8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 17, 2019

Philip Morris International Inc.

(Exact name of registrant as specified in its charter)

Virginia	1-33708	13-3435103
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

120 Park Avenue	New York	New York	10017-5592
(Address of principal executive offices)			(Zip Code)

Registrant's telephone number, including area code: (917) 663-2000

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	PM	New York Stock Exchange
1.875% Notes due 2019	PM19D	New York Stock Exchange
2.000% Notes due 2020	PM20B	New York Stock Exchange
Floating Notes due 2020	PM20C	New York Stock Exchange
1.750% Notes due 2020	PM20A	New York Stock Exchange
4.500% Notes due 2020	PM20	New York Stock Exchange
1.875% Notes due 2021	PM21B	New York Stock Exchange
1.875% Notes due 2021	PM21C	New York Stock Exchange
4.125% Notes due 2021	PM21	New York Stock Exchange
2.900% Notes due 2021	PM21A	New York Stock Exchange
2.625% Notes due 2022	PM22A	New York Stock Exchange
2.375% Notes due 2022	PM22B	New York Stock Exchange
2.500% Notes due 2022	PM22	New York Stock Exchange
2.500% Notes due 2022	PM22C	New York Stock Exchange
2.625% Notes due 2023	PM23	New York Stock Exchange
2.125% Notes due 2023	PM23B	New York Stock Exchange
3.600% Notes due 2023	PM23A	New York Stock Exchange

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
2.875% Notes due 2024	PM24	New York Stock Exchange
2.875% Notes due 2024	PM24C	New York Stock Exchange
0.625% Notes due 2024	PM24B	New York Stock Exchange
3.250% Notes due 2024	PM24A	New York Stock Exchange
2.750% Notes due 2025	PM25	New York Stock Exchange
3.375% Notes due 2025	PM25A	New York Stock Exchange
2.750% Notes due 2026	PM26A	New York Stock Exchange
2.875% Notes due 2026	PM26	New York Stock Exchange
0.125% Notes due 2026	PM26B	New York Stock Exchange
3.125% Notes due 2027	PM27	New York Stock Exchange
3.125% Notes due 2028	PM28	New York Stock Exchange
2.875% Notes due 2029	PM29	New York Stock Exchange
3.375% Notes due 2029	PM29A	New York Stock Exchange
0.800% Notes due 2031	PM31	New York Stock Exchange
3.125% Notes due 2033	PM33	New York Stock Exchange
2.000% Notes due 2036	PM36	New York Stock Exchange
1.875% Notes due 2037	PM37A	New York Stock Exchange
6.375% Notes due 2038	PM38	New York Stock Exchange
1.450% Notes due 2039	PM39	New York Stock Exchange
4.375% Notes due 2041	PM41	New York Stock Exchange
4.500% Notes due 2042	PM42	New York Stock Exchange
3.875% Notes due 2042	PM42A	New York Stock Exchange
4.125% Notes due 2043	PM43	New York Stock Exchange
4.875% Notes due 2043	PM43A	New York Stock Exchange
4.250% Notes due 2044	PM44	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

                                                

         Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
☐

Item 2.02. Results of Operations and Financial Condition.

On October 17, 2019, Philip Morris International Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2019. The earnings release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference to this Item 2.02.

In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such filing or document.

Item 7.01. Regulation FD Disclosure.

On October 17, 2019, the Company held a live audio webcast to discuss its financial results for the quarter ended September 30, 2019. In connection with the webcast, the Company is furnishing to the Securities and Exchange Commission the following documents attached as exhibits to this Current Report on Form 8-K and incorporated by reference to this Item 7.01: the conference call script attached as Exhibit 99.2 hereto and the webcast slides attached as Exhibit 99.3 hereto.

In accordance with General Instruction B.2 of Form 8-K, the information in Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.2 and 99.3, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 7.01 of this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such filing or document.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 Philip Morris International Inc. Press Release dated October 17, 2019 (furnished pursuant to Item 2.02).

99.2 Conference Call Script dated October 17, 2019 (furnished pursuant to Item 7.01).

99.3 Webcast Slides dated October 17, 2019 (furnished pursuant to Item 7.01).

104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PHILIP MORRIS INTERNATIONAL INC.
By:	/s/ JERRY WHITSON
Name:	Jerry Whitson
Title:	Deputy General Counsel and Corporate Secretary

DATE: October 17, 2019

EX-99.1

Exhibit 99.1

PRESS RELEASE
Investor Relations:	Media:
New York: +1 (917) 663 2233	Lausanne: +41 (0)58 242 4500
Lausanne: +41 (0)58 242 4666	Email: Iro.Antoniadou@pmi.com
Email: InvestorRelations@pmi.com

PHILIP MORRIS INTERNATIONAL INC. REPORTS 2019THIRD-QUARTER RESULTS;

REVISES, FOR A TAX CHARGE OF $0.20 PER SHARE IN RUSSIA, 2019 FULL-YEAR REPORTED DILUTED EPS FORECAST TO AT LEAST $4.73 VS. $5.08 IN 2018, REFLECTING CURRENCY-NEUTRAL LIKE-FOR-LIKE ADJUSTED DILUTED EPS GROWTH OF AT LEAST 9.0%

NEW YORK, October 17, 2019 – Philip Morris International Inc. (NYSE: PM) today announces its 2019third-quarter results and revises its 2019 full-year reported diluted earnings per share forecast. Comparisons presented in this press release on a "like-for-like" basis reflect pro forma 2018 results, which have been adjusted for the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019 (the date of deconsolidation). In addition, reflecting the deconsolidation, PMI's total market share has been restated for previous periods.

2019THIRD-QUARTER & YEAR-TO-DATE HIGHLIGHTS

2019Third-Quarter

• Reported diluted EPS of $1.22, down by 15.3%; also down by 15.3%, excluding currency

• Adjusted diluted EPS of $1.43, down by 0.7%; up by 5.9% on a like-for-like basis, excluding currency

• Cigarette and heated tobacco unit shipment volume down by 2.1%, reflecting cigarette shipment volume down by 5.9% and heated tobacco unit shipment volume up by 84.8%; on a like-for-like basis, cigarette and heated tobacco unit shipment volume down by 1.4%

• Market share of heated tobacco units in IQOS markets, excluding the U.S., up by 1.3 points to 5.1%

• A charge of approximately $0.20 per share related to an excise tax and Value Added Tax (VAT) audit in Russia

• Net revenues up by 1.8%; up by 7.0% on a like-for-like basis, excluding currency

• Operating income down by 11.7%; down by 11.3%, excluding currency

• Adjusted operating income up by 8.0% on a like-for-like basis, excluding currency

• Adjusted operating income margin up by 0.4 points to 41.2% on a like-for-like basis, excluding currency

• Increased the regular quarterly dividend by 2.6% to an annualized rate of $4.68 per common share

• IQOS introduced for sale in the U.S. following its marketing order authorization by the U.S. Food and Drug Administration

• New IQOS 3 DUO device introduced for sale in Japan as part of a planned introduction in most IQOS markets by year-end 2019

2019Nine Months Year-to-Date

• Reported diluted EPS of $3.57, down by 7.3%; down by 3.9%, excluding currency

• Adjusted diluted EPS of $3.97, up by 3.1%; up by 11.7% on a like-for-like basis, excluding currency

• Cigarette and heated tobacco unit shipment volume down by 0.9%, reflecting cigarette shipment volume down by 3.4% and heated tobacco unit shipment volume up by 45.7%; on a like-for-like basis, cigarette and heated tobacco shipment volume down by 0.4%

• Market share of heated tobacco units in IQOS markets, excluding the U.S., up by 1.3 points to 4.9%

• Net revenues down by 0.2%; up by 6.5% on a like-for-like basis, excluding currency

• Operating income down by 7.5%; down by 3.8%, excluding currency

• Adjusted operating income up by 11.0% on a like-for-like basis, excluding currency

• Adjusted operating income margin up by 1.6 points to 40.0% on a like-for-like basis, excluding currency

"Our third quarter results continued to reflect strong underlying business performance and include the better-than-anticipated timing of pricing and costs compared to our previously communicated assumptions for the quarter,"said André Calantzopoulos, Chief Executive Officer.

"The exciting global growth of our heated tobacco products drove our resilient total shipment performance, despite certain timing issues related to our combustible portfolio. The quality of our execution across the business drove growth against each of the key metrics of net revenues, operating income, margin, as well as earnings per share -- both in the quarter and year-to-date -- on a currency-neutral, adjusted like-for-like basis."

"Importantly, IQOS was introduced in the U.S. this quarter, where it is currently the only FDA-authorized heat-not-burn product."

"While we expect our net revenue and adjusted operating income growth in the fourth quarter to be in line with our year-to-date results, our currency-neutral adjusted EPS growth is anticipated to be lower than our year-to-date performance, primarily due to an unfavorable income tax rate comparison and a high relative adjusted operating income growth contribution from markets with sizable non-controlling interests. Nevertheless, we are fully on track to deliver our target of full-year currency-neutral, like-for-like adjusted diluted EPS growth of at least 9%."

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2019FULL-YEAR FORECAST

	Full-Year
2019 EPS Forecast	2019 Forecast				2018			Adjusted Growth
Reported Diluted EPS	≥	$4.73		(a)	$5.08
2018 Tax items		—			0.02
2019 Tax items		(0.04	)		—
2019 Asset impairment and exit costs		0.04			—
2019 Canadian tobacco litigation-related expense		0.09			—
2019 Loss on deconsolidation of RBH		0.12			—
2019 Russia excise and VAT audit charge		0.20			—
Adjusted Diluted EPS		$5.14			$5.10
Net earnings attributable to RBH					(0.26	)	(b)
Adjusted Diluted EPS		$5.14			$4.84		(c)
Currency		(0.14	)
Adjusted Diluted EPS, excluding currency	≥	$5.28			$4.84		(c)	≥	9%
(a) Reflects the exclusion of previously anticipated net EPS of approximately $0.28 attributable to RBH from March 22, 2019 through December 31, 2019. The impact relating to the eight-day stub period was not material.
(b) Net reported diluted EPS attributable to RBH from March 22, 2018 through December 31, 2018.
(c) Pro forma.

PMI revises its full-year 2019 reported diluted EPS forecast to be at least $4.73 at prevailing exchange rates, compared to the previously communicated forecast of at least $4.94, versus $5.08 in 2018.

This revised full-year guidance reflects:

• A favorable tax item of $0.04 per share related to a reduction in estimated U.S. federal income tax on dividend repatriation for the years 2015-2018 recorded in the second quarter of 2019;

• Asset impairment and exit costs of approximately $0.04 per share resulting from plant closures as part of global manufacturing infrastructure optimization, reflecting: $0.01 per share related to Pakistan recorded in the first quarter of 2019; $0.02 per share related to Colombia ($0.01 per share recorded in the second quarter of 2019 and $0.01 per share in the third quarter of 2019); and $0.01 per share anticipated in the fourth quarter of 2019;

• A Canadian tobacco litigation-related expense of approximately $0.09 per share, announced on March 4, 2019, as well as the net impact of the loss on deconsolidation of PMI's Canadian subsidiary Rothmans, Benson & Hedges Inc. (RBH) under U.S. GAAP of approximately $0.12 per share, recorded in the first quarter of 2019, which is a non-cash item;

• A charge of approximately $0.20 per share related to an excise and VAT tax audit in Russia (see below for a full description);

• An unfavorable currency impact, at prevailing exchange rates, of approximately $0.14;

• The exclusion, announced on March 22, 2019, of RBH’s previously anticipated net earnings from PMI’s consolidated financial statements, from March 22, 2019 (the date of deconsolidation) to December 31, 2019, of approximately $0.28 per share;

• A full-year effective tax rate of approximately 23%, excluding discrete tax items and Loss on Deconsolidation of RBH; and

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• A projected increase of at least 9%, excluding currency, versus pro forma adjusted diluted earnings per share of $4.84 in 2018, as detailed in the attached Schedule 3 and as shown in the 2019 EPS Forecast table above.

Russia Excise & VAT Audit Charge

The Moscow Tax Inspectorate for Major Taxpayers (MTI) conducted an audit of AO Philip Morris Izhora (PM Izhora), our Russian affiliate, for the 2015-2017 financial years. On July 26, 2019, MTI issued its initial assessment, claiming that intercompany sales of cigarettes between PM Izhora and another Russian affiliate prior to excise tax increases and submission by PM Izhora of the maximum retail sales price notifications for cigarettes to the tax authorities were improper under Russian tax laws and resulted in underpayment of excise taxes and VAT. In August 2019, PM Izhora submitted its objections disagreeing with MTI’s allegations set forth in the initial assessment and MTI’s methodology for calculating the alleged underpayments. MTI accepted some of PM Izhora’s arguments and in September 2019, issued the final tax assessment claiming an underpayment of RUB 24.3 billion (approximately $374 million) including penalties and interest. In accordance with Russian tax laws, PM Izhora paid the entire amount of MTI’s final assessment. PMI recorded a pre-tax charge of $374 million, representing $315 million net of income tax and an earnings per share charge of approximately $0.20. Under the Russian law, PM Izhora has until mid-September 2020 to challenge the final tax assessment to the Federal Tax Service and is considering whether to pursue such a challenge.

2019 Full-Year Forecast Overview & Assumptions

This forecast assumes:

• An estimated total international industry volume decline, excluding China and the U.S., of approximately 2.5%;

• A total cigarette and heated tobacco unit shipment volume decline for PMI of approximately 1.0% to 1.5% on a like-for-like basis, compared to the previously communicated decline rate of approximately 1.0%, primarily reflecting the impact of earlier-than-initially-anticipated price increases in select markets;

• Heated tobacco unit shipment volume in line with PMI's in-market heated tobacco unit sales volume, with 2019 inventory movements in individual markets expected to offset on an aggregate basis;

• Currency-neutral net revenue growth, on a like-for-like basis, of at least 6%;

• Currency-neutral net incremental investment behind RRPs of approximately $400 million for the full year 2019;

• An increase in full-year currency-neutral, like-for-like adjusted operating income margin of approximately 150 basis points versus 2018, compared to the previously communicated increase of at least 100 basis points;

• Operating cash flow of approximately $9.2 billion, compared to the previously communicated assumption of $9.5 billion, primarily reflecting the impact of the Russia excise and VAT audit charge described above, subject to year-end working capital requirements;

• Capital expenditures of approximately $1.0 billion, compared to the previously communicated assumption of $1.1 billion;

• An effective tax rate of approximately 23%; and

• No share repurchases.

This forecast excludes the impact of any future acquisitions, unanticipated asset impairment and exit cost charges, future changes in currency exchange rates, further developments related to the Tax Cuts and Jobs Act, further developments pertaining to the judgment in the two Québec Class Action lawsuits and the Companies’ Creditors Arrangement Act (CCAA) protection granted to RBH and any unusual events. 

- -4 -

This forecast also excludes the contemplated proposal, previously communicated by PMI's local affiliate, to end cigarette production in Berlin, Germany, by January 2020, as part of global manufacturing infrastructure optimization. Until the consultation process is concluded, the closure of the Berlin facility is not considered probable (under U.S. GAAP), and the total potential costs associated with this contemplated proposal, which are expected to be significant, cannot be determined.  As a result, no related costs were recorded in the third quarter of 2019.  If the consultation process is successfully concluded, PMI would expect, at that time, to record charges, which would include employee severance costs, asset costs, including accelerated depreciation, and impairment and other closure related costs.  The amount and timing of the income statement recognition of these amounts and the related cash flows will depend on a number of factors including the timing of the completion of the consultation process as well as the negotiated elements of the associated social plan. The Berlin facility has a projected 2019 production capacity of approximately 40 billion units. Approximately 950 employees are anticipated to be impacted under this contemplated proposal.

Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.

Conference Call

A conference call, hosted by Martin King, Chief Financial Officer, will be webcast at 9:00 a.m., Eastern Time, on October 17, 2019. Access is at www.pmi.com/2019Q3earnings. The audio webcast may also be accessed on iOS or Android devices by downloading PMI’s free Investor Relations Mobile Application at www.pmi.com/irapp.

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CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE

PMI Shipment Volume by Region	Third-Quarter				Nine Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes
European Union	47,238	48,223	(2.0	)%	133,093	135,878	(2.0	)%
Eastern Europe	27,379	29,801	(8.1	)%	74,779	80,294	(6.9	)%
Middle East & Africa	36,994	37,406	(1.1	)%	101,957	100,831	1.1	%
South & Southeast Asia	42,362	45,840	(7.6	)%	130,230	130,846	(0.5	)%
East Asia & Australia	12,692	14,186	(10.5	)%	38,650	43,391	(10.9	)%
Latin America & Canada	16,854	19,612	(14.1	)%	52,906	58,829	(10.1	)%
Total PMI	183,519	195,068	(5.9	)%	531,615	550,069	(3.4	)%
Heated Tobacco Units
European Union	3,474	1,730	+100%		8,810	3,853	+100%
Eastern Europe	3,858	1,152	+100%		8,213	2,667	+100%
Middle East & Africa	588	1,152	(49.0	)%	2,061	2,832	(27.2	)%
South & Southeast Asia	—	—	—	%	—	—	—	%
East Asia & Australia	7,976	4,575	74.3	%	23,253	19,755	17.7	%
Latin America & Canada (1)	89	43	+100%		202	98	+100%
Total PMI	15,985	8,652	84.8	%	42,539	29,205	45.7	%
Cigarettes and Heated Tobacco Units
European Union	50,712	49,953	1.5	%	141,903	139,731	1.6	%
Eastern Europe	31,237	30,953	0.9	%	82,992	82,961	—	%
Middle East & Africa	37,582	38,558	(2.5	)%	104,018	103,663	0.3	%
South & Southeast Asia	42,362	45,840	(7.6	)%	130,230	130,846	(0.5	)%
East Asia & Australia	20,668	18,761	10.2	%	61,903	63,146	(2.0	)%
Latin America & Canada	16,943	19,655	(13.8	)%	53,108	58,927	(9.9	)%
Total PMI	199,504	203,720	(2.1	)%	574,154	579,274	(0.9	)%
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license.

Third-Quarter

PMI's total shipment volume decreased by 2.1%, or by 1.4% on a like-for-like basis, principally due to:

• Middle East & Africa, reflecting lower heated tobacco unit shipment volume in PMI Duty Free and cigarette shipment volume, notably in Saudi Arabia and Turkey, partly offset by Egypt;

• South & Southeast Asia, reflecting lower cigarette shipment volume, primarily in Indonesia, Pakistan and the Philippines, partly offset by Thailand; and

• Latin America & Canada, due to lower cigarette shipment volume, primarily in Canada (reflecting the impact of the deconsolidation of RBH) and Mexico, partly offset by Brazil. On a like-for-like basis, PMI's total shipment volume in the Region decreased by 6.9%;

partly offset by

• the EU, reflecting higher heated tobacco unit shipment volume across the Region, notably in Italy, partly offset by lower cigarette shipment volume, primarily in France and Italy;

- -6 -

• Eastern Europe, reflecting higher heated tobacco unit shipment volume across the Region, notably in Kazakhstan, Russia and Ukraine, partly offset by lower cigarette shipment volume, mainly in Russia and Ukraine; and

• East Asia & Australia, driven by higher heated tobacco unit shipment volume in Japan (mainly reflecting a favorable comparison with the third quarter of 2018 in which IQOS consumable inventories were reduced), partly offset by lower cigarette shipment volume across the Region, notably in Japan and Korea, as well as lower heated tobacco unit shipment volume in Korea.

Impact of Inventory Movements

On a like-for-like basis, excluding the net favorable impact of estimated distributor inventory movements of approximately 4.8 billion units, PMI’s total in-market sales declined by 3.6% due to a 5.7% decline of cigarette in-market sales, partially offset by a 28.3% increase in heated tobacco unit in-market sales.

The net favorable impact of estimated distributor inventory movements of approximately 4.8 billion units was driven by 3.8 billion heated tobacco units (mainly reflecting a favorable comparison with the third quarter of 2018 in which IQOS consumable inventories in Japan were reduced), and 1.0 billion cigarettes, driven partly by Japan.

Nine Months Year-to-Date

PMI's total shipment volume decreased by 0.9%, or by 0.4% on a like-for-like basis, due to:

• South & Southeast Asia, reflecting lower cigarette shipment volume, primarily in Indonesia and Pakistan, partly offset by the Philippines and Thailand;

• East Asia & Australia, primarily reflecting lower cigarette shipment volume in Japan and lower cigarette and heated tobacco unit shipment volume in Korea, partly offset by higher heated tobacco unit shipment volume in Japan; and

• Latin America & Canada, reflecting lower cigarette shipment volume, principally in Argentina, Canada (primarily reflecting the impact of the deconsolidation of RBH), Mexico and Venezuela, partly offset by Brazil. On a like-for-like basis, PMI's total shipment volume in the Region decreased by 5.2%;

partly offset by

• the EU, reflecting higher heated tobacco unit shipment volume across the Region, notably in Italy, and higher cigarette shipment volume in Poland, partly offset by lower cigarette shipment volume in France and Italy; and

• Middle East & Africa, primarily reflecting higher cigarette shipment volume, notably in Egypt and Saudi Arabia, partly offset by lower cigarette and heated tobacco unit shipment volume in PMI Duty Free.

PMI's total shipment volume in Eastern Europe was flat, reflecting higher heated tobacco unit shipment volume across the Region, notably in Kazakhstan, Russia and Ukraine, offset by lower cigarette shipment volume, primarily in Russia and Ukraine.

