Delivered 2022
Second-Quarter Reported Diluted EPS of $1.43 and Pro Forma
(Excluding Russia and Ukraine) Adjusted Diluted EPS of $1.32,
Representing Currency-Neutral Growth of 5.6%; Targets 2022 Full-Year Reported Diluted EPS of $5.73 to
$5.88 (Including Russia and Ukraine) and Pro Forma Adjusted Diluted
EPS of $5.23 to $5.34, Representing Currency-Neutral Growth of 10%
to 12%
Regulatory News:
Philip Morris International Inc. (NYSE: PM) today announces its
2022 second-quarter and first-half results. Growth rates presented
in this press release on an organic basis reflect adjusted results,
excluding currency, acquisitions and disposals. Given the
uncertainty and volatility regarding the company’s operations in
Russia and Ukraine, PMI is also providing figures and comparisons
on a pro forma basis, which exclude the company’s operations in
these two markets for all periods and provide a more comparable
view of PMI's business performance. 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.
2022 SECOND-QUARTER & YEAR-TO-DATE
HIGHLIGHTS
Second-Quarter
Six Months
Year-to-Date
Reported
Pro Forma Adjusted
Reported
Pro Forma Adjusted
Total Shipment Volume Growth
1.1
%
3.0
%
2.2
%
4.0
%
HTU Shipment Volume (units billion)
24.8
20.1
49.6
40.2
- Growth
1.9
%
7.4
%
7.7
%
12.6
%
Net Revenue Growth
3.1
%
6.2
%
(a)
2.6
%
8.1
%
(a)
Operating Income Growth
(2.3
)%
1.6
%
(a)
(3.3
)%
5.4
%
(a)
Operating Income Margin Growth
(2.2
)pp
(1.9
)pp
(a)
(2.5
)pp
(1.1
)pp
(a)
Diluted Earnings per Share
$1.43
$1.32
$2.93
$2.79
- Growth
2.9
%
5.6
%
(b)
—
%
10.4
%
(b)
(a) On an organic basis
(b) Excluding currency
Second-Quarter
- Net revenues from smoke-free products accounted for 29.9% of
total net revenues, or 29.1% on a pro forma basis
- Market share for heated tobacco units in IQOS markets up by 1.2
points to 7.5% on a pro forma basis
- Pro forma total IQOS users at quarter-end estimated at
approximately 19.0 million (up by 3.2 million or 20.5% versus June
30, 2021), of which approximately 13.2 million had switched to IQOS
and stopped smoking
- Announced recommended public offer for Swedish Match AB of SEK
106 in cash per share (see "Swedish Match AB Offer" section on page
6) and suspension of PMI's three-year share repurchase program (see
"Share Repurchase Program" section on page 6)
- Declared regular quarterly dividend of $1.25 per common share,
representing an annualized rate of $5.00
Six Months Year-to-Date
- Net revenues from smoke-free products accounted for 30.5% of
total net revenues, or 29.7% on a pro forma basis
- Market share for heated tobacco units in IQOS markets up by 1.1
points to 7.5% on a pro forma basis
"First and foremost, the war in Ukraine continues to deeply
affect the lives of our employees and families in the region," said
Jacek Olczak, Chief Executive Officer. "My first priority is to
give them the help they need and as a company we are focused on
doing our utmost to support them throughout this conflict."
"Turning to our results, our strong underlying performance
continued in the second quarter, with top- and bottom-line growth
exceeding our initial expectations. This reflected excellent IQOS
momentum, including accelerating growth in pro forma total IQOS
users and heated tobacco unit in-market sales volume, as well as
favorable cigarette category trends."
"We are raising our outlook for the full year and now expect to
deliver pro forma adjusted growth in net revenues of 6% to 8%, on
an organic basis, and diluted EPS of 10% to 12%, excluding
currency, underpinned by pro forma heated tobacco unit shipment
volume of 90 to 92 billion units."
"Building on our excellent financial results in 2021, this
year's outlook puts us well on track to comfortably exceed our
minimum compound annual net revenue and adjusted diluted EPS growth
targets for 2021 to 2023 on a pro forma basis."
2022 SECOND-QUARTER SUMMARY
Pro forma adjusted net revenues increased by 6.2% on an organic
basis, notably reflecting pro forma total shipment volume growth of
3.0%, driven by cigarettes (+2.4%) and heated tobacco units
(+7.4%). As anticipated in April, heated tobacco unit shipment
volume in the quarter was adversely impacted by the timing of
shipments to Japan (approximately 2 billion units, which are
expected in the second half) as the company manages the
cancellation of planned heated tobacco unit manufacturing in Russia
and disruptions in global supply chains generally. In-market sales
for heated tobacco units increased by 19.9% in the quarter on a pro
forma basis, a slight acceleration versus the first quarter.
Pro forma adjusted net revenue per unit increased by 3.0% on an
organic basis, reflecting a further increase in the proportion of
heated tobacco units in PMI’s sales mix (albeit at a lower rate
than in prior quarters, due to the above-mentioned timing impact
involving heated tobacco unit shipments to Japan) and higher
pricing. Pro forma pricing for combustible products increased by
3.5%, or by almost 5% excluding Indonesia.
Pro forma adjusted operating income margin declined by 1.9
points on an organic basis, primarily reflecting: (i) investment to
further expand and match the speed of growth of PMI's smoke-free
portfolio, including the initial higher cost of ILUMA devices and
heated tobacco units, as well as the transitory dilutive margin
impact of higher device sales from the roll-out of ILUMA and the
replenishment of distribution channels as device constraints ease
(following component-related shortages) to support re-accelerating
IQOS user growth; (ii) the impact of supply chain disruptions,
notably due to the war in Ukraine; and (iii) cost inflation driven
by the global pandemic recovery and exacerbated by the war in
Ukraine, notably for certain direct materials, wages, energy and
transportation costs. The decline also reflected a challenging
prior year comparison, which included substantial productivity
savings.
Despite the specific margin pressures in the quarter, the
company’s strong net revenue growth, coupled with the positive
effects from higher pricing and operating cost efficiencies, drove
adjusted diluted EPS of $1.48 and pro forma adjusted diluted EPS of
$1.32, reflecting currency-neutral growth of 3.8% and 5.6%,
respectively, as shown in the table below.
Quarters Ended June
30,
2022
2021
Currency
Var. excl. Currency
Reported Diluted EPS
$ 1.43
$ 1.39
$ (0.16)
14.4%
Asset impairment and exit costs
—
0.04
Amortization of intangibles
0.02
0.01
Saudi Arabia customs assessments
—
0.14
Costs associated with Swedish Match AB
offer
0.02
—
Charges related to the war in Ukraine
0.04
—
Tax items
(0.03)
—
Adjusted Diluted EPS
$ 1.48
$ 1.58
$ (0.16)
3.8%
Less: Net earnings attributable to Russia
and Ukraine
0.16
0.15
0.03
Pro Forma Adjusted Diluted EPS
$ 1.32
$ 1.43
$ (0.19)
5.6%
2022 FULL-YEAR FORECAST
Full-Year
2022 Forecast
2021
Growth
Reported Diluted EPS
$5.73
-
$5.88
$ 5.83
Adjustments:
Asset impairment and exit costs
—
0.12
Equity investee ownership dilution
—
(0.04)
Amortization of intangibles
0.08
0.05
Saudi Arabia customs assessments
—
0.14
Charges related to the war in Ukraine
0.07
—
Fair value adj. for equity security
investments (1)
0.03
—
Asset acquisition cost
—
0.03
Costs associated with Swedish Match AB
offer
0.02
—
Tax items
(0.03)
—
Total Adjustments
0.17
0.30
Adjusted Diluted EPS
$5.90
-
$6.05
$ 6.13
Less: Net earnings attributable to Russia
and Ukraine (2)
0.67
-
0.71
0.60
Pro Forma Adjusted Diluted EPS
$5.23
-
$5.34
$ 5.53
Less: Pro Forma Currency
(0.86)
Pro Forma Adjusted Diluted EPS,
ex-currency
$6.09
-
$6.20
$ 5.53
10%
-
12%
1) Reflects the adjustment resulting from
share price movements in PMI's investments in India and Sri Lanka,
which are publicly traded entities that are not controlled or
influenced by PMI
2) Includes a favorable currency variance
of $0.17 per share for full-year 2022
Reported diluted EPS is forecast to be in a range of $5.73 to
$5.88, at prevailing exchange rates, versus reported diluted EPS of
$5.83 in 2021. Excluding (i) 2022 adjustments of $0.17 per share,
(ii) net earnings attributable to Russia and Ukraine of $0.67 to
$0.71 per share assumed for full-year 2022, and (iii) an adverse
pro forma currency impact, at prevailing exchange rates, of $0.86
per share, this forecast represents a projected increase of 10% to
12% versus pro forma adjusted diluted EPS of $5.53 in 2021, as
outlined in the above table.
2022 Full-Year Forecast Assumptions
This forecast assumes:
- The full contribution of the company's operations in Russia and
Ukraine for the entire year;
- No asset impairment costs or further other charges related to
the company's operations in Russia or Ukraine;
- No contribution from the operations of Swedish Match in 2022
following the assumed transaction close in the fourth quarter and
no further costs associated with the Swedish Match offer;
- Continuing uncertainty over the pace of the ongoing recovery
from pandemic-related effects on the operating environment, notably
in select geographies in PMI's South & Southeast Asia
Region;
- A continued gradual improvement in PMI's duty-free business
outside Asia;
- An improving IQOS device supply situation, with some remaining
uncertainty on the timing of full IQOS availability;
- The impact on TEREA heated tobacco unit production capacity
build-up due to the decision to cancel manufacturing plans in
Russia;
- A pro forma estimated total international industry volume
change, excluding China and the U.S., of approximately flat to
+1%;
- Pro forma total cigarette and heated tobacco unit shipment
volume growth for PMI of approximately 1.5% to 2.5%;
- Pro forma heated tobacco unit shipment volume of 90 to 92
billion units, compared to pro forma shipment volume of 73.5
billion units in 2021;
- Pro forma adjusted net revenue growth of approximately 6.0% to
8.0% on an organic basis (compared to 2021 pro forma adjusted net
revenues of $29.2 billion), which includes the adverse full-year
impact of moving to highly inflationary accounting in Turkey,
effective April 1st, of approximately 0.7 points;
- A pro forma adjusted operating income margin change of flat to
+50 basis points on an organic basis, primarily reflecting:
- the continued favorable product mix shift from cigarettes to
smoke-free products, coupled with the benefit of further operating
leverage and accelerated operating efficiencies;
- the expectation of a lower gross margin primarily due to:
- the significant growth in IQOS device volumes (notably in the
first-half) as device supply constraints ease, reflecting the
replenishment of channel inventories for user acquisition and
supply for the accelerated device replacement cycle driven by
ILUMA;
- the higher initial cost of IQOS ILUMA devices and initial
weight and cost of TEREA consumables, which are expected to reduce
over time, as with previous innovations;
- higher logistics costs, including costs related to the use of
air freight to support: (i) the strong up-take of IQOS ILUMA and
TEREA consumables in Japan, and (ii) the re-sourcing of select
cigarette brands for Japan due to the war in Ukraine;
- investments to grow production capacity across PMI's smoke-free
platforms; and
- increased inflation in raw material and energy prices, and
additional supply chain costs due to war-related disruptions;
- continued commercial reinvestment to support the company's
growing portfolio of smoke-free alternatives;
- Wellness and Healthcare segment net revenues of around $300
million (including smoking cessation products), with an operating
loss of around $150 million, primarily due to:
- the amortization of intangibles related to acquisitions;
- investments in research and development; and
- expenses related to employee retention and recruitment
programs;
- Full-year amortization of acquired intangibles of $0.08 per
share;
- Operating cash flow of around $10.5 billion at prevailing
exchange rates and subject to year-end working capital
requirements;
- Capital expenditures of approximately $1.0 billion;
- An effective tax rate, excluding discrete tax events, of 21% to
22%;
- The impact on diluted EPS of first-half 2022 share
repurchases;
- Pro forma third-quarter adjusted diluted EPS of $1.23 to $1.28,
including an unfavorable currency impact of around $0.24 per share,
at prevailing exchange rates, reflecting:
- heated tobacco unit shipment volume of around 22 billion;
- mid-single-digit pro forma net revenue growth, on an organic
basis, notably reflecting:
- strong IQOS growth; partly offset by
- a tougher year-over-year comparison for cigarette shipment
volume versus the first half, as well as a modest negative impact
due to cigarette shipment timing;
- lower gross margin headwinds compared to the second quarter,
broadly offset by a step-up in commercial investments as compared
to a device-constrained third quarter of 2021;
- Fourth-quarter-weighted (i) growth in pro forma heated tobacco
unit shipment volume and (ii) recovery in pro forma adjusted OI
margin.
Factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to
these projections.
Swedish Match AB Offer
On May 11, 2022, Philip Morris Holland Holdings B.V. (PMHH), an
affiliate of PMI, announced a recommended public offer to the
shareholders of Swedish Match AB (Swedish Match) to tender all
shares in Swedish Match (excluding treasury shares) to PMHH at a
price of SEK 106 in cash per share.
On June 28, 2022, the offer document regarding PMHH's
recommended offer was made public, following approval and
registration by the Swedish Financial Supervisory Authority. The
offer document and other public information regarding the offer are
available on the offer website (www.smokefree-offer.com).
PMI expects the transaction to close in the fourth quarter of
this year, subject to Swedish Match shareholder acceptance and all
necessary regulatory and other approvals.
As of the date of the offer document, the waiting period for the
transaction under the U.S. Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (HSR Act), had expired, meaning that PMHH
has satisfied its requirements under the HSR Act to proceed with
the transaction.
Share Repurchase Program
On May 11, 2022, PMI announced the suspension of its three-year
share repurchase program as part of the company's announcement of
its recommended public offer to the shareholders of Swedish Match.
Prior to the suspension of the program, the company made no share
repurchases during the second quarter of 2022.
From January 1, 2022 through March 31, 2022, PMI repurchased
approximately 2.0 million shares of common stock for approximately
$199 million, at an average price of $100.95 per share,
representing total repurchases of approximately $983 million since
the start of the three-year program in July 2021.
War in Ukraine
Since the onset of the war in Ukraine, PMI's main priority has
been the safety and security of its more than 1,300 employees and
their families in the country. PMI has taken three critical steps
in this regard: helping to evacuate more than 1,000 people from
Ukraine and relocate over 2,700 others from conflict zones to
locations in the country away from the heaviest fighting; providing
critical aid to employees who cannot leave or who decide to remain
in Ukraine; and providing those who have left the country with
logistical, medical, financial, and other practical support in
neighboring countries. The company is continuing to pay salaries to
all its Ukrainian employees and is also providing substantial
in-kind support to them and their families. In addition, PMI has
already contributed approximately $10 million in funds and donated
essential items across the country, directly to humanitarian
organizations and through the company's own employee-led
initiative, 'Projects With a Heart'.
On February 25th, PMI announced the temporary suspension of its
operations in Ukraine, including at its factory, in Kharkiv. During
the second quarter, the company resumed some retail activities
where safety allowed, in order to provide product availability and
service to adult consumers, and began to supply the market from
production centers outside Ukraine. Production at the company's
factory in Kharkiv remains suspended. PMI is applying increased
security and safety measures for personnel.
In 2021, Ukraine accounted for around 2% of PMI’s total
cigarette and heated tobacco unit shipment volume and under 2% of
PMI’s total net revenues. As of June 30, 2022, PMI's Ukrainian
operations have approximately $0.5 billion in total assets,
excluding intercompany balances.
On March 24th, PMI announced the concrete steps it had taken to
suspend planned investments and scale down its manufacturing
operations in Russia. This included:
- the discontinuation of a number of cigarette products offered
in the market (representing approximately one-quarter of the
company's domestic cigarette SKUs, including Marlboro and
Parliament SKUs) and the reduction of its manufacturing activities
accordingly;
- the suspension of its marketing activities in the country;
- the cancellation of all product launches planned for 2022 in
the market, including the launch of its flagship heated tobacco
product IQOS ILUMA, originally planned for March 2022; and
- the cancellation of its plans to manufacture TEREA heated
tobacco units for IQOS ILUMA in Russia (with an eventual annualized
capacity of more than 20 billion units) and the related ongoing
investment of $150 million.
As previously announced, PMI intends to exit the Russian market
in an orderly manner, as the complexities of continuing to operate
in Russia increase, such as supply chain challenges and financial
and banking sector restrictions. The company's Board of Directors
and senior executives continue to actively work on options for
doing so, in the context of an increasingly complex and rapidly
changing regulatory and operating environment, including the
requirement to obtain certain governmental approvals for any
transaction.
PMI employs more than 3,200 people in Russia and will continue
to support its employees there, including paying their salaries,
while continuing to fulfil its legal obligations. The company will
continue to make decisions with their safety and security as a
priority.
