
373
1,320
28.3
%
361
1,282
28.2
%
361
1,282
28.2
%
Americas
332
1,216
27.3
%
1.0
0.9
0.9
$ 10,495
$ 23,547
44.6
%
$ 10,116
$ 22,795
44.4
%
$ 10,116
$ 22,793
44.4
%
Total PMI
$ 8,834
$ 21,250
41.6
%
3.0
2.8
2.8
(1) For the calculation of Adjusted
Operating Income and Adjusted Operating Income excluding currency
and acquisitions refer to Schedule 7
(2) For the calculation of Adjusted Net
Revenues excluding currency and acquisitions refer to Schedule
5
Schedule 9
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Statements of
Earnings
($ in millions, except per share
data) / (Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2021
2020
Change
Fav./(Unfav.)
2021
2020
Change
Fav./(Unfav.)
$ 21,617
$ 20,444
5.7
%
Revenues including Excise Taxes
(1)
$ 61,393
$ 56,516
8.6
%
13,495
12,998
(3.8
)%
Excise Taxes on products
38,092
35,266
(8.0
)%
8,122
7,446
9.1
%
Net Revenues (1)
23,301
21,250
9.7
%
2,596
2,416
(7.5
)%
Cost of sales
7,223
6,997
(3.2
)%
5,526
5,030
9.9
%
Gross profit
16,078
14,253
12.8
%
2,053
1,769
(16.1
)%
Marketing, administration and
research costs (2)
5,995
5,435
(10.3
)%
18
18
Amortization of intangibles
55
55
3,455
3,243
6.5
%
Operating Income
10,028
8,763
14.4
%
154
163
5.5
%
Interest expense, net
482
454
(6.2
)%
27
23
(17.4
)%
Pension and other employee
benefit costs
82
68
(20.6
)%
3,274
3,057
7.1
%
Earnings before income taxes
9,464
8,241
14.8
%
735
640
(14.8
)%
Provision for income taxes
2,078
1,764
(17.8
)%
(49
)
(20
)
Equity investments and securities
(income)/loss, net
(95
)
4
2,588
2,437
6.2
%
Net Earnings
7,481
6,473
15.6
%
162
130
Net Earnings attributable to
noncontrolling interests
465
393
$ 2,426
$ 2,307
5.2
%
Net Earnings attributable to
PMI
$ 7,016
$ 6,080
15.4
%
Per share data (3):
$ 1.55
$ 1.48
4.7
%
Basic Earnings Per
Share
$ 4.49
$ 3.90
15.1
%
$ 1.55
$ 1.48
4.7
%
Diluted Earnings Per
Share
$ 4.48
$ 3.90
14.9
%
(1) Nine months ended September 30, 2021
includes a reduction in net revenues of $246 million related to the
Saudi Arabia customs assessments
(2) Quarter ended September 30, 2021
includes asset acquisition cost ($51 million) related to OtiTopic
Inc. in August 2021 and asset impairment and exit costs ($43
million). Nine months ended September 30, 2021 includes asset
acquisition cost ($51 million) and asset impairment and exit costs
($170 million). Nine months ended September 30, 2020 includes asset
impairment and exit costs ($71 million)
(3) Net Earnings and weighted-average
shares used in the basic and diluted Earnings Per Share
computations for the quarters and for the nine months ended
September 30, 2021 and 2020 are shown on Schedule 1, Footnote 1
Schedule 10
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Balance
Sheets
($ in millions) / (Unaudited)
September 30,
December 31,
2021
2020
Assets
Cash and cash equivalents
$
4,491
$
7,280
All other current assets
13,355
14,212
Property, plant and equipment, net
6,061
6,365
Goodwill
6,814
5,964
Other intangible assets, net
2,893
2,019
Equity investments
4,624
4,798
Other assets
3,351
4,177
Total assets
$
41,589
$
44,815
Liabilities and Stockholders' (Deficit)
Equity
Short-term borrowings
$
223
$
244
Current portion of long-term debt
3,114
3,124
All other current liabilities
14,540
16,247
Long-term debt
25,768
28,168
Deferred income taxes
720
684
Other long-term liabilities
5,856
6,979
Total liabilities
50,221
55,446
Total PMI stockholders' deficit
(10,551
)
(12,567
)
Noncontrolling interests
1,919
1,936
Total stockholders' (deficit)
equity
(8,632
)
(10,631
)
Total liabilities and stockholders'
(deficit) equity
$
41,589
$
44,815
Schedule 11
PHILIP MORRIS INTERNATIONAL INC.
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)
Year Ended September 30,
2021
Year Ended December 31,
2020
October ~ December
January ~ September
12 months
2020
2021
rolling
Net Earnings
$
2,119
$
7,481
$
9,600
$
8,592
Equity investments and securities
(income)/loss, net
(20
)
(95
)
(115
)
(16
)
Provision for income taxes
613
2,078
2,691
2,377
Interest expense, net
164
482
646
618
Depreciation and amortization
272
719
991
981
Asset impairment and exit costs and Others
(1)
(41
)
467
426
30
Adjusted EBITDA
$
3,107
$
11,132
$
14,239
$
12,582
September 30,
December 31,
2021
2020
Short-term borrowings
$
223
$
244
Current portion of long-term debt
3,114
3,124
Long-term debt
25,768
28,168
Total Debt
$
29,105
$
31,536
Cash and cash equivalents
4,491
7,280
Net Debt
$
24,614
$
24,256
Ratios:
Total Debt to Adjusted EBITDA
2.04
2.51
Net Debt to Adjusted EBITDA
1.73
1.93
(1) For the period January 2021 to
September 2021 "Others" includes a reduction in net revenues of
$246 million related to the Saudi Arabia customs assessments that
was recorded in the second quarter of 2021 and asset acquisition
cost of $51 million related to OtiTopic Inc. in August 2021. For
the period October 2020 to December 2020 and for the year ended
December 31, 2020, "Others" include the Brazil indirect tax credit
$119 million that was recorded in the fourth quarter of 2020.
Schedule 12
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Operating
Cash Flow to Operating Cash Flow, excluding Currency
($ in millions) / (Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2021
2020
% Change
2021
2020
% Change
$ 3,870
$ 3,614
7.1%
Net cash provided by operating
activities (1)
$ 7,935
$ 6,650
19.3%
140
Less: Currency
759
$ 3,730
$ 3,614
3.2%
Net cash provided by operating
activities,
excluding currency
$ 7,176
$ 6,650
7.9%
(1) Operating cash flow
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211019005613/en/
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InvestorRelations@pmi.com
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