Impact of Inventory Movements

On a like-for-like basis, excluding the net favorable impact of estimated distributor inventory movements of approximately 3.6 billion units, PMI’s total in-market sales declined by 1.0% due to a 2.9% decline of cigarette in-market sales, partly offset by a 31.8% increase in heated tobacco unit in-market sales.

The net favorable impact of estimated distributor inventory movements of approximately 3.6 billion units reflected 2.9 billion heated tobacco units, driven primarily by Japan, partly offset by PMI Duty Free and Russia, and 0.7 billion cigarettes, driven primarily by the EU Region and Saudi Arabia, partly offset by North Africa and Thailand.

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PMI Shipment Volume by Brand

PMI Shipment Volume by Brand	Third-Quarter				Nine Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes
Marlboro	68,859	69,121	(0.4	)%	196,883	195,987	0.5	%
L&M	24,428	24,329	0.4	%	69,765	66,751	4.5	%
Chesterfield	15,001	15,821	(5.2	)%	43,502	44,622	(2.5	)%
Philip Morris	13,275	13,505	(1.7	)%	36,949	36,687	0.7	%
Parliament	10,407	11,588	(10.2	)%	29,085	31,041	(6.3	)%
Sampoerna A	8,756	10,333	(15.3	)%	26,012	29,131	(10.7	)%
Dji Sam Soe	8,599	7,578	13.5	%	23,089	21,151	9.2	%
Bond Street	7,687	8,595	(10.6	)%	21,099	23,960	(11.9	)%
Lark	4,955	6,058	(18.2	)%	15,575	17,604	(11.5	)%
Fortune	3,215	4,052	(20.7	)%	9,702	11,791	(17.7	)%
Others	18,337	24,088	(23.9	)%	59,954	71,344	(16.0	)%
Total Cigarettes	183,519	195,068	(5.9	)%	531,615	550,069	(3.4	)%
Heated Tobacco Units (1)	15,985	8,652	84.8	%	42,539	29,205	45.7	%
Total PMI	199,504	203,720	(2.1	)%	574,154	579,274	(0.9	)%
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license.
Note: Sampoerna A includes Sampoerna; Philip Morris includes Philip Morris/Dubliss; and Lark includes Lark Harmony.

Third-Quarter

PMI's cigarette shipment volume of the following brands decreased:

• Marlboro, mainly due to the GCC, Japan, partly reflecting the impact of out-switching to heated tobacco units, and Mexico, partly offset by the Philippines and Turkey;

• Chesterfield, mainly due to Argentina, Mexico, Russia and Saudi Arabia, partly offset by Brazil;

• Philip Morris, mainly due to Ukraine, partly offset by Indonesia;

• Parliament, mainly due to Japan, Korea, Russia and Turkey;

• Sampoerna A in Indonesia, mainly reflecting the impact of retail price increases resulting in widened price gaps with competitors' products;

• Bond Street, mainly due to Russia and Ukraine;

• Lark, mainly due to Japan and Turkey;

• Fortune in the Philippines, mainly reflecting up-trading to Marlboro resulting from narrowed price gaps with the below premium price segment; and

• "Others," notably due to: the impact of the deconsolidation of RBH in Canada; mid-price Sampoerna U in Indonesia, partly reflecting the impact of above-inflation retail price increases; and low-price brands, notably Morven in Pakistan, partly offset by Jackpot in the Philippines.

The increase in PMI's heated tobacco unit shipment volume was mainly driven by the EU, notably Italy, Eastern Europe, notably Kazakhstan, Russia and Ukraine, as well as Japan, partly offset by Korea and PMI Duty Free.

PMI's cigarette shipment volume of the following brands increased:

• L&M, mainly driven by Egypt and Thailand, partly offset by Russia and Turkey; and

• Dji Sam Soe in Indonesia, driven by the strong performance of the DSS Magnum Mild 16 variant and the introduction of 20s and 50s variants.

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International Share of Market

PMI's total international market share (excluding China and the United States), defined as PMI's cigarette and heated tobacco unit sales volume as a percentage of total industry cigarette and heated tobacco unit sales volume, decreased by 0.1 point to 28.8%, reflecting:

• Total international cigarette market share of 26.5%, down by 0.6 points; and

• Total international heated tobacco unit market share of 2.3%, up by 0.6 points.

PMI's total international cigarette market share, defined as PMI's cigarette sales volume as a percentage of total industry cigarette sales volume, was 27.3%, down by 0.4 points, mainly reflecting: out-switching to IQOS, notably in the EU Region, Japan and Russia; and lower cigarette market share, notably in Argentina, Indonesia, Korea, Mexico and Turkey.

Nine Months Year-to-Date

PMI's cigarette shipment volume of the following brands decreased:

• Chesterfield, mainly due to Argentina, Italy, Russia and Venezuela, partly offset by Brazil, Mexico and Poland;

• Parliament, mainly due to Korea and Russia, partly offset by Turkey;

• Sampoerna A in Indonesia, reflecting the same factor as in the quarter;

• Bond Street, mainly due to Russia and Ukraine;

• Lark, mainly due to Japan and Turkey;

• Fortune in the Philippines, mainly reflecting the same factor as in the quarter; and

• "Others," notably due to: the impact of the deconsolidation of RBH in Canada; mid-price Sampoerna U in Indonesia, partly reflecting the impact of above-inflation retail price increases; and low-price brands, notably in Mexico, mainly reflecting the morphing of Delicados into Chesterfield, and Russia, partly offset by Jackpot in the Philippines.

The increase in PMI's heated tobacco unit shipment volume was mainly driven by: the EU, notably Italy, Eastern Europe, notably Kazakhstan, Russia and Ukraine, and Japan, partly offset by Korea and PMI Duty Free.

PMI's cigarette shipment volume of the following brands increased:

• Marlboro, mainly driven by Indonesia, reflecting the growth of the Filter Black 12s and 20s variants, the Philippines, reflecting up-trading resulting from narrowed price gaps with the below premium price segment, Saudi Arabia and Turkey, partially offset by Italy and Japan, partly reflecting the impact of out-switching to heated tobacco units, as well as France and PMI Duty Free;

• L&M, mainly driven by Egypt, Saudi Arabia and Thailand, partly offset by Russia and Turkey;

• Philip Morris, mainly driven by Indonesia and Russia, partly offset by Argentina; and

• Dji Sam Soe in Indonesia, driven by the same factors as in the quarter.

International Share of Market

PMI's total international market share (excluding China and the United States), 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 0.2 points to 28.3%, reflecting:

• Total international cigarette market share of 26.2%, down by 0.3 points; and

• Total international heated tobacco unit market share of 2.1%, up by 0.5 points.

- -9 -

PMI's total international cigarette market share, defined as PMI's cigarette sales volume as a percentage of total industry cigarette sales volume, was 26.9%, down by 0.2 points.

CONSOLIDATED FINANCIAL SUMMARY

Third-Quarter

Financial Summary - Quarters Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other(1)
(in millions)
Net Revenues	$ 7,642		$ 7,504		1.8	%	3.4	%	138		(115	)	266	263		(276	)
Cost of Sales	(2,605)		(2,618)		0.5	%	(0.6	)%	13		30		—	(181	)	164
Marketing, Administration and Research Costs (2)	(2,234)		(1,710)		(30.6	)%	(34.8	)%	(524	)	71		—	—		(595	)
Amortization of Intangibles	(15)		(20)		25.0	%	15.0	%	5		2		—	—		3
Operating Income	$ 2,788		$ 3,156		(11.7	)%	(11.3	)%	(368	)	(12	)	266	82		(704	)
Asset Impairment & Exit Costs (3)	(22	)	—		—	%	—	%	(22	)	—		—	—		(22	)
Russia Excise and VAT Audit Charge (3)	(374	)	—		—	%	—	%	(374	)	—		—	—		(374	)
Adjusted Operating Income	$ 3,184		$ 3,156		0.9	%	1.3	%	28		(12	)	266	82		(308	)
Adjusted Operating Income Margin	41.7	%	42.1	%	(0.4)pp		(0.9)pp
(1) Cost/Other variance includes the impact of the RBH deconsolidation.
(2) Unfavorable Cost/Other variance includes 2019 asset impairment and exit costs and the Russia excise and VAT audit charge.
(3) Included in Marketing, Administration and Research Costs above.
Note: Net Revenues include revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States.

Net revenues, excluding unfavorable currency, increased by 3.4%, mainly reflecting: a favorable pricing variance, driven notably by Germany, Indonesia, Mexico, the Philippines and Turkey, partly offset by Japan (reflecting the price repositioning of IQOS devices and associated inventory revaluation); as well as a favorable volume/mix, mainly driven by heated tobacco units, notably across the EU, Japan and Russia, partly offset by unfavorable volume/mix of cigarettes, notably in Australia, Indonesia, Japan, Mexico, Russia and Turkey, as well as unfavorable volume of heated tobacco units in Korea and PMI Duty Free. The currency-neutral growth in net revenues of 3.4% came despite the unfavorable impact of $276 million, shown in "Cost/Other," predominantly resulting from the deconsolidation of RBH. On a like-for-like basis, net revenues, excluding unfavorable currency, increased by 7.0%, as detailed in the attached Schedule 9.

Operating income, excluding unfavorable currency, decreased by 11.3%. Excluding asset impairment and exit charges related to a plant closure in Colombia as part of global manufacturing infrastructure optimization, as well as the Russia excise and VAT audit charge, adjusted operating income, excluding unfavorable currency, increased by 1.3%, primarily reflecting: a favorable pricing variance; favorable volume/mix, reflecting the same drivers as for net revenues noted above; and lower manufacturing costs across the Regions; partly offset by higher marketing, administration and research costs, reflecting increased investment behind reduced-risk products mainly in the EU, Eastern Europe and East Asia & Australia, and the net unfavorable impact resulting from the deconsolidation of RBH shown in "Cost/Other." On a like-for-like basis, adjusted operating income, excluding unfavorable currency, increased by 8.0%, as detailed in the attached Schedule 9.

Adjusted operating income margin, excluding currency, decreased by 0.9 points to 41.2%, reflecting the factors

- -10 -

mentioned above, as detailed in the attached Schedule 8, or increased by 0.4 points to 41.2% on a like-for-like basis, as detailed in the attached Schedule 9.

Nine Months Year-to-Date

Financial Summary - Nine Months Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other(1)
(in millions)
Net Revenues	$ 22,092		$ 22,126		(0.2	)%	4.1	%	(34	)	(931	)	953	457		(513	)
Cost of Sales	(7,735	)	(7,977	)	3.0	%	(0.4	)%	242		274		—	(255	)	223
Marketing, Administration and Research Costs (2)	(6,282	)	(5,411	)	(16.1	)%	(22.3	)%	(871	)	333		—	—		(1,204	)
Amortization of Intangibles	(50	)	(63	)	20.6	%	15.9	%	13		3		—	—		10
Operating Income	$ 8,025		$ 8,675		(7.5	)%	(3.8	)%	(650	)	(321	)	953	202		(1,484	)
Asset Impairment & Exit Costs (3)	(65	)	—		—	%	—	%	(65	)	—		—	—		(65	)
Canadian Tobacco Litigation-Related Expense (3)	(194	)	—		—	%	—	%	(194	)	—		—	—		(194	)
Loss on Deconsolidation of RBH (3)	(239	)	—		—	%	—	%	(239	)	—		—	—		(239	)
Russia Excise and VAT Audit Charge (3)	(374	)	—		—	%	—	%	(374	)	—		—	—		(374	)
Adjusted Operating Income	$ 8,897		$ 8,675		2.6	%	6.3	%	222		(321	)	953	202		(612	)
Adjusted Operating Income Margin	40.3	%	39.2	%	1.1pp		0.8pp
(1) Cost/Other variance includes the impact of the RBH deconsolidation.
(2) Unfavorable Cost/Other variance includes the 2019 Canadian tobacco litigation-related expense, the loss on deconsolidation of RBH, asset impairment and exit costs, the impact of the RBH deconsolidation and the Russia excise and VAT audit charge.
(3) Included in Marketing, Administration and Research Costs above.
Note: Net Revenues include revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States.

Net revenues, excluding unfavorable currency, increased by 4.1%, mainly reflecting: a favorable pricing variance, notably in Germany, Indonesia, Japan, the Philippines and Turkey, partly offset by Argentina; and favorable volume/mix, mainly driven by heated tobacco units in the EU, Japan and Russia, partly offset by unfavorable volume/mix of cigarettes, notably in the EU, Indonesia, Japan and Russia, as well as unfavorable volume of heated tobacco units in Korea and PMI Duty Free. The currency-neutral growth in net revenues of 4.1% came despite the unfavorable impact of $513 million, shown in "Cost/Other," predominantly resulting from the deconsolidation of RBH. On a like-for-like basis, net revenues, excluding unfavorable currency, increased by 6.5%, as detailed in the attached Schedule 9.

Operating income, excluding unfavorable currency, decreased by 3.8%. Excluding the loss on deconsolidation of RBH, the Canadian tobacco litigation-related expense, and asset impairment and exit charges related to plant closures in Colombia and Pakistan as part of global manufacturing infrastructure optimization, as well as the Russia excise and VAT audit charge, adjusted operating income, excluding unfavorable currency, increased by 6.3%, primarily reflecting: a favorable pricing variance; favorable volume/mix, mainly across the EU, Eastern Europe and the Philippines, partly offset by Argentina, Australia, Indonesia, Japan, Korea and PMI Duty Free; and lower manufacturing costs; partly offset by higher marketing, administration and research costs, reflecting increased investment behind reduced-risk products mainly in the EU and Eastern Europe, and the net unfavorable impact resulting from the deconsolidation of RBH, shown in "Cost/Other." On a like-for-like basis, adjusted operating

- -11 -

income, excluding unfavorable currency, increased by 11.0%, as detailed in the attached Schedule 9.

Adjusted operating income margin, excluding currency, increased by 0.8 points to 40.0%, reflecting the factors mentioned above, as detailed in the attached Schedule 8, or by 1.6 points to 40.0% on a like-for-like basis, as detailed in the attached Schedule 9.

EUROPEAN UNION REGION

Third-Quarter

Financial Summary - Quarters Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)
Net Revenues	$ 2,645		$ 2,467		7.2	%	11.2	%	178	(98	)	54	222	—
Operating Income	$ 1,255		$ 1,179		6.4	%	12.0	%	76	(66	)	54	153	(65	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—	—		—	—	—
Adjusted Operating Income	$ 1,255		$ 1,179		6.4	%	12.0	%	76	(66	)	54	153	(65	)
Adjusted Operating Income Margin	47.4	%	47.8	%	(0.4)pp		0.4pp

Net revenues, excluding unfavorable currency, increased by 11.2%, reflecting a favorable pricing variance, driven principally by France, Germany and the United Kingdom, and favorable volume/mix, driven by favorable heated tobacco unit volume, notably in the Czech Republic, Germany, Italy and Poland, partly offset by unfavorable cigarette volume/mix, notably in Germany, Italy and the United Kingdom.

Operating income, excluding unfavorable currency, increased by 12.0%, mainly reflecting: a favorable pricing variance; favorable volume/mix, driven by heated tobacco unit volume, notably in the Czech Republic, Germany, Italy and Poland, partly offset by lower cigarette volume/mix, notably in Germany, Italy, Switzerland and the United Kingdom; and lower manufacturing costs; partly offset by higher marketing, administration and research costs, largely related to increased investments behind reduced-risk products.

Adjusted operating income margin, excluding currency, increased by 0.4 points to 48.2%, reflecting the factors mentioned above, as detailed on Schedule 8.

Nine Months Year-to-Date

Financial Summary - Nine Months Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)
Net Revenues	$ 7,381		$ 6,958		6.1	%	12.6	%	423	(457	)	206	674	—
Operating Income	$ 3,346		$ 3,096		8.1	%	16.5	%	250	(261	)	206	518	(213	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—	—		—	—	—
Adjusted Operating Income	$ 3,346		$ 3,096		8.1	%	16.5	%	250	(261	)	206	518	(213	)
Adjusted Operating Income Margin	45.3	%	44.5	%	0.8pp		1.5pp

- -12 -

Net revenues, excluding unfavorable currency, increased by 12.6%, reflecting a favorable pricing variance, driven principally by France, Germany and the United Kingdom, partly offset by Poland; and favorable volume/mix, primarily reflecting favorable heated tobacco unit volume/mix, notably in the Czech Republic, Germany, Italy and Poland, partly offset by lower cigarette volume, notably in France and Italy, and lower cigarette volume/mix in Germany.

Operating income, excluding unfavorable currency, increased by 16.5%, mainly reflecting: a favorable pricing variance; favorable volume/mix, notably in the Czech Republic, Germany, Italy and Poland, driven by heated tobacco unit volume, partially offset by lower cigarette volume/mix, reflecting the same drivers as for net revenues noted above; partially offset by higher manufacturing costs and higher marketing, administration and research costs notably related to increased investment behind reduced-risk products.

Adjusted operating income margin, excluding currency, increased by 1.5 points to 46.0%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries

European Union Key Data	Third-Quarter						Nine Months Year-to-Date
					Change						Change
	2019		2018		% / pp		2019		2018		% / pp
Total Market (billion units)	132.1		131.4		0.5	%	363.8		365.2		(0.4	)%
PMI Shipment Volume (million units)
Cigarettes	47,238		48,223		(2.0	)%	133,093		135,878		(2.0	)%
Heated Tobacco Units	3,474		1,730		+100.0%		8,810		3,853		+100.0%
Total EU	50,712		49,953		1.5	%	141,903		139,731		1.6	%
PMI Market Share
Marlboro	18.0	%	18.5	%	(0.5	)	18.1	%	18.4	%	(0.3	)
L&M	6.7	%	7.0	%	(0.3	)	6.7	%	6.9	%	(0.2	)
Chesterfield	5.8	%	5.9	%	(0.1	)	5.8	%	5.9	%	(0.1	)
Philip Morris	2.7	%	2.9	%	(0.2	)	2.7	%	3.0	%	(0.3	)
HEETS	2.5	%	1.2	%	1.3		2.3	%	1.0	%	1.3
Others	3.0	%	3.0	%	—		3.2	%	3.2	%	—
Total EU	38.7	%	38.5	%	0.2		38.8	%	38.4	%	0.4

Third-Quarter

The estimated total market in the EU increased by 0.5% to 132.1 billion units, mainly driven by:

• Germany, up by 1.3%, primarily reflecting the impact of estimated trade inventory movements of competitors' products, partly offset by the impact of price increases in March 2019; and

• Poland, up by 4.3%, primarily reflecting a lower prevalence of illicit trade;

partly offset by

• France, down by 4.8%, mainly due to the impact of significant excise-tax driven price increases, and an increase in the prevalence of illicit trade.

PMI's total shipment volume increased by 1.5% to 50.7 billion units, reflecting:

• higher heated tobacco unit shipment volume across the Region, notably Italy, driven by higher market share;

- -13 -

partly offset by:

• lower cigarette shipment volume, mainly in France, due to the lower total market and lower cigarette market share, and Italy, partly reflecting out-switching to heated tobacco units.

Nine Months Year-to-Date

The estimated total market in the EU decreased by 0.4% to 363.8 billion units, notably due to:

• France, down by 6.4%, primarily reflecting the impact of price increases in 2018 and the first quarter of 2019;

• Germany, down by 1.9%, primarily reflecting the impact of price increases in 2018 and March 2019; and

• Italy, down by 1.8%, primarily reflecting the impact of price increases in 2018 and the first quarter of 2019;

partly offset by

• Poland, up by 6.7%, reflecting the same factor as in the quarter; and

• Spain, up by 0.9%, partly reflecting a lower prevalence of illicit trade.

PMI's total shipment volume increased by 1.6% to 141.9 billion units, reflecting:

• higher heated tobacco unit shipment volume across the Region, notably Italy, driven by higher market share;

partly offset by

• lower cigarette shipment volume, mainly in France and Italy, reflecting the same factors as in the quarter, partly offset by Poland, mainly driven by the higher total market.

EASTERN EUROPE REGION

Third-Quarter

Financial Summary - Quarters Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price		Vol/ Mix	Cost/ Other
(in millions)
Net Revenues	$ 899		$ 778		15.6	%	16.5	%	121		(7	)	(3	)	131	—
Operating Income (Loss)	$ (101)		$ 270		-(100)%		-(100)%		(371	)	25		(3	)	32	(425	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—		—	—
Russia Excise and VAT Audit Charge (1)	(374	)	—		—	%	—	%	(374	)	—		—		—	(374	)
Adjusted Operating Income	$ 273		$ 270		1.1	%	(8.1	)%	3		25		(3	)	32	(51	)
Adjusted Operating Income Margin	30.4	%	34.7	%	(4.3)pp		(7.3)pp
(1) Included in marketing, administration and research costs at the consolidated operating income level.

Net revenues, excluding unfavorable currency, increased by 16.5%, reflecting favorable volume/mix, predominantly driven by heated tobacco unit volume in Kazakhstan and Ukraine, and heated tobacco unit and IQOS device volume in Russia, partly offset by lower cigarette volume/mix, mainly due to Russia and Ukraine.

Operating income, excluding favorable currency, decreased by over 100% due primarily to the unfavorable impact, shown in "Cost/Other," of the Russia excise and VAT audit charge. Excluding this charge, adjusted operating income, excluding favorable currency, decreased by 8.1%, mainly due to higher marketing, administration and research costs, notably reflecting increased investments behind reduced-risk products, primarily in Russia in support

- -14 -

of geographic expansion, partly offset by favorable volume/mix, predominantly driven by heated tobacco unit volume in Russia, partly offset by lower cigarette volume/mix in Russia.

Adjusted operating income margin, excluding currency, decreased by 7.3 points to 27.4%, reflecting the factors mentioned above, as detailed on Schedule 8.