In 2021, Russia made up almost 10% of total shipment volumes and
around 6% of PMI net revenues. As of June 30, 2022, PMI's Russian
operations have approximately $2.5 billion in total assets,
excluding intercompany balances.
PMI recorded charges related to the war in Ukraine of
approximately $80 million in the second quarter of 2022 and
approximately $122 million in the first half of 2022. This includes
charges in Russia related to the cancellation of the planned launch
of IQOS ILUMA and the planned production of TEREA heated tobacco
units.
Amortization and Impairment of Acquired Intangibles
Starting in the second quarter of 2022, and on a comparative
basis, PMI will exclude amortization and impairment of acquired
intangibles, if any, from its adjusted operating results (e.g.,
adjusted operating income and margin; adjusted diluted EPS). The
company believes that operating results adjusted for these items
better reflect the underlying performance of the business and
provide a better comparison to past operating performance.
Amortization of acquired intangibles is driven by the purchase
price allocated to specific assets and is varied across
acquisitions because of unique facts and circumstances, timing and
terms of acquisition which result in amortization charges that
could be inconsistent in size as compared to the revenues generated
by those assets.
Conference Call
A conference call, hosted by Emmanuel Babeau, Chief Financial
Officer, will be webcast at 9:00 a.m., Eastern Time, on July 21,
2022. Access the call at www.pmi.com/2022Q2earnings.
CONSOLIDATED SHIPMENT VOLUME & MARKET
SHARE
PMI Shipment Volume by Region
Second-Quarter
Six Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
European Union
41,276
41,504
(0.5)%
77,720
78,273
(0.7)%
Eastern Europe
20,633
22,785
(9.4)%
39,147
42,751
(8.4)%
Middle East & Africa
34,544
30,347
13.8%
64,015
57,989
10.4%
South & Southeast Asia
34,754
35,321
(1.6)%
72,215
70,209
2.9%
East Asia & Australia
10,391
10,968
(5.3)%
21,944
22,330
(1.7)%
Americas
16,080
15,213
5.7%
30,875
30,098
2.6%
Total PMI
157,678
156,138
1.0%
305,916
301,650
1.4%
Heated Tobacco Units
European Union
9,353
6,921
35.1%
17,919
13,347
34.3%
Eastern Europe
5,922
6,840
(13.4)%
11,788
12,475
(5.5)%
Middle East & Africa
1,158
512
+100%
2,055
908
+100%
South & Southeast Asia
96
39
+100%
190
72
+100%
East Asia & Australia
8,186
9,904
(17.3)%
17,474
19,043
(8.2)%
Americas
106
140
(24.3)%
214
245
(12.7)%
Total PMI
24,821
24,356
1.9%
49,640
46,090
7.7%
Cigarettes and Heated Tobacco
Units
European Union
50,629
48,425
4.6%
95,639
91,620
4.4%
Eastern Europe
26,555
29,625
(10.4)%
50,935
55,226
(7.8)%
Middle East & Africa
35,702
30,859
15.7%
66,070
58,897
12.2%
South & Southeast Asia
34,850
35,360
(1.4)%
72,405
70,281
3.0%
East Asia & Australia
18,577
20,872
(11.0)%
39,418
41,373
(4.7)%
Americas
16,186
15,353
5.4%
31,089
30,343
2.5%
Total PMI
182,499
180,494
1.1%
355,556
347,740
2.2%
Second-Quarter
PMI's total shipment volume increased by 1.1%, driven by:
- the EU, reflecting higher heated tobacco unit shipment volume
across the Region (notably in Italy and Poland), partly offset by
lower cigarette shipment volume (mainly in France and Spain,
partially offset by Poland);
- Middle East & Africa, reflecting higher cigarette shipment
volume (primarily in PMI Duty Free and Turkey, partly offset by
Egypt) and higher heated tobacco unit shipment volume (mainly in
Egypt, Lebanon and PMI Duty Free); and
- Americas, primarily reflecting higher cigarette shipment
volume, mainly in Argentina and Brazil;
partly offset by
- Eastern Europe, reflecting lower cigarette and heated tobacco
unit shipment volume (primarily in Russia and Ukraine);
- South & Southeast Asia, primarily reflecting lower
cigarette shipment volume, mainly in the Philippines, partly offset
by Indonesia; and
- East Asia & Australia, reflecting lower cigarette and
heated tobacco unit shipment volume, primarily in Japan.
On a pro forma basis, PMI's total shipment volume increased by
3.0%, with a decrease of 3.4% in the Eastern Europe Region, as
detailed in Appendix 3 and Appendix 4, respectively.
Impact of Inventory Movements
Excluding the net unfavorable impact of estimated distributor
inventory movements of approximately 1.9 billion units, PMI’s total
in-market sales increased by 2.2%.
The net unfavorable impact of approximately 1.9 billion units
reflected:
- A net unfavorable impact of 2.3 billion heated tobacco units,
essentially due to Japan (reflecting the delayed timing of
shipments, as the company manages the cancellation of planned
heated tobacco unit manufacturing in Russia and disruptions in
global supply chains generally); partly offset by
- A net favorable impact of 0.4 billion cigarettes, mainly driven
by PMI Duty Free (reflecting the replenishment of distributor
inventories to account for increased passenger traffic in certain
geographies), partially offset by Spain (mainly reflecting
inventory movements in the second quarter of 2021).
On a pro forma basis, PMI's total in-market sales increased by
4.2%.
PMI's total heated tobacco unit in-market sales volume in the
quarter was 25.7 billion units, or 21.1 billion units on a pro
forma basis, representing growth of 12.1% and 19.9%,
respectively.
Six Months Year-to-Date
PMI's total shipment volume increased by 2.2%, driven by:
- the EU, reflecting higher heated tobacco unit shipment volume
across the Region (particularly in Italy and Poland), partly offset
by lower cigarette shipment volume (notably in France and Germany,
partially offset by Poland);
- Middle East & Africa, reflecting higher cigarette shipment
volume (primarily in PMI Duty Free and Turkey), as well as higher
heated tobacco unit shipment volume (mainly in Egypt, Lebanon and
PMI Duty Free);
- South & Southeast Asia, primarily reflecting higher
cigarette shipment volume, mainly in India and Indonesia, partly
offset by Thailand; and
- Americas, mainly reflecting higher cigarette shipment volume,
primarily in Brazil;
partly offset by
- Eastern Europe, reflecting lower cigarette and heated tobacco
unit shipment volume (mainly in Russia and Ukraine); and
- East Asia & Australia, reflecting lower heated tobacco unit
shipment volume (primarily in Japan), as well as lower cigarette
shipment volume (notably in Japan).
On a pro forma basis, PMI's total shipment volume increased by
4.0%, with an increase of 0.2% in the Eastern Europe Region, as
detailed in Appendix 3 and Appendix 4, respectively.
Impact of Inventory Movements
Excluding the net unfavorable impact of estimated distributor
inventory movements of approximately 0.3 billion units, PMI’s total
in-market sales increased by 2.4%.
The net unfavorable impact of approximately 0.3 billion units
reflected:
- A net unfavorable impact of 2.8 billion heated tobacco units,
primarily due to Japan (reflecting the same factors as in the
quarter); partly offset by
- A net favorable impact of 2.5 billion cigarettes, mainly driven
by PMI Duty Free (reflecting the same factor as in the
quarter).
On a pro forma basis, PMI's total in-market sales increased by
4.0%, in line with the increase in total shipment volume.
PMI's total heated tobacco unit in-market sales volume in the
six months year-to-date was 50.6 billion units, or 40.6 billion
units on a pro forma basis, representing growth of 14.3% and 19.7%,
respectively.
PMI Shipment Volume by Brand
PMI Shipment Volume by Brand
Second-Quarter
Six Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
Marlboro
62,671
58,466
7.2%
119,936
112,148
6.9%
L&M
21,022
22,096
(4.9)%
41,220
42,464
(2.9)%
Chesterfield
17,086
14,269
19.7%
32,691
27,027
21.0%
Parliament
10,960
10,023
9.3%
20,111
18,980
6.0%
Philip Morris
10,317
10,590
(2.6)%
20,070
20,774
(3.4)%
Sampoerna A
9,786
9,186
6.5%
19,505
17,884
9.1%
Dji Sam Soe
5,928
5,422
9.3%
11,700
11,126
5.2%
Lark
2,866
3,882
(26.2)%
6,318
7,781
(18.8)%
Next
2,394
2,300
4.1%
4,336
4,168
4.0%
Others
14,648
19,904
(26.4)%
30,029
39,298
(23.6)%
Total Cigarettes
157,678
156,138
1.0%
305,916
301,650
1.4%
Heated Tobacco Units
24,821
24,356
1.9%
49,640
46,090
7.7%
Total PMI
182,499
180,494
1.1%
355,556
347,740
2.2%
Note: Lark includes Lark Harmony; Next
includes Next Dubliss; Philip Morris includes Philip
Morris/Dubliss; and Sampoerna A includes Sampoerna.
Second-Quarter
The increase in PMI's heated tobacco unit shipment volume was
mainly driven by the EU (notably Italy and Poland) and Middle East
& Africa (primarily Egypt, Lebanon and PMI Duty Free), partly
offset by Japan and Eastern Europe (mainly Russia and Ukraine). On
a pro forma basis, PMI's heated tobacco unit shipment volume
increased by 7.4%.
PMI's cigarette shipment volume of the following brands
increased:
- Marlboro, mainly driven by PMI Duty Free, Russia and Turkey,
partly offset by the Philippines;
- Chesterfield, primarily driven by Brazil, the Philippines and
Russia;
- Parliament, mainly driven by Turkey and PMI Duty Free, partly
offset by Ukraine;
- Sampoerna A in Indonesia, primarily driven by premium A
Mild;
- Dji Sam Soe in Indonesia, mainly driven by Dji Sam Soe Magnum
Mild; and
- Next, primarily driven by Russia.
PMI's cigarette shipment volume of the following brands
decreased:
- L&M, primarily due to Egypt, Spain, Thailand, Turkey and
Ukraine, partly offset by PMI Duty Free;
- Philip Morris, mainly due to Russia and Ukraine, partly offset
by Japan and Kazakhstan;
- Lark, primarily due to Japan and Turkey; and
- "Others," mainly due to: mid-price Sampoerna U (Indonesia); and
low-price Bond Street (primarily due to Kazakhstan, Russia and
Ukraine), Fortune (Philippines), More (Philippines) and Morven
(Pakistan).
On a pro forma basis, PMI's cigarette shipment volume increased
by 5.6% for Marlboro, 8.6% for Chesterfield, 15.3% for Parliament
and 18.0% for Philip Morris, and decreased by 2.9% for L&M and
5.2% for Next.
International Share of Market
PMI's pro forma 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, increased by 0.4 points to 27.0%,
reflecting:
- Market share for heated tobacco units of 3.5%, up by 0.5
points; and
- Market share for cigarettes of 23.5%, down by 0.1 point.
PMI's pro forma total international cigarette sales volume as a
percentage of pro forma total industry cigarette sales volume
increased by 0.1 point to 24.7%, mainly reflecting a higher
cigarette market share and/or favorable geographic mix impact,
notably in Brazil, Indonesia, PMI Duty Free, Poland and Turkey,
partly offset by France and the Philippines.
Six Months Year-to-Date
The increase in PMI's heated tobacco unit shipment volume was
mainly driven by the EU (notably Italy and Poland) and Middle East
& Africa (primarily Egypt, Lebanon and PMI Duty Free), partly
offset by Japan and Eastern Europe (mainly Russia and Ukraine). On
a pro forma basis, PMI's heated tobacco unit shipment volume
increased by 12.6%.
PMI's cigarette shipment volume of the following brands
increased:
- Marlboro, mainly driven by PMI Duty Free, Russia and Turkey,
partly offset by Japan;
- Chesterfield, primarily driven by Brazil, the Philippines,
Poland and Russia;
- Parliament, mainly driven by PMI Duty Free and Turkey, partly
offset by Russia, Saudi Arabia and Ukraine;
- Sampoerna A in Indonesia, primarily driven by premium A
Mild;
- Dji Sam Soe in Indonesia, mainly driven by Dji Sam Soe Magnum
Mild; and
- Next, primarily driven by Russia.
PMI's cigarette shipment volume of the following brands
decreased:
- L&M, mainly due to Germany, Thailand, Turkey and Ukraine,
partly offset by PMI Duty Free;
- Philip Morris, primarily due to Russia and Ukraine, partly
offset by Japan and Kazakhstan;
- Lark, mainly due to Japan and Turkey; and
- "Others," notably due to: mid-price Sampoerna U (Indonesia);
and low-price Bond Street (primarily due to Kazakhstan, Russia and
Ukraine), Fortune (Philippines) and More (Philippines).
On a pro forma basis, PMI's cigarette shipment volume increased
by 5.4% for Marlboro, 9.6% for Chesterfield, 10.4% for Parliament,
15.6% for Philip Morris and 0.1% for Next, and decreased by 1.5%
for L&M.
International Share of Market
PMI's pro forma total international market share (excluding
China and the U.S.) increased by 0.6 points to 26.9%,
reflecting:
- Market share for heated tobacco units of 3.5%, up by 0.5
points; and
- Market share for cigarettes of 23.4%, flat.
PMI's pro forma total international cigarette sales volume as a
percentage of total industry cigarette sales volume increased by
0.3 points to 24.6%, mainly reflecting higher cigarette market
share and/or a favorable geographic mix impact, notably in
Indonesia, PMI Duty Free, Poland and Turkey, partly offset by
Germany and Thailand.
CONSOLIDATED FINANCIAL SUMMARY
Second-Quarter
Financial Summary
-
Quarters
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
7,832
$
7,594
3.1
%
8.7
%
238
(501
)
79
142
265
253
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Adjusted Net Revenues
$
7,832
$
7,840
(0.1
)%
5.3
%
(8
)
(501
)
79
142
265
7
Net Revenues (1)
$
7,832
$
7,594
3.1
%
8.7
%
238
(501
)
79
142
265
253
Cost of Sales
(2,648
)
(2,353
)
(12.5
)%
(15.3
)%
(295
)
116
(51
)
—
(282
)
(78
)
Marketing, Administration and Research
Costs
(2,092
)
(2,093
)
—
%
(2.4
)%
1
86
(34
)
—
—
(51
)
Amortization of Intangibles
(36
)
(19
)
(89.5
)%
5.3
%
(17
)
—
(18
)
—
—
1
Operating Income
$
3,056
$
3,129
(2.3
)%
8.0
%
(73
)
(299
)
(24
)
142
(17
)
125
Asset Impairment & Exit Costs (2)
—
(79
)
+100
%
+100
%
79
—
—
—
—
79
Amortization of Intangibles
(36
)
(19
)
(89.5
)%
5.3
%
(17
)
—
(18
)
—
—
1
Charges related to the war in Ukraine
(3)
(80
)
—
—
%
—
%
(80
)
—
—
—
—
(80
)
Costs associated with Swedish Match AB
offer (2)
(52
)
—
—
%
—
%
(52
)
—
—
—
—
(52
)
Saudi Arabia Customs Assessments (4)
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Adjusted Operating Income
$
3,224
$
3,473
(7.2
)%
1.6
%
(249
)
(299
)
(6
)
142
(17
)
(69
)
Adjusted Operating Income
Margin
41.2
%
44.3
%
(3.1
)pp
(1.5
)pp
(1) Favorable 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 Cost of Sales ($20
million) and Marketing, Administration and Research Costs ($60
million) above.
(4) Included in Net Revenues above.
Net revenues increased by 8.7%, excluding currency and
acquisitions, mainly reflecting: favorable volume/mix, primarily
driven by higher heated tobacco unit volume, device volume and
cigarette volume, partly offset by unfavorable device mix and
cigarette mix; a favorable comparison related to the Saudi Arabia
customs assessments of $246 million in 2021, shown in "Cost/Other";
and a favorable pricing variance, driven by higher combustible
tobacco pricing, partly offset by lower device pricing. Adjusted
net revenues increased by 5.3% on an organic basis.
During the quarter, Russia and Ukraine accounted for around 8%
of PMI's total net revenues. Pro forma adjusted net revenues
increased by 6.2% on an organic basis, as detailed in Schedule
11.
Operating income increased by 8.0%, excluding currency and
acquisitions, notably reflecting: a favorable comparison versus the
prior year period related to the Saudi Arabia customs assessments
(as noted above for net revenues) and asset impairment and exit
costs, partly offset by 2022 charges related to the war in Ukraine
and 2022 costs associated with the Swedish Match AB offer.
Adjusted operating income increased by 1.6% on an organic basis,
primarily reflecting: a favorable pricing variance, partly offset
by higher manufacturing costs (mainly due to higher logistics costs
and other inflationary impacts, partially offset by productivity).