Nine Months Year-to-Date

Financial Summary - Nine Months Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)
Net Revenues	$ 2,300		$ 2,105		9.3	%	15.8	%	195		(137	)	50	282	—
Operating Income	$ 284		$ 682		(58.4	)%	(56.9	)%	(398	)	(10	)	50	73	(511	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—	—
Russia Excise and VAT Audit Charge (1)	(374	)	—		—	%	—	%	(374	)	—		—	—	(374	)
Adjusted Operating Income	$ 658		$ 682		(3.5	)%	(2.1	)%	(24	)	(10	)	50	73	(137	)
Adjusted Operating Income Margin	28.6	%	32.4	%	(3.8)pp		(5.0)pp
(1) Included in marketing, administration and research costs at the consolidated operating income level.

Net revenues, excluding unfavorable currency, increased by 15.8%, reflecting a favorable pricing variance, driven notably by Ukraine, and favorable volume/mix, predominantly driven by heated tobacco unit and IQOS device volume in Russia and Ukraine, partly offset by lower cigarette volume/mix in Russia.

Operating income, excluding unfavorable currency, decreased by 56.9% due primarily to the unfavorable impact, shown in "Cost/Other," of the Russia excise and VAT audit charge. Excluding this charge, adjusted operating income, excluding unfavorable currency, decreased by 2.1%, due to: higher manufacturing costs and higher marketing, administration and research costs, notably reflecting increased investments behind reduced-risk products, primarily in Russia in support of geographic expansion; partly offset by a favorable pricing variance and favorable volume/mix, predominantly driven by heated tobacco unit volume in Russia and Ukraine, partly offset by lower cigarette volume/mix in Russia.

Adjusted operating income margin, excluding currency, decreased by 5.0 points to 27.4%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries

PMI Shipment Volume	Third-Quarter				Nine Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	27,379	29,801	(8.1	)%	74,779	80,294	(6.9	)%
Heated Tobacco Units	3,858	1,152	+100.0%		8,213	2,667	+100.0%
Total Eastern Europe	31,237	30,953	0.9	%	82,992	82,961	—	%

Third-Quarter

The estimated total market in Eastern Europe decreased, notably due to:

- -15 -

• Russia, down by 5.9%, primarily reflecting the impact of price increases, as well as an increase in the prevalence of illicit trade; and

• Ukraine, down by 14.5%, primarily reflecting the impact of excise tax-driven price increases, as well as an increase in the prevalence of illicit trade;

partly offset by

• Kazakhstan, up by 4.6%, partly reflecting a lower prevalence of illicit trade.

PMI's total shipment volume increased by 0.9% to 31.2 billion units, driven by:

• Kazakhstan, up by 7.9%, mainly reflecting a higher total market and a higher market share of heated tobacco units; and

• Russia, up by 2.8%, mainly reflecting a higher market share of heated tobacco units, partially offset by the lower total market;

partly offset by

• Ukraine, down by 6.3%, reflecting a lower total market, partly offset by higher market share of heated tobacco units.

Nine Months Year-to-Date

The estimated total market in Eastern Europe decreased, notably due to:

• Russia, down by 5.3%, reflecting the same factors as in the quarter; and

• Ukraine, down by 13.4%, reflecting the same factors as in the quarter;

partly offset by

• Kazakhstan, up by 5.2%, reflecting the same factor as in the quarter.

PMI's total shipment volume was flat at 83.0 billion units, notably reflecting:

• Kazakhstan, up by 10.5%, reflecting a higher total market and a higher market share of heated tobacco units; and

• Russia, up by 0.1%, mainly reflecting a higher market share of heated tobacco units, partially offset by the lower total market;

offset by

• Ukraine, down by 3.2%, reflecting a lower total market, partly offset by a higher market share, notably of heated tobacco units.

- -16 -

MIDDLE EAST & AFRICA REGION

Third-Quarter

Financial Summary - Quarters Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
(in millions)
Net Revenues	$ 1,127		$ 1,143		(1.4	)%	—	%	(16	)	(16	)	89	(70	)	(19	)
Operating Income	$ 519		$ 491		5.7	%	4.9	%	28		4		89	(69	)	4
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—		—
Adjusted Operating Income	$ 519		$ 491		5.7	%	4.9	%	28		4		89	(69	)	4
Adjusted Operating Income Margin	46.1	%	43.0	%	3.1pp		2.1pp

Net revenues, excluding unfavorable currency, were flat, reflecting a favorable pricing variance, driven predominantly by Turkey, offset by: unfavorable volume/mix, notably due to unfavorable heated tobacco unit volume in PMI Duty Free, and unfavorable cigarette volume in the GCC, primarily Saudi Arabia, and Turkey, partly offset by favorable cigarette volume in Egypt; and an unfavorable cost/other variance mainly driven by the timing of other revenues.

Operating income, excluding favorable currency, increased by 4.9%, mainly reflecting a favorable pricing variance and lower manufacturing costs, partly offset by unfavorable volume/mix, reflecting the same drivers as for net revenues noted above, and the timing of other revenues.

Adjusted operating income margin, excluding currency, increased by 2.1 points to 45.1%, reflecting the factors mentioned above, as detailed on Schedule 8.

- -17 -

Nine Months Year-to-Date

Financial Summary - Nine Months Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
(in millions)
Net Revenues	$ 3,058		$ 3,126		(2.2	)%	3.4	%	(68	)	(174	)	154	(45	)	(3	)
Operating Income	$ 1,304		$ 1,268		2.8	%	8.2	%	36		(68	)	154	(81	)	31
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—		—
Adjusted Operating Income	$ 1,304		$ 1,268		2.8	%	8.2	%	36		(68	)	154	(81	)	31
Adjusted Operating Income Margin	42.6	%	40.6	%	2.0pp		1.9pp

Net revenues, excluding unfavorable currency, increased by 3.4%, mainly reflecting: a favorable pricing variance, primarily driven by Egypt, Kuwait, PMI Duty Free and Turkey, partly offset by Saudi Arabia; partly offset by unfavorable volume/mix, predominantly due to unfavorable cigarette and heated tobacco unit volume in PMI Duty Free, partly offset by Egypt and Saudi Arabia.

Operating income, excluding unfavorable currency, increased by 8.2%, mainly reflecting a favorable pricing variance and lower manufacturing costs, partly offset by unfavorable volume/mix, notably due to unfavorable cigarette and heated tobacco unit volume in PMI Duty Free, partly offset by cigarette mix in Saudi Arabia.

Adjusted operating income margin, excluding currency, increased by 1.9 points to 42.5%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries

PMI Shipment Volume	Third-Quarter				Nine Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	36,994	37,406	(1.1	)%	101,957	100,831	1.1	%
Heated Tobacco Units	588	1,152	(49.0	)%	2,061	2,832	(27.2	)%
Total Middle East & Africa	37,582	38,558	(2.5	)%	104,018	103,663	0.3	%

Third-Quarter

The estimated total market in the Middle East & Africa increased, notably driven by:

• Algeria, up by 7.5%, partly reflecting the impact of estimated trade inventory movements;

• Egypt, up by 10.1%, mainly due to the timing of estimated trade inventory movements in the third quarter of 2019 related to anticipated price increases compared to estimated unfavorable trade inventory movements in the third quarter of 2018 following the July 2018 health tax increase; and

• Saudi Arabia, up by 4.1%, primarily reflecting a recovery of the total market following the introduction of the new excise tax in June 2017 and VAT in January 2018, respectively;

partly offset by

• Duty Free, down by 5.6%, mainly reflecting increased enforcement of traveler allowances, notably by China.

PMI's total shipment volume decreased by 2.5% to 37.6 billion units, notably due to:

- -18 -

• PMI Duty Free, down by 11.1%. Excluding the net unfavorable impact of estimated distributor inventory movements, primarily of heated tobacco units, PMI's in market sales declined by 8.0%, primarily reflecting the lower total market;

• Saudi Arabia, down by 21.1%. Net unfavorable estimated distributor inventory movements totaled 0.6 billion cigarettes, mainly attributable to the pay-back of adjustments in the first half of 2019 resulting from the delayed importation deadline before the implementation of plain packaging scheduled for January 1, 2020. Excluding the impact of these inventory movements, PMI's in-market sales grew by 1.9%; and

• Turkey, down by 10.7%, mainly reflecting lower market share, primarily driven by the timing of above-inflation retail price increases in April 2019 compared to competition, as well as the impact of price increases in August 2019;

partly offset by

• Egypt, up by 22.6%, primarily reflecting higher market share, driven by L&M, as well as a higher total market.

Nine Months Year-to-Date

The estimated total market in the Middle East & Africa increased, notably driven by:

• Algeria, up by 5.9%, partly reflecting the timing of estimated trade inventory movements in 2019 compared to 2018;

• Egypt, up by 1.8%, mainly reflecting the same factor as in the quarter;

• Saudi Arabia, up by 6.3%, primarily reflecting a favorable comparison with the first nine months of 2018, which was down by 24.5%, mainly due to the impact of retail price increases in 2017, the first quarter of 2018 following the introduction of the new excise tax in June 2017 and VAT in January 2018; and

• Turkey, up by 8.2%, notably reflecting a lower prevalence of illicit trade;

partly offset by

• Duty Free, down by 5.4%, mainly reflecting the lower total market.

PMI's total shipment volume increased by 0.3% to 104.0 billion units, notably in:

• Egypt, up by 14.6%, mainly reflecting the same factors as in the quarter; and

• Saudi Arabia, up by 26.1%. Net favorable estimated distributor inventory movements totaled 1.1 billion cigarettes, mainly attributable to the timing of shipments compared to 2018. Excluding the impact of these inventory movements, PMI's in-market sales grew by 4.6%, partly reflecting a higher total market;

partly offset by

• PMI Duty Free, down by 10.6%. Excluding the net unfavorable impact of estimated distributor inventory movements of 0.8 billion units, PMI's in-market sales decline was 5.6%, mainly reflecting the same factor as in the quarter.

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SOUTH & SOUTHEAST ASIA REGION

Third-Quarter

Financial Summary - Quarters Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total	Cur- rency	Price	Vol/ Mix		Cost/ Other
(in millions)
Net Revenues	$ 1,246		$ 1,197		4.1	%	2.8	%	49	15	123	(89	)	—
Operating Income	$ 539		$ 455		18.5	%	14.3	%	84	19	123	(64	)	6
Asset Impairment & Exit Costs	—		—		—	%	—	%	—	—	—	—		—
Adjusted Operating Income	$ 539		$ 455		18.5	%	14.3	%	84	19	123	(64	)	6
Adjusted Operating Income Margin	43.3	%	38.0	%	5.3pp		4.2pp

Net revenues, excluding favorable currency, increased by 2.8%, predominantly reflecting a favorable pricing variance driven by Indonesia and the Philippines, partly offset by unfavorable volume/mix, mainly due to Indonesia and Pakistan, partly offset by the favorable mix in the Philippines.

Operating income, excluding favorable currency, increased by 14.3%, predominantly reflecting: a favorable pricing variance; lower manufacturing costs, mainly in the Philippines; partly offset by unfavorable volume/mix, mainly due to Indonesia and Pakistan, partly offset by favorable mix in the Philippines; and higher marketing, administration and research costs.

Adjusted operating income margin, excluding currency, increased by 4.2 points to 42.2%, reflecting the factors mentioned above, as detailed on Schedule 8.

Nine Months Year-to-Date

Financial Summary - Nine Months Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
(in millions)
Net Revenues	$ 3,607		$ 3,434		5.0	%	7.3	%	173		(78	)	313	(62	)	—
Operating Income	$ 1,471		$ 1,324		11.1	%	13.0	%	147		(25	)	313	(41	)	(100	)
Asset Impairment & Exit Costs (1)	(20	)	—		—	%	—	%	(20	)	—		—	—		(20	)
Adjusted Operating Income	$ 1,491		$ 1,324		12.6	%	14.5	%	167		(25	)	313	(41	)	(80	)
Adjusted Operating Income Margin	41.3	%	38.6	%	2.7pp		2.5pp
(1) Included in marketing, administration and research costs at the consolidated operating income level.

Net revenues, excluding unfavorable currency, increased by 7.3%, reflecting: a favorable pricing variance, driven principally by Indonesia and the Philippines, partly offset by unfavorable volume/mix, largely due to Indonesia, partly offset by the Philippines.

Operating income, excluding unfavorable currency, increased by 13.0%. Excluding asset impairment and exit costs related to a plant closure in Pakistan in the first quarter of 2019 as part of global manufacturing infrastructure optimization, adjusted operating income, excluding unfavorable currency, increased by 14.5%, mainly reflecting: a

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favorable pricing variance; partly offset by unfavorable volume/mix, mainly due to Indonesia, partly offset by the Philippines; and higher marketing, administration and research costs, partly due to the Philippines.

Adjusted operating income margin, excluding currency, increased by 2.5 points to 41.1%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries

PMI Shipment Volume	Third-Quarter				Nine Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	42,362	45,840	(7.6	)%	130,230	130,846	(0.5	)%
Heated Tobacco Units	—	—	—	%	—	—	—	%
Total South & Southeast Asia	42,362	45,840	(7.6	)%	130,230	130,846	(0.5	)%

Third-Quarter

The estimated total market in South & Southeast Asia decreased, notably due to:

• Indonesia, down by 1.6%, mainly due to estimated trade inventory movements;

• Pakistan, down by 49.8%, mainly due to estimated trade inventory movements following those of the second quarter 2019 related to anticipated excise tax-driven price increases compared to the prior year. Excluding the impact of these inventory movements, the total market is estimated to have declined by 14.7%; and

• the Philippines, down by 5.8%, mainly due to the impact of price increases in the below premium segment in the fourth quarter of 2018, as well as price increases in the third-quarter of 2019;

partly offset by

• Thailand, up by 3.3%, primarily reflecting on-going recovery from the September 2017 excise tax reform.

PMI's total shipment volume decreased by 7.6% to 42.4 billion units, notably due to:

• Indonesia, down by 5.7%, mainly reflecting a lower market share, primarily due to widening price gaps between Sampoerna A and competitive brands following its price increase in October 2018, as well as a lower total market;

• Pakistan, down by 54.1%, mainly reflecting a lower total market; and

• the Philippines, down by 2.8%, mainly reflecting a lower total market, partly offset by higher market share, notably of Marlboro;

partly offset by

• Thailand, up by 8.0%, mainly reflecting a higher market share driven by the continued strong performance of L&M7.1 and the favorable impact of distribution expansion in 2018, as well as a higher total market.

Nine Months Year-to-Date

The estimated total market in South & Southeast Asia decreased, notably due to:

• Pakistan, down by 9.8%, mainly reflecting the impact of excise tax-driven price increases; and

• Vietnam, down by 4.4%, mainly reflecting the impact of excise tax-driven price increases;

partly offset by

• Indonesia, up by 0.7%, reflecting the absence of an excise tax increase in 2019; and

• Thailand, up by 12.9%, reflecting the same factor as in the quarter.

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PMI's total shipment volume decreased by 0.5% to 130.2 billion units, notably due to:

• Indonesia, down by 3.2%, mainly reflecting a lower market share primarily due to the widened retail price gap of Sampoerna A to competitive brands following its price increase in October 2018, partly offset by a higher total market; and

• Pakistan, down by 2.4%, mainly reflecting a lower total market, partly offset by a higher market share resulting from the timing of estimated trade inventory movements of competitors' brands;

partly offset by

• the Philippines, up by 1.5%, mainly reflecting a higher market share, notably of Marlboro;and

• Thailand, up by 20.2%, reflecting the same factors as in the quarter.

EAST ASIA & AUSTRALIA REGION

Third-Quarter

Financial Summary - Quarters Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price		Vol/ Mix	Cost/ Other
(in millions)
Net Revenues	$ 1,252		$ 1,166		7.4	%	7.5	%	86	(1	)	(21	)	108	—
Operating Income	$ 451		$ 426		5.9	%	3.1	%	25	12		(21	)	64	(30	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—	—		—		—	—
Adjusted Operating Income	$ 451		$ 426		5.9	%	3.1	%	25	12		(21	)	64	(30	)
Adjusted Operating Income Margin	36.0	%	36.5	%	(0.5)pp		(1.5)pp

Net revenues, excluding unfavorable currency, increased by 7.5%, reflecting favorable volume/mix, mainly driven by heated tobacco units in Japan, reflecting the favorable comparison with the third quarter of 2018 in which distributor inventories were rightsized, partly offset by unfavorable cigarette volume in Australia and Japan, and unfavorable cigarette and heated tobacco unit and IQOS device volume in Korea. The favorable volume/mix was partly offset by an unfavorable pricing variance, mainly due to Japan (reflecting the price repositioning of IQOS devices and associated inventory revaluation).

Operating income, excluding favorable currency, increased by 3.1%, mainly reflecting favorable volume/mix, mainly driven by favorable heated tobacco unit volume in Japan, partly offset by unfavorable cigarette volume in Australia and Japan, and unfavorable cigarette and heated tobacco unit volume in Korea. The favorable volume/mix was partly offset by an unfavorable pricing variance and higher marketing, administration and research costs, partly related to reduced-risk products in Japan, partly offset by lower manufacturing costs, mainly in Korea.

Adjusted operating income margin, excluding currency, decreased by 1.5 points to 35.0%, reflecting the factors mentioned above, as detailed on Schedule 8.

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Nine Months Year-to-Date

Financial Summary - Nine Months Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
(in millions)
Net Revenues	$ 4,094		$ 4,235		(3.3	)%	(2.7	)%	(141	)	(26	)	186	(301	)	—
Operating Income	$ 1,520		$ 1,439		5.6	%	3.3	%	81		33		186	(190	)	52
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—		—
Adjusted Operating Income	$ 1,520		$ 1,439		5.6	%	3.3	%	81		33		186	(190	)	52
Adjusted Operating Income Margin	37.1	%	34.0	%	3.1pp		2.1pp

Net revenues, excluding unfavorable currency, decreased by 2.7%, reflecting: unfavorable volume/mix, mainly due to lower cigarette shipment volume in Australia, Japan and Korea, lower IQOS device volume in Japan and lower heated tobacco unit volume and IQOS device sales in Korea, partly offset by higher heated tobacco unit volume in Japan. The unfavorable volume/mix was partly offset by a favorable pricing variance driven predominantly by Japan.

Operating income, excluding favorable currency, increased by 3.3%, mainly reflecting: a favorable pricing variance and lower manufacturing costs related to Japan and Korea, partly offset by unfavorable volume/mix, reflecting the same drivers as for net revenues noted above, and higher marketing, administration and research costs, mainly related to reduced-risk products in Japan, partly offset by Australia and Korea.

Adjusted operating income margin, excluding currency, increased by 2.1 points to 36.1%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries

PMI Shipment Volume	Third-Quarter				Nine Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	12,692	14,186	(10.5	)%	38,650	43,391	(10.9	)%
Heated Tobacco Units	7,976	4,575	74.3	%	23,253	19,755	17.7	%
Total East Asia & Australia	20,668	18,761	10.2	%	61,903	63,146	(2.0	)%

Third-Quarter

The estimated total market in East Asia & Australia, excluding China, decreased, notably due to:

• Australia, down by 7.4%, or by 11.0% excluding the impact of estimated trade inventory movements, mainly reflecting the impact of excise tax-driven retail price increases;

• Japan, down by 12.9%, or by 4.5% excluding the impact of estimated trade inventory movements, mainly reflecting the impact of the October 1, 2018 excise tax-driven retail price increases, as well as out-switching to the low-price cigarillo category;

• Korea, down by 1.9%, reflecting the secular decline of the cigarette category, partly offset by the growth of the heat-not-burn category; and

• Taiwan, down by 7.9%, continuing to reflect the impact of significant excise tax-driven retail price increases in June 2017, as well as an increase in the prevalence of illicit trade.

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PMI's total shipment volume increased by 10.2% to 20.7 billion units, notably in:

• Japan, up by 24.5%. Excluding the net favorable impact of estimated distributor inventory movements of approximately 4.4 billion units, comprised of approximately 3.9 billion heated tobacco units and approximately 0.5 billion cigarettes, mainly reflecting a favorable comparison with the third quarter of 2018 in which IQOS consumable inventories in Japan were reduced, PMI's in-market sales decline was 11.2%, reflecting the lower total market, partly offset by higher heated tobacco unit market share;

partly offset by

• Korea, down by 10.5%, principally due to lower market share, as well as a lower total market.

Nine Months Year-to-Date

The estimated total market in East Asia & Australia, excluding China, decreased, notably due to:

• Australia, down by 4.3%, or by 9.6% excluding the impact of estimated trade inventory movements, mainly reflecting the same factor as in the quarter;

• Japan, down by 7.7%, or by 4.5% excluding the impact of estimated trade inventory movements, mainly reflecting the same factor as in the quarter;

• Korea, down by 1.4%, mainly reflecting the same factor as in the quarter; and

• Taiwan, down by 5.2%, mainly reflecting the same factors as in the quarter.

PMI's total shipment volume decreased by 2.0% to 61.9 billion units, notably in:

• Korea, down by 10.0%, principally due to lower cigarette and heated tobacco unit market share, as well as a lower total market;

partly offset by

• Japan, up by 1.4%. Excluding the net favorable impact of estimated distributor inventory movements of approximately 3.9 billion units, comprised of approximately 3.8 billion heated tobacco units and approximately 0.1 billion cigarettes, reflecting the same factor as in the quarter, PMI's in-market sales decline was 7.6%, primarily reflecting the lower total market.