Volume/mix was slightly unfavorable, reflecting unfavorable
cigarette mix, heated tobacco unit mix and device mix, as well as
the unfavorable impact on profitability of higher device volume,
partly offset by higher heated tobacco unit volume and cigarette
volume. Adjusted operating income margin decreased by 1.5 points on
an organic basis.
Pro forma adjusted operating income increased by 1.6% on an
organic basis, while pro forma adjusted operating income margin
decreased by 1.9 points, on the same basis, as detailed in Schedule
11. The margin decline primarily reflected the impact of
significantly higher device sales; the growth of IQOS ILUMA (with
its higher initial unit cost for devices and consumables); the
temporary adverse timing impact related to heated tobacco unit
shipments to Japan; and inflation in certain elements of the
company's supply chain, which was also exacerbated by the impact of
the war in Ukraine. The decline also reflected a challenging prior
year comparison, which included substantial productivity
savings.
Six Months Year-to-Date
Financial Summary
-
Six Months
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
15,578
$
15,179
2.6
%
8.8
%
399
(1,091
)
149
250
827
264
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Adjusted Net Revenues
$
15,578
$
15,425
1.0
%
7.1
%
153
(1,091
)
149
250
827
18
Net Revenues (1)
$
15,578
$
15,179
2.6
%
8.8
%
399
(1,091
)
149
250
827
264
Cost of Sales
(5,256
)
(4,627
)
(13.6
)%
(16.8
)%
(629
)
241
(93
)
—
(580
)
(197
)
Marketing, Administration and Research
Costs
(3,894
)
(3,942
)
1.2
%
(0.5
)%
48
136
(69
)
—
—
(19
)
Amortization of Intangibles
(74
)
(37
)
-(100
)%
—
%
(37
)
—
(37
)
—
—
—
Operating Income
$
6,354
$
6,573
(3.3
)%
8.3
%
(219
)
(714
)
(50
)
250
247
48
Asset Impairment & Exit Costs (2)
—
(127
)
+100
%
+100
%
127
—
—
—
—
127
Amortization of Intangibles
(74
)
(37
)
-(100
)%
—
%
(37
)
—
(37
)
—
—
—
Charges related to the war in Ukraine
(3)
(122
)
—
—
%
—
%
(122
)
—
—
—
—
(122
)
Costs associated with Swedish Match AB
offer (2)
(52
)
—
—
%
—
%
(52
)
—
—
—
—
(52
)
Saudi Arabia Customs Assessments (4)
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Adjusted Operating Income
$
6,602
$
6,983
(5.5
)%
5.0
%
(381
)
(714
)
(13
)
250
247
(151
)
Adjusted Operating Income
Margin
42.4
%
45.3
%
(2.9
)pp
(0.9
)pp
(1) Favorable 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 Cost of Sales ($46
million) and Marketing, Administration and Research Costs ($76
million) above.
(4) Included in Net Revenues above.
Net revenues increased by 8.8%, excluding currency and
acquisitions, mainly reflecting: favorable volume/mix, primarily
driven by higher heated tobacco unit volume, device volume and
cigarette volume, partly offset by unfavorable cigarette mix and
device mix; a favorable pricing variance, driven by higher
combustible tobacco pricing, partly offset by lower device pricing;
and a favorable comparison related to the Saudi Arabia customs
assessments of $246 million in 2021, shown in "Cost/Other".
Adjusted net revenues increased by 7.1% on an organic basis.
During the first half, Russia and Ukraine accounted for around
7% of PMI's total net revenues. Pro forma adjusted net revenues
increased by 8.1% on an organic basis, as detailed in Schedule
11.
Operating income increased by 8.3%, excluding currency and
acquisitions, notably reflecting: a favorable comparison versus the
prior year period related to the Saudi Arabia customs assessments
(as noted above for net revenues) and asset impairment and exit
costs, partly offset by 2022 charges related to the war in Ukraine
and 2022 costs associated with the Swedish Match AB offer.
Adjusted operating income increased by 5.0% on an organic basis,
reflecting: a favorable pricing variance; and favorable volume/mix,
primarily driven by higher heated tobacco unit volume and cigarette
volume, partly offset by unfavorable cigarette mix, heated tobacco
unit mix and device mix, as well as the unfavorable impact on
profitability of higher device volume; partially offset by higher
manufacturing costs (primarily due to higher logistics costs and
other inflationary impacts, partly offset by productivity).
Adjusted operating income margin decreased by 0.9 points on an
organic basis.
Pro forma adjusted operating income increased by 5.4% on an
organic basis, while pro forma adjusted operating income margin
decreased by 1.1 points, on the same basis, as detailed in Schedule
11. The margin decline primarily reflects the same factors as in
the quarter.
EUROPEAN UNION REGION
Second-Quarter
Financial Summary
-
Quarters
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
3,143
$
3,149
(0.2
)%
10.1
%
(6
)
(327
)
3
(35
)
353
—
Operating Income
$
1,519
$
1,641
(7.4
)%
7.5
%
(122
)
(245
)
—
(35
)
221
(63
)
Asset Impairment & Exit Costs
—
(35
)
+100
%
+100
%
35
—
—
—
—
35
Amortization of Intangibles
(9
)
(9
)
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(23
)
—
—
%
—
%
(23
)
—
—
—
—
(23
)
Adjusted Operating Income
$
1,551
$
1,685
(8.0
)%
6.6
%
(134
)
(245
)
—
(35
)
221
(75
)
Adjusted Operating Income
Margin
49.3
%
53.5
%
(4.2
)pp
(1.7
)pp
Net revenues increased by 10.1% on an organic basis, reflecting:
favorable volume/mix, mainly driven by higher heated tobacco unit
volume and device volume, partly offset by lower cigarette volume;
partially offset by an unfavorable pricing variance, primarily
reflecting lower device pricing, partly offset by higher
combustible pricing.
Operating income increased by 7.5%, excluding currency and
acquisitions, primarily reflecting: favorable volume/mix, mainly
driven by higher heated tobacco unit volume, partly offset by lower
cigarette volume; partially offset by higher marketing,
administration and research costs; an unfavorable pricing variance;
and higher manufacturing costs (primarily due to inflationary
impacts).
Adjusted operating income increased by 6.6% on an organic basis.
Adjusted operating income margin decreased by 1.7 points on the
same basis.
Six Months Year-to-Date
Financial Summary
-
Six Months
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
6,155
$
6,058
1.6
%
10.3
%
97
(533
)
7
(30
)
653
—
Operating Income
$
3,046
$
3,131
(2.7
)%
9.8
%
(85
)
(390
)
(2
)
(30
)
429
(92
)
Asset Impairment & Exit Costs
—
(44
)
+100
%
+100
%
44
—
—
—
—
44
Amortization of Intangibles
(18
)
(18
)
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(23
)
—
—
%
—
%
(23
)
—
—
—
—
(23
)
Adjusted Operating Income
$
3,087
$
3,193
(3.3
)%
9.0
%
(106
)
(390
)
(2
)
(30
)
429
(113
)
Adjusted Operating Income
Margin
50.2
%
52.7
%
(2.5
)pp
(0.6
)pp
Net revenues increased by 10.3% on an organic basis, reflecting:
favorable volume/mix, mainly driven by higher heated tobacco unit
volume and device volume, partly offset by lower cigarette volume,
unfavorable cigarette mix, and unfavorable heated tobacco unit mix;
partially offset by an unfavorable pricing variance, mainly due to
lower device pricing and heated tobacco unit pricing, partly offset
by higher combustible pricing.
Operating income increased by 9.8%, excluding currency and
acquisitions, primarily reflecting: favorable volume/mix, mainly
driven by higher heated tobacco unit volume, partly offset by lower
cigarette volume, unfavorable cigarette mix and unfavorable heated
tobacco unit mix; partially offset by higher marketing,
administration and research costs; higher manufacturing costs
(primarily due to inflationary impacts); and an unfavorable pricing
variance.
Adjusted operating income increased by 9.0% on an organic basis.
Adjusted operating income margin decreased by 0.6 points on the
same basis.
Total Market, PMI Shipment & Market Share
Commentaries
European Union Key Data
Second-Quarter
Six Months
Year-to-Date
Change
Change
2022
2021
% / pp
2022
2021
% / pp
Total Market (billion units)
126.4
122.2
3.4
%
235.9
228.7
3.2
%
PMI Shipment Volume (million
units)
Cigarettes
41,276
41,504
(0.5
)%
77,720
78,273
(0.7
)%
Heated Tobacco Units
9,353
6,921
35.1
%
17,919
13,347
34.3
%
Total EU
50,629
48,425
4.6
%
95,639
91,620
4.4
%
PMI Market Share
Marlboro
16.0
%
16.6
%
(0.6
)
16.1
%
16.8
%
(0.7
)
L&M
5.4
%
5.6
%
(0.2
)
5.4
%
5.7
%
(0.3
)
Chesterfield
5.6
%
5.4
%
0.2
5.6
%
5.5
%
0.1
Philip Morris
2.0
%
2.2
%
(0.2
)
2.1
%
2.2
%
(0.1
)
Heated Tobacco Units
7.1
%
5.5
%
1.6
7.3
%
5.5
%
1.8
Others
3.0
%
3.1
%
(0.1
)
3.0
%
3.0
%
—
Total EU
39.1
%
38.4
%
0.7
39.6
%
38.8
%
0.8
Note: Sum may not foot due to
roundings.
Second-Quarter
The estimated total market in the EU increased by 3.4% to 126.4
billion units, primarily driven by:
- Italy, up by 5.5%, mainly reflecting the impact on adult smoker
average daily consumption of the easing of pandemic-related
measures;
- Poland, up by 18.5%, primarily reflecting a lower estimated
prevalence of illicit trade, as well as higher border sales due to
the easing of pandemic-related measures; and
- Spain, up by 9.2%, mainly reflecting the impact of increased
in-bound tourism, coupled with higher border sales due to the
easing of pandemic-related measures;
partly offset by
- the U.K., down by 17.6%, notably reflecting the impact of
increased out-bound tourism compared to the pandemic-affected prior
year period.
PMI's total shipment volume increased by 4.6% to 50.6 billion
units, mainly driven by:
- Italy, up by 10.6%, primarily reflecting the higher total
market and a higher market share driven by heated tobacco units;
and
- Poland, up by 20.1%, mainly reflecting the higher total market
and a higher market share driven by heated tobacco units.
Six Months Year-to-Date
The estimated total market in the EU increased by 3.2% to 235.9
billion units, primarily driven by:
- Italy, up by 5.4%, mainly reflecting the same factor as in the
quarter;
- Poland, up by 18.6%, primarily reflecting the same factors as
in the quarter; and
- Spain, up by 7.0%, mainly reflecting the same factors as in the
quarter;
partly offset by
- Germany, down by 5.4%, primarily reflecting the impact of
excise tax-driven price increases and higher cross-border
(non-domestic) purchases due to the easing of pandemic-related
measures; and
- the U.K., down by 11.2%, primarily reflecting the same factor
as in the quarter.
PMI's total shipment volume increased by 4.4% to 95.6 billion
units, mainly driven by:
- Italy, up by 5.9%, primarily reflecting the same factors as in
the quarter; and
- Poland, up by 20.4%, mainly reflecting the same factors as in
the quarter.
EASTERN EUROPE REGION
Second-Quarter
Financial Summary
-
Quarters
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
898
$
895
0.3
%
(1.7
)%
3
18
—
89
(104
)
—
Operating Income
$
291
$
314
(7.3
)%
(25.2
)%
(23
)
56
—
89
(69
)
(99
)
Asset Impairment & Exit Costs
—
(7
)
+100
%
+100
%
7
—
—
—
—
7
Amortization of Intangibles
—
(1
)
+100
%
+100
%
1
—
—
—
—
1
Charges related to the war in Ukraine
(80
)
—
—
%
—
%
(80
)
—
—
—
—
(80
)
Costs associated with Swedish Match AB
offer
(6
)
—
—
%
—
%
(6
)
—
—
—
—
(6
)
Adjusted Operating Income
$
377
$
322
17.1
%
(0.3
)%
55
56
—
89
(69
)
(21
)
Adjusted Operating Income
Margin
42.0
%
36.0
%
6.0
pp
0.5
pp
Net revenues decreased by 1.7% on an organic basis, reflecting:
unfavorable volume/mix, mainly due to lower cigarette volume and
heated tobacco unit volume; partly offset by a favorable pricing
variance, primarily driven by higher combustible pricing. During
the quarter, Russia and Ukraine accounted for around 68% of PMI's
total net revenues in the Region. Pro forma net revenues increased
by 5.7% on an organic basis, as detailed in Schedule 11.
Operating income decreased by 25.2%, excluding currency and
acquisitions, primarily reflecting 2022 charges related to the war
in Ukraine.
Adjusted operating income decreased by 0.3% on an organic basis,
mainly reflecting: unfavorable volume/mix, primarily due to the
same factors as for net revenues; and higher manufacturing costs;
partly offset by a favorable pricing variance. Adjusted operating
income margin increased by 0.5 points on an organic basis.
On an organic basis, pro forma adjusted operating income and
adjusted operating income margin increased by 6.3% and 0.2 points,
respectively, as detailed in Schedule 11.
Six Months Year-to-Date
Financial Summary
-
Six Months
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,624
$
1,691
(4.0
)%
(0.8
)%
(67
)
(54
)
—
125
(138
)
—
Operating Income
$
435
$
575
(24.3
)%
(23.7
)%
(140
)
(4
)
—
125
(95
)
(166
)
Asset Impairment & Exit Costs
—
(9
)
+100
%
+100
%
9
—
—
—
—
9
Amortization of Intangibles
(1
)
(1
)
—
%
—
%
—
—
—
—
—
—
Charges related to the war in Ukraine
(122
)
—
—
%
—
%
(122
)
—
—
—
—
(122
)
Costs associated with Swedish Match AB
offer
(6
)
—
—
%
—
%
(6
)
—
—
—
—
(6
)
Adjusted Operating Income
$
564
$
585
(3.6
)%
(2.9
)%
(21
)
(4
)
—
125
(95
)
(47
)
Adjusted Operating Income
Margin
34.7
%
34.6
%
0.1
pp
(0.8
)pp
Net revenues decreased by 0.8% on an organic basis, reflecting:
unfavorable volume/mix, mainly due to lower cigarette volume, lower
heated tobacco unit volume and unfavorable cigarette mix; largely
offset by a favorable pricing variance, primarily driven by higher
combustible pricing. During the first six months of 2022, Russia
and Ukraine accounted for around 67% of PMI's total net revenues in
the Region. Pro forma net revenues increased by 8.1% on an organic
basis, as detailed in Schedule 11.
Operating income decreased by 23.7%, excluding currency and
acquisitions, primarily reflecting 2022 charges related to the war
in Ukraine.
Adjusted operating income decreased by 2.9% on an organic basis,
primarily reflecting: unfavorable volume/mix, mainly due to the
same factors as for net revenues; higher manufacturing costs; and
higher marketing, administration and research costs; partly offset
by a favorable pricing variance. Adjusted operating income margin
decreased by 0.8 points on an organic basis.
Pro forma adjusted operating income increased by 6.2% on an
organic basis, while pro forma adjusted operating income margin
decreased by 0.7 points, on the same basis, as detailed in Schedule
11.
Total Market, PMI Shipment & Market Share
Commentaries
Given the company's intention to exit the Russian market and the
impact of the war in Ukraine on business operations in the country,
PMI's references to the total market estimate for the Eastern
Europe Region exclude Russia and Ukraine.
The company's reported shipment volume, presented in the table
below, includes Russia and Ukraine.
PMI Shipment Volume
Second-Quarter
Six Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
20,633
22,785
(9.4)%
39,147
42,751
(8.4)%
Heated Tobacco Units
5,922
6,840
(13.4)%
11,788
12,475
(5.5)%
Total Eastern Europe
26,555
29,625
(10.4)%
50,935
55,226
(7.8)%
Second-Quarter
The pro forma estimated total market in Eastern Europe
decreased, mainly due to:
- Kazakhstan, down by 4.7%. Excluding the net unfavorable impact
of estimated trade inventory movements, total in-market sales
volume increased by 2.7%, notably reflecting the impact of
population inflow;
partly offset by
- Southeast Europe, up by 11.0%, mainly reflecting increased
in-bound travel, the impact on adult smoker average daily
consumption of the easing of pandemic-related measures and a lower
estimated prevalence of illicit trade.
PMI's total shipment volume decreased by 10.4% to 26.6 billion
units, primarily due to:
- Russia, down by 4.5%, due to cigarettes and heated tobacco
units; and
- Ukraine, down by 48.3%, due to cigarettes and heated tobacco
units.
During the quarter, Russia and Ukraine accounted for around 71%
of PMI's total shipment volume in the Region. Pro forma total
shipment volume, excluding Russia and Ukraine, decreased by 3.4%,
as detailed in Appendix 4.