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LATIN AMERICA & CANADA REGION

Third-Quarter

Financial Summary - Quarters Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other(1)
(in millions)
Net Revenues	$ 473		$ 753		(37.2	)%	(36.1	)%	(280	)	(8	)	24	(39	)	(257	)
Operating Income	$ 125		$ 335		(62.7	)%	(60.9	)%	(210	)	(6	)	24	(34	)	(194	)
Asset Impairment & Exit Costs (2)	(22	)	—		—	%	—	%	(22	)	—		—	—		(22	)
Adjusted Operating Income	$ 147		$ 335		(56.1	)%	(54.3	)%	(188	)	(6	)	24	(34	)	(172	)
Adjusted Operating Income Margin	31.1	%	44.5	%	(13.4)pp		(12.7)pp
(1) Unfavorable Cost/Other variance includes the impact of the RBH deconsolidation.
(2) Included in marketing, administration and research costs at the consolidated operating income level.
Note: Net Revenues include revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States.

Net revenues, excluding unfavorable currency, decreased by 36.1%, almost entirely due to the unfavorable impact of the deconsolidation of RBH shown in "Cost/Other." On a like-for-like basis, net revenues, excluding unfavorable currency, decreased by 3.8%, as detailed in the attached Schedule 10, reflecting unfavorable volume/mix, mainly due to Mexico; partly offset by a favorable pricing variance, driven by Mexico, partly offset by Argentina as a result of the adoption of highly inflationary accounting.

Operating income, excluding unfavorable currency, decreased by 60.9%, predominantly due to the unfavorable impact of the deconsolidation of RBH, shown in "Cost/Other." Excluding asset impairment and exit costs related to a plant closure in Colombia as part of global manufacturing infrastructure optimization, adjusted operating income, excluding unfavorable currency, decreased by 54.3%. On a like-for-like basis, excluding unfavorable currency, adjusted operating income increased by 10.1%, as detailed in the attached Schedule 10, reflecting a favorable pricing variance, lower manufacturing costs, and lower marketing, administration and research costs, partly offset by unfavorable volume/mix, mainly in Mexico.

Adjusted operating income margin, excluding currency, decreased by 12.7 points to 31.8%, reflecting the factors mentioned above, as detailed on Schedule 8, or increased by 4.0 points to 31.7% on a like-for-like basis, as detailed in the attached Schedule 10.

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Nine Months Year-to-Date

Financial Summary - Nine Months Ended September 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other(1)
(in millions)
Net Revenues	$ 1,652		$ 2,268		(27.2	)%	(24.6	)%	(616	)	(59	)	44	(91	)	(510	)
Operating Income	$ 100		$ 866		(88.5	)%	(89.6	)%	(766	)	10		44	(77	)	(743	)
Asset Impairment & Exit Costs (2)	(45	)	—		—	%	—	%	(45	)	—		—	—		(45	)
Canadian Tobacco Litigation-Related Expense (2)	(194	)	—		—	%	—	%	(194	)	—		—	—		(194	)
Loss on Deconsolidation of RBH (2)	(239	)	—		—	%	—	%	(239	)	—		—	—		(239	)
Adjusted Operating Income	$ 578		$ 866		(33.3	)%	(34.4	)%	(288	)	10		44	(77	)	(265	)
Adjusted Operating Income Margin	35.0	%	38.2	%	(3.2)pp		(5.0)pp
(1) Unfavorable Cost/Other variance includes the impact of the RBH deconsolidation.
(2) Included in marketing, administration and research costs at the consolidated operating income level.
Note: Net Revenues include revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States.

Net revenues, excluding unfavorable currency, decreased by 24.6%, predominantly due to the unfavorable impact of the deconsolidation of RBH, shown in "Cost/Other." On a like-for-like basis, net revenues, excluding unfavorable currency, decreased by 3.0%, as detailed in the attached Schedule 10, reflecting: unfavorable volume, mainly due to Argentina and Canada, partly offset by a favorable pricing variance, notably in Canada and Mexico, partially offset by Argentina mainly due to the adoption of highly inflationary accounting.

Operating income, excluding favorable currency, decreased by 89.6%, predominantly due to the unfavorable impact of the deconsolidation of RBH and reporting adjustments, shown in "Cost/Other." Excluding asset impairment and exit costs related to a plant closure in Colombia as part of global manufacturing infrastructure optimization, the Canadian tobacco litigation-related expense and the loss on deconsolidation of RBH, adjusted operating income, excluding favorable currency, decreased by 34.4%. On a like-for-like basis, excluding favorable currency, adjusted operating income increased by 15.0%, as detailed in the attached Schedule 10. This increase reflected: a favorable pricing variance; lower manufacturing costs and lower marketing, administration and research costs, partly resulting from the adoption of highly inflationary accounting in Argentina; partly offset by an unfavorable volume/mix, mainly due to lower cigarette volume in Argentina and Canada.

Adjusted operating income margin, excluding currency, decreased by 5.0 points to 33.2%, reflecting the factors mentioned above, as detailed on Schedule 8, or increased by 5.2 points to 33.2% on a like-for-like basis, as detailed in the attached Schedule 10.

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Total Market, PMI Shipment & Market Share Commentaries

PMI Shipment Volume	Third-Quarter				Nine Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	16,854	19,612	(14.1	)%	52,906	58,829	(10.1	)%
Heated Tobacco Units	89	43	+100.0%		202	98	+100.0%
Total Latin America & Canada	16,943	19,655	(13.8	)%	53,108	58,927	(9.9	)%

Third-Quarter

The estimated total market in Latin America & Canada decreased, notably due to:

• Canada, down by 11.1%, primarily due to the impact of cumulative price increases, as well as the growing prevalence of e-vapor products;

• Mexico, down by 9.8%, or by 2.3% excluding estimated net trade inventory movements related to the timing of price increases; and

• Venezuela, down by 55.1%, mainly reflecting the deterioration of the socioeconomic environment and the impact of inflation-driven price increases;

partly offset by:

• Argentina, up by 2.3%. Excluding estimated net trade inventory movements related to the timing of price increases, the total market decreased by 1.6%, primarily due to the impact of cumulative price increases and the impact of the economic downturn as of the second half of 2018; and

• Brazil, up by 5.4%. Excluding estimated net trade inventory movements primarily related to the timing of price increases, the total market increased by 0.7%.

PMI's total shipment volume decreased by 13.8% to 16.9 billion units, or by 6.9% on a like-for-like basis, in part due to:

• Mexico, down by 17.3%, driven by the lower total market and lower market share, largely reflecting the timing of retail price increases compared to 2018.

Nine Months Year-to-Date

The estimated total market in Latin America & Canada decreased, notably due to:

• Argentina, down by 4.9%, reflecting the same factors as in the quarter;

• Canada, down by 8.9%, reflecting the same factors as in the quarter; and

• Venezuela, down by 57.6%, reflecting the same factors as in the quarter.

PMI's total shipment volume decreased by 9.9% to 53.1 billion units, or by 5.2% on a like-for-like basis, in part due to:

• Argentina, down by 8.1%, primarily reflecting the lower total market, as well as lower market share;

• Mexico, down by 1.9%, primarily reflecting the lower total market, as well as lower market share; and

• Venezuela, down by 76.9%, primarily reflecting the lower total market, as well as lower market share.

- -27 -

Philip Morris International: Delivering a Smoke-Free Future

Philip Morris International (PMI) is leading a transformation in the tobacco industry to create a smoke-free future and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue to smoke, society, the company and its shareholders. PMI is a leading international tobacco company engaged in the manufacture and sale of cigarettes, as well as smoke-free products and associated electronic devices and accessories, and other nicotine-containing products in markets outside the United States. In addition, PMI ships its IQOS device and its consumables to Altria Group, Inc. for sale in the United States under license. PMI is building a future on a new category of smoke-free products that, while not risk-free, are a much better choice than continuing to smoke. Through multidisciplinary capabilities in product development, state-of-the-art facilities and scientific substantiation, PMI aims to ensure that its smoke-free products meet adult consumer preferences and rigorous regulatory requirements. PMI's smoke-free IQOS product portfolio includes heat-not-burn and nicotine-containing vapor products. As of September 30, 2019, PMI estimates that approximately 8.8 million adult smokers around the world have already stopped smoking and switched to PMI's heat-not-burn product, available for sale in 51 markets in key cities or nationwide under the IQOS brand. For more information, please visit www.pmi.comand 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; health concerns relating to the use of tobacco products and exposure to environmental tobacco smoke; litigation related to tobacco use; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; changes in adult smoker behavior; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost and quality of tobacco and other agricultural products and raw materials; and the integrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful in its attempts to produce and commercialize reduced-risk products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce new products, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and the development of strategic business relationships; or if it is unable to attract and retain the best global talent. Future results are also subject to the lower predictability of our reduced-risk product category's performance.

PMI is further subject to other risks detailed from time to time in its publicly filed documents, including the Form 10-Q for the quarter ended June 30, 2019. PMI cautions that the foregoing list of important factors is not a complete

- -28 -

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.

- -29 -

Key Terms, Definitions and Explanatory Notes

General

• "PMI" refers to Philip Morris International Inc. and its subsidiaries. Trademarks and service marks that are the registered property of, or licensed by, the subsidiaries of PMI, are italicized.

• Comparisons are made to the same prior-year period unless otherwise stated.

• Unless otherwise stated, references to total industry, total market, PMI shipment volume and PMI market share performance reflect cigarettes and heated tobacco units.

• References to total international market, defined as worldwide cigarette and heated tobacco unit volume excluding the United States, total industry, total market and market shares are PMI estimates for tax-paid products based on the latest available data from a number of internal and external sources and may, in defined instances, exclude the People's Republic of China and/or PMI's duty free business. In addition, to reflect the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019, PMI's total market share has been restated for previous periods.

• "OTP" is defined as "other tobacco products," primarily roll-your-own and make-your-own cigarettes, pipe tobacco, cigars and cigarillos, and does not include reduced-risk products.

• "Combustible products" is the term PMI uses to refer to cigarettes and OTP, combined.

• In-market sales, or "IMS," is defined as sales to the retail channel, depending on the market and distribution model.

• "Total shipment volume" is defined as the combined total of cigarette shipment volume and heated tobacco unit shipment volume.

• "North Africa" is defined 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).

• Following the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), PMI will continue to report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owner. These include HEETS, Next, Philip Morris and Rooftop, which accounted for approximately 40% of RBH's total shipment volume in 2018.

• From time to time, PMI’s shipment volumes are subject to the impact of distributor inventory movements, and estimated total industry/market volumes are subject to the impact of inventory movements in various trade channels that include estimated trade inventory movements of PMI’s competitors arising from market-specific factors that significantly distort reported volume disclosures. Such factors may include changes to the manufacturing supply chain, shipment methods, consumer demand, timing of excise tax increases or other influences that may affect the timing of sales to customers. In such instances, in addition to reviewing PMI shipment volumes and certain estimated total industry/market volumes on a reported basis, management reviews these measures on an adjusted basis that excludes the impact of distributor and/or estimated trade inventory movements. Management also believes that disclosing PMI shipment volumes and estimated total industry/market volumes in such circumstances on a basis that excludes the impact of distributor and/or estimated trade inventory movements, such as on an IMS basis, improves the comparability of performance and trends for these measures over different reporting periods.

Financial

• Net revenues related to combustible products refer to the operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes. PMI recognizes revenue when control is transferred to the customer, typically either upon shipment or delivery of goods.

• Net revenues related to RRPs represent the sale of heated tobacco units, IQOS devices and related accessories, and other nicotine-containing products, primarily e-vapor products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes.PMI recognizes revenue when control is transferred to the customer, typically either upon shipment or delivery of goods.

• "Cost of sales" consists principally of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs; shipping and handling costs; and the cost of IQOS devices produced by third-party electronics manufacturing service providers.  Estimated costs associated with IQOS warranty programs are generally provided for in cost of sales in the period the related revenues are recognized.

- -30 -

• "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.

• [NEW] "Cost/Other" in the Consolidated Financial Summary table of total PMI and the six reporting segments of this release reflects the currency-neutral variances of: cost of sales (excluding the volume/mix cost component); marketing, administration and research costs (including asset impairment and exit costs, the Canadian tobacco litigation-related expense and the charge related to the deconsolidation of RBH in Canada, and the Russia excise & VAT audit charge); and amortization of intangibles. “Cost/Other” also includes the currency-neutral net revenue variance, unrelated to volume/mix and price components, attributable to fees for certain distribution rights billed to customers in certain markets in the ME&A Region, as well as the impact of the deconsolidation in RBH.

• "Adjusted Operating Income Margin" is calculated as adjusted operating income, divided by net revenues.

• "Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization and equity (income)/loss in unconsolidated subsidiaries, excluding asset impairment and exit costs, and unusual items.

• "Net debt" is defined as total debt, less cash and cash equivalents.

• [NEW] Management reviews net revenues, OI, OI margins, operating cash flow and earnings per share, or "EPS," on an adjusted basis, which may exclude the impact of currency and other items such as acquisitions, asset impairment and exit costs, tax items and other special items. For example, PMI’s adjusted diluted EPS and other impacted results reflect the loss on deconsolidation of RBH and the Canadian tobacco litigation-related expense, recorded in the first quarter of 2019, and the Russia excise & VAT charge, recorded in the third quarter of 2019. PMI believes that the adjusted measures, including pro forma measures, will provide useful insight into underlying business trends and results, and will provide a more meaningful performance comparison for the period during which RBH remains under CCAA protection. For PMI's 2018 pro forma adjusted diluted EPS by quarter and year-to-date, see Schedule 3 in PMI's third-quarter 2019 earnings release.

• Management reviews these measures because they exclude changes in currency exchange rates and other factors that may distort underlying business trends, thereby improving the comparability of PMI’s business performance between reporting periods. Furthermore, PMI uses several of these measures in its management compensation program to promote internal fairness and a disciplined assessment of performance against company targets. PMI discloses these measures to enable investors to view the business through the eyes of management.

• Non-GAAP measures used in this release should neither be considered in isolation nor as a substitute for the financial measures prepared in accordance with U.S. GAAP. For a reconciliation of non-GAAP measures to the most directly comparable U.S. GAAP measures, see the relevant schedules provided with this press release.

• U.S. GAAP Treatment of Argentina as a Highly Inflationary Economy. Following the categorization of Argentina by the International Practices Task Force of the Center for Audit Quality as a country with a three-year cumulative inflation rate greater than 100%, the country is considered highly inflationary in accordance with U.S. GAAP. Consequently, PMI began to account for the operations of its Argentinian affiliates as highly inflationary, and to treat the U.S. dollar as the functional currency of the affiliates, effective July 1, 2018. The move to highly inflationary accounting in Argentina reduced PMI's currency-neutral net revenue growth by approximately 0.6 points in 2018.

Reduced-Risk Products

• Reduced Risk Products (“RRPs”) is the term PMI uses to refer to products that present, are likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continuing smoking.  PMI has a range of RRPs in various stages of development, scientific assessment and commercialization. PMI's RRPs are smoke-free products that produce an aerosol that contains far lower quantities of harmful and potentially harmful constituents than found in cigarette smoke.

• "Heated tobacco units," or "HTUs," is the term PMI uses to refer to heated tobacco consumables, which include the company's HEETS, HEETS Marlboro and HEETS FROM MARLBORO, defined collectively as HEETS, as well as MarlboroHeatSticks and Parliament HeatSticks.

• Unless otherwise stated, all references to IQOS are to PMI's heat-not-burn products.

• The IQOS heat-not-burn device is a precisely controlled heating device into which a specially designed and proprietary tobacco unit is inserted and heated to generate an aerosol.

- -31 -

[NEW] IQOS in the United States

• On April 30, 2019, the U.S. Food and Drug Administration (FDA) announced that the marketing of IQOS, PMI's electrically heated tobacco system, is appropriate for the protection of public health and authorized it for sale in the United States. The FDA’s decision follows its comprehensive assessment of PMI’s premarket tobacco product applications (PMTAs) submitted to the Agency in 2017. In the third quarter of 2019, PMI brought the IQOS device and three variants of its heated tobacco units (the term PMI uses to refer to heated tobacco consumables) to the U.S. through its license with Altria Group, Inc., whose subsidiary, Philip Morris USA Inc., will market the product and comply with the provisions set forth in the FDA's marketing order.

• Shipment volume of heated tobacco units to the United States is included in the heated tobacco unit shipment volume of the Latin America & Canada segment. Revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc. for sale under license in the United States are included in Net Revenues of the Latin America & Canada segment.

- -32 -

																						Appendix 1
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Key Market Data
	Quarters Ended September 30,
Market	Total Market, bio units				PMI Shipments, bio units												PMI Market Share, % (1)
					Total				Cigarette				HTU				Total				HTU
	2019	2018	% Change		2019	2018	% Change		2019	2018	% Change		2019	2018	% Change		2019	2018	pp Change		2019	2018	pp Change
Total PMI	696.1	720.1	(3.3	)	199.5	203.7	(2.1	)	183.5	195.1	(5.9	)	16.0	8.7	84.8		28.8	28.9	(0.1	)	2.3	1.7	0.6
European Union
France	10.2	10.7	(4.8	)	4.5	4.6	(2.8	)	4.5	4.6	(3.0	)	—	—	—		45.0	45.7	(0.7	)	0.2	0.1	0.1
Germany	20.7	20.5	1.3		7.4	7.3	1.7		7.2	7.2	(0.1	)	0.2	0.1	+100		35.7	35.5	0.2		1.1	0.5	0.6
Italy	18.3	18.3	0.3		9.5	9.3	2.2		8.5	8.8	(3.6	)	1.1	0.5	95.8		52.0	51.9	0.1		4.6	2.0	2.6
Poland	12.5	11.9	4.3		5.3	5.2	2.3		5.0	5.1	(1.5	)	0.3	0.1	+100		42.5	43.4	(0.9	)	2.4	0.9	1.5
Spain	12.6	12.5	0.8		3.8	3.9	(1.5	)	3.8	3.8	(2.0	)	0.1	0.1	25.9		31.6	32.4	(0.8	)	0.7	0.4	0.3
Eastern Europe
Russia	61.4	65.3	(5.9	)	18.9	18.4	2.8		16.2	17.6	(8.0	)	2.7	0.7	+100		30.9	28.3	2.6		4.0	1.1	2.9
Middle East & Africa
Saudi Arabia	5.5	5.3	4.1		2.0	2.5	(21.1	)	2.0	2.5	(21.1	)	—	—	—		40.8	41.7	(0.9	)	—	—	—
Turkey	33.8	33.7	0.3		14.2	15.9	(10.7	)	14.2	15.9	(10.7	)	—	—	—		41.9	47.1	(5.2	)	—	—	—
South & Southeast Asia
Indonesia	79.0	80.3	(1.6	)	25.0	26.5	(5.7	)	25.0	26.5	(5.7	)	—	—	—		31.7	33.0	(1.3	)	—	—	—
Philippines	17.2	18.3	(5.8	)	12.4	12.7	(2.8	)	12.4	12.7	(2.8	)	—	—	—		71.8	69.5	2.3		—	—	—
East Asia & Australia
Australia	3.2	3.4	(7.4	)	0.9	1.0	(11.8	)	0.9	1.0	(11.8	)	—	—	—		27.7	29.1	(1.4	)	—	—	—
Japan	42.1	48.3	(12.9	)	13.3	10.7	24.5		6.5	7.5	(13.4	)	6.8	3.2	+100		34.3	33.7	0.6		17.0	15.5	1.5
Korea	18.4	18.7	(1.9	)	4.1	4.6	(10.5	)	2.9	3.2	(7.1	)	1.1	1.4	(18.4	)	22.2	24.2	(2.0	)	6.2	7.4	(1.2	)
Latin America & Canada
Argentina	8.3	8.1	2.3		5.9	6.1	(3.0	)	5.9	6.1	(3.0	)	—	—	—		70.4	75.2	(4.8	)	—	—	—
Mexico	7.7	8.5	(9.8	)	4.9	5.9	(17.3	)	4.9	5.9	(17.3	)	—	—	—		63.4	69.1	(5.7	)	—	—	—
(1) Market share estimates are calculated using IMS data
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands.

																						Appendix 2
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Key Market Data
	Nine Months Ended September 30,
Market	Total Market, bio units				PMI Shipments, bio units												PMI Market Share, % (1)
					Total				Cigarette				HTU				Total				HTU
	2019	2018	% Change		2019	2018	% Change		2019	2018	% Change		2019	2018	% Change		2019	2018	pp Change		2019	2018	pp Change
Total PMI	2,023.2	2,057.6	(1.7	)	574.2	579.3	(0.9	)	531.6	550.1	(3.4	)	42.5	29.2	45.7		28.3	28.1	0.2		2.1	1.6	0.5
European Union
France	29.1	31.1	(6.4	)	13.1	14.0	(6.6	)	13.1	14.0	(6.8	)	0.1	—	—		44.9	45.3	(0.4	)	0.2	0.1	0.1
Germany	55.1	56.1	(1.9	)	20.8	20.5	1.1		20.2	20.3	(0.6	)	0.6	0.3	+100		37.7	36.6	1.1		1.1	0.5	0.6
Italy	51.1	52.0	(1.8	)	26.6	26.6	(0.1	)	24.1	25.5	(5.3	)	2.5	1.1	+100		51.6	51.8	(0.2	)	4.3	1.8	2.5
Poland	35.4	33.1	6.7		14.5	13.8	5.5		13.8	13.6	1.8		0.7	0.2	+100		41.1	41.6	(0.5	)	2.1	0.7	1.4
Spain	34.4	34.1	0.9		11.3	11.1	2.5		11.1	10.9	1.5		0.2	0.1	79.7		31.5	32.1	(0.6	)	0.7	0.4	0.3
Eastern Europe
Russia	167.7	177.2	(5.3	)	48.8	48.7	0.1		43.4	47.1	(7.8	)	5.3	1.6	+100		29.7	27.8	1.9		3.3	0.8	2.5
Middle East & Africa
Saudi Arabia	16.1	15.2	6.3		6.7	5.3	26.1		6.7	5.3	26.1		—	—	—		40.5	41.1	(0.6	)	—	—	—
Turkey	95.4	88.2	8.2		40.6	40.9	(0.7	)	40.6	40.9	(0.7	)	—	—	—		42.5	46.4	(3.9	)	—	—	—
South & Southeast Asia
Indonesia	226.3	224.8	0.7		72.1	74.5	(3.2	)	72.1	74.5	(3.2	)	—	—	—		31.9	33.1	(1.2	)	—	—	—
Philippines	52.6	52.6	(0.1	)	37.2	36.7	1.5		37.2	36.7	1.5		—	—	—		70.8	69.8	1.0		—	—	—
East Asia & Australia
Australia	9.2	9.6	(4.3	)	2.6	2.8	(9.6	)	2.6	2.8	(9.6	)	—	—	—		27.6	29.3	(1.7	)	—	—	—
Japan	120.3	130.4	(7.7	)	40.5	39.9	1.4		20.9	24.2	(13.3	)	19.5	15.8	23.9		34.3	34.2	0.1		16.9	15.6	1.3
Korea	51.7	52.4	(1.4	)	11.8	13.1	(10.0	)	8.2	9.1	(10.0	)	3.6	4.0	(9.9	)	22.9	24.9	(2.0	)	6.9	7.6	(0.7	)
Latin America & Canada
Argentina	24.6	25.8	(4.9	)	17.6	19.1	(8.1	)	17.6	19.1	(8.1	)	—	—	—		71.5	74.0	(2.5	)	—	—	—
Mexico	25.1	25.4	(1.1	)	16.6	16.9	(1.9	)	16.6	16.9	(1.9	)	—	—	—		65.9	66.4	(0.5	)	—	—	—
(1) Market share estimates are calculated using IMS data
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands.

												Appendix 3
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Shipment Volume Adjusted for the Impact of RBH Deconsolidation
(in million units) / (Unaudited)
	Total PMI	Quarters Ended September 30,						Nine Months Ended September 30,
		2019	2018			% Change		2019	2018			% Change
	Total Shipment Volume	199,504	203,720			(2.1	)%	574,154	579,274			(0.9	)%
	Shipment Volume for RBH-owned brands (1)		(1,462	)					(2,922	)	(2)
	Total Shipment Volume	199,504	202,258		(3)	(1.4	)%	574,154	576,352		(3)	(0.4	)%
	Latin America & Canada
	Total Shipment Volume	16,943	19,655			(13.8	)%	53,108	58,927			(9.9	)%
	Shipment Volume for RBH-owned brands		(1,450	)					(2,896	)	(2)
	Total Shipment Volume	16,943	18,205		(3)	(6.9	)%	53,108	56,031		(3)	(5.2	)%
	(1) Includes Duty Free sales in Canada
	(2) Represents volume for RBH-owned brands from March 22, 2018 through end of period date
	(3) Pro forma
	Note: Shipment Volume includes Cigarettes and Heated Tobacco Units; following the deconsolidation of RBH, we report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owners

										Schedule 1
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Diluted Earnings Per Share (EPS)
($ in millions, except per share data) / (Unaudited)
	Quarters Ended					Diluted EPS	Nine Months Ended
	September 30,						September 30,
		$	1.22			2019 Diluted Earnings Per Share (1)		$	3.57
		$	1.44			2018 Diluted Earnings Per Share (1)		$	3.85
		$	(0.22		)	Change		$	(0.28		)
		(15.3			)%	% Change		(7.3			)%
						Reconciliation:
		$	1.44			2018 Diluted Earnings Per Share (1)		$	3.85
		—				2018 Asset impairment and exit costs		—
		—				2018 Tax items		—
		(0.01			)	2019 Asset impairment and exit costs		(0.03			)
		—				2019 Canadian tobacco litigation-related expense		(0.09			)
		—				2019 Loss on deconsolidation of RBH		(0.12			)
		(0.20			)	2019 Russia excise and VAT audit charge		(0.20			)
		—				2019 Tax items		0.04
		—				Currency		(0.13			)
		0.01				Interest		0.04
		—				Change in tax rate		0.03
		(0.02			)	Operations (2)		0.18
		$	1.22			2019 Diluted Earnings Per Share (1)		$	3.57
(1) Basic and diluted EPS were calculated using the following (in millions):
	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
	$ 1,896			$ 2,247		Net Earnings attributable to PMI	$ 5,569			$ 6,001
	5			5		Less distributed and undistributed earnings attributable to share-based payment awards	13			13
	$ 1,891			$ 2,242		Net Earnings for basic and diluted EPS	$ 5,556			$ 5,988
	1,556			1,555		Weighted-average shares for basic EPS	1,556			1,555
	—			—		Plus Contingently Issuable Performance Stock Units	—			—
	1,556			1,555		Weighted-average shares for diluted EPS	1,556			1,555
(2) Includes the impact of shares outstanding and share-based payments

											Schedule 2
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency,
and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency
(Unaudited)
	Quarters Ended September 30,					Nine Months Ended September 30,
	2019	2018	% Change			2019		2018	% Change
	$ 1.22	$ 1.44	(15.3	)%	Reported Diluted EPS	$ 3.57		$ 3.85	(7.3	)%
	—				Currency	(0.13	)
	$ 1.22	$ 1.44	(15.3	)%	Reported Diluted EPS, excluding Currency	$ 3.70		$ 3.85	(3.9	)%
	Quarters Ended September 30,					Nine Months Ended September 30,						Year Ended
	2019	2018	% Change			2019		2018	% Change			2018
	$ 1.22	$ 1.44	(15.3	)%	Reported Diluted EPS	$ 3.57		$ 3.85	(7.3	)%		$ 5.08
	0.01	—			Asset impairment and exit costs	0.03		—				—
	—	—			Canadian tobacco litigation-related expense	0.09		—				—
	—	—			Loss on deconsolidation of RBH	0.12		—				—
	0.20	—			Russia excise and VAT audit charge	0.20		—				—
	—	—			Tax items	(0.04	)	—				0.02
	$ 1.43	$ 1.44	(0.7	)%	Adjusted Diluted EPS	$ 3.97		$ 3.85	3.1	%		$ 5.10
	—				Currency	(0.13	)
	$ 1.43	$ 1.44	(0.7	)%	Adjusted Diluted EPS, excluding Currency	$ 4.10		$ 3.85	6.5	%

																				Schedule 3
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,
		2018		2018		2018			2018		2018			2018		2018				2019
	Reported Diluted EPS	$ 1.00		$ 1.41		$ 2.41			$ 1.44		$ 3.85			$ 1.23		$	5.08			$ 0.87
	Asset impairment and exit costs	—		—		—			—		—			—		—				0.01
	Canadian tobacco litigation-related expense	—		—		—			—		—			—		—				0.09
	Loss on deconsolidation of RBH	—		—		—			—		—			—		—				0.12
	Tax items	—		—		—			—		—			0.02		0.02				—
	Adjusted Diluted EPS	$ 1.00		$ 1.41		$ 2.41			$ 1.44		$ 3.85			$ 1.25		$ 5.10				$ 1.09	(3)
	Net earnings attributable to RBH	—	(1)	(0.08	)	(0.08	)	(1)	(0.09	)	(0.18	)	(1)	(0.08	)	(0.26		)	(1)	—	(2)
	Pro Forma Adjusted Diluted EPS	$ 1.00		$ 1.33		$ 2.33			$ 1.35		$ 3.67			$ 1.17		$ 4.84
	(1) Represents the impact of net earnings attributable to RBH from March 22, 2018 through end of period date
	(2) Represents the impact of net earnings attributable to RBH from March 22, 2019 through end of period date
	(3) Includes approximately $0.06 per share of net earnings attributable to RBH from January 1, 2019 through March 21, 2019
	Note: EPS is computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may not agree to the total for the year.

										Schedule 4
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Net Revenues by Product Category and Adjustments of Net Revenues for the Impact of Currency and Acquisitions
($ in millions) / (Unaudited)
Net Revenues	Currency		Net Revenues excluding Currency	Acquisitions	Net Revenues excluding Currency & Acquisitions	Quarters Ended September 30,	Net Revenues	Total		Excluding Currency		Excluding Currency & Acquisitions
2019						Combustible Products	2018	% Change
$ 2,178	$ (81)		$ 2,259	—	$ 2,259	European Union	$ 2,225	(2.1	)%	1.6	%	1.6	%
664	(4	)	668	—	668	Eastern Europe	705	(5.8	)%	(5.2	)%	(5.2	)%
1,064	(17	)	1,081	—	1,081	Middle East & Africa	1,019	4.4	%	6.1	%	6.1	%
1,246	15		1,231	—	1,231	South & Southeast Asia	1,197	4.1	%	2.8	%	2.8	%
680	(8	)	687	—	687	East Asia & Australia	789	(13.8	)%	(12.8	)%	(12.8	)%
466	(8	)	473	—	473	Latin America & Canada	748	(37.7	)%	(36.7	)%	(36.7	)%
$ 6,298	$ (102)		$ 6,399	—	$ 6,399	Total Combustible	$ 6,681	(5.7	)%	(4.2	)%	(4.2	)%
2019						Reduced-Risk Products	2018	% Change
$ 467	$ (17)		$ 484	—	$ 484	European Union	$ 242	92.5	%	99.6	%	99.6	%
235	(3	)	238	—	238	Eastern Europe	73	+100%		+100%		+100%
63	1		62	—	62	Middle East & Africa	124	(49.2	)%	(49.9	)%	(49.9	)%
—	—		—	—	—	South & Southeast Asia	—	—	%	—	%	—	%
572	7		566	—	566	East Asia & Australia	377	51.6	%	49.9	%	49.9	%
7	—		8	—	8	Latin America & Canada(1)	5	44.2	%	50.5	%	50.5	%
$ 1,344	$ (13)		$ 1,358	—	$ 1,358	Total RRPs	$ 823	63.4	%	65.1	%	65.1	%
2019						PMI	2018	% Change
$ 2,645	$ (98)		$ 2,743	—	$ 2,743	European Union	$ 2,467	7.2	%	11.2	%	11.2	%
899	(7	)	906	—	906	Eastern Europe	778	15.6	%	16.5	%	16.5	%
1,127	(16	)	1,143	—	1,143	Middle East & Africa	1,143	(1.4	)%	—	%	—	%
1,246	15		1,231	—	1,231	South & Southeast Asia	1,197	4.1	%	2.8	%	2.8	%
1,252	(1	)	1,253	—	1,253	East Asia & Australia	1,166	7.4	%	7.5	%	7.5	%
473	(8	)	481	—	481	Latin America & Canada	753	(37.2	)%	(36.1	)%	(36.1	)%
$ 7,642	$ (115)		$ 7,757	—	$ 7,757	Total PMI	$ 7,504	1.8	%	3.4	%	3.4	%
(1) Net Revenues include revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States.
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
Net Revenues by Product Category and Adjustments of Net Revenues for the Impact of Currency and Acquisitions
($ in millions) / (Unaudited)
Net Revenues	Currency		Net Revenues excluding Currency	Acquisitions	Net Revenues excluding Currency & Acquisitions	Nine Months Ended September 30,	Net Revenues	Total		Excluding Currency		Excluding Currency & Acquisitions
2019						Combustible Products	2018	% Change
$ 6,139	$ (381)		$ 6,520	—	$ 6,520	European Union	$ 6,381	(3.8	)%	2.2	%	2.2	%
1,774	(106	)	1,880	—	1,880	Eastern Europe	1,926	(7.9	)%	(2.4	)%	(2.4	)%
2,810	(172	)	2,982	—	2,982	Middle East & Africa	2,813	(0.1	)%	6.0	%	6.0	%
3,607	(78	)	3,685	—	3,685	South & Southeast Asia	3,434	5.0	%	7.3	%	7.3	%
2,074	(33	)	2,106	—	2,106	East Asia & Australia	2,348	(11.7	)%	(10.3	)%	(10.3	)%
1,634	(58	)	1,692	—	1,692	Latin America & Canada	2,254	(27.5	)%	(24.9	)%	(24.9	)%
$ 18,039	$ (827)		$ 18,865	—	$ 18,865	Total Combustible	$ 19,156	(5.8	)%	(1.5	)%	(1.5	)%
2019						Reduced-Risk Products	2018	% Change
$ 1,242	$ (76)		$ 1,318	—	$ 1,318	European Union	$ 577	+100%		+100%		+100%
526	(31	)	557	—	557	Eastern Europe	179	+100%		+100%		+100%
248	(2	)	250	—	250	Middle East & Africa	313	(20.9	)%	(20.2	)%	(20.2	)%
—	—		—	—	—	South & Southeast Asia	—	—	%	—	%	—	%
2,020	7		2,014	—	2,014	East Asia & Australia	1,887	7.0	%	6.7	%	6.7	%
18	(1	)	19	—	19	Latin America & Canada(1)	14	28.1	%	36.2	%	36.2	%
$ 4,053	$ (104)		$ 4,158	—	$ 4,158	Total RRPs	$ 2,970	36.5	%	40.0	%	40.0	%
2019						PMI	2018	% Change
$ 7,381	$ (457)		$ 7,838	—	$ 7,838	European Union	$ 6,958	6.1	%	12.6	%	12.6	%
2,300	(137	)	2,437	—	2,437	Eastern Europe	2,105	9.3	%	15.8	%	15.8	%
3,058	(174	)	3,232	—	3,232	Middle East & Africa	3,126	(2.2	)%	3.4	%	3.4	%
3,607	(78	)	3,685	—	3,685	South & Southeast Asia	3,434	5.0	%	7.3	%	7.3	%
4,094	(26	)	4,120	—	4,120	East Asia & Australia	4,235	(3.3	)%	(2.7	)%	(2.7	)%
1,652	(59	)	1,711	—	1,711	Latin America & Canada	2,268	(27.2	)%	(24.6	)%	(24.6	)%
$ 22,092	$ (931)		$ 23,023	—	$ 23,023	Total PMI	$ 22,126	(0.2	)%	4.1	%	4.1	%
(1) Net Revenues include revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States.
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 6
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments of Operating Income for the Impact of Currency and Acquisitions
($ in millions) / (Unaudited)
Operating Income			Currency		Operating Income excluding Currency		Acquisitions	Operating Income excluding Currency & Acquisitions			Operating Income	Total		Excluding Currency		Excluding Currency & Acquisitions
2019										Quarters Ended September 30,	2018	% Change
$ 1,255			$ (66)		$ 1,321		—	$ 1,321		European Union	$ 1,179	6.4	%	12.0	%	12.0	%
(101	)	(1)	25		(126	)	—	(126	)	Eastern Europe	270	-(100)%		-(100)%		-(100)%
519			4		515		—	515		Middle East & Africa	491	5.7	%	4.9	%	4.9	%
539			19		520		—	520		South & Southeast Asia	455	18.5	%	14.3	%	14.3	%
451			12		439		—	439		East Asia & Australia	426	5.9	%	3.1	%	3.1	%
125		(2)	(6	)	131		—	131		Latin America & Canada	335	(62.7	)%	(60.9	)%	(60.9	)%
$ 2,788			$ (12)		$ 2,800		—	$ 2,800		Total PMI	$ 3,156	(11.7	)%	(11.3	)%	(11.3	)%
2019										Nine Months Ended September 30,	2018	% Change
$ 3,346			$ (261)		$ 3,607		—	$ 3,607		European Union	$ 3,096	8.1	%	16.5	%	16.5	%
284		(1)	(10	)	294		—	294		Eastern Europe	682	(58.4	)%	(56.9	)%	(56.9	)%
1,304			(68	)	1,372		—	1,372		Middle East & Africa	1,268	2.8	%	8.2	%	8.2	%
1,471		(3)	(25	)	1,496		—	1,496		South & Southeast Asia	1,324	11.1	%	13.0	%	13.0	%
1,520			33		1,487		—	1,487		East Asia & Australia	1,439	5.6	%	3.3	%	3.3	%
100		(4)	10		90		—	90		Latin America & Canada	866	(88.5	)%	(89.6	)%	(89.6	)%
$ 8,025			$ (321)		$ 8,346		—	$ 8,346		Total PMI	$ 8,675	(7.5	)%	(3.8	)%	(3.8	)%
(1) Includes the Russia excise and VAT audit charge ($374 million)
(2) Includes asset impairment and exit costs ($22 million)
(3) Includes asset impairment and exit costs ($20 million)
(4) Includes asset impairment and exit costs ($45 million), the Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million)

																		Schedule 7
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Operating Income to Adjusted Operating Income, excluding Currency and Acquisitions
($ in millions) / (Unaudited)
Operating Income		Asset Impairment & Exit Costs and Others			Adjusted Operating Income	Currency		Adjusted Operating Income excluding Currency	Acqui-sitions	Adjusted Operating Income excluding Currency & Acqui-sitions			Operating Income	Asset Impairment & Exit Costs	Adjusted Operating Income	Total		Excluding Currency		Excluding Currency & Acqui-sitions
2019											Quarters Ended September 30,		2018			% Change
$ 1,255		—			$ 1,255	$ (66)		$ 1,321	—	$ 1,321		European Union	$ 1,179	—	$ 1,179	6.4	%	12.0	%	12.0	%
(101	)	(374	)	(1)	273	25		248	—	248		Eastern Europe	270	—	270	1.1	%	(8.1	)%	(8.1	)%
519		—			519	4		515	—	515		Middle East & Africa	491	—	491	5.7	%	4.9	%	4.9	%
539		—			539	19		520	—	520		South & Southeast Asia	455	—	455	18.5	%	14.3	%	14.3	%
451		—			451	12		439	—	439		East Asia & Australia	426	—	426	5.9	%	3.1	%	3.1	%
125		(22	)	(2)	147	(6	)	153	—	153		Latin America & Canada	335	—	335	(56.1	)%	(54.3	)%	(54.3	)%
$ 2,788		$ (396)			$ 3,184	$ (12)		$ 3,196	—	$ 3,196		Total PMI	$ 3,156	—	$ 3,156	0.9	%	1.3	%	1.3	%
2019											Nine Months Ended September 30,		2018			% Change
$ 3,346		—			$ 3,346	$ (261)		$ 3,607	—	$ 3,607		European Union	$ 3,096	—	$ 3,096	8.1	%	16.5	%	16.5	%
284		(374	)	(1)	658	(10	)	668	—	668		Eastern Europe	682	—	682	(3.5	)%	(2.1	)%	(2.1	)%
1,304		—			1,304	(68	)	1,372	—	1,372		Middle East & Africa	1,268	—	1,268	2.8	%	8.2	%	8.2	%
1,471		(20	)	(2)	1,491	(25	)	1,516	—	1,516		South & Southeast Asia	1,324	—	1,324	12.6	%	14.5	%	14.5	%
1,520		—			1,520	33		1,487	—	1,487		East Asia & Australia	1,439	—	1,439	5.6	%	3.3	%	3.3	%
100		(478	)	(3)	578	10		568	—	568		Latin America & Canada	866	—	866	(33.3	)%	(34.4	)%	(34.4	)%
$ 8,025		$ (872)			$ 8,897	$ (321)		$ 9,218	—	$ 9,218		Total PMI	$ 8,675	—	$ 8,675	2.6	%	6.3	%	6.3	%
(1) Represents the Russia excise and VAT audit charge
(2) Represents asset impairment and exit costs
(3) Includes asset impairment and exit costs ($45 million), the Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million)

																				Schedule 8
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted Operating Income Margin, excluding Currency and Acquisitions
($ in millions) / (Unaudited)
Adjusted Operating Income (1)	Net Revenues	Adjusted Operating Income Margin		Adjusted Operating Income excluding Currency (1)	Net Revenues excluding Currency (2)	Adjusted Operating Income Margin excluding Currency		Adjusted Operating Income excluding Currency & Acqui-sitions (1)	Net Revenues excluding Currency & Acqui-sitions (2)	Adjusted Operating Income Margin excluding Currency & Acqui-sitions				Adjusted Operating Income (1)	Net Revenues	Adjusted Operating Income Margin		Adjusted Operating Income Margin		Adjusted Operating Income Margin excluding Currency		Adjusted Operating Income Margin excluding Currency & Acqui-sitions
2019												Quarters Ended September 30,		2018				% Points Change
$ 1,255	$ 2,645	47.4	%	$ 1,321	$ 2,743	48.2	%	$ 1,321	$ 2,743	48.2	%		European Union	$ 1,179	$ 2,467	47.8	%	(0.4	)	0.4		0.4
273	899	30.4	%	248	906	27.4	%	248	906	27.4	%		Eastern Europe	270	778	34.7	%	(4.3	)	(7.3	)	(7.3	)
519	1,127	46.1	%	515	1,143	45.1	%	515	1,143	45.1	%		Middle East & Africa	491	1,143	43.0	%	3.1		2.1		2.1
539	1,246	43.3	%	520	1,231	42.2	%	520	1,231	42.2	%		South & Southeast Asia	455	1,197	38.0	%	5.3		4.2		4.2
451	1,252	36.0	%	439	1,253	35.0	%	439	1,253	35.0	%		East Asia & Australia	426	1,166	36.5	%	(0.5	)	(1.5	)	(1.5	)
147	473	31.1	%	153	481	31.8	%	153	481	31.8	%		Latin America & Canada	335	753	44.5	%	(13.4	)	(12.7	)	(12.7	)
$ 3,184	$ 7,642	41.7	%	$ 3,196	$ 7,757	41.2	%	$ 3,196	$ 7,757	41.2	%		Total PMI	$ 3,156	$ 7,504	42.1	%	(0.4	)	(0.9	)	(0.9	)
2019												Nine Months Ended September 30,		2018				% Points Change
$ 3,346	$ 7,381	45.3	%	$ 3,607	$ 7,838	46.0	%	$ 3,607	$ 7,838	46.0	%		European Union	$ 3,096	$ 6,958	44.5	%	0.8		1.5		1.5
658	2,300	28.6	%	668	2,437	27.4	%	668	2,437	27.4	%		Eastern Europe	682	2,105	32.4	%	(3.8	)	(5.0	)	(5.0	)
1,304	3,058	42.6	%	1,372	3,232	42.5	%	1,372	3,232	42.5	%		Middle East & Africa	1,268	3,126	40.6	%	2.0		1.9		1.9
1,491	3,607	41.3	%	1,516	3,685	41.1	%	1,516	3,685	41.1	%		South & Southeast Asia	1,324	3,434	38.6	%	2.7		2.5		2.5
1,520	4,094	37.1	%	1,487	4,120	36.1	%	1,487	4,120	36.1	%		East Asia & Australia	1,439	4,235	34.0	%	3.1		2.1		2.1
578	1,652	35.0	%	568	1,711	33.2	%	568	1,711	33.2	%		Latin America & Canada	866	2,268	38.2	%	(3.2	)	(5.0	)	(5.0	)
$ 8,897	$ 22,092	40.3	%	$ 9,218	$ 23,023	40.0	%	$ 9,218	$ 23,023	40.0	%		Total PMI	$ 8,675	$ 22,126	39.2	%	1.1		0.8		0.8
(1) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to Schedule 7
(2) For the calculation of Net Revenues excluding currency and acquisitions refer to Schedules 4 and 5