Six Months Year-to-Date
The pro forma estimated total market in Eastern Europe
decreased, mainly due to:
- Central Asia, down by 10.9%, primarily reflecting a higher
estimated prevalence of illicit trade following excise tax-driven
price increases in July 2021;
partly offset by
- Southeast Europe, up by 10.6%, mainly reflecting the same
factors as in the quarter.
PMI's total shipment volume decreased by 7.8% to 50.9 billion
units, primarily due to:
- Russia, down by 7.1%, due to cigarettes and heated tobacco
units; and
- Ukraine, down by 25.5%, due to cigarettes and heated tobacco
units.
During the first six months of 2022, Russia and Ukraine
accounted for around 72% of PMI's total shipment volume in the
Region. Pro forma total shipment volume, excluding Russia and
Ukraine, increased by 0.2%, as detailed in Appendix 4.
MIDDLE EAST & AFRICA REGION
Second-Quarter
Financial Summary
-
Quarters
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,006
$
560
79.6
%
87.7
%
446
(45
)
—
20
221
250
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Adjusted Net Revenues
$
1,006
$
806
24.8
%
30.4
%
200
(45
)
—
20
221
4
Net Revenues (1)
$
1,006
$
560
79.6
%
87.7
%
446
(45
)
—
20
221
250
Operating Income
$
498
$
16
+100
%
+100
%
482
(4
)
—
20
182
284
Asset Impairment & Exit Costs
—
(8
)
+100
%
+100
%
8
—
—
—
—
8
Amortization of Intangibles
(2
)
(2
)
—
%
—
%
—
—
—
—
—
—
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Costs associated with Swedish Match AB
offer
(6
)
—
—
%
—
%
(6
)
—
—
—
—
(6
)
Adjusted Operating Income
$
506
$
272
86.0
%
87.5
%
234
(4
)
—
20
182
36
Adjusted Operating Income
Margin
50.3
%
33.7
%
16.6
pp
14.8
pp
Net revenues increased by 87.7%, excluding currency and
acquisitions, notably reflecting a favorable comparison related to
the Saudi Arabia customs assessments of $246 million in 2021, shown
in "Cost/Other".
Adjusted net revenues increased by 30.4% on an organic basis, as
detailed above, reflecting: favorable volume/mix, mainly driven by
higher cigarette volume, higher heated tobacco unit volume and
favorable cigarette mix; and a favorable pricing variance, driven
by combustible pricing.
Operating income increased by +100%, excluding currency and
acquisitions, notably reflecting a favorable comparison related to
the Saudi Arabia customs assessments in 2021 (as noted above for
net revenues).
Adjusted operating income increased by 87.5% on an organic
basis, primarily reflecting: favorable volume/mix, mainly driven by
the same factors as for net revenues; lower marketing,
administration and research costs; and a favorable pricing
variance. Adjusted operating income margin increased by 14.8 points
on an organic basis.
Six Months Year-to-Date
Financial Summary
-
Six Months
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr.
&
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,997
$
1,361
46.7
%
61.0
%
636
(194
)
—
183
386
261
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Adjusted Net Revenues
$
1,997
$
1,607
24.3
%
36.3
%
390
(194
)
—
183
386
15
Net Revenues
$
1,997
$
1,361
46.7
%
61.0
%
636
(194
)
—
183
386
261
Operating Income
$
1,019
$
351
+100
%
+100
%
668
(119
)
—
183
307
297
Asset Impairment & Exit Costs
—
(10
)
+100
%
+100
%
10
—
—
—
—
10
Amortization of Intangibles
(4
)
(4
)
—
%
—
%
—
—
—
—
—
—
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Costs associated with Swedish Match AB
offer
(6
)
—
—
%
—
%
(6
)
—
—
—
—
(6
)
Adjusted Operating Income
$
1,029
$
611
68.4
%
87.9
%
418
(119
)
—
183
307
47
Adjusted Operating Income
Margin
51.5
%
38.0
%
13.5
pp
14.4
pp
Net revenues increased by 61.0%, excluding currency and
acquisitions, notably reflecting a favorable comparison related to
the Saudi Arabia customs assessments of $246 million in 2021, shown
in "Cost/Other".
Adjusted net revenues increased by 36.3% on an organic basis, as
detailed above, reflecting: favorable volume/mix, primarily driven
by higher cigarette volume, higher heated tobacco unit volume and
favorable cigarette mix; and a favorable pricing variance, mainly
driven by combustible pricing.
Operating income increased by +100%, excluding currency and
acquisitions, notably reflecting a favorable comparison related to
the Saudi Arabia customs assessments in 2021 (as noted above for
net revenues).
Adjusted operating income increased by 87.9% on an organic
basis, mainly reflecting: favorable volume/mix, primarily driven by
the same factors as for net revenues; a favorable pricing variance;
and lower marketing, administration and research costs; partly
offset by higher manufacturing costs. Adjusted operating income
margin increased by 14.4 points on an organic basis.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Second-Quarter
Six Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
34,544
30,347
13.8%
64,015
57,989
10.4%
Heated Tobacco Units
1,158
512
+100%
2,055
908
+100%
Total Middle East & Africa
35,702
30,859
15.7%
66,070
58,897
12.2%
Second-Quarter
The estimated total market in the Middle East & Africa
increased, mainly driven by:
- International Duty Free, up by 60.1%, primarily reflecting the
impact of reduced government travel restrictions and increased
passenger traffic in certain geographies; and
- Turkey, up by 2.4%, mainly reflecting the impact on adult
smoker average daily consumption of the easing of pandemic-related
measures, coupled with increased in-bound tourism, partly offset by
a higher estimated prevalence of illicit trade;
partly offset by
- South Africa, down by 20.9%, primarily reflecting a higher
estimated prevalence of illicit trade.
PMI's total shipment volume increased by 15.7% to 35.7 billion
units, mainly driven by:
- PMI Duty Free, up by +100%, or by 66.9% excluding the net
favorable impact of estimated distributor inventory movements
(primarily due to cigarettes, as described in the "Impact of
Inventory Movements" section on page 9), reflecting the higher
total market and a higher market share; and
- Turkey, up by 7.4%, primarily reflecting a higher market share,
driven by cigarettes, and the higher total market.
Excluding the net favorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume increased
by 10.9%.
Six Months Year-to-Date
The estimated total market in the Middle East & Africa
increased, mainly driven by:
- International Duty Free, up by 45.9%, reflecting the same
factors as in the quarter;
partly offset by
- Algeria, down by 17.7%, or by 8.4% excluding the net
unfavorable impact of estimated trade inventory movements,
primarily reflecting industry supply chain disruptions.
PMI's total shipment volume increased by 12.2% to 66.1 billion
units, mainly driven by:
- PMI Duty Free, up by +100%, or by 55.2% excluding the net
favorable impact of estimated distributor inventory movements
(primarily due to cigarettes, as described in the "Impact of
Inventory Movements" section on page 10), reflecting the same
factors as in the quarter; and
- Turkey, up by 4.3%, primarily reflecting a higher market share
driven by cigarettes.
Excluding the net favorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume increased
by 7.6%.
SOUTH & SOUTHEAST ASIA REGION
Second-Quarter
Financial Summary
-
Quarters
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,034
$
1,046
(1.1
)%
2.6
%
(12
)
(39
)
—
17
10
—
Operating Income
$
306
$
331
(7.6
)%
(0.9
)%
(25
)
(22
)
—
17
(36
)
16
Asset Impairment & Exit Costs
—
(10
)
+100
%
+100
%
10
—
—
—
—
10
Amortization of Intangibles
(5
)
(4
)
(25.0
)%
(25.0
)%
(1
)
—
—
—
(1
)
Costs associated with Swedish Match AB
offer
(5
)
—
—
%
—
%
(5
)
—
—
—
(5
)
Adjusted Operating Income
$
316
$
345
(8.4
)%
(2.0
)%
(29
)
(22
)
—
17
(36
)
12
Adjusted Operating Income
Margin
30.6
%
33.0
%
(2.4
)pp
(1.5
)pp
Net revenues increased by 2.6% on an organic basis, reflecting:
a favorable pricing variance, driven by combustible pricing; and
favorable volume/mix, primarily driven by favorable cigarette mix,
partly offset by lower cigarette volume.
Operating income decreased by 0.9%, excluding currency and
acquisitions, primarily reflecting: unfavorable volume/mix, mainly
due to lower cigarette volume; partly offset by a favorable pricing
variance; and lower marketing, administration and research
costs.
Adjusted operating income decreased by 2.0% on an organic basis.
Adjusted operating income margin decreased by 1.5 points on the
same basis.
Six Months Year-to-Date
Financial Summary
-
Six Months
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
2,157
$
2,219
(2.8
)%
0.9
%
(62
)
(83
)
—
(128
)
149
—
Operating Income
$
751
$
860
(12.7
)%
(7.2
)%
(109
)
(47
)
—
(128
)
51
15
Asset Impairment & Exit Costs
—
(13
)
+100
%
+100
%
13
—
—
—
—
13
Amortization of Intangibles
(9
)
(8
)
(12.5
)%
(12.5
)%
(1
)
—
—
—
—
(1
)
Costs associated with Swedish Match AB
offer
(5
)
—
—
%
—
%
(5
)
—
—
—
—
(5
)
Adjusted Operating Income
$
765
$
881
(13.2
)%
(7.8
)%
(116
)
(47
)
—
(128
)
51
8
Adjusted Operating Income
Margin
35.5
%
39.7
%
(4.2
)pp
(3.4
)pp
Net revenues increased by 0.9% on an organic basis, reflecting:
favorable volume/mix, primarily driven by higher cigarette volume
and favorable cigarette mix; partly offset by an unfavorable
pricing variance, mainly due to combustible pricing.
Operating income decreased by 7.2%, excluding currency and
acquisitions, primarily reflecting: an unfavorable pricing
variance; partly offset by favorable volume/mix, mainly driven by
higher cigarette volume; and lower marketing, administration and
research costs.
Adjusted operating income decreased by 7.8% on an organic basis.
Adjusted operating income margin decreased by 3.4 points on the
same basis.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Second-Quarter
Six Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
34,754
35,321
(1.6)%
72,215
70,209
2.9%
Heated Tobacco Units
96
39
+100%
190
72
+100%
Total South & Southeast
Asia
34,850
35,360
(1.4)%
72,405
70,281
3.0%
Second-Quarter
The estimated total market in South & Southeast Asia
increased, mainly driven by:
- India, up by 25.0%, primarily reflecting a favorable comparison
versus the prior year period, during which pandemic-related
restrictions impacted the movement of certain products, including
tobacco; and
- Indonesia, up by 6.6%, mainly reflecting the impact on adult
smoker consumption of the easing of pandemic-related measures,
which drove growth in the tax-advantaged 'below tier one'
segment;
partly offset by
- the Philippines, down by 16.5%, primarily reflecting the impact
of first-quarter 2022 excise tax-driven price increases and related
trade inventory movements.
PMI's total shipment volume decreased by 1.4% to 34.9 billion
units, mainly due to:
- the Philippines, down by 17.7%, primarily reflecting the lower
total market and a lower market share for cigarettes;
partly offset by
- Indonesia, up by 6.2%, 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).
Six Months Year-to-Date
The estimated total market in South & Southeast Asia
increased, mainly driven by:
- India, up by 15.6%, primarily reflecting the same factor as in
the quarter; and
- Indonesia, up by 6.2%, mainly reflecting the same factor as in
the quarter;
partly offset by
- Bangladesh, down by 10.1%, primarily reflecting the impact of
pandemic-related restrictions on mobility during February 2022;
and
- Thailand, down by 13.0%, mainly reflecting the impact of excise
tax-driven price increases.
PMI's total shipment volume increased by 3.0% to 72.4 billion
units, mainly driven by:
- India, up by 78.0%, primarily reflecting a higher market share
(driven by geographic expansion) and the higher total market;
and
- Indonesia, up by 5.7%, mainly reflecting the higher total
market, partly offset by a lower market share (mainly due to the
same factors as in the quarter);
partly offset by
- Thailand, down by 9.5%, primarily reflecting the lower total
market, partly offset by a higher market share for cigarettes.
EAST ASIA & AUSTRALIA REGION
Second-Quarter
Financial Summary
-
Quarters
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,206
$
1,514
(20.3
)%
(12.9
)%
(308
)
(112
)
—
27
(223
)
—
Operating Income
$
346
$
715
(51.6
)%
(39.3
)%
(369
)
(88
)
—
27
(316
)
8
Asset Impairment & Exit Costs
—
(15
)
+100
%
+100
%
15
—
—
—
—
15
Amortization of Intangibles
—
—
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(10
)
—
—
%
—
%
(10
)
—
—
—
—
(10
)
Adjusted Operating Income
$
356
$
730
(51.2
)%
(39.2
)%
(374
)
(88
)
—
27
(316
)
3
Adjusted Operating Income
Margin
29.5
%
48.2
%
(18.7
)pp
(14.5
)pp
Net revenues decreased by 12.9% on an organic basis, reflecting:
unfavorable volume/mix, mainly due to lower heated tobacco unit
volume (primarily in Japan, as the company manages temporary
production and supply chain impacts, described earlier), as well as
lower cigarette volume, unfavorable cigarette mix and unfavorable
device mix, partly offset by higher device volume; partially offset
by a favorable pricing variance, primarily driven by higher
combustible pricing, partly offset by lower heated tobacco unit
pricing and device pricing.
Operating income decreased by 39.3%, excluding currency and
acquisitions, mainly reflecting: unfavorable volume/mix, primarily
due to lower heated tobacco unit volume, as well as lower cigarette
volume, the unfavorable impact on profitability of higher device
volume, and unfavorable mix for cigarettes, heated tobacco units
and devices; and higher manufacturing costs (mainly due to higher
logistics costs); partly offset by a favorable pricing variance;
and lower marketing, administration and research costs.
Adjusted operating income decreased by 39.2% on an organic
basis. Adjusted operating income margin decreased by 14.5 points on
the same basis. The margin decline notably reflected the impact of:
higher device sales; the growth of IQOS ILUMA within the Region's
smoke-free product portfolio mix, with its higher initial unit cost
of devices and consumables; the timing of heated tobacco unit
shipments to Japan; and higher logistics costs, including costs
related to the use of air freight to Japan to support: (i) the
strong up-take of IQOS ILUMA and TEREA consumables, and (ii) the
re-sourcing of select cigarette brands due to the war in
Ukraine.
Six Months Year-to-Date
Financial Summary
-
Six Months
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
2,610
$
2,986
(12.6
)%
(5.3
)%
(376
)
(218
)
—
57
(215
)
—
Operating Income
$
917
$
1,410
(35.0
)%
(23.9
)%
(493
)
(156
)
—
57
(437
)
43
Asset Impairment & Exit Costs
—
(46
)
+100
%
+100
%
46
—
—
—
—
46
Amortization of Intangibles
(1
)
(1
)
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(10
)
—
—
%
—
%
(10
)
—
—
—
—
(10
)
Adjusted Operating Income
$
928
$
1,457
(36.3
)%
(25.6
)%
(529
)
(156
)
—
57
(437
)
7
Adjusted Operating Income
Margin
35.6
%
48.8
%
(13.2
)pp
(10.5
)pp
Net revenues decreased by 5.3% on an organic basis, reflecting:
unfavorable volume/mix, mainly due to lower heated tobacco unit
volume (primarily in Japan, reflecting the same factors as in the
quarter), as well as lower cigarette volume, unfavorable cigarette
mix and unfavorable device mix, partly offset by higher device
volume; partially offset by a favorable pricing variance, primarily
driven by higher combustible pricing, partly offset by lower device
pricing.
Operating income decreased by 23.9%, excluding currency and
acquisitions, mainly reflecting: unfavorable volume/mix, primarily
due to lower heated tobacco unit volume, as well as lower cigarette
volume, the unfavorable impact on profitability of higher device
volume, and unfavorable mix for cigarettes, heated tobacco units
and devices; and higher manufacturing costs (mainly due to higher
logistics costs); partly offset by a favorable pricing variance;
and lower marketing, administration and research costs.
Adjusted operating income decreased by 25.6% on an organic
basis. Adjusted operating income margin decreased by 10.5 points on
the same basis. The margin decline notably reflected the impact of
the same factors as in the quarter.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Second-Quarter
Six Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
10,391
10,968
(5.3)%
21,944
22,330
(1.7)%
Heated Tobacco Units
8,186
9,904
(17.3)%
17,474
19,043
(8.2)%
Total East Asia & Australia
18,577
20,872
(11.0)%
39,418
41,373
(4.7)%
Second-Quarter
The estimated total market in East Asia & Australia,
excluding China, decreased, mainly due to:
- Japan, down by 1.7%, primarily reflecting the impact of the
October 2021 excise tax-driven price increase; and
- Taiwan, down by 4.7%, or by 2.3% excluding the net unfavorable
impact of estimated trade inventory movements, mainly reflecting
the impact of pandemic-related measures;
partly offset by
- South Korea, up by 3.5%, primarily reflecting the impact on
adult smoker average daily consumption of the easing of
pandemic-related measures.