														Schedule 9
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency
($ in millions, except per share data) / (Unaudited)
		Quarters Ended September 30,							Nine Months Ended September 30,
		2019		2018			% Change		2019		2018			% Change
	Net Revenues	$ 7,642		$ 7,504			1.8	%	$ 22,092		$ 22,126			(0.2	)%
	Net Revenues attributable to RBH			(253	)						(506	)	(1)
	Net Revenues	$ 7,642		$ 7,251		(2)	5.4	%	$ 22,092		$ 21,620		(2)	2.2	%
	Currency	(116	)						(932	)
	Net Revenues, ex. currency	$ 7,758		$ 7,251		(2)	7.0	%	$ 23,024		$ 21,620		(2)	6.5	%
	Operating Income	$ 2,788		$ 3,156			(11.7	)%	$ 8,025		$ 8,675			(7.5	)%
	Asset impairment and exit costs	(22	)	—					(65	)	—
	Canadian tobacco litigation-related expense	—		—					(194	)	—
	Loss on deconsolidation of RBH	—		—					(239	)	—
	Russia excise and VAT audit charge	(374	)	—					(374	)	—
	Adjusted Operating Income	$ 3,184		$ 3,156			0.9	%	$ 8,897		$ 8,675			2.6	%
	Operating Income attributable to RBH			(197	)						(374	)	(1)
	Adjusted Operating Income	$ 3,184		$ 2,959		(2)	7.6	%	$ 8,897		$ 8,301		(2)	7.2	%
	Currency	(12	)						(321	)
	Adjusted Operating Income, ex. currency	$ 3,196		$ 2,959		(2)	8.0	%	$ 9,218		$ 8,301		(2)	11.0	%
	Adjusted OI Margin	41.7	%	42.1	%		(0.4	)	40.3	%	39.2	%		1.1
	Adjusted OI Margin attributable to RBH			(1.3	)						(0.8	)	(1)
	Adjusted OI Margin	41.7	%	40.8	%	(2)	0.9		40.3	%	38.4	%	(2)	1.9
	Currency	0.5							0.3
	Adjusted OI Margin, ex. currency	41.2	%	40.8	%	(2)	0.4		40.0	%	38.4	%	(2)	1.6
	Adjusted Diluted EPS(3)	$ 1.43		$ 1.44			(0.7	)%	$ 3.97		$ 3.85			3.1	%
	Net earnings attributable to RBH			(0.09	)						(0.18	)	(1)
	Adjusted Diluted EPS	$ 1.43		$ 1.35		(2)	5.9	%	$ 3.97		$ 3.67		(2)	8.2	%
	Currency	—							(0.13	)
	Adjusted Diluted EPS, ex. currency	$ 1.43		$ 1.35		(2)	5.9	%	$ 4.10		$ 3.67		(2)	11.7	%
	(1) Represents the impact attributable to RBH from March 22, 2018 through end of period date
	(2) Pro forma
	(3) For the calculation, see Schedule 2
	Note: Financials attributable to RBH include Duty Free sales in Canada

														Schedule 10
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency
($ in millions) / (Unaudited)
	Latin America & Canada	Quarters Ended September 30,							Nine Months Ended September 30,
		2019		2018			% Change		2019		2018			% Change
	Net Revenues	$ 473		$ 753			(37.2	)%	$ 1,652		$ 2,268			(27.2	)%
	Net Revenues attributable to RBH			(252	)						(503	)	(1)
	Net Revenues	$ 473		$ 501		(2)	(5.6	)%	$ 1,652		$ 1,765		(2)	(6.4	)%
	Currency	(9	)						(60	)
	Net Revenues, ex. currency	$ 482		$ 501		(2)	(3.8	)%	$ 1,712		$ 1,765		(2)	(3.0	)%
	Operating Income	$ 125		$ 335			(62.7	)%	$ 100		$ 866			(88.5	)%
	Asset impairment and exit costs	(22	)	—					(45	)	—
	Canadian tobacco litigation-related expense	—		—					(194	)	—
	Loss on deconsolidation of RBH	—		—					(239	)	—
	Adjusted Operating Income	$ 147		$ 335			(56.1	)%	$ 578		$ 866			(33.3	)%
	Operating Income attributable to RBH			(196	)						(372	)	(1)
	Adjusted Operating Income	$ 147		$ 139		(2)	5.8	%	$ 578		$ 494		(2)	17.0	%
	Currency	(6	)						10
	Adjusted Operating Income, ex. currency	$ 153		$ 139		(2)	10.1	%	$ 568		$ 494		(2)	15.0	%
	Adjusted OI Margin	31.1	%	44.5	%		(13.4	)	35.0	%	38.2	%		(3.2	)
	Adjusted OI Margin attributable to RBH			(16.8	)						(10.2	)	(1)
	Adjusted OI Margin	31.1	%	27.7	%	(2)	3.4		35.0	%	28.0	%	(2)	7.0
	Currency	(0.6	)						1.8
	Adjusted OI Margin, ex. currency	31.7	%	27.7	%	(2)	4.0		33.2	%	28.0	%	(2)	5.2
	(1) Represents the impact attributable to RBH from March 22, 2018 through end of period date
	(2) Pro forma

										Schedule 11
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Condensed Statements of Earnings
($ in millions, except per share data) / (Unaudited)
	Quarters Ended September 30,							Nine Months Ended September 30,
	2019		2018		Change Fav./(Unfav.)			2019		2018		Change Fav./(Unfav.)
	$ 20,380		$ 20,439		(0.3	)%	Revenues including Excise Taxes	$ 58,072		$ 59,965		(3.2	)%
	12,738		12,935		1.5	%	Excise Taxes on products	35,980		37,839		4.9	%
	7,642		7,504		1.8	%	Net Revenues	22,092		22,126		(0.2	)%
	2,605		2,618		0.5	%	Cost of sales	7,735		7,977		3.0	%
	5,037		4,886		3.1	%	Gross profit	14,357		14,149		1.5	%
	2,234		1,710		(30.6	)%	Marketing, administration and research costs (1)	6,282		5,411		(16.1	)%
	15		20				Amortization of intangibles	50		63
	2,788		3,156		(11.7	)%	Operating Income	8,025		8,675		(7.5	)%
	132		145		9.0	%	Interest expense, net	434		540		19.6	%
	20		7		-(100)%		Pension and other employee benefit costs	61		19		-(100)%
	2,636		3,004		(12.3	)%	Earnings before income taxes	7,530		8,116		(7.2	)%
	635		691		8.1	%	Provision for income taxes	1,670		1,894		11.8	%
	(45	)	(28	)			Equity investments and securities (income)/loss, net	(86	)	(61	)
	2,046		2,341		(12.6	)%	Net Earnings	5,946		6,283		(5.4	)%
	150		94				Net Earnings attributable to noncontrolling interests	377		282
	$ 1,896		$ 2,247		(15.6	)%	Net Earnings attributable to PMI	$ 5,569		$ 6,001		(7.2	)%
							Per share data (2):
	$ 1.22		$ 1.44		(15.3	)%	Basic Earnings Per Share	$ 3.57		$ 3.85		(7.3	)%
	$ 1.22		$ 1.44		(15.3	)%	Diluted Earnings Per Share	$ 3.57		$ 3.85		(7.3	)%
(1) Nine months ended September 30, 2019 includes asset impairment and exit costs ($65 million), the Canadian tobacco litigation-related expense ($194 million), the loss on deconsolidation of RBH ($239 million) and the Russia excise and VAT audit charge ($374 million). Quarter ended September 30, 2019 includes asset impairment and exit costs ($22 million) and the Russia excise and VAT audit charge ($374 million).
(2) Net Earnings and weighted-average shares used in the basic and diluted Earnings Per Share computations for the quarters and for the nine months ended September 30, 2019 and 2018 are shown on Schedule 1, Footnote 1.

					Schedule 12
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Condensed Balance Sheets
($ in millions, except ratios) / (Unaudited)
	September 30,				December 31,
	2019				2018
Assets
Cash and cash equivalents		$	6,507			$	6,593
All other current assets		13,068				12,849
Property, plant and equipment, net		6,636				7,201
Goodwill		5,720				7,189
Other intangible assets, net		2,088				2,278
Investments in unconsolidated subsidiaries and equity securities		4,499				1,269
Other assets		2,902				2,422
Total assets		$	41,420			$	39,801
Liabilities and Stockholders' (Deficit) Equity
Short-term borrowings		$	355			$	730
Current portion of long-term debt		5,035				4,054
All other current liabilities		12,655				12,407
Long-term debt		26,426				26,975
Deferred income taxes		905				898
Other long-term liabilities		5,199				5,476
Total liabilities		50,575				50,540
Total PMI stockholders' deficit		(11,010		)		(12,459		)
Noncontrolling interests		1,855				1,720
Total stockholders' (deficit) equity		(9,155		)		(10,739		)
Total liabilities and stockholders' (deficit) equity		$	41,420			$	39,801

													Schedule 13
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Calculation of Total Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA Ratios
($ in millions, except ratios) / (Unaudited)
	Year Ended September 30, 2019												Year Ended December 31, 2018
	October ~ December				January ~ September				12 months
	2018				2019				rolling
Net Earnings		$	2,003			$	5,946			$	7,949			$	8,286
Equity (income)/loss in unconsolidated subsidiaries, net		(10		)		(84		)		(94		)		(65		)
Provision for income taxes		551				1,670				2,221				2,445
Interest expense, net		125				434				559				665
Depreciation and amortization		255				709				964				989
Asset impairment and exit costs and Others (1)		—				872				872				—
Adjusted EBITDA		$	2,924			$	9,547			$	12,471			$	12,320
									September 30,				December 31,
									2019				2018
Short-term borrowings										$	355			$	730
Current portion of long-term debt										5,035				4,054
Long-term debt										26,426				26,975
Total Debt										$	31,816			$	31,759
Cash and cash equivalents										6,507				6,593
Net Debt										$	25,309			$	25,166
Ratios:
Total Debt to Adjusted EBITDA										2.55				2.58
Net Debt to Adjusted EBITDA										2.03				2.04
(1) Others include the Canadian tobacco litigation-related expense ($194 million), the loss on deconsolidation of RBH ($239 million) and the Russia excise and VAT audit charge ($374 million)

										Schedule 14
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding Currency
($ in millions) / (Unaudited)
	Quarters Ended September 30,						Nine Months Ended September 30,
	2019		2018	% Change			2019		2018	% Change
	$ 2,083		$ 1,683	23.8	%	Net cash provided by operating activities (1)	$ 6,766		$ 7,056	(4.1	)%
	(83	)				Currency	(860	)
	$ 2,166		$ 1,683	28.7	%	Net cash provided by operating activities, excluding currency	$ 7,626		$ 7,056	8.1	%
(1) Operating cash flow

EX-99.2

Exhibit 99.2

Philip Morris International Inc.

2019 Third-Quarter Results Conference Call

October 17, 2019

NICK ROLLI

(SLIDE 1.)

Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2019 third-quarter results. You may access the release on www.pmi.com or the PMI Investor Relations App.

(SLIDE 2.)

A glossary of terms, including the definition for reduced-risk products, or "RRPs," as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures, are at the end of today’s webcast slides, which are posted on our website. Unless otherwise stated, all references to IQOS are to our IQOS heat-not-burn products.

Comparisons are presented on a "like-for-like" basis reflecting pro forma 2018 results, which have been adjusted for the deconsolidation of our Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019.

(SLIDE 3.)

Today’s remarks contain forward-looking statements and projections of future results. I direct your attention to the Forward-Looking and Cautionary Statements disclosure in today’s presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements.

It’s now my pleasure to introduce Martin King, our Chief Financial Officer.

Martin.

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MARTIN KING

(SLIDE 4.)

Thank you, Nick, and welcome, ladies and gentlemen.

Our third-quarter results continued to reflect strong underlying business performance.

The results include the better-than-anticipated timing of pricing and costs compared to our previously communicated assumptions for the quarter.

Our reported results in the quarter were impacted by an after-tax charge in Russia of $315 million related to a final assessment by the Moscow tax authorities on excise taxes and VAT for the 2015 to 2017 period. Additional detail on this charge is provided in today's press release.

(SLIDE 5.)

Total shipment volume in the third quarter declined by 1.4%.

Excluding the net favorable impact of estimated distributor inventory movements -- due primarily to the heated tobacco unit inventory reduction in Japan during the third quarter of 2018 -- our total in-market sales volume declined by 3.6%, reflecting lower cigarette volume, partly offset by strong heated tobacco unit volume growth.

Approximately two-thirds of the total in-market sales volume decline was due to three markets, in two of which the decreases were largely timing related:

• In Pakistan, our cigarette volume was down by approximately 50% -- broadly in line with the industry decline -- reflecting the timing of excise tax increase announcements compared to last year, as well as the impact of price increases.

• In Turkey, our cigarette volume decline was due mainly to the impact of two price increases this year -- totaling five Turkish Lira per pack or roughly 44% on a weighted-average basis -- which disproportionately impacted our share given the timing of our price increases vis-a-vis the competition.

• In Indonesia, our cigarette volume decline mainly reflected lower share, primarily due to widened price gaps between our brands and the competition's, as well as a lower total market.

(SLIDE 6.)

Heated tobacco unit shipment volume reached 16.0 billion units in the quarter. Excluding the net favorable impact of inventory movements -- primarily related to the third-quarter 2018 inventory reduction in Japan -- our HTU in-market sales volume increased by 28.3%, driven by the EU and Eastern Europe Regions.

HTU shipment volume in the quarter was in line with our HTU in-market sales volume of 15.9 billion units.

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(SLIDE 7.)

Third-quarter net revenues increased by 7.0%, excluding currency, driven by higher HTU shipment volume and favorable pricing for our combustible tobacco portfolio, partly offset by lower cigarette shipment volume.

RRP net revenues reached $1.3 billion in the quarter, or over 17% of PMI's total net revenues. It is worth noting that our year-to-date September RRP net revenues of $4.1 billion have essentially reached the full-year 2018 total.

(SLIDE 8.)

We recorded a strong combustible tobacco pricing variance of 5.9% in the quarter, driven notably by Germany, Indonesia, Mexico, the Philippines, Russia and Turkey.

(SLIDE 9.)

On a currency-neutral basis, adjusted operating income increased by 8.0%, while adjusted operating income margin grew by 40 basis points.

This margin expansion was achieved despite net incremental investment behind RRPs in the quarter of approximately $170 million, and was driven primarily by favorable geographic mix related to HTUs, reflecting the increased contribution of volume from IQOS geographies with relatively high unit margins, notably markets in the EU Region.

Our adjusted operating income and margin also benefited from the timing of costs, as certain expenditures initially planned for the third quarter were not incurred by quarter-end.

(SLIDE 10.)

Adjusted diluted EPS increased by 5.9%, excluding currency.

The lower currency-neutral growth in adjusted diluted EPS, compared to adjusted operating income, notably reflected the high relative growth contribution in the quarter from markets with sizable non-controlling interests, for example, the Philippines, with a non-controlling interest of 50%.

(SLIDE 11.)

Our total international market share, excluding China and the U.S., was essentially stable in the third quarter, reflecting lower share for cigarettes offset by higher share for heated tobacco units, which reached 2.3%.

(SLIDE 12.)

Our share of the cigarette category declined by 0.4 points, reflecting continued adult smoker out-switching to IQOS -- particularly in the EU Region, Japan and

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Russia -- coupled with lower share notably in Argentina, Indonesia, Korea, Mexico and Turkey.

Importantly, Marlboro's share of the cigarette category increased by 0.2 points to 10.2%, driven by Germany, the Philippines, Russia, Saudi Arabia and Turkey.

(SLIDE 13.)

The share decline in Indonesia primarily reflects the impact of widened price gaps between Sampoerna A -- notably A Mild -- and competitive brands, particularly at the bottom of the market.

As you may recall, we increased our prices in Indonesia late last year in anticipation of a 2019 excise tax increase that ultimately did not materialize. Our competitors largely maintained their prices, particularly following the government's decision to leave cigarette excise taxes unchanged, leading to the widened price gaps with our brands this year.

Although no formal regulation has yet been issued, the government recently outlined a 2020 cigarette excise tax with an average increase of 23% in excise and 35% in the minimum banderole price. As the government has not yet announced the increase for each individual tax tier, it is difficult to accurately gauge the anticipated volume and share impact in 2020. We do note, however, that while the potential tax pass-on is relatively steep, in the context of a two-year stack -- with no excise tax increase in 2019 -- the average percentage increase is broadly in-line with historical levels.

(SLIDE 14.)

Turning now to a more detailed discussion of RRP performance, we estimate that there were approximately 12.4 million IQOS users as of quarter-end. We further estimate that 71% of the total -- or some 8.8 million IQOS users -- have stopped smoking and switched to IQOS, with the balance in various stages of conversion.

(SLIDE 15.)

IQOS is now commercially available in 51 markets, following recent launches in Belarus, the United Arab Emirates and the U.S.

(SLIDE 16.)

We are particularly excited by the launch of IQOS in the U.S. through our commercial arrangement with Altria. The first IQOS retail store has opened in the initial lead market of Atlanta, Georgia, marking an historic milestone in providing better alternatives to the 40 million men and women in the U.S. who smoke.

IQOS is currently the only heat-not-burn product on the market authorized through the U.S. Food and Drug Administration's PMTA pathway as "appropriate for the protection of public health."

4

As you are aware, the merger discussions with Altria have ended. Although this chapter is definitively closed, we have an ongoing relationship with Altria, and both companies will focus on maximizing the IQOS opportunity in the U.S. market.

(SLIDE 17.)

Last month we took another important step in our journey towards a smoke-free future with the launch of IQOS 3 DUO.

This latest addition to the IQOS family was designed with enhanced features to help adult smokers switch more seamlessly from cigarettes. IQOS 3 DUO allows two consecutive uses without recharging the holder, while its charging time is significantly faster compared to IQOS 3 and IQOS 2.4 PLUS.

IQOS 3 DUO is currently available in Japan and will be rolled out in most markets where IQOS is commercially available by the end of this year, further strengthening our smoke-free leadership position.

(SLIDE 18.)

Let me now take you through the performance of IQOS in the quarter.

In the markets where IQOS has been commercialized, excluding the U.S., our HTU brands recorded a total combined share of 5.1%, despite not yet being nationally distributed in many of them. At this share level, our HTU brands would collectively be the 4th-largest tobacco "brand" in these markets, up from number six in the third quarter of last year.

(SLIDE 19.)

In the EU Region -- where we are commercializing IQOS in areas representing approximately 57% of total industry volume -- share for HEETS more than doubled in the quarter to reach 2.5%. This growth reflects continued strength across a broad range of markets, as detailed in the HTU market share appendix included at the end of today's presentation.

On a sequential basis, share increased by 0.1 point compared to the second quarter. Given the impact of higher industry cigarette sales volume reflecting summer seasonality, we believe that this sequential share performance understates the favorable momentum of HEETS. To this point, the in-market sales volume for HEETS increased by over 9% sequentially versus the second quarter.

(SLIDE 20.)

IQOS continued its strong performance in Russia in the quarter, with HEETS share up by 2.9 points to reach 4.0%. On a sequential basis versus the second quarter, HEETS share increased by 1.1 points, while in-market sales increased by over 40% to reach 2.4 billion units.

5

HEETS share growth in the quarter was consistent with the pace of adult smoker adoption and our geographic expansion. We are now commercializing IQOS in cities representing approximately half of the market by total industry volume, compared to an estimated 40% at the end of the second quarter.

(SLIDE 21.)

In Japan, our total share for HeatSticks and HEETS increased by 1.5 points to reach 17.0% in the quarter. The initiatives that we introduced during the second half of last year continued to pay off and drove a step-up in our share performance. On a sequential basis, the share for our HTU brands was up by 0.4 points, or stable after adjusting for the estimated impact of trade loading in advance of the October 1st tax and price increases.

(SLIDE 22.)

Importantly, our weekly offtake share increased sequentially during the quarter, reaching over 18% by the end of September. While we acknowledge that our offtake shares toward the end of the period may have been favorably impacted by consumer loading ahead of October 1st, our share growth continued in the first week of this month.

We are encouraged by our HTU share performance in the face of increased competitive activity as the year has progressed. While the growing number of smoke-free devices and consumables has contributed to competitive churn, IQOS remains the market leader with approximately 73% HTU category share despite accounting for only around 20% of category SKUs.

We believe the launch of IQOS 3 DUO will further reinforce the IQOS family's leadership position. This will be complemented by recent line extensions in our HeatSticks and HEETS line-ups.

(SLIDE 23.)

In Korea, the heated tobacco category remains highly competitive, particularly in the area of non-menthol flavors and related new taste dimensions that are also present in the cigarette category.

HEETS share in the third quarter declined by 1.2 points, or by one point on an adjusted basis. Share for HEETS was also down sequentially versus the second quarter.

However, we began to see early signs of stabilization in HEETS offtake segment share over the course of the third quarter, supported by recent launches that expanded the flavor line-up.

While we are encouraged by this trend, we have a lot of work to do to reinforce the heated tobacco category's benefits and build upon IQOS's leadership position. In this regard, we look forward to the upcoming roll-out of IQOS 3 DUO.

6

(SLIDE 24.)

Turning now to our full-year outlook, as announced in today's press release, we are revising our 2019 reported diluted EPS guidance, at prevailing exchange rates, to be at least $4.73.

The 21-cent decrease, compared to our prior guidance on July 18th of at least $4.94, was predominantly due to the $315 million after-tax charge in Russia, noted earlier.

Our guidance continues to include an unfavorable currency impact, at prevailing exchange rates, of approximately $0.14 per share.

(SLIDE 25.)

After excluding the reporting adjustments and tax items outlined on this slide, our forecast continues to represent a projected currency-neutral increase of at least 9% versus our pro forma adjusted diluted EPS of $4.84 in 2018.

(SLIDE 26.)

Our guidance continues to assume an industry total volume decline in 2019 of approximately 2.5%, excluding China and the U.S.

As a result of recent cigarette price increases in select markets -- notably the Philippines and Turkey -- we now assume a full-year total shipment volume decline rate of 1.0% to 1.5%, versus approximately 1.0% previously. This revision solely reflects changes to our full-year cigarette shipment volume outlook.

We continue to anticipate full-year HTU shipment volume broadly in line with our HTU in-market sales volume, with any inventory movements this year in individual markets essentially offsetting on an aggregate basis.

(SLIDE 27.)

We are maintaining our full-year assumption of currency-neutral net revenue growth of at least 6%. This now reflects a higher combustible tobacco pricing variance of approximately 6%, compared to above 5% previously, which is effectively offset by the impact of our revised total shipment volume target.

While we continue to anticipate net incremental investments behind RRPs of approximately $400 million, excluding currency, we are refining our currency-neutral adjusted operating income margin expansion assumption for the year to approximately 150 basis points, from at least 100 basis points previously.

In addition, please note that we now expect the full-year contribution of IQOS devices to total RRP net revenues to be approximately 15%, compared to below 20% previously.

7

This primarily reflects:

• the favorable geographic mix impact of greater HTU volume in relatively high margin geographies, notably markets in the EU Region;

• the longer lifespan of the latest IQOS devices compared to prior versions; and

• the impact of IQOS device retail price changes in select markets.

(SLIDE 28.)

We now anticipate full-year operating cash flow of approximately $9.2 billion, subject to year-end working capital requirements. The change compared to our prior assumption of approximately $9.5 billion reflects the impact of the after-tax charge in Russia.

Separately, we now expect 2019 capital expenditures of approximately $1 billion, compared to approximately $1.1 billion previously.

Dividends remain the primary use of our operating cash flow after capital expenditures. Last month, we increased our quarterly dividend rate by 2.6% to $1.17 per share. This equates to a total quarterly dividend of approximately $1.8 billion, or approximately $7.3 billion annually.

(SLIDE 29.)

To close on our full-year guidance and assumptions, I would like to touch on our anticipated fourth-quarter performance.

Importantly, we expect currency-neutral net revenue and adjusted operating income growth to be in-line with our year-to-date September results.

However, our currency-neutral adjusted diluted EPS growth will be lower than our year-to-date September performance due to the following factors:

• An unfavorable income tax rate comparison of roughly four percentage points versus the fourth-quarter of 2018, during which our three-month tax rate benefited from the full-year impact of further clarifications related to U.S. tax reform; and

• A continued high relative adjusted operating income growth contribution from markets with sizable non-controlling interests.

We expect these two factors to serve as a drag of approximately nine percentage points on our fourth-quarter currency-neutral adjusted diluted EPS growth rate, compared to our pro forma adjusted diluted EPS of $1.17 in the fourth quarter of 2018.

(SLIDE 30.)

To conclude, we recorded strong underlying business performance in the third quarter, reflecting the quality of our execution against each of the key metrics of

8

net revenues, operating income, margin, and diluted EPS on a currency-neutral, adjusted basis.

The fundamentals supporting our strong combustible tobacco portfolio are intact.

The favorable momentum for IQOS continues across geographies, further supporting our confidence in our HTU shipment volume target of 90 to 100 billion units by 2021.

We are excited by the recent launch of IQOS in the U.S. and the global launch of IQOS 3 DUO.

Finally, on a currency-neutral basis, we are maintaining our full-year 2019 growth assumption for net revenues of at least 6% and our anticipated full-year 2019 growth rate for adjusted diluted EPS of at least 9%.

(SLIDE 31.)

Thank you. I am now happy to take your questions.

NICK ROLLI

That concludes our call today. Thank you for joining us. If you have any follow-up questions, please contact the Investor Relations team. Thank you again and have a nice day.

9

EX-99.3

Exhibit 99.3 Delivering a Smoke-Free Future 2019 Third-Quarter Results October 17, 2019

Introduction • A glossary of key terms and definitions, including the definition for reduced-risk products, or "RRPs," as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures, are at the end of today’s webcast slides, which are posted on our website • Unless otherwise stated, all references to IQOS are to our IQOS heat-not-burn products • Comparisons are presented on a "like-for-like" basis reflecting pro forma 2018 results, which have been adjusted for the deconsolidation of our Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019 2

Forward-Looking and Cautionary Statements • This presentation and related discussion contain projections of future results and other forward-looking statements. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI • PMI's business risks include: excise tax increases and discriminatory tax structures; increasing marketing and regulatory restrictions that could reduce our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products; health concerns relating to the use of tobacco products and exposure to environmental tobacco smoke; litigation related to tobacco use; intense competition; the effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; changes in adult smoker behavior; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost and quality of tobacco and other agricultural products and raw materials; and the integrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful in its attempts to produce and commercialize reduced-risk products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce new products, promote brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and the development of strategic business relationships; or if it is unable to attract and retain the best global talent. Future results are also subject to the lower predictability of our reduced-risk product category's performance • PMI is further subject to other risks detailed from time to time in its publicly filed documents, including the Form 10-Q for the quarter ended June 30, 2019. 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 3

Q3, 2019: Strong Underlying Business Performance Q3, 2019 Growth vs. PY • Includes better-than-anticipated timing (ex-currency, like-for-like basis) of pricing and costs vs. previously (July 18th) communicated assumptions Disclosure Actual • Reported results impacted by a $315 million after-tax charge in Russia: Net Revenues <6% 7.0% ⎼ Final assessment by the Moscow tax authorities related to excise taxes and VAT for the 2015-2017 period Adjusted Essentially 5.9% Diluted EPS flat Source: PMI Financials or estimates 4

Q3, 2019: Total PMI Volume (Like-for-Like Change vs. PY) IMS Volume Decline Notably Due To: Shipments IMS(a) Pakistan Pakistan • Timing of excise tax increase announcements vs. last year (0.8)pp • Impact of price increases Turkey 2/3 (0.8)pp ̴ (1.4)% Turkey Indonesia (0.7)pp • Impact of two price increases in 2019, which disproportionately impacted our share (given timing of our price increases vs. competition) Other Indonesia (3.6)% • Lower share primarily due to widened price gaps (a) Excluding China and the U.S. Source: PMI Financials or estimates 5

Q3, 2019: PMI HTU Shipment Growth Continues 16 billion units HTU IMS Volume: +28.3% vs. PY Source: PMI Financials or estimates 6

Q3, 2019: Adjusted Financial Results Growth vs. PY • Currency-neutral like-for-like net revenue growth driven by: (ex-currency, like-for-like basis) ⎼ Higher HTU shipment volume ⎼ Favorable pricing for combustible tobacco portfolio ⎼ Partly offset by lower cigarette shipment volume 7.0% Net Adjusted Adjusted Revenues OI Diluted EPS Source: PMI Financials or estimates 7

Q3, 2019: Strong Combustible Tobacco Pricing Variance of 5.9%(a) Driven notably by Germany, Indonesia, Mexico, the Philippines, Russia and Turkey (a) Reflects combustible tobacco pricing as a % of PY combustible tobacco net revenues, on a like-for-like basis Source: PMI Financials or estimates 8

Q3, 2019: Adjusted Financial Results Growth vs. PY • Currency-neutral like-for-like net revenue growth driven by: (ex-currency, like-for-like basis) ⎼ Higher HTU shipment volume ⎼ Favorable pricing for combustible tobacco portfolio ⎼ Partly offset by lower cigarette shipment volume • 40bps currency-neutral like-for-like adjusted OI margin increase, despite net incremental investment behind RRPs of approximately $170 million: ⎼ Driven primarily by favorable geographic mix related to HTUs ⎼ Also benefited from the timing of costs, as certain expenditures initially planned for Q3 were not incurred by quarter-end 7.0% 8.0% Net Adjusted Adjusted Revenues OI Diluted EPS Source: PMI Financials or estimates 9

Q3, 2019: Adjusted Financial Results Growth vs. PY • Currency-neutral like-for-like net revenue growth driven by: (ex-currency, like-for-like basis) ⎼ Higher HTU shipment volume ⎼ Favorable pricing for combustible tobacco portfolio ⎼ Partly offset by lower cigarette shipment volume • 40bps currency-neutral like-for-like adjusted OI margin increase, despite net incremental investment behind RRPs of approximately $170 million: ⎼ Driven primarily by favorable geographic mix related to HTUs ⎼ Also benefited from the timing of costs, as certain expenditures initially planned for Q3 were not incurred by quarter-end % % % • Lower like-for-like currency-neutral growth in adjusted 7.0 8.0 5.9 diluted EPS vs. adjusted OI, notably reflected high relative Net Adjusted Adjusted growth contribution from markets with sizable non- Revenues OI Diluted EPS controlling interests (e.g., the Philippines with 50%) Source: PMI Financials or estimates 10

Q3, 2019: Essentially Flat Total SoM; Strong HTU Growth 28.9% Total PMI 28.8% 1.7% HTUs 2.3% +0.6pp 27.1% Cigarettes 26.5% (0.6)pp 20% Q3, 2018 Q3, 2019 Note: Excluding China and the U.S. Current view (reflecting the deconsolidation, PMI’s total market share has been restated for previous periods). Sales volume of PMI cigarettes and HTUs as a percentage of the total industry sales volume for cigarettes and HTUs. Sum of product categories does not foot due to rounding Source: PMI Financials or estimates 11

Q3, 2019: Strong Marlboro Cigarette Share Performance 27.7% Total PMI 27.3% Other 10.0 Marlboro 10.2 +0.2pp Q3, 2018 Q3, 2019 Note: Excluding China and the U.S. Current view (reflecting the deconsolidation, PMI’s total market share has been restated for previous periods). Sales volume of PMI cigarettes as a percentage of the total industry sales volume for cigarettes Source: PMI Financials or estimates 12

Indonesia: PMI Cigarette Market Share (%) 33.0 31.7 • Share decline primarily reflects the impact of widened price gaps Other between Sampoerna A (notably A Mild) and competitive brands, particularly at the bottom of the market 12.8 Sampoerna A 11.0 • We increased prices in late-2018 in anticipation of a 2019 excise tax 9.4 Dji Sam Soe 10.9 increase that ultimately did not materialize: ⎼ Competitors largely maintained their prices, 5.9 Marlboro 5.8 leading to the widened price gaps this year Q3, 2018 Q3, 2019 Source: PMI Financials or estimates 13

Q3, 2019: Surpassed 12 Million IQOS Users (in millions) (a) Total IQOS users 12.4 Estimated users who are in various stages of conversion to IQOS(a) 11.3 Estimated users who have 10.4 stopped smoking and switched to IQOS(a) 9.6 8.8 8.3 7.6 67% 67% 67% 69% 70% 70% 71% 3.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2018 2019 (a) See Glossary for definition Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 14

IQOS Available for Sale in 51 Markets Worldwide Available for sale (a) (a) IQOS 2.4 Plus internationally, IQOS 2.4 in the U.S. Note: Status at October 17, 2019. Reflects markets where IQOS is available in key cities or nationwide. The number of markets includes Duty Free 15

IQOS Now Available in the U.S. Only heat-not-burn product authorized through FDA’s PMTA pathway as "appropriate for the protection of public health" 16

Global IQOS 3 DUO Launch Initiated # Uses Before Recharging Holder 2 1 1 Average Holder Recharge Time 1min 50secs(a) 3mins 30secs 4mins 10secs after 1 use (a) Charging time from 0 to 1 use: 1min 50secs; from 1 to 2 uses: 3mins 25secs; from 0 to 2 uses: 5mins 15secs 17

Q3, 2019: PMI HTUs – Fourth-Largest Tobacco Brand in IQOS Markets Share in IQOS Markets 10.8% 5.1% 4.0% #4 Marlboro Winston Rothmans PMI HTUs L&M Note: Excluding the U.S. Reflects sales volume as a percentage of the total industry sales volume for cigarettes and HTUs Source: PMI Financials or estimates 18

EU Region: HEETS Share Growth Continues 2.5% Sequential Performance (vs. Q2, 2019) +1.3pp SoM: +0.1pp 1.2% IMS Volume: +9.3% Q3, 2018 Q3, 2019 Note: HTU market shares for select EU Region markets provided in the appendix Source: PMI Financials or estimates 19

Russia: Strong HEETS Share Growth Continues 4.0% Sequential Performance (vs. Q2, 2019) +2.9pp SoM: +1.1pp IMS Volume: +41.0% 1.1% Q3, 2018 Q3, 2019 Note: Includes Parliament HeatSticks in Q3, 2018 Source: PMI Financials or estimates 20

Japan: H2, 2018 Initiatives Driving Step-up in PMI HTU Share Performance 17.0% 15.5% +1.5pp Sequential Performance (vs. Q2, 2019) SoM: +0.4pp Adjusted SoM: Stable(a) Q3, 2018 Q3, 2019 (a) Excluding the impact of estimated trade inventory movements Source: PMI Financials or estimates 21

Japan: PMI HTU Offtake Share Growth 2019 Weekly Offtake SoM 18.3% 17.8% 17.5% 17.4% Jun 30 Jul 28 Sept 1 Sept 29 Week Ending Note: Offtake shares represent select C-Store sales volume for PMI HTUs as a percentage of the total retail sales volume for cigarettes and HTUs in these C-Stores Source: PMI Financials or estimates 22

Korea: A Highly Competitive Environment HEETS IMS SoM 2019 HEETS Weekly Offtake SoS Adjusted(a): 7.3% (1.0)pp 6.3% 7.4% 65.7% 64.7% (1.2)pp 63.5% 6.2% Q3, 2018 Q3, 2019 March 31 June 30 September 29 Week Ending (a) Excluding the impact of estimated trade inventory movements Source: PMI Financials or estimates 23

2019: Revising EPS Guidance for Russia Tax Audit Charge • Revising our 2019 reported diluted EPS guidance, at prevailing exchange rates, to be at least $4.73, compared to $5.08 in 2018 • 21-cent decrease (vs. July 18th guidance) predominantly due to the $315 million after- tax charge in Russia • Guidance continues to include an unfavorable currency impact, at prevailing exchange rates, of approximately $0.14 per share Source: PMI Financials or estimates 24

2019: EPS Guidance Full-Year ($/share) 2019 Adjusted Forecast 2018 Growth Reported Diluted EPS ≥ $4.73 (a) $5.08 - Tax items (0.04) 0.02 - Asset impairment and exit costs 0.04 ̶ - Canadian tobacco litigation-related expense 0.09 ̶ - Loss on deconsolidation of RBH 0.12 ̶ - Russia excise and VAT audit charge 0.20 ̶ Adjusted Diluted EPS $5.14 $5.10 - Net earnings attributable to RBH (0.26) (b) Adjusted Diluted EPS $5.14 $4.84 (c) - Currency (0.14) Adjusted Diluted EPS, excluding currency ≥ $5.28 $4.84 (c) ≥ 9% (a) Reflects the exclusion of previously anticipated net EPS of approximately $0.28 attributable to RBH from March 22, 2019 through December 31, 2019. The impact relating to the eight-day stub period was not material (b) Net reported diluted EPS attributable to RBH from March 22, 2018 through December 31, 2018 (c) Pro forma Source: PMI Financials or estimates 25

2019: Select Guidance Assumptions Industry ̴ (2.5)% Total Volume excluding China and the U.S. PMI Total % %(a) Reflects impact of recent cigarette (1.0) -(1.5) price increases in select markets (notably the Philippines and Turkey) Shipments vs. ̴ (1.0)% previously PMI HTU Broadly in line with Inventory movements this year in individual markets essentially Shipments our HTU IMS volume offsetting on an aggregate basis (a) Like-for-like basis Source: PMI Financials or estimates 26

2019: Select Guidance Assumptions (cont.) Net Net Incremental Revenue Growth Investments in RRPs % ≥6 ̴ $400 million ex-currency, like-for-like basis ex-currency Combustible Tobacco Adjusted OI Pricing Variance(a) Margin Expansion ̴ 6% ̴ 150bps like-for-like basis ex-currency, like-for-like basis (vs. >5% previously) (vs. ≥100bps previously) (a) Reflects combustible tobacco pricing as a % of PY combustible tobacco net revenues Source: PMI Financials or estimates 27

2019: Cash Flow • Anticipate operating cash flow of approximately $9.2 billion, subject to year-end working capital requirements (vs. approximately $9.5 billion, previously): ⎼ Change reflects the impact of the after-tax charge in Russia • Expect capital expenditures of approximately $1 billion (vs. approximately $1.1 billion, previously) • Dividends remain the primary use of our operating cash flow after capital expenditures • In September, we increased our quarterly dividend rate by 2.6% to $1.17 per share Note: Operating cash flows is net cash provided by operating activities Source: PMI Financials or estimates 28

Q4, 2019: Outlook Net Revenues and Adjusted Operating Income • We expect like-for-like currency-neutral growth to be in line with YTD September, 2019 results Adjusted Diluted EPS • Like-for-like currency-neutral growth will be lower than our YTD September, 2019 performance due to the following factors: ⎼ An unfavorable income tax rate comparison of roughly four percentage points vs. Q4, 2018, during which our three-month tax rate benefited from the full-year impact of further clarifications related to the U.S. Tax Cuts and Jobs Act ⎼ A continued high relative adjusted OI growth contribution from markets with sizable non-controlling interests Source: PMI Financials or estimates 29

Strong Underlying Q3 Performance • Fundamentals supporting our strong combustible tobacco portfolio are intact • Favorable momentum for IQOS continues across geographies: ⎼ Confidence in HTU shipment volume target of 90 to 100 billion units by 2021 • On a currency-neutral like-for-like basis, maintaining: ⎼ 2019 growth assumption for net revenues of ≥6% ⎼ Anticipated 2019 growth rate for adjusted diluted EPS of ≥9% Source: PMI Financials or estimates 30

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Delivering a Smoke-Free Future 2019 Third-Quarter Results October 17, 2019

Appendix, Glossary of Key Terms and Definitions, and Reconciliation of Non-GAAP Measures 33

EU Region: HEETS Share Growth Across Markets Growth Growth Growth Q3, 2019 vs. PY Q3, 2019 vs. PY Q3, 2019 vs. PY Bulgaria 3.7% +0.6pp Hungary 2.2% +2.2pp Portugal 6.2% +3.4pp Croatia 3.1 +2.2 Italy 4.6 +2.6 Romania 2.1 +0.5 Czech Slovak 5.8 +3.3 Latvia 5.9 +5.2 7.0 +3.6 Republic Republic Germany 1.1 +0.6 Lithuania 14.9 +9.3 Slovenia 3.0 +1.5 Greece 7.8 +3.1 Poland 2.4 +1.5 Switz. 2.5 +0.9 Note: Select markets where HEETS share is ≥ 1%. Switz. is Switzerland Source: PMI Financials or estimates 34