PMI's total shipment volume decreased by 11.0% to 18.6 billion
units, mainly due to:
- Japan, down by 15.0%. Excluding the net unfavorable impact of
estimated distributor inventory movements (primarily due to heated
tobacco units, as described in the "Impact of Inventory Movements"
section on page 9) total in-market sales volume increased by 4.1%,
reflecting a higher market share (driven by heated tobacco units),
partly offset by the lower total market.
Excluding the net unfavorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume increased
by 2.2%.
Six Months Year-to-Date
The estimated total market in East Asia & Australia,
excluding China, decreased, mainly due to:
- Japan, down by 2.5%, primarily reflecting the same factor as in
the quarter; and
- Taiwan, down by 6.4%, or by 2.4% excluding the net unfavorable
impact of estimated trade inventory movements, mainly reflecting
the same factor as in the quarter;
partly offset by
- South Korea, up by 1.9%, primarily reflecting the same factor
as in the quarter.
PMI's total shipment volume decreased by 4.7% to 39.4 billion
units, mainly due to:
- Japan, down by 6.0%. Excluding the net unfavorable impact of
estimated distributor inventory movements (primarily due to heated
tobacco units, as described in the "Impact of Inventory Movements"
section on page 10), total in-market sales volume increased by
2.1%, primarily reflecting the same factor as in the quarter.
Excluding the net unfavorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume increased
by 0.7%.
AMERICAS REGION
Second-Quarter
Financial Summary
-
Quarters
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
469
$
430
9.1
%
8.1
%
39
4
—
24
8
3
Operating Income
$
130
$
112
16.1
%
12.5
%
18
4
—
24
1
(11
)
Asset Impairment & Exit Costs
—
(4
)
+100
%
+100
%
4
—
—
—
—
4
Amortization of Intangibles
(2
)
(3
)
33.3
%
33.3
%
1
—
—
—
—
1
Costs associated with Swedish Match AB
offer
(2
)
—
—
%
—
%
(2
)
—
—
—
—
(2
)
Adjusted Operating Income
$
134
$
119
12.6
%
9.2
%
15
4
—
24
1
(14
)
Adjusted Operating Income
Margin
28.6
%
27.7
%
0.9
pp
0.3
pp
Net revenues increased by 8.1% on an organic basis, primarily
reflecting: a favorable pricing variance, driven by combustible
pricing; and favorable volume/mix, driven by higher cigarette
volume, partly offset by unfavorable cigarette mix.
Operating income increased by 12.5%, excluding currency and
acquisitions, mainly reflecting: a favorable pricing variance;
partly offset by higher manufacturing costs (primarily due to
inflationary impacts); and higher marketing, administration and
research costs. Volume/mix was slightly favorable, reflecting
higher cigarette volume, largely offset by unfavorable cigarette
mix.
Adjusted operating income increased by 9.2% on an organic basis.
Adjusted operating income margin increased by 0.3 points on the
same basis.
Six Months Year-to-Date
Financial Summary
-
Six Months
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
893
$
864
3.4
%
4.4
%
29
(9
)
—
43
(8
)
3
Operating Income
$
251
$
246
2.0
%
1.2
%
5
2
—
43
(8
)
(32
)
Asset Impairment & Exit Costs
—
(5
)
+100
%
+100
%
5
—
—
—
—
5
Amortization of Intangibles
(4
)
(5
)
20.0
%
20.0
%
1
—
—
—
—
1
Costs associated with Swedish Match AB
offer
(2
)
—
—
%
—
%
(2
)
—
—
—
—
(2
)
Adjusted Operating Income
$
257
$
256
0.4
%
(0.4
)%
1
2
—
43
(8
)
(36
)
Adjusted Operating Income
Margin
28.8
%
29.6
%
(0.8
)pp
(1.3
)pp
Net revenues increased by 4.4% on an organic basis, primarily
reflecting: a favorable pricing variance, driven by combustible
pricing; partly offset by unfavorable volume/mix, mainly due to
unfavorable cigarette mix, partially offset by higher cigarette
volume.
Operating income increased by 1.2%, excluding currency and
acquisitions, mainly reflecting: a favorable pricing variance;
largely offset by higher manufacturing costs (primarily due to
inflationary impacts); higher marketing, administration and
research costs; and unfavorable volume/mix, mainly due to the same
factors as for net revenues.
Adjusted operating income decreased by 0.4% on an organic basis.
Adjusted operating income margin decreased by 1.3 points on the
same basis.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Second-Quarter
Six Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
16,080
15,213
5.7%
30,875
30,098
2.6%
Heated Tobacco Units
106
140
(24.3)%
214
245
(12.7)%
Total Americas
16,186
15,353
5.4%
31,089
30,343
2.5%
Second-Quarter
The estimated total market in Americas, excluding the U.S.,
increased, primarily driven by:
- Argentina, up by 10.2%, mainly reflecting a favorable
comparison due to the impact on adult smoker average daily
consumption of strict pandemic-related measures implemented during
the second quarter of 2021; and
- Brazil, up by 12.8%, primarily reflecting a lower estimated
prevalence of illicit trade;
partly offset by
- Canada, down by 19.6%, notably reflecting out-switching from
cigarettes to e-vapor products.
PMI's total shipment volume increased by 5.4% to 16.2 billion
units, mainly driven by:
- Argentina, up by 4.3%, primarily reflecting the higher total
market, partly offset by a lower market share due to adult smoker
down-trading to ultra-low-price brands produced by local
manufacturers; and
- Brazil, up by 18.4%, mainly reflecting the higher total market
and a higher market share driven by Chesterfield.
Six Months Year-to-Date
The estimated total market in Americas, excluding the U.S.,
increased, primarily driven by:
- Argentina, up by 4.6% mainly reflecting the same factor as in
the quarter; and
- Brazil, up by 8.4%, primarily reflecting the same factor as in
the quarter;
partly offset by
- Canada, down by 15.9%, notably reflecting the impact of price
increases and out-switching from cigarettes to e-vapor
products.
PMI's total shipment volume increased by 2.5% to 31.1 billion
units, mainly driven by:
- Brazil, up by 11.7%, primarily reflecting the same factors as
in the quarter; and
- Mexico, up by 1.6%, mainly reflecting a higher market share for
cigarettes;
partly offset by
- Argentina, down by 1.8%, primarily reflecting a lower market
share due to adult smoker down-trading to ultra-low-price brands
produced by local manufacturers.
WELLNESS AND HEALTHCARE
In the third quarter of 2021, PMI acquired Fertin Pharma A/S,
Vectura Group plc. and OtiTopic, Inc. On March 31, 2022, PMI
launched a new Wellness and Healthcare business -- Vectura Fertin
Pharma -- consolidating these entities. The operating results of
this business are reported in the Wellness and Healthcare segment
(formerly the Other category). The business operations of PMI's
Wellness and Healthcare segment are managed and evaluated
separately from the geographical segments.
Second-Quarter
Financial Summary
-
Quarters
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
76
$
—
—
%
—
%
76
—
76
—
—
—
Operating Income / (Loss)
$
(34
)
$
—
—
%
—
%
(34
)
—
(24
)
—
—
(10
)
Amortization of Intangibles
(18
)
—
—
%
—
%
(18
)
—
(18
)
—
—
—
Adjusted Operating Income /
(Loss)
$
(16
)
$
—
—
%
—
%
(16
)
—
(6
)
—
—
(10
)
Adjusted Operating Income / (Loss)
Margin
(21.1
)%
n/a
—
pp
—
pp
PMI recorded net revenues of $76 million in the Wellness and
Healthcare segment, with an operating loss of $34 million,
primarily reflecting the amortization of intangibles related to the
acquisitions, as well as investments in research and development.
Excluding the amortization of acquired intangibles, the segment
recorded an adjusted operating loss of $16 million and an adjusted
operating loss margin of 21.1%.
Six Months Year-to-Date
Financial Summary
-
Six Months
Ended
June
30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
142
$
—
—
%
—
%
142
—
142
—
—
—
Operating Income / (Loss)
$
(65
)
$
—
—
%
—
%
(65
)
—
(48
)
—
—
(17
)
Amortization of Intangibles
(37
)
—
—
%
—
%
(37
)
—
(37
)
—
—
—
Adjusted Operating Income /
(Loss)
$
(28
)
$
—
—
%
—
%
(28
)
—
(11
)
—
—
(17
)
Adjusted Operating Income / (Loss)
Margin
(19.7
) %
n/a
—
pp
—
pp
PMI recorded net revenues of $142 million in the Wellness and
Healthcare segment, with an operating loss of $65 million,
primarily reflecting the amortization of intangibles related to the
acquisitions, investments in research and development, and expenses
related to employee retention programs. Excluding the amortization
of acquired intangibles, the segment recorded an adjusted operating
loss of $28 million and an adjusted operating loss margin of
19.7%.
Philip Morris International: Delivering a Smoke-Free
Future
Philip Morris International (PMI) is a leading international
tobacco company working to deliver a smoke-free future and evolving
its portfolio for the long term to include products outside of the
tobacco and nicotine sector. The company’s current product
portfolio primarily consists of cigarettes and smoke-free products,
including heat-not-burn, vapor and oral nicotine products, which
are sold in markets outside the U.S. Since 2008, PMI has invested
more than USD 9 billion to develop, scientifically substantiate and
commercialize innovative smoke-free products for adults who would
otherwise continue to smoke, with the goal of completely ending the
sale of cigarettes. This includes the building of world-class
scientific assessment capabilities, notably in the areas of
pre-clinical systems toxicology, clinical and behavioral research,
as well as post-market studies. The U.S. Food and Drug
Administration (FDA) has authorized the marketing of versions of
PMI’s IQOS Platform 1 devices and consumables as Modified Risk
Tobacco Products (MRTPs), finding that exposure modification orders
for these products are appropriate to promote the public health. As
of June 30, 2022, excluding Russia and Ukraine, PMI's smoke-free
products were available for sale in 70 markets, and PMI estimates
that approximately 13.2 million adults around the world had already
switched to IQOS and stopped smoking. With a strong foundation and
significant expertise in life sciences, in February 2021 PMI
announced its ambition to expand into wellness and healthcare areas
and deliver innovative products and solutions that aim to address
unmet consumer and patient needs. 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; the impact
and consequences of Russia's invasion of Ukraine; changes in adult
smoker behavior; the impact of COVID-19 on PMI's business; 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, including women or diverse candidates.
Future results are also subject to the lower predictability of our
reduced-risk product category's performance.
In addition, important factors that could cause actual results
to differ materially from those indicated by forward-looking
statements include risks and uncertainties related to: the
possibility that expected benefits related to recent or pending
acquisitions, including the proposed transaction with Swedish
Match, may not materialize as expected; the proposed transaction
not being timely completed, if completed at all; regulatory
approvals required for the transaction not being timely obtained,
if obtained at all, or being obtained subject to conditions; prior
to the completion of the transaction, Swedish Match’s business
experiencing disruptions due to transaction-related uncertainty or
other factors making it more difficult to maintain relationships
with employees, customers, licensees, other business partners or
governmental entities; difficulty retaining key employees; the
outcome of any legal proceedings related to the proposed
transaction; and the parties being unable to successfully implement
integration strategies or to achieve expected synergies and
operating efficiencies within the expected time-frames or at
all.
Important information for U.S. Swedish Match shareholders: The
offer described in this release is made for the issued and
outstanding shares of Swedish Match, a company incorporated under
Swedish law, and is subject to Swedish disclosure and procedural
requirements, which may be different from those of the United
States. The offer is made in the United States pursuant to Section
14(e) of the U.S. Securities Exchange Act of 1934, as amended, and
Regulation 14E thereunder, to the extent applicable, and otherwise
in compliance with the disclosure and procedural requirements of
Swedish law, including with respect to withdrawal rights, the offer
timetable, notices of extensions, announcements of results,
settlement procedures (including as regards to the time when
payment of the consideration is rendered) and waivers of
conditions, which may be different from requirements or customary
practices in relation to U.S. domestic tender offers. Swedish
Match’s financial statements, including any included in any
documents relating to the offer, have been or will be prepared in
accordance with IFRS and may not be comparable to the financial
statements or financial information of companies in the United
States or other companies whose financial statements are prepared
in accordance with U.S. GAAP. To the extent permissible under
applicable law or regulations, PMI and its affiliates or its
brokers and its brokers' affiliates (acting as agents for PMI or
its affiliates, as applicable) may from time to time and during the
pendency of the offer, and other than pursuant to the offer,
directly or indirectly purchase or arrange to purchase shares of
Swedish Match outside the United States, or any securities that are
convertible into, exchangeable for or exercisable for such shares.
These purchases may occur either in the open market at prevailing
prices or in private transactions at negotiated prices, and
information about such purchases will be disclosed by means of a
press release or other means reasonably calculated to inform
shareholders of Swedish Match domiciled in the U.S. (“U.S.
Holders”) of such information, to the extent required by applicable
laws and regulations. The receipt of cash pursuant to the offer by
a U.S. Holder may be a taxable transaction for U.S. federal income
tax purposes and under applicable U.S. state and local, as well as
foreign and other, tax laws. Each shareholder is urged to consult
an independent professional adviser regarding the tax consequences
of accepting the offer.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including PMI's Annual Report on
Form 10-K for the fourth quarter and year ended December 31, 2021
and the Form 10-Q for the quarter ended June 30, 2022, which will
be filed in the coming days. 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.
- As of the first quarter of 2022, total industry volume, PMI
in-market sales volume and PMI market share for the following
geographies include the cigarillo category in Japan: the total
international market, East Asia & Australia Region, and
Japanese domestic market.
- 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.
- 2021 and 2022 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 other tobacco products, 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. References to "Americas" may, in defined
instances, exclude the U.S.
- "Central Asia" is defined as Kyrgyzstan, Mongolia, Tajikistan
and Uzbekistan.
- "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.
- In the third quarter of 2021, PMI acquired Fertin Pharma A/S,
Vectura Group plc. and OtiTopic, Inc. On March 31, 2022, PMI
launched a new Wellness and Healthcare business consolidating these
entities, Vectura Fertin Pharma. The operating results of this new
business are reported in the Wellness and Healthcare segment. The
business operations of PMI's Wellness and Healthcare segment are
managed and evaluated separately from the geographical
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.
- Net revenues related to Wellness and Healthcare products
primarily consist of operating revenues generated from the sale of
inhaled therapeutics and oral and intra-oral delivery systems that
are included in the operating results of PMI's new Wellness and
Healthcare business, Vectura Fertin Pharma.
- 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
Middle East & Africa 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.
- Figures and comparisons presented on a pro forma basis exclude
PMI’s operations in Russia and Ukraine.
- Growth rates presented on an organic basis reflect adjusted
results, excluding currency, acquisitions and disposals.
- 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. Additionally,
starting in 2022 and on a comparative basis, for these measures
other than net revenues and operating cash flow, PMI will include
adjustments to add back amortization expense on acquisition related
intangible assets that are recorded as part of purchase accounting
and contribute to PMI’s revenue generation, as well as impairment
of intangible assets, if any. Currency-neutral and 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 a country as a Highly Inflationary
Economy. Following the categorization of a country by the
International Practices Task Force of the Center for Audit Quality
as having a three-year cumulative inflation rate greater than 100%,
the country is considered highly inflationary in accordance with
U.S. GAAP. For such countries, PMI accounts for the operations of
its local affiliates as highly inflationary, and to treat the U.S.
dollar as the functional currency of the affiliates. Such treatment
was effective July 1, 2018, for Argentina, and April 1, 2022, for
Turkey.
- "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, SENTIA and TEREA, as
well as the KT&G-licensed brands, Fiit and Miix (outside of
South 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.
- IQOS heat-not-burn devices are precisely controlled heating
devices into which a specially designed and proprietary tobacco
units are 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 a portion of their daily
tobacco consumption over the past seven days. 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: The above IQOS user metrics reflect PMI estimates, which
are based on consumer claims and sample-based statistical
assessments with an average margin of error of +/-5% at a 95%
Confidence Interval in key volume markets. The accuracy and
reliability of IQOS user metrics may vary based on individual
market maturity and availability of information.
As of December 2020, PMI heat-not-burn products and HTUs include
licensed KT&G heat-not-burn products and HTUs,
respectively.
Appendix 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Key Market Data
Quarters Ended June
30,
Market
Total Market, bio
units
PMI Shipments, bio
units
PMI Market Share, %(2)
Total
Cigarette
HTU
Total
HTU
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
2022
2021
pp Change
2022
2021
pp Change
Total (1) (3)
602.5
586.6
2.7
182.5
180.5
1.1
157.7
156.1
1.0
24.8
24.4
1.9
27.0
26.6
0.4
3.5
3.0
0.5
European Union
France
8.5
9.1
(6.8
)
3.8
4.1
(8.2
)
3.7
4.1
(8.5
)
0.1
—
—
42.8
43.5
(0.7
)
0.7
0.6
0.1
Germany
17.9
18.6
(3.4
)
7.0
7.2
(3.2
)
6.5
6.7
(2.7
)
0.5
0.5
(9.3
)
38.9
38.8
0.1
2.5
2.7
(0.2
)
Italy
18.9
17.9
5.5
10.9
9.9
10.6
7.8
7.7
2.4
3.1
2.2
38.7
54.0
53.0
1.0
14.4
11.2
3.2
Poland
14.8
12.5
18.5
5.6
4.7
20.1
4.5
3.9
15.7
1.1
0.8
42.4
38.0
37.5
0.5
7.5
6.3
1.2
Spain
11.5
10.5
9.2
3.7
4.1
(10.6
)
3.5
4.0
(13.5
)
0.2
0.1
74.2
30.3
31.1
(0.8
)
1.7
1.2
0.5
Eastern Europe
Russia
n/a
55.4
—
16.8
17.6
(4.5
)
12.9
13.3
(3.2
)
3.9
4.3
(8.8
)
n/a
31.5
—
n/a
7.3
—
Middle East & Africa
Egypt
22.5
22.8
(1.1
)
4.9
5.1
(5.2
)
4.7
5.1
(8.8
)
0.2
—
—
23.1
22.4
0.7
0.8
—
0.8
Turkey
31.5
30.7
2.4
14.5
13.5
7.4
14.5
13.5
7.4
—
—
—
46.2
44.1
2.1
—
—
—
South & Southeast Asia
Indonesia
76.8
72.1
6.6
21.4
20.1
6.2
21.4
20.1
6.2
—
—
—
27.8
27.9
(0.1
)
—
—
—
Philippines
11.5
13.8
(16.5
)
7.1
8.6
(17.7
)
7.0
8.5
(17.8
)
—
—
—
61.3
62.2
(0.9
)
0.4
0.3
0.1
East Asia & Australia
Australia
2.3
2.4
(5.3
)
0.7
0.7
(2.0
)
0.7
0.7
(2.0
)
—
—
—
31.9
30.8
1.1
—
—
—
Japan (3)
37.4
38.1
(1.7
)
12.0
14.2
(15.0
)
5.1
5.5
(8.5
)
7.0
8.6
(19.2
)
37.3
35.3
2.0
23.0
20.8
2.2
South Korea
18.7
18.1
3.5
3.6
3.6
(1.9
)
2.4
2.4
0.1
1.1
1.2
(5.9
)
19.0
20.0
(1.0
)
5.9
6.5
(0.6
)
Americas
Argentina
7.5
6.8
10.2
4.7
4.5
4.3
4.7
4.5
4.3
—
—
—
63.3
66.8
(3.5
)
—
—
—
Mexico
8.0
8.0
(0.4
)
5.2
5.1
2.1
5.1
5.0
1.9
—
—
—
64.8
63.2
1.6
0.4
0.3
0.1
(1) Total market and market share
estimates exclude Russia & Ukraine
(2) Market share estimates are calculated
using IMS data
(3) Total market and market share
estimates include cigarillos in Japan
Appendix 2
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Key Market Data
Six Months Ended June
30,
Market
Total Market, bio
units
PMI Shipments, bio
units
PMI Market Share, %
(2)
Total
Cigarette
HTU
Total
HTU
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
2022
2021
pp Change
2022
2021
pp Change
Total (1) (3)
1,162.2
1,143.4
1.6
355.6
347.7
2.2
305.9
301.7
1.4
49.6
46.1
7.7
26.9
26.3
0.6
3.5
3.0
0.5
European Union
France
16.3
17.3
(5.6
)
7.3
7.9
(7.5
)
7.2
7.8
(7.7
)
0.1
0.1
0.8
43.8
43.6
0.2
0.7
0.6
0.1
Germany
34.0
36.0
(5.4
)
13.8
14.3
(3.7
)
12.4
13.2
(6.1
)
1.4
1.1
24.9
40.5
39.8
0.7
4.1
3.1
1.0
Italy
35.6
33.8
5.4
20.7
19.5
5.9
14.9
15.1
(1.3
)
5.7
4.4
30.4
54.1
52.9
1.2
14.6
11.2
3.4
Poland
27.6
23.2
18.6
10.4
8.6
20.4
8.3
7.3
14.4
2.1
1.4
52.3
37.7
37.1
0.6
7.5
5.9
1.6
Spain
21.5
20.1
7.0
7.0
6.8
2.8
6.6
6.6
0.3
0.4
0.2
71.2
30.3
31.1
(0.8
)
1.6
1.2
0.4
Eastern Europe
Russia
n/a
104.5
—
30.9
33.3
(7.1
)
23.6
25.4
(6.9
)
7.3
7.9
(7.6
)
n/a
31.3
—
n/a
7.5
—
Middle East & Africa
Egypt
46.0
46.3
(0.5
)
10.2
10.0
2.5
9.9
10.0
(0.9
)
0.3
—
—
22.5
21.2
1.3
0.8
—
0.8
Turkey
55.3
56.0
(1.2
)
25.5
24.5
4.3
25.5
24.5
4.3
—
—
—
46.2
43.7
2.5
—
—
—
South & Southeast Asia
Indonesia
152.0
143.1
6.2
42.3
40.0
5.7
42.3
40.0
5.7
—
—
—
27.8
28.0
(0.2
)
—
—
—
Philippines
26.9
26.8
0.4
16.7
16.7
(0.1
)
16.6
16.7
(0.2
)
0.1
0.1
31.0
62.0
62.3
(0.3
)
0.3
0.3
—
East Asia & Australia
Australia
4.5
4.8
(6.4
)
1.5
1.5
(3.1
)
1.5
1.5
(3.1
)
—
—
—
32.9
31.8
1.1
—
—
—
Japan (3)
71.8
73.7
(2.5
)
26.3
28.0
(6.0
)
11.2
11.4
(1.8
)
15.1
16.5
(8.9
)
37.3
35.7
1.6
23.0
21.2
1.8
South Korea
35.6
34.9
1.9
6.8
7.0
(2.3
)
4.6
4.7
(0.7
)
2.2
2.3
(5.6
)
19.3
20.0
(0.7
)
6.2
6.6
(0.4
)
Americas
Argentina
15.2
14.5
4.6
9.6
9.8
(1.8
)
9.6
9.8
(1.8
)
—
—
—
63.4
67.5
(4.1
)
—
—
—
Mexico
14.5
14.7
(1.9
)
9.2
9.1
1.6
9.2
9.1
1.4
0.1
—
—
63.9
61.7
2.2
0.4
0.3
0.1
(1) Total market and market share
estimates excludes Russia & Ukraine
(2) Market share estimates are calculated
using IMS data
(3) Total market and market share includes
cigarillos in Japan
Appendix 3
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
PMI Shipment Volume Adjusted
for the Impact of Russia and Ukraine
(in million units) /
(Unaudited)
Year Ended December
31,
Quarters Ended June
30,
Six Months Ended June
30,
2022
2021
% Change
2022
2021
% Change
2021
Cigarettes
157,678
156,138
1.0%
Shipment Volume
305,916
301,650
1.4%
624,875
12,871
13,294
Russia
23,643
25,395
52,499
1,331
2,799
Ukraine
3,542
5,157
10,669
143,477
140,046
2.4%
Pro Forma Shipment
Volume
278,731
271,098
2.8%
561,707
Heated Tobacco Units
24,821
24,356
1.9%
Shipment Volume
49,640
46,090
7.7%
94,976
3,907
4,283
Russia
7,267
7,864
16,309
814
1,352
Ukraine
2,197
2,546
5,168
20,100
18,721
7.4%
Pro Forma Shipment
Volume
40,176
35,680
12.6%
73,499
Cigarettes & HTU
182,499
180,494
1.1%
Shipment Volume
355,556
347,740
2.2%
719,851
16,778
17,577
Russia
30,909
33,259
68,807
2,145
4,151
Ukraine
5,739
7,703
15,838
163,577
158,767
3.0%
Pro Forma Shipment
Volume
318,907
306,778
4.0%
635,206
Appendix 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Eastern Europe Shipment Volume
Adjusted for the Impact of Russia and Ukraine
(in million units) /
(Unaudited)
Quarters Ended June
30,
Six Months Ended June
30,
2022
2021
% Change
2022
2021
% Change
Cigarettes
20,633
22,785
(9.4)%
Shipment Volume
39,147
42,751
(8.4)%
12,871
13,294
Russia
23,643
25,395
1,331
2,799
Ukraine
3,542
5,157
6,432
6,693
(3.9)%
Pro Forma Shipment
Volume
11,962
12,199
(1.9)%
Heated Tobacco Units
5,922
6,840
(13.4)%
Shipment Volume
11,788
12,475
(5.5)%
3,907
4,283
Russia
7,267
7,864
814
1,352
Ukraine
2,197
2,546
1,201
1,205
(0.3)%
Pro Forma Shipment
Volume
2,324
2,065
12.5%
Cigarettes & HTU
26,555
29,625
(10.4)%
Shipment Volume
50,935
55,226
(7.8)%
16,778
17,577
Russia
30,909
33,259
2,145
4,151
Ukraine
5,739
7,703
7,633
7,898
(3.4)%
Pro Forma Shipment
Volume
14,286
14,264
0.2%
Schedule 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Diluted Earnings Per Share
(EPS)
($ in millions, except per share
data) / (Unaudited)
Quarters Ended
Diluted EPS
Six Months Ended
June 30,
June 30,
$
1.43
2022 Diluted Earnings Per
Share (1)
$
2.93
$
1.39
2021 Diluted Earnings Per
Share (1)
$
2.93
$
0.04
Change
$
—
2.9
%
% Change
—
%
Reconciliation:
$
1.39
2021 Diluted Earnings Per
Share (1)
$
2.93
0.04
2021 Asset impairment and exit
costs
0.07
0.01
2021 Amortization of
intangibles
0.02
0.14
2021 Saudi Arabia customs
assessments
0.14
—
2022 Asset impairment and exit
costs
—
(0.02
)
2022 Amortization of
intangibles
(0.04
)
(0.02
)
2022 Costs associated with
Swedish Match AB offer
(0.02
)
(0.04
)
2022 Charges related to the war
in Ukraine
(0.07
)
—
2022 Fair value adjustment for
equity security investments
(0.03
)
0.03
2022 Tax Items
0.03
(0.16
)
Currency
(0.39
)
0.01
Interest
0.02
(0.01
)
Change in tax rate
0.02
0.06
Operations (2)
0.25
$
1.43
2022 Diluted Earnings Per
Share (1)
$
2.93
(1) Basic and diluted EPS were calculated
using the following (in millions):
Quarters Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
$
2,233
$
2,172
Net Earnings attributable to
PMI
$
4,564
$
4,590
7
6
Less: Distributed and
undistributed earnings
attributable to share-based
payment awards
13
14
$
2,226
$
2,166
Net Earnings for basic and
diluted EPS
$
4,551
$
4,576
1,551
1,558
Weighted-average shares for basic
EPS
1,550
1,558
1
2
Plus Contingently Issuable
Performance Stock Units
2
2
1,552
1,560
Weighted-average shares for
diluted EPS
1,552
1,560
(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 June
30,
Six Months Ended June
30,
2022
2021
% Change
2022
2021
% Change
$ 1.43
$ 1.39
2.9%
Reported Diluted EPS
$ 2.93
$ 2.93
—%
(0.16)
Less: Currency
(0.39)
$ 1.59
$ 1.39
14.4%
Reported Diluted EPS,
excluding Currency
$ 3.32
$ 2.93
13.3%
Quarters Ended June
30,
Six Months Ended June
30,
Year Ended
2022
2021
% Change
2022
2021
% Change
2021
$ 1.43
$ 1.39
2.9%
Reported Diluted EPS
$ 2.93
$ 2.93
—%
$ 5.83
—
0.04
Asset impairment and exit
costs
—
0.07
0.12
0.02
0.01
Amortization of intangibles
0.04
0.02
0.05
—
0.14
Saudi Arabia customs
assessments
—
0.14
0.14
—
—
Equity investee ownership
dilution
—
—
(0.04)
—
—
Asset acquisition cost
—
—
0.03
0.02
—
Costs associated with Swedish
Match AB offer
0.02
—
—
0.04
—
Charges related to the war in
Ukraine
0.07
—
—
—
—
Fair value adjustment for equity
security investments
0.03
—
—
(0.03)
—
Tax items
(0.03)
—
—
$ 1.48
$ 1.58
(6.3)%
Adjusted Diluted EPS
$ 3.06
$ 3.16
(3.2)%
$ 6.13
(0.16)
Less: Currency
(0.39)
$ 1.64
$ 1.58
3.8%
Adjusted Diluted EPS,
excluding Currency
$ 3.45
$ 3.16
9.2%
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
Acqui- sitions
Net Revenues excluding
Currency & Acquisitions
Quarters Ended June
30,
Net Revenues
Total
Excluding Currency
Excluding Currency &
Acquisitions
2022
Combustible Products
2021
% Change
$ 1,954
$ (200)
$ 2,154
$ (1)
$ 2,154
European Union
$ 2,162
(9.6)%
(0.4)%
(0.4)%
585
15
570
—
570
Eastern Europe
555
5.5%
2.8%
2.8%
933
(41)
974
—
974
Middle East & Africa
527
(1)
76.9%
84.7%
84.7%
1,029
(39)
1,068
—
1,068
South & Southeast Asia
1,045
(1.5)%
2.3%
2.3%
528
(42)
570
—
570
East Asia & Australia
611
(13.6)%
(6.8)%
(6.8)%
460
4
456
—
456
Americas
418
10.0%
9.0%
9.0%
$ 5,489
$ (302)
$ 5,791
$ (1)
$ 5,792
Total Combustible
$ 5,318
3.2%
8.9%
8.9%
2022
Reduced-Risk Products
2021
% Change
$ 1,189
$ (127)
$ 1,316
$ 4
$ 1,313
European Union
$ 987
20.5%
33.4%
33.0%
313
3
310
—
310
Eastern Europe
340
(8.0)%
(8.9)%
(8.9)%
73
(4)
77
—
77
Middle East & Africa
33
+100%
+100%
+100%
5
—
5
—
5
South & Southeast Asia
1
+100%
+100%
+100%
678
(70)
748
—
748
East Asia & Australia
903
(24.9)%
(17.1)%
(17.1)%
9
—
9
—
9
Americas
12
(24.4)%
(22.9)%
(22.9)%
$ 2,267
$ (199)
$ 2,466
$ 4
$ 2,462
Total RRPs
$ 2,276
(0.4)%
8.3%
8.2%
2022
Wellness and
Healthcare
2021
% Change
$ 76
$ —
$76
$76
$ —
Wellness and
Healthcare
$ —
— %
— %
— %
2022
PMI
2021
% Change
$ 3,143
$ (327)
$ 3,470
$ 3
$ 3,467
European Union
$ 3,149
(0.2)%
10.2%
10.1%
898
18
880
—
880
Eastern Europe
895
0.3%
(1.7)%
(1.7)%
1,006
(45)
1,051
—
1,051
Middle East & Africa
560
(1)
79.6%
87.7%
87.7%
1,034
(39)
1,073
—
1,073
South & Southeast Asia
1,046
(1.1)%
2.6%
2.6%
1,206
(112)
1,318
—
1,318
East Asia & Australia
1,514
(20.3)%
(12.9)%
(12.9)%
469
4
465
—
465
Americas
430
9.1%
8.1%
8.1%
76
—
76
76
—
Wellness and Healthcare
—
—%
—%
—%
$ 7,832
$ (501)
$ 8,333
$79
$ 8,254
Total PMI
$ 7,594
3.1%
9.7%
8.7%
(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 +$0.5 million
Schedule 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Net Revenues by Product