Glossary: General Terms • "PMI" refers to Philip Morris International Inc. and its subsidiaries • Until March 28, 2008, PMI was a wholly owned subsidiary of Altria Group, Inc. ("Altria"). Since that time the company has been independent and is listed on the New York Stock Exchange (ticker symbol "PM") • "RBH" refers to PMI’s Canadian subsidiary, Rothmans, Benson & Hedges Inc. • The Companies’ Creditors Arrangement Act (CCAA) is a Canadian federal law that permits a Canadian business to restructure its affairs while carrying on its business in the ordinary course • Trademarks are italicized • Comparisons are made to the same prior-year period unless otherwise stated • Unless otherwise stated, references to total industry, total market, PMI shipment volume and PMI market share performance reflect cigarettes and heated tobacco units • References to total international market, defined as worldwide cigarette and heated tobacco unit volume excluding the United States, total industry, total market and market shares are PMI estimates for tax-paid products based on the latest available data from a number of internal and external sources and may, in defined instances, exclude the People's Republic of China and/or PMI's duty free business. In addition, to reflect the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019, PMI's total market share has been restated for previous periods • "OTP" is defined as "other tobacco products," primarily roll-your-own and make-your-own cigarettes, pipe tobacco, cigars and cigarillos, and does not include reduced-risk products • "Combustible products" is the term PMI uses to refer to cigarettes and OTP, combined • In-market sales, or "IMS," is defined as sales to the retail channel, depending on the market and distribution model • "Total shipment volume" is defined as the combined total of cigarette shipment volume and heated tobacco unit shipment volume 35

Glossary: General Terms (cont.) • "EU" is defined as the European Union Region • "EE" is defined as the Eastern Europe Region • "ME&A" is defined as the Middle East & Africa Region and includes PMI's duty free business • "S&SA" is defined as the South & Southeast Asia Region • "EA&A" is defined as the East Asia & Australia Region • "LA&C" is defined as the Latin America & Canada Region • Following the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), PMI will continue to report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owner. These include HEETS, Next, Philip Morris and Rooftop, which accounted for approximately 40% of RBH's total shipment volume in 2018 • From time to time, PMI’s shipment volumes are subject to the impact of distributor inventory movements, and estimated total industry/market volumes are subject to the impact of inventory movements in various trade channels that include estimated trade inventory movements of PMI’s competitors arising from market-specific factors that significantly distort reported volume disclosures. Such factors may include changes to the manufacturing supply chain, shipment methods, consumer demand, timing of excise tax increases or other influences that may affect the timing of sales to customers. In such instances, in addition to reviewing PMI shipment volumes and certain estimated total industry/market volumes on a reported basis, management reviews these measures on an adjusted basis that excludes the impact of distributor and/or estimated trade inventory movements. Management also believes that disclosing PMI shipment volumes and estimated total industry/market volumes in such circumstances on a basis that excludes the impact of distributor and/or estimated trade inventory movements, such as on an IMS basis, improves the comparability of performance and trends for these measures over different reporting periods • "SoM" stands for share of market • "SoS" stands for share of segment 36

Glossary: Financial Terms • Net revenues related to combustible products refer to the operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes. PMI recognizes revenue when control is transferred to the customer, typically either upon shipment or delivery of goods • Net revenues related to RRPs represent the sale of heated tobacco units, IQOS devices and related accessories, and other nicotine-containing products, primarily e-vapor products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes. PMI recognizes revenue when control is transferred to the customer, typically either upon shipment or delivery of goods. • "Adjusted Operating Income (OI) Margin" is calculated as adjusted OI, divided by net revenues • Management reviews net revenues, OI, OI margins, operating cash flow and earnings per share, or "EPS," on an adjusted basis, which may exclude the impact of currency and other items such as acquisitions, asset impairment and exit costs, tax items and other special items. For example, PMI’s adjusted diluted EPS and other impacted results reflect the loss on deconsolidation of RBH and the Canadian tobacco litigation-related expense, recorded in the first quarter of 2019, and the Russia excise & VAT charge, recorded in the third quarter of 2019. PMI believes that the adjusted measures, including pro forma measures, will provide useful insight into underlying business trends and results, and will provide a more meaningful performance comparison for the period during which RBH remains under CCAA protection. For PMI's 2018 pro forma adjusted diluted EPS by quarter and year-to-date, see Schedule 3 in PMI's third-quarter 2019 earnings release 37

Glossary: Reduced-Risk Products • "Reduced-risk products," or "RRPs," is the term PMI uses to refer to products that present, are likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continuing smoking. PMI has a range of RRPs in various stages of development, scientific assessment and commercialization. PMI RRPs are smoke-free products that produce an aerosol that contains far lower quantities of harmful and potentially harmful constituents than found in cigarette smoke • "Aerosol" refers to a gaseous suspension of fine solid particles and/or liquid droplets • "Combustion" is the process of burning a substance in oxygen, producing heat and often light • "Smoke" is a visible suspension of solid particles, liquid droplets and gases in air, emitted when a material burns • "Heated tobacco units," or "HTUs," is the term PMI uses to refer to heated tobacco consumables, which for PMI include the company's HEETS, HEETS Marlboro and HEETS FROM MARLBORO, defined collectively as HEETS, as well as Marlboro HeatSticks and Parliament HeatSticks • The IQOS heat-not-burn device is a precisely controlled heating device into which a specially designed and proprietary tobacco unit is inserted and heated to generate an aerosol • HTU "offtake volume" represents the estimated retail offtake of HTUs based on a selection of sales channels that vary by market, but notably include retail points of sale and e-commerce platforms • HTU "offtake share" represents the estimated retail offtake volume of HTUs divided by the sum of estimated total offtake volume for cigarettes and HTUs • National 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 38

Glossary: Reduced-Risk Products (cont.) • "Total IQOS users" means the estimated number of Legal Age (minimum 18-year-old) IQOS users that used PMI HTUs for at least 5% of their daily tobacco consumption over the past seven days • "Converted IQOS Users" means the estimated number of Legal Age (minimum 18-year-old) IQOS users that used PMI HTUs for over 95% of their daily tobacco consumption over the past seven days • "Predominant IQOS Users" means the estimated number of Legal Age (minimum 18-year-old) IQOS users that used PMI HTUs units for between 70% and 95% of their daily tobacco consumption over the past seven days • "Situational IQOS Users" means the estimated number of Legal Age (minimum 18-year-old) IQOS users that used PMI HTUs for between 5% and less than 70% of their daily tobacco consumption over the past seven days • "Abandoned IQOS Users" means the estimated number of Legal Age (minimum 18-year-old) IQOS users that used PMI HTUs for less than 5% of their daily tobacco consumption over the past seven days • New PMI methodology as of 2018 for estimating the number of people who have stopped smoking and made the change to IQOS: for markets where IQOS is the only heated tobacco product, daily individual consumption of PMI HTUs represents the totality of their daily tobacco consumption in the past seven days. For markets where IQOS is one among other heated tobacco products, daily individual consumption of HTUs represents the totality of their daily tobacco consumption in the past seven days, of which at least 70% are PMI HTUs • "FDA" stands for the U.S. Food & Drug Administration • "MRTP" stands for Modified Risk Tobacco Product, the term used by the U.S. FDA to refer to RRPs • "MRTP application" stands for Modified Risk Tobacco Product application under section 911 of the FD&C Act • "PMTA" stands for Premarket Tobacco Application under section 910 of the FD&C Act 39

Glossary: IQOS in the United States • On April 30, 2019, the U.S. Food and Drug Administration (FDA) announced that the marketing of IQOS, PMI's electrically heated tobacco system, is appropriate for the protection of public health and authorized it for sale in the United States. The FDA’s decision follows its comprehensive assessment of PMI’s premarket tobacco product applications (PMTAs) submitted to the Agency in 2017. In the third quarter of 2019, PMI brought the IQOS device and three variants of its heated tobacco units (the term PMI uses to refer to heated tobacco consumables) to the U.S. through its license with Altria Group, Inc., whose subsidiary, Philip Morris USA, will market the product and comply with the provisions set forth in the FDA's marketing order • Shipment volume of heated tobacco units to the United States is included in the heated tobacco unit shipment volume of the Latin America & Canada segment. Revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc. for sale under license in the United States are included in Net Revenues of the Latin America & Canada segment 40

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency, and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency (Unaudited) Quarters Ended September 30, 2019 2018 % Change Reported Diluted EPS $ 1.22 $ 1.44 (15.3)% Currency - Reported Diluted EPS, excluding Currency $ 1.22 $ 1.44 (15.3)% Quarters Ended September 30, Year Ended 2019 2018 % Change 2018 Reported Diluted EPS $ 1.22 $ 1.44 (15.3)% $ 5.08 Asset impairment and exit costs 0.01 - - Russia excise and VAT audit charge 0.20 - - Tax items - - 0.02 Adjusted Diluted EPS $ 1.43 $ 1.44 (0.7)% $ 5.10 Currency - Adjusted Diluted EPS, excluding Currency $ 1.43 $ 1.44 (0.7)% 41

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of RBH, excluding Currency (Unaudited) Quarters Ended September 30, 2019 2018 % Change Adjusted Diluted EPS (a) $ 1.43 $ 1.44 (0.7)% Net earnings attributable to RBH (0.09) Adjusted Diluted EPS $ 1.43 $ 1.35 (b) 5.9% Currency - Adjusted Diluted EPS, excluding Currency $ 1.43 $ 1.35 (b) 5.9% (a) For the calculation, see previous slide (b) Pro forma 42

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 Net Revenues Excluding Net Revenues Quarters Ended Net Excluding Currency Acquisitions excluding Total Currency & Revenues excluding September 30, Revenues Currency Currency & Acquisitions Currency Acquisitions 2019 Reduced-Risk Products 2018 % Change $ 467 $ (17) $ 484 $ - $ 484 European Union $ 242 92.5% 99.6% 99.6% 235 (3) 238 - 238 Eastern Europe 73 +100% +100% +100% 63 1 62 - 62 Middle East & Africa 124 (49.2)% (49.9)% (49.9)% - - - - - South & Southeast Asia - - - - 572 7 566 - 566 East Asia & Australia 377 51.6% 49.9% 49.9% 7 - 8 - 8 Latin America & Canada(a) 5 44.2% 50.5% 50.5% $ 1,344 $ (13) $ 1,358 $ - $ 1,358 Total RRPs $ 823 63.4% 65.1% 65.1% 2019 PMI 2018 % Change $ 2,645 $ (98) $ 2,743 $ - $ 2,743 European Union $ 2,467 7.2% 11.2% 11.2% 899 (7) 906 - 906 Eastern Europe 778 15.6% 16.5% 16.5% 1,127 (16) 1,143 - 1,143 Middle East & Africa 1,143 (1.4)% - - 1,246 15 1,231 - 1,231 South & Southeast Asia 1,197 4.1% 2.8% 2.8% 1,252 (1) 1,253 - 1,253 East Asia & Australia 1,166 7.4% 7.5% 7.5% 473 (8) 481 - 481 Latin America & Canada 753 (37.2)% (36.1)% (36.1)% $ 7,642 $ (115) $ 7,757 $ - $ 7,757 Total PMI $ 7,504 1.8% 3.4% 3.4% (a) Net Revenues include revenues from shipments of the IQOS heated tobacco device, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States Note: Sum of Regions might not foot to Total PMI due to roundings. "-" indicates amounts between -$0.5 million and +$0.5 million 43

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of RBH, excluding Currency ($ in millions) / (Unaudited) Quarters Ended September 30, 2019 2018 % Change Net Revenues $ 7,642 $ 7,504 1.8% Net Revenues attributable to RBH (253) Net Revenues $ 7,642 $ 7,251 (a) 5.4% Currency (116) Net Revenues, excluding Currency $ 7,758 $ 7,251 (a) 7.0% (a) Pro forma 44

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) Adjusted Adjusted Operating Excluding Asset Adjusted Operating Income Asset Adjusted Operating Acqui- Operating Excluding Currency Impairment Operating Currency Income excluding Impairment Operating Total Income sitions Income Currency & Acqui- & Exit Costs Income excluding Currency & Exit Costs Income sitions Currency & Acqui- sitions Quarters Ended 2019 2018 % Change September 30, $ 1,255 $ - $ 1,255 $ (66) $ 1,321 $ - $ 1,321 European Union $ 1,179 $ - $ 1,179 6.4% 12.0% 12.0% (101) (374) (a) 273 25 248 - 248 Eastern Europe 270 - 270 1.1% (8.1)% (8.1)% 519 - 519 4 515 - 515 Middle East & Africa 491 - 491 5.7% 4.9% 4.9% 539 - 539 19 520 - 520 South & Southeast Asia 455 - 455 18.5% 14.3% 14.3% 451 - 451 12 439 - 439 East Asia & Australia 426 - 426 5.9% 3.1% 3.1% 125 (22) (b) 147 (6) 153 - 153 Latin America & Canada 335 - 335 (56.1)% (54.3)% (54.3)% $ 2,788 $ (396) $ 3,184 $ (12) $ 3,196 $ - $ 3,196 Total PMI $ 3,156 $ - $ 3,156 0.9% 1.3% 1.3% (a) Represents the Russia excise and VAT audit charge (b) Represents asset impairment and exit costs 45

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of RBH, excluding Currency ($ in millions) / (Unaudited) Quarters Ended September 30, 2019 2018 % Change Operating Income $ 2,788 $ 3,156 (11.7)% Asset impairment and exit costs (22) - Russia excise and VAT audit charge (374) - Adjusted Operating Income $ 3,184 $ 3,156 0.9% Operating Income attributable to RBH (197) Adjusted Operating Income $ 3,184 $ 2,959 (a) 7.6% Currency (12) Adjusted Operating Income, excluding Currency $ 3,196 $ 2,959 (a) 8.0% (a) Pro forma 46

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 Adjusted Adjusted Adjusted Adjusted Net Operating Adjusted Operating Net Operating Adjusted Adjusted Operating Operating Revenues Income Adjusted Adjusted Adjusted Operating Income Revenues Income Operating Net Operating Income Income excluding Margin Operating Net Operating Operating Income Margin excluding excluding Income Revenues Income excluding Margin Currency excluding Income Revenues Income Income Margin excluding Currency Currency (a) Margin Currency excluding & Acqui- Currency (a) Margin Margin excluding Currency (b) & Acqui- (a) Currency sitions (b) & Acqui- Currency & Acqui- sitions (a) sitions sitions Quarters Ended 2019 2018 % Points Change September 30, $ 1,255 $ 2,645 47.4% $ 1,321 $ 2,743 48.2% $ 1,321 $ 2,743 48.2% European Union $ 1,179 $ 2,467 47.8% (0.4) 0.4 0.4 273 899 30.4% 248 906 27.4% 248 906 27.4% Eastern Europe 270 778 34.7% (4.3) (7.3) (7.3) 519 1,127 46.1% 515 1,143 45.1% 515 1,143 45.1% Middle East & Africa 491 1,143 43.0% 3.1 2.1 2.1 539 1,246 43.3% 520 1,231 42.2% 520 1,231 42.2% South & Southeast Asia 455 1,197 38.0% 5.3 4.2 4.2 451 1,252 36.0% 439 1,253 35.0% 439 1,253 35.0% East Asia & Australia 426 1,166 36.5% (0.5) (1.5) (1.5) 147 473 31.1% 153 481 31.8% 153 481 31.8% Latin America & Canada 335 753 44.5% (13.4) (12.7) (12.7) $ 3,184 $ 7,642 41.7% $ 3,196 $ 7,757 41.2% $ 3,196 $ 7,757 41.2% Total PMI $ 3,156 $ 7,504 42.1% (0.4) (0.9) (0.9) (a) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to slide 45 (b) For the calculation of Net Revenues excluding currency and acquisitions refer to slide 43 47

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of RBH, excluding Currency ($ in millions) / (Unaudited) Quarters Ended September 30, 2019 2018 % Change Adjusted Operating Income(a) $ 3,184 $ 3,156 0.9% Net Revenues $ 7,642 $ 7,504 1.8% Adjusted OI Margin 41.7% 42.1% (0.4) Adjusted OI Margin attributable to RBH (1.3) Adjusted OI Margin 41.7% 40.8% (b) 0.9 Currency 0.5 Adjusted OI Margin, excluding Currency 41.2% 40.8% (b) 0.4 (a) For the calculation of Adjusted Operating Income refer to slide 45 (b) Pro forma 48

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Pro Forma Adjusted Diluted EPS (Unaudited) Quarter Quarter Six Months Quarter Nine Months Quarter Year Quarter Ended Ended Ended Ended Ended Ended Ended Ended Mar 31, Jun 30, Jun 30, Sept 30, Sept 30, Dec 31, Dec 31, Mar 31, 2018 2018 2018 2018 2018 2018 2018 2019 Reported Diluted EPS $ 1.00 $ 1.41 $ 2.41 $ 1.44 $ 3.85 $ 1.23 $ 5.08 $ 0.87 Asset impairment and exit costs - - - - - - - 0.01 Canadian tobacco litigation-related expense - - - - - - - 0.09 Loss on deconsolidation of RBH - - - - - - - 0.12 Tax items - - - - - 0.02 0.02 - Adjusted Diluted EPS $ 1.00 $ 1.41 $ 2.41 $ 1.44 $ 3.85 $ 1.25 $ 5.10 $ 1.09 (c) Net earnings attributable to RBH - (a) (0.08) (0.08) (a) (0.09) (0.18) (a) (0.08) (0.26) (a) - (b) Pro Forma Adjusted Diluted EPS $ 1.00 $ 1.33 $ 2.33 $ 1.35 $ 3.67 $ 1.17 $ 4.84 (a) Represents the impact of net earnings attributable to RBH from March 22, 2018 through end of period date (b) Represents the impact of net earnings attributable to RBH from March 22, 2019 through end of period date (c) Includes approximately $0.06 per share of net earnings attributable to RBH from January 1, 2019 through March 21, 2019 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 49

Delivering a Smoke-Free Future 2019 Third-Quarter Results October 17, 2019

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0.625% Notes due 2024 [Member]
Entity Information [Line Items]
Title of 12(b) Security	0.625% Notes due 2024
Trading Symbol	PM24B
Security Exchange Name	NYSE
3.250% Notes due 2024 [Member]
Entity Information [Line Items]
Title of 12(b) Security	3.250% Notes due 2024
Trading Symbol	PM24A
Security Exchange Name	NYSE
2.750% Notes due 2025 [Member]
Entity Information [Line Items]
Title of 12(b) Security	2.750% Notes due 2025
Trading Symbol	PM25
Security Exchange Name	NYSE
3.375% Notes due 2025 [Member]
Entity Information [Line Items]
Title of 12(b) Security	3.375% Notes due 2025
Trading Symbol	PM25A
Security Exchange Name	NYSE
2.750% Notes due 2026 [Member]
Entity Information [Line Items]
Title of 12(b) Security	2.750% Notes due 2026
Trading Symbol	PM26A
Security Exchange Name	NYSE
2.875% Notes due 2026 [Member]
Entity Information [Line Items]
Title of 12(b) Security	2.875% Notes due 2026
Trading Symbol	PM26
Security Exchange Name	NYSE
0.125% Notes due 2026 [Member]
Entity Information [Line Items]
Title of 12(b) Security	0.125% Notes due 2026
Trading Symbol	PM26B
Security Exchange Name	NYSE
3.125% Notes due 2027 [Member]
Entity Information [Line Items]
Title of 12(b) Security	3.125% Notes due 2027
Trading Symbol	PM27
Security Exchange Name	NYSE
3.125% Notes due 2028 [Member]
Entity Information [Line Items]
Title of 12(b) Security	3.125% Notes due 2028
Trading Symbol	PM28
Security Exchange Name	NYSE
2.875% Notes due 2029 [Member]
Entity Information [Line Items]
Title of 12(b) Security	2.875% Notes due 2029
Trading Symbol	PM29
Security Exchange Name	NYSE
3.375% Notes due 2029 [Member]
Entity Information [Line Items]
Title of 12(b) Security	3.375% Notes due 2029
Trading Symbol	PM29A
Security Exchange Name	NYSE
0.800% Notes due 2031 [Member]
Entity Information [Line Items]
Title of 12(b) Security	0.800% Notes due 2031
Trading Symbol	PM31
Security Exchange Name	NYSE
3.125% Notes due 2033 [Member]
Entity Information [Line Items]
Title of 12(b) Security	3.125% Notes due 2033
Trading Symbol	PM33
Security Exchange Name	NYSE
2.000% Notes due 2036 [Member]
Entity Information [Line Items]
Title of 12(b) Security	2.000% Notes due 2036
Trading Symbol	PM36
Security Exchange Name	NYSE
1.875% Notes due 2037 [Member]
Entity Information [Line Items]
Title of 12(b) Security	1.875% Notes due 2037
Trading Symbol	PM37A
Security Exchange Name	NYSE
6.375% Notes due 2038 [Member]
Entity Information [Line Items]
Title of 12(b) Security	6.375% Notes due 2038
Trading Symbol	PM38
Security Exchange Name	NYSE
1.450% Notes due 2039 [Member]
Entity Information [Line Items]
Title of 12(b) Security	1.450% Notes due 2039
Trading Symbol	PM39
Security Exchange Name	NYSE
4.375% Notes due 2041 [Member]
Entity Information [Line Items]
Title of 12(b) Security	4.375% Notes due 2041
Trading Symbol	PM41
Security Exchange Name	NYSE
4.500% Notes due 2042 [Member]
Entity Information [Line Items]
Title of 12(b) Security	4.500% Notes due 2042
Trading Symbol	PM42
Security Exchange Name	NYSE
3.875% Notes due 2042 [Member]
Entity Information [Line Items]
Title of 12(b) Security	3.875% Notes due 2042
Trading Symbol	PM42A
Security Exchange Name	NYSE
4.125% Notes due 2043 [Member]
Entity Information [Line Items]
Title of 12(b) Security	4.125% Notes due 2043
Trading Symbol	PM43
Security Exchange Name	NYSE
4.875% Notes due 2043 [Member]
Entity Information [Line Items]
Title of 12(b) Security	4.875% Notes due 2043
Trading Symbol	PM43A
Security Exchange Name	NYSE
4.250% Notes due 2044 [Member]
Entity Information [Line Items]
Title of 12(b) Security	4.250% Notes due 2044
Trading Symbol	PM44
Security Exchange Name	NYSE