Category and Adjustments of Net Revenues for the Impact of Currency
and Acquisitions
($ in millions) / (Unaudited)
Net Revenues
Currency
Net Revenues
excluding Currency
Acquisitions
Net Revenues excluding
Currency & Acquisitions
Six Months Ended June
30,
Net Revenues
Total
Excluding Currency
Excluding Currency &
Acquisitions
2022
Combustible Products
2021
% Change
$ 3,763
$ (324)
$ 4,087
$ —
$ 4,087
European Union
$ 4,113
(8.5)%
(0.6)%
(0.6)%
1,042
(31)
1,073
—
1,073
Eastern Europe
1,047
(0.5)%
2.5%
2.5%
1,862
(189)
2,051
—
2,051
Middle East & Africa
1,307
(1)
42.4%
56.9%
56.9%
2,147
(83)
2,230
—
2,230
South & Southeast Asia
2,216
(3.1)%
0.6%
0.6%
1,129
(81)
1,210
—
1,210
East Asia & Australia
1,259
(10.3)%
(3.9)%
(3.9)%
876
(8)
885
—
885
Americas
840
4.3%
5.3%
5.3%
$ 10,819
$ (717)
$ 11,537
$ —
$ 11,537
Total Combustible
$ 10,781
0.4%
7.0%
7.0%
2022
Reduced-Risk Products
2021
% Change
$ 2,392
$ (209)
$ 2,601
$ 7
$ 2,593
European Union
$ 1,945
22.9%
33.7%
33.3%
582
(23)
605
—
605
Eastern Europe
644
(9.6)%
(6.1)%
(6.1)%
135
(5)
140
—
140
Middle East & Africa
54
+100%
+100%
+100%
10
—
10
—
10
South & Southeast Asia
3
+100%
+100%
+100%
1,481
(137)
1,618
—
1,618
East Asia & Australia
1,727
(14.2)%
(6.3)%
(6.3)%
17
(1)
17
—
17
Americas
24
(29.8)%
(27.7)%
(27.7)%
$ 4,617
$ (374)
$ 4,991
$ 7
$ 4,983
Total RRPs
$ 4,398
5.0%
13.5 %
13.3 %
2022
Wellness and
Healthcare
2021
% Change
$ 142
$ —
$142
$142
$ —
Wellness and
Healthcare
$ —
—%
—%
—%
2022
PMI
2021
% Change
$ 6,155
$ (533)
$ 6,688
$ 7
$ 6,681
European Union
$ 6,058
1.6%
10.4%
10.3%
1,624
(54)
1,678
—
1,678
Eastern Europe
1,691
(4.0)%
(0.8)%
(0.8)%
1,997
(194)
2,191
—
2,191
Middle East & Africa
1,361
(1)
46.7%
61.0%
61.0%
2,157
(83)
2,240
—
2,240
South & Southeast Asia
2,219
(2.8)%
0.9%
0.9%
2,610
(218)
2,828
—
2,828
East Asia & Australia
2,986
(12.6)%
(5.3)%
(5.3)%
893
(9)
902
—
902
Americas
864
3.4%
4.4%
4.4%
142
—
142
142
—
Wellness and Healthcare
—
—%
—%
—%
$ 15,578
$ (1,091)
$ 16,669
$149
$ 16,520
Total PMI
$ 15,179
2.6%
9.8%
8.8%
(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
2022
Quarters Ended June
30,
2021
% Change
$ 3,143
$ —
$ 3,143
$ (327)
$ 3,470
$ 3
$ 3,467
European Union
$ 3,149
$ —
$ 3,149
(0.2)%
10.2%
10.1%
898
—
898
18
880
—
880
Eastern Europe
895
—
895
0.3%
(1.7)%
(1.7)%
1,006
—
1,006
(45)
1,051
—
1,051
Middle East & Africa
560
(246)
(1)
806
24.8%
30.4%
30.4%
1,034
—
1,034
(39)
1,073
—
1,073
South & Southeast Asia
1,046
—
1,046
(1.1)%
2.6%
2.6%
1,206
—
1,206
(112)
1,318
—
1,318
East Asia & Australia
1,514
—
1,514
(20.3)%
(12.9)%
(12.9)%
469
—
469
4
465
—
465
Americas
430
—
430
9.1%
8.1%
8.1%
76
—
76
—
76
76
—
Wellness and Healthcare
—
—
—
—%
—%
—%
$ 7,832
$ —
$ 7,832
$ (501)
$ 8,333
$ 79
$ 8,254
Total PMI
$ 7,594
$ (246)
$ 7,840
(0.1)%
6.3%
5.3%
2022
Six Months Ended June
30,
2021
% Change
$ 6,155
$ —
$ 6,155
$ (533)
$ 6,688
$ 7
$ 6,681
European Union
$ 6,058
$ —
$ 6,058
1.6%
10.4%
10.3%
1,624
—
1,624
(54)
1,678
—
1,678
Eastern Europe
1,691
—
1,691
(4.0)%
(0.8)%
(0.8)%
1,997
—
1,997
(194)
2,191
—
2,191
Middle East & Africa
1,361
(246)
(1)
1,607
24.3%
36.3%
36.3%
2,157
—
2,157
(83)
2,240
—
2,240
South & Southeast Asia
2,219
—
2,219
(2.8)%
0.9%
0.9%
2,610
—
2,610
(218)
2,828
—
2,828
East Asia & Australia
2,986
—
2,986
(12.6)%
(5.3)%
(5.3)%
893
—
893
(9)
902
—
902
Americas
864
—
864
3.4%
4.4%
4.4%
142
—
142
—
142
142
—
Wellness and Healthcare
—
—
—
—%
—%
—%
$ 15,578
$ —
$ 15,578
$ (1,091)
$ 16,669
$ 149
$ 16,520
Total PMI
$ 15,179
$ (246)
$ 15,425
1.0%
8.1%
7.1%
(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
Acqui- sitions
Operating Income excluding
Currency & Acquisitions
Operating Income
Total
Excluding Currency
Excluding Currency &
Acquisitions
2022
Quarters Ended June
30,
2021
% Change
$ 1,519
$ (245)
$ 1,764
$ —
$ 1,764
European Union
$ 1,641
(7.4)%
7.5%
7.5%
291
56
235
—
235
Eastern Europe
314
(7.3)%
(25.2)%
(25.2)%
498
(4)
502
—
502
Middle East & Africa
16
+100%
+100%
+100%
306
(22)
328
—
328
South & Southeast Asia
331
(7.6)%
(0.9)%
(0.9)%
346
(88)
434
—
434
East Asia & Australia
715
(51.6)%
(39.3)%
(39.3)%
130
4
126
—
126
Americas
112
16.1%
12.5%
12.5%
(34)
—
(34)
(24)
(10)
Wellness and Healthcare
—
—%
—%
—%
$ 3,056
$ (299)
$ 3,355
$ (24)
$ 3,379
Total PMI
$ 3,129
(2.3)%
7.2%
8.0%
2022
Six Months Ended June
30,
2021
% Change
$ 3,046
$ (390)
$ 3,436
$ (2)
$ 3,438
European Union
$ 3,131
(2.7)%
9.7%
9.8%
435
(4)
439
—
439
Eastern Europe
575
(24.3)%
(23.7)%
(23.7)%
1,019
(119)
1,138
—
1,138
Middle East & Africa
351
+100%
+100%
+100%
751
(47)
798
—
798
South & Southeast Asia
860
(12.7)%
(7.2)%
(7.2)%
917
(156)
1,073
—
1,073
East Asia & Australia
1,410
(35.0)%
(23.9)%
(23.9)%
251
2
249
—
249
Americas
246
2.0%
1.2%
1.2%
(65)
—
(65)
(48)
(17)
Wellness and Healthcare
—
—%
—%
—%
$ 6,354
$ (714)
$ 7,068
$ (50)
$ 7,118
Total PMI
$ 6,573
(3.3)%
7.5%
8.3%
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 and Others
Adjusted Operating
Income
Total
Excluding Currency
Excluding Currency
& Acqui- sitions
2022
Quarters Ended June
30,
2021
% Change
$ 1,519
$ (32)
$ 1,551
$ (245)
$ 1,796
$ —
$ 1,796
European Union
$ 1,641
$ (44)
$ 1,685
(8.0)%
6.6 %
6.6%
291
(86)
377
56
321
—
321
Eastern Europe
314
(8)
322
17.1%
(0.3) %
(0.3)%
498
(8)
506
(4)
510
—
510
Middle East & Africa
16
(256)
272
86.0%
87.5 %
87.5%
306
(10)
316
(22)
338
—
338
South & Southeast Asia
331
(14)
345
(8.4)%
(2.0) %
(2.0)%
346
(10)
356
(88)
444
—
444
East Asia & Australia
715
(15)
730
(51.2)%
(39.2) %
(39.2)%
130
(4)
134
4
130
—
130
Americas
112
(7)
119
12.6%
9.2 %
9.2%
(34)
(18)
(16)
—
(16)
(6)
(10)
Wellness and Healthcare
—
—
—
—%
— %
—%
$ 3,056
$ (168)
$ 3,224
$ (299)
$ 3,523
$ (6)
$ 3,529
Total PMI
$ 3,129
$ (344)
$ 3,473
(7.2)%
1.4 %
1.6%
2022
Six Months Ended June
30,
2021
% Change
$ 3,046
$ (41)
$ 3,087
$ (390)
$ 3,477
$ (2)
$ 3,479
European Union
$ 3,131
$ (62)
$ 3,193
(3.3)%
8.9%
8.9%
435
(129)
564
(4)
568
—
568
Eastern Europe
575
(10)
585
(3.6)%
(2.9)%
(2.9)%
1,019
(10)
1,029
(119)
1,148
—
1,148
Middle East & Africa
351
(260)
611
68.4%
87.9%
87.9%
751
(14)
765
(47)
812
—
812
South & Southeast Asia
860
(21)
881
(13.2)%
(7.8)%
(7.8)%
917
(11)
928
(156)
1,084
—
1,084
East Asia & Australia
1,410
(47)
1,457
(36.3)%
(25.6)%
(25.6)%
251
(6)
257
2
255
—
255
Americas
246
(10)
256
0.4%
(0.4)%
(0.4)%
(65)
(37)
(28)
—
(28)
(11)
(17)
Wellness and Healthcare
—
—
—
—%
—%
—%
$ 6,354
$ (248)
$ 6,602
$ (714)
$ 7,316
$ (13)
$ 7,329
Total PMI
$ 6,573
$ (410)
$ 6,983
(5.5)%
4.8%
5.0%
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
2022
Quarters Ended June
30,
2021
% Points Change
$ 1,551
$ 3,143
49.3%
$ 1,796
$ 3,470
51.8%
$ 1,796
$ 3,467
51.8%
European Union
$ 1,685
$ 3,149
53.5%
(4.2)
(1.7)
(1.7)
377
898
42.0%
321
880
36.5%
321
880
36.5%
Eastern Europe
322
895
36.0%
6.0
0.5
0.5
506
1,006
50.3%
510
1,051
48.5%
510
1,051
48.5%
Middle East & Africa
272
806
33.7%
16.6
14.8
14.8
316
1,034
30.6%
338
1,073
31.5%
338
1,073
31.5%
South & Southeast Asia
345
1,046
33.0%
(2.4)
(1.5)
(1.5)
356
1,206
29.5%
444
1,318
33.7%
444
1,318
33.7%
East Asia & Australia
730
1,514
48.2%
(18.7)
(14.5)
(14.5)
134
469
28.6%
130
465
28.0%
130
465
28.0%
Americas
119
430
27.7%
0.9
0.3
0.3
$ (16)
$ 76
(21.1)%
$ (16)
$ 76
(21.1)%
$ (10)
$ —
—%
Wellness and Healthcare
$ —
$ —
—%
—
—
—
$ 3,224
$ 7,832
41.2%
$ 3,523
$ 8,333
42.3%
$ 3,529
$ 8,254
42.8%
Total PMI
$ 3,473
$ 7,840
44.3%
(3.1)
(2.0)
(1.5)
2022
Six Months Ended June
30,
2021
% Points Change
$ 3,087
$ 6,155
50.2%
$ 3,477
$ 6,688
52.0%
$ 3,479
$ 6,681
52.1%
European Union
$ 3,193
$ 6,058
52.7%
(2.5)
(0.7)
(0.6)
564
1,624
34.7%
568
1,678
33.8%
568
1,678
33.8%
Eastern Europe
585
1,691
34.6%
0.1
(0.8)
(0.8)
1,029
1,997
51.5%
1,148
2,191
52.4%
1,148
2,191
52.4%
Middle East & Africa
611
1,607
38.0%
13.5
14.4
14.4
765
2,157
35.5%
812
2,240
36.3%
812
2,240
36.3%
South & Southeast Asia
881
2,219
39.7%
(4.2)
(3.4)
(3.4)
928
2,610
35.6%
1,084
2,828
38.3%
1,084
2,828
38.3%
East Asia & Australia
1,457
2,986
48.8%
(13.2)
(10.5)
(10.5)
257
893
28.8%
255
902
28.3%
255
902
28.3%
Americas
256
864
29.6%
(0.8)
(1.3)
(1.3)
(28)
142
(19.7)%
(28)
142
(19.7)%
(17)
—
—%
Wellness and Healthcare
—
—
—%
—
—
—
$ 6,602
$ 15,578
42.4%
$ 7,316
$ 16,669
43.9%
$ 7,329
$ 16,520
44.4%
Total PMI
$ 6,983
$ 15,425
45.3%
(2.9)
(1.4)
(0.9)
(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 June
30,
Six Months Ended June
30,
2022
2021
Change
Fav./(Unfav.)
2022
2021
Change
Fav./(Unfav.)
$ 20,409
$ 20,421
(0.1
)%
Revenues including Excise
Taxes
$ 39,750
$ 39,776
(0.1
)%
12,577
12,827
1.9
%
Excise Taxes on products
24,172
24,597
1.7
%
7,832
7,594
3.1
%
Net Revenues
15,578
15,179
2.6
%
2,648
2,353
(12.5
)%
Cost of sales
5,256
4,627
(13.6
)%
5,184
5,241
(1.1
)%
Gross profit
10,322
10,552
(2.2
)%
2,092
2,093
—
%
Marketing, administration and
research costs
3,894
3,942
1.2
%
36
19
Amortization of intangibles
74
37
3,056
3,129
(2.3
)%
Operating Income
6,354
6,573
(3.3
)%
126
161
21.7
%
Interest expense, net
280
328
14.6
%
5
27
81.5
%
Pension and other employee
benefit costs
9
55
83.6
%
2,925
2,941
(0.5
)%
Earnings before income taxes
6,065
6,190
(2.0
)%
594
646
8.0
%
Provision for income taxes
1,213
1,343
9.7
%
(15
)
(3
)
Equity investments and securities
(income)/loss, net
41
(46
)
2,346
2,298
2.1
%
Net Earnings
4,811
4,893
(1.7
)%
113
126
Net Earnings attributable to
noncontrolling interests
247
303
$ 2,233
$ 2,172
2.8
%
Net Earnings attributable to
PMI
$ 4,564
$ 4,590
(0.6
)%
Per share data (1):
$ 1.44
$ 1.39
3.6
%
Basic Earnings Per
Share
$ 2.94
$ 2.94
—
%
$ 1.43
$ 1.39
2.9
%
Diluted Earnings Per
Share
$ 2.93
$ 2.93
—
%
(1) Net Earnings and weighted-average
shares used in the basic and diluted Earnings Per Share
computations for the quarters and for the six months ended June 30,
2022 and 2021 are shown on Schedule 1, Footnote 1
Schedule 10
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Adjustments for the Impact of
Russia and Ukraine, excluding Currency
(Unaudited)
Quarters Ended June
30,
Six Months Ended June
30,
2022
2021
Currency
Variance excluding
Currency
2022
2021
Currency
Variance excluding
Currency
$ 1.48
$ 1.58
$ (0.16)
3.8%
Adjusted Diluted EPS
(1)
$ 3.06
$ 3.16
$ (0.39)
9.2%
0.16
0.15
0.03
Net Earnings attributable to
Russia and Ukraine
$ 0.27
$ 0.28
$ —
$ 1.32
$ 1.43
$ (0.19)
5.6%
Pro Forma Adjusted Diluted
EPS
$ 2.79
$ 2.88
$ (0.39)
10.4%
(1) For the calculation of Adjusted
Diluted EPS, see Schedule 2
Schedule 11
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
PMI & EE Region -
Adjustments for the Impact of Russia and Ukraine, excluding
Currency and Acquisitions
($ in millions) / (Unaudited)
Quarters Ended June
30,
Six Months Ended June
30,
2022
2021
Currency
Acqui- sitions
Variance excluding
Curr. & Acquis.
2022
2021
Currency
Acqui- sitions
Variance excluding
Currency & Acqui- sitions
PMI
$ 7,832
$ 7,840
$ (501)
$ 79
5.3%
Adjusted Net Revenues
(1)
$ 15,578
$ 15,425
$ (1,091)
$ 149
7.1%
614
612
33
—
Net Revenues attributable to
Russia and Ukraine
1,088
1,173
(30)
—
$ 7,218
$ 7,228
$ (534)
$ 79
6.2%
Pro Forma Adjusted Net
Revenues
$ 14,490
$ 14,252
$ (1,061)
$ 149
8.1%
$ 3,224
$ 3,473
$ (299)
$ (6)
1.6%
Adjusted Operating Income
(2)
$ 6,602
$ 6,983
$ (714)
$ (13)
5.0%
313
257
50
—
Operating Income attributable to
Russia and Ukraine
494
484
12
—
$ 2,911
$ 3,216
$ (349)
$ (6)
1.6%
Pro Forma Adjusted Operating
Income
$ 6,108
$ 6,499
$ (726)
$ (13)
5.4%
41.2%
44.3%
(1.1)pp
(0.5)pp
(1.5)pp
Adjusted Operating Income
Margin
42.4%
45.3%
(1.5)pp
(0.5)pp
(0.9)pp
0.9pp
(0.2)pp
Adjusted OI margin attributable
to Russia and Ukraine
0.2pp
(0.3)pp
40.3%
44.5%
(1.8)pp
(0.5)pp
(1.9)pp
Pro Forma Adjusted Operating
Income Margin
42.2%
45.6%
(1.7)pp
(0.6)pp
(1.1)pp
Eastern Europe
$ 898
$ 895
$ 18
$ —
(1.7)%
Adjusted Net Revenues
(1)
$ 1,624
$ 1,691
$ (54)
$ —
(0.8)%
614
612
33
—
Net Revenues attributable to
Russia and Ukraine
1,088
1,173
(30)
—
$ 284
$ 283
$ (15)
$ —
5.7%
Pro Forma Adjusted Net
Revenues
$ 536
$ 518
$ (24)
$ —
8.1%
$ 377
$ 322
$ 56
$ —
(0.3)%
Adjusted Operating Income
(2)
$ 564
$ 585
$ (4)
$ —
(2.9)%
313
257
50
—
Operating Income attributable to
Russia and Ukraine
494
484
12
—
(71)
(58)
2
—
Corporate expenses apportioned to
Russia and Ukraine
(132)
(108)
4
—
$ 135
$ 123
$ 4
$ —
6.3%
Pro Forma Adjusted Operating
Income
$ 202
$ 209
$ (20)
$ —
6.2%
42.0%
36.0%
5.5pp
—pp
0.5pp
Adjusted Operating Income
Margin
34.7%
34.6%
0.9pp
—pp
(0.8)pp
(5.5)pp
(7.5)pp
Adjusted OI margin attributable
to Russia and Ukraine (3)
(3.0)pp
(5.7)pp
47.5%
43.5%
3.8pp
—pp
0.2pp
Pro Forma Adjusted Operating
Income Margin
37.7%
40.3%
(1.9)pp
—pp
(0.7)pp
(1) For the calculation of Adjusted Net
Revenues, see Schedule 5
(2) For the calculation of Adjusted
Operating Income, see Schedule 7
(3) Includes also impact of corporate
expenses apportioned to Russia and Ukraine
Note: Sum might not foot to Total due to
roundings, which could impact variance %
Schedule 12
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Net Revenues by Product
Category and Adjustments for the Impact of Russia and
Ukraine
($ in millions) / (Unaudited)
Year Ended December
31,
Quarters Ended June
30,
Six Months Ended June
30,
2022
2021
Currency
Acqui- sitions
Variance excluding
Currency & Acqui- sitions
2022
2021
Currency
Acqui- sitions
Variance excluding
Currency & Acqui- sitions
2021
Combustible Products
$ 5,489
$ 5,564
$ (302)
$ (1)
4.1%
Adjusted Net Revenues
$ 10,819
$ 11,027
$ (717)
$ —
4.6%
$ 22,436
368
337
25
—
Net Revenues attributable to
Russia and Ukraine
637
645
(15)
—
1,399
$ 5,121
$ 5,227
$ (328)
$ (1)
4.2%
Pro Forma Adjusted Net
Revenues
$ 10,182
$ 10,383
$ (702)
$ —
4.8%
$ 21,037
Reduced-Risk Products
$ 2,267
$ 2,276
$ (199)
$ 4
8.2%
Adjusted Net Revenues
$ 4,617
$ 4,398
$ (374)
$ 7
13.3%
$ 9,115
246
275
8
—
Net Revenues attributable to
Russia and Ukraine
451
528
(15)
—
1,072
$ 2,021
$ 2,001
$ (206)
$ 4
11.1%
Pro Forma Adjusted Net
Revenues
$ 4,166
$ 3,869
$ (359)
$ 7
16.8%
$ 8,042
Wellness and
Healthcare
$ 76
$ —
$ —
$ 76
—%
Adjusted Net Revenues
$ 142
$ —
$ —
$ 142
—%
$ 101
—
—
—
—
Net Revenues attributable to
Russia and Ukraine
—
—
—
—
—
$ 76
$ —
$ —
$ 76
—%
Pro Forma Adjusted Net
Revenues
$ 142
$ —
$ —
$ 142
—%
$ 101
PMI
$ 7,832
$ 7,840
$ (501)
$ 79
5.3%
Adjusted Net Revenues
(1)
$ 15,578
$ 15,425
$ (1,091)
$ 149
7.1%
$ 31,651
614
612
33
—
Net Revenues attributable to
Russia and Ukraine
1,088
1,173
(30)
—
2,471
$ 7,218
$ 7,228
$ (534)
$ 79
6.2%
Pro Forma Adjusted Net
Revenues
$ 14,490
$ 14,252
$ (1,061)
$ 149
8.1%
$ 29,180
(1) For the calculation of Adjusted Net
Revenues, see Schedule 5
Note: Sum of product categories might not
foot to Total PMI due to roundings. "-" indicates amounts between
-$0.5 million and +$0.5 million
Schedule 13
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Reported
Diluted EPS to Pro Forma Adjusted Diluted EPS
(Unaudited)
Quarter Ended
Quarter Ended
Six Months
Ended
Quarter Ended
Nine Months
Ended
Quarter Ended
Year Ended
Quarter Ended
March 31,
June 30,
June 30,
September 30,
September 30,
December 31,
December 31,
March 31,
2021
2021
2021
2021
2021
2021
2021
2022
Reported Diluted EPS
$ 1.55
$ 1.39
$ 2.93
$ 1.55
$ 4.48
$ 1.34
$ 5.83
$ 1.50
Asset impairment and exit costs
0.02
0.04
0.07
0.02
0.09
0.02
0.12
—
Asset acquisition cost
—
—
—
0.03
0.03
—
0.03
—
Equity investee ownership dilution
—
—
—
(0.02
)
(0.02
)
(0.01
)
(0.04
)
—
Saudi Arabia customs assessments
—
0.14
0.14
—
0.14
—
0.14
—
Charges related to the war in Ukraine
—
—
—
—
—
—
—
0.03
Fair value adjustment for equity security
investments
—
—
—
—
—
—
—
0.03
Amortization of intangibles
0.01
0.01
0.02
0.01
0.03
0.02
0.05
0.02
Adjusted Diluted EPS
$ 1.58
$ 1.58
$ 3.16
$ 1.59
$ 4.75
$ 1.37
$ 6.13
$ 1.58
Net Earnings attributable to Russia &
Ukraine
0.13
0.15
0.28
0.15
0.43
0.17
0.60
0.10
Pro Forma Adjusted Diluted EPS
$ 1.45
$ 1.43
$ 2.88
$ 1.44
$ 4.32
$ 1.20
$ 5.53
$ 1.48
Weighted-average shares for diluted
EPS
1,560
1,560
1,560
1,560
1,560
1,557
1,559
1,552
Note: EPS is computed independently for
each of the periods presented. Accordingly, the sum of the
quarterly EPS amounts may not agree to the total for the year
Schedule 14
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Reported
Operating Income to Adjusted Operating Income
(Unaudited)
Quarter Ended
Quarter Ended
Six Months
Ended
Quarter Ended
Nine Months
Ended
Quarter Ended
Year Ended
Quarter Ended
March 31,
June 30,
June 30,
September 30,
September 30,
December 31,
December 31,
March 31,
2021
2021
2021
2021
2021
2021
2021
2022
PMI
Operating Income
$ 3,444
$ 3,129
$ 6,573
$ 3,455
$ 10,028
$ 2,947
$ 12,975
$ 3,298
Asset impairment and exit costs
(48
)
(79
)
(127
)
(43
)
(170
)
(46
)
(216
)
—
Asset acquisition cost
—
—
—
(51
)
(51
)
—
(51
)
—
Saudi Arabia customs assessments
—
(246
)
(246
)
—
(246
)
—
(246
)
—
Amortization of intangibles
(18
)
(19
)
(37
)
(18
)
(55
)
(41
)
(96
)
(38
)
Charges related to the war in Ukraine
—
—
—
—
—
—
—
(42
)
Adjusted Operating Income
$ 3,510
$ 3,473
$ 6,983
$ 3,567
$ 10,550
$ 3,034
$ 13,584
$ 3,378
Note: Sum of Regions might not foot to
Total PMI due to roundings. "-" indicates amounts between -$0.5
million and +$0.5 million
Schedule 15a
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Reported
Operating Income to Adjusted Operating Income
(Unaudited)
Quarter Ended
Quarter Ended
Six Months
Ended
Quarter Ended
Nine Months
Ended
Quarter Ended
Year Ended
Quarter Ended
March 31,
June 30,
June 30,
September 30,
September 30,
December 31,
December 31,
March 31,
2021
2021
2021
2021
2021
2021
2021
2022
European Union
Reported Operating Income
$ 1,490
$ 1,641
$ 3,131
$ 1,680
$ 4,811
$ 1,308
$ 6,119
$ 1,527
Asset impairment and exit costs
(9
)
(35
)
(44
)
(12
)
(56
)
(12
)
(68
)
—
Amortization of intangibles
(9
)
(9
)
(18
)
(8
)
(26
)
(9
)
(35
)
(9
)
Adjusted Operating Income
$ 1,508
$ 1,685
$ 3,193
$ 1,700
$ 4,893
$ 1,329
$ 6,222
$ 1,536
Eastern Europe
Reported Operating Income
$ 261
$ 314
$ 575
$ 338
$ 913
$ 300
$ 1,213
$ 144
Asset impairment and exit costs
(2
)
(7
)
(9
)
(2
)
(11
)
(3
)
(14
)
—
Amortization of intangibles
—
(1
)
(1
)
—
(1
)
(1
)
(2
)
(1
)
Charges related to the war in Ukraine
—
—
—
—
—
—
—
(42
)
Adjusted Operating Income
$ 263
$ 322
$ 585
$ 340
$ 925
$ 304
$ 1,229
$ 187
Middle East & Africa
Reported Operating Income
$ 335
$ 16
$ 351
$ 388
$ 739
$ 407
$ 1,146
$ 521
Asset impairment and exit costs
(2
)
(8
)
(10
)
(3
)
(13
)
(4
)
(17
)
—
Saudi Arabia customs assessments
—
(246
)
(246
)
—
(246
)
—
(246
)
—
Amortization of intangibles
(2
)
(2
)
(4
)
(2
)
(6
)
(2
)
(8
)
(2
)
Adjusted Operating Income
$ 339
$ 272
$ 611
$ 393
$ 1,004
$ 413
$ 1,417
$ 523
Schedule 15b
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Reported
Operating Income to Adjusted Operating Income (continued)
(Unaudited)
Quarter Ended
Quarter Ended
Six Months
Ended
Quarter Ended
Nine Months
Ended
Quarter Ended
Year Ended
Quarter Ended
March 31,
June 30,
June 30,
September 30,
September 30,
December 31,
December 31,
March 31,
2021
2021
2021
2021
2021
2021
2021
2022
South & Southeast Asia
Reported Operating Income
$ 529
$ 331
$ 860
$ 348
$ 1,208
$ 298
$ 1,506
$ 445
Asset impairment and exit costs
(3
)
(10
)
(13
)
(4
)
(17
)
(4
)
(21
)
—
Amortization of intangibles
(4
)
(4
)
(8
)
(5
)
(13
)
(8
)
(21
)
(4
)
Adjusted Operating Income
$ 536
$ 345
$ 881
$ 357
$ 1,238
$ 310
$ 1,548
$ 449
East Asia & Austr.
Reported Operating Income
$ 695
$ 715
$ 1,410
$ 631
$ 2,041
$ 515
$ 2,556
$ 571
Asset impairment and exit costs
(31
)
(15
)
(46
)
(21
)
(67
)
(21
)
(88
)
—
Amortization of intangibles
(1
)
—
(1
)
(1
)
(2
)
(1
)
(3
)
(1
)
Adjusted Operating Income
$ 727
$ 730
$ 1,457
$ 653
$ 2,110
$ 537
$ 2,647
$ 572
Americas
Reported Operating Income
$ 134
$ 112
$ 246
$ 121
$ 367
$ 120
$ 487
$ 121
Asset impairment and exit costs
(1
)
(4
)
(5
)
(1
)
(6
)
(2
)
(8
)
—
Amortization of intangibles
(2
)
(3
)
(5
)
(2
)
(7
)
(2
)
(9
)
(2
)
Adjusted Operating Income
$ 137
$ 119
$ 256
$ 124
$ 380
$ 124
$ 504
$ 123
Wellness and Healthcare
Reported Operating Income
$ —
$ —
$ —
$ (51
)
$ (51
)
$ (1
)
$ (52
)
$ (31
)
Asset impairment and exit costs
—
—
—
—
—
—
—
—
Asset acquisition cost
—
—
—
(51
)
(51
)
—
(51
)
—
Amortization of intangibles
—
—
—
—
—
(18
)
(18
)
(19
)
Adjusted Operating Income
$ —
$ —
$ —
$ —
$ —
$ 17
$ 17
$ (12
)
Note: Sum of Regions might not foot to
Total PMI due to roundings. "-" indicates amounts between -$0.5
million and +$0.5 million
Schedule 16
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Balance
Sheets
($ in millions) / (Unaudited)
June 30,
December 31,
2022
2021
Assets
Cash and cash equivalents
$
5,036
$
4,496
All other current assets
13,340
13,221
Property, plant and equipment, net
5,965
6,168
Goodwill
6,318
6,680
Other intangible assets, net
2,656
2,818
Equity investments
4,328
4,463
Other assets
3,317
3,444
Total assets
$
40,960
$
41,290
Liabilities and Stockholders' (Deficit)
Equity
Short-term borrowings
$
1,558
$
225
Current portion of long-term debt
4,149
2,798
All other current liabilities
14,840
16,232
Long-term debt
22,345
24,783
Deferred income taxes
856
726
Other long-term liabilities
4,472
4,734
Total liabilities
48,220
49,498
Total PMI stockholders' deficit
(9,044
)
(10,106
)
Noncontrolling interests
1,784
1,898
Total stockholders' (deficit)
equity
(7,260
)
(8,208
)
Total liabilities and stockholders'
(deficit) equity
$
40,960
$
41,290
Schedule 17
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 June 30,
2022
Year Ended December 31,
2021
July ~ December
January ~ June
12 months
2021
2022
rolling
Net Earnings
$
4,817
$
4,811
$
9,628
$
9,710
Equity investments and securities
(income)/loss, net
(103
)
41
(62
)
(149
)
Provision for income taxes
1,328
1,213
2,541
2,671
Interest expense, net
300
280
580
628
Depreciation and amortization
514
540
1,054
998
Asset impairment and exit costs and Others
(1)
140
174
314
513
Adjusted EBITDA
$
6,996
$
7,059
$
14,055
$
14,371
June 30,
December 31,
2022
2021
Short-term borrowings
$
1,558
$
225
Current portion of long-term debt
4,149
2,798
Long-term debt
22,345
24,783
Total Debt
$
28,052
$
27,806
Cash and cash equivalents
5,036
4,496
Net Debt
$
23,016
$
23,310
Ratios:
Total Debt to Adjusted EBITDA
2.00
1.93
Net Debt to Adjusted EBITDA
1.64
1.62
(1) For the period January 2022 to June
2022 "Others" includes $122 million of charges related to the war
in Ukraine and $52 million of costs associated with Swedish Match
AB offer. For the period July 2021 to December 2021 "Others"
includes asset acquisition cost of $51 million related to OtiTopic
Inc. Additionally, for the year ended December 31, 2021 "Others"
includes a reduction in net revenues of $246 million related to the
Saudi Arabia customs assessments that was recorded in the second
quarter of 2021.
Schedule 18
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Operating
Cash Flow to Operating Cash Flow, excluding Currency
($ in millions) / (Unaudited)
Quarters Ended June
30,
Six Months Ended June
30,
2022
2021
% Change
2022
2021
% Change
$
3,524
$
3,630
(2.9)%
Net cash provided by operating
activities (1)
$
4,642
$
4,065
14.2%
(54
)
Less: Currency
(487
)
$
3,578
$
3,630
(1.4)%
Net cash provided by operating
activities,
excluding currency
$
5,129
$
4,065
26.2%
(1) Operating cash flow
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220720006017/en/
Philip Morris International Investor Relations: New York:
+1 (917) 663 2233 Lausanne: +41 (0)58 242 4666
InvestorRelations@pmi.com
Media: Lausanne: +41 (0)58 242 4500 David.Fraser@pmi.com
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