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(Address of principal executive offices) | (Zip Code) |
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)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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. |
Item 7.01. | Financial Statements and Exhibits. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document and contained in Exhibit 101) |
PHILIP MORRIS INTERNATIONAL INC. | ||
By: | /s/ JERRY WHITSON | |
Name: | Jerry Whitson | |
Title: | Deputy General Counsel and Corporate Secretary |
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 |
• | Reported diluted EPS of $1.25, down by 16.1%; down by 12.1%, excluding currency |
• | Adjusted diluted EPS of $1.29, down by 11.6%; down by 7.5%, excluding currency |
• | Cigarette and heated tobacco unit shipment volume down by 14.5% (reflecting cigarette shipment volume down by 17.6%, and heated tobacco unit shipment volume up by 24.3% to 18.7 billion units) |
• | Market share for heated tobacco units in IQOS markets, excluding the U.S., up by 1.8 points to 6.3% |
• | Net revenues down by 13.6%; down by 9.5%, excluding currency |
• | Operating income down by 14.3%; down by 11.0%, excluding currency |
• | Adjusted operating income down by 9.5%, excluding currency |
• | Adjusted operating income margin flat at 41.7%, excluding currency |
• | Total IQOS users at quarter-end estimated at approximately 15.4 million, of which approximately 11.2 million have stopped smoking and switched to IQOS |
• | During the quarter, PMI declared a regular quarterly dividend of $1.17 per common share, representing an annualized rate of $4.68 |
• | On July 7, 2020, the U.S. Food and Drug Administration (FDA) authorized the marketing of the IQOS tobacco heating system as a modified risk tobacco product |
• | Reported diluted EPS of $2.42, up by 2.5%; up by 10.6%, excluding currency |
• | Adjusted diluted EPS of $2.50, down by 2.0%; up by 8.0% on a like-for-like basis, excluding currency |
• | Cigarette and heated tobacco unit shipment volume down by 8.2% (reflecting cigarette shipment volume down by 11.4%, and heated tobacco unit shipment volume up by 33.4% to 35.4 billion units); down by 8.0% on a like-for-like basis |
• | Market share for heated tobacco units in IQOS markets, excluding the U.S., up by 1.8 points to 6.3% |
• | Net revenues down by 4.5%; down by 0.5% on a like-for-like basis, excluding currency |
• | Operating income up by 5.4%; up by 11.1%, excluding currency |
• | Adjusted operating income up by 5.4% on a like-for-like basis, excluding currency |
• | Adjusted operating income margin up by 2.3 points to 41.5% on a like-for-like basis, excluding currency |
Full-Year | |||||||||||
2020 EPS Forecast | 2020 Forecast | 2019 | Adjusted Growth | ||||||||
Reported Diluted EPS | $4.84 | - | $4.99 | $4.61 | |||||||
Tax items | (0.04 | ) | |||||||||
Asset impairment and exit costs | 0.04 | 0.23 | |||||||||
Canadian tobacco litigation-related expense | 0.09 | ||||||||||
Loss on deconsolidation of RBH | 0.12 | ||||||||||
Russia excise and VAT audit charge | 0.20 | ||||||||||
Fair value adjustment for equity security investments | 0.04 | (0.02 | ) | ||||||||
Adjusted Diluted EPS | $4.92 | - | $5.07 | $5.19 | |||||||
Net earnings attributable to RBH | (0.06 | ) | (a) | ||||||||
Adjusted Diluted EPS | $4.92 | - | $5.07 | $5.13 | (b) | ||||||
Currency | 0.31 | ||||||||||
Adjusted Diluted EPS, excluding currency | $5.23 | - | $5.38 | $5.13 | (b) | 2% | - | 5% | |||
(a) Net reported diluted EPS attributable to RBH from January 1, 2019 through March 21, 2019. | |||||||||||
(b) Pro forma. |
• | Excluding an unfavorable currency impact, at prevailing exchange rates, of approximately $0.31 per share, asset impairment and exit costs of $0.04 per share, and a fair value adjustment for equity security investments of $0.04 per share, this forecast represents a projected increase of approximately 2% to 5% versus pro forma adjusted diluted earnings per share of $5.13 in 2019, as detailed in the above table. |
• | No recurrence of national lockdowns in PMI's key international markets during the second half of 2020; |
• | Lack of near-term recovery in PMI's duty-free business given the uncertain outlook for global travel, with current dynamics persisting at least through the third quarter; |
• | Full enforcement of minimum retail selling price requirements in Indonesia as of September 2020, at the earliest; |
• | An estimated total international industry volume decline, excluding China and the U.S., of approximately 7% to 9%; |
• | A total cigarette and heated tobacco unit shipment volume decline for PMI of approximately 8% to 10% on a like-for-like basis, notably due to Indonesia and PMI Duty Free; |
• | A full-year heated tobacco unit shipment volume that keeps PMI on-track to reach its 2021 target of 90 to 100 billion units; |
• | A currency-neutral net revenue decline in the low single digits, on a like-for-like basis. Excluding Indonesia and PMI Duty Free, this assumes currency-neutral net revenue growth in the low single digits on the same basis; |
• | An increase in currency-neutral, like-for-like adjusted operating income margin of more than 150 basis points; |
• | Reported diluted EPS in the third quarter broadly in line with the company's second-quarter 2020 EPS results, supported by a sequential improvement in reported net revenues in the quarter, offset by the unfavorable impact of the reversal of certain items from the first half and the timing of certain costs; |
• | Operating cash flow of at least $9.0 billion, subject to year-end working capital requirements and currency movements; |
• | Capital expenditures of approximately $0.7 billion; |
• | An effective tax rate of 22% to 23%, compared to approximately 23% assumed previously, notably reflecting changes in the company's earnings mix and a lower corporate tax rate in Indonesia; and |
• | No share repurchases. |
• | The IQOS system heats tobacco but does not burn it |
• | This significantly reduces the production of harmful and potentially harmful chemicals |
• | Scientific studies have shown that switching completely from conventional cigarettes to the IQOS system reduces your body’s exposure to harmful or potentially harmful chemicals |
PMI Shipment Volume by Region | Second-Quarter | Six Months Year-to-Date | ||||||||||||
(million units) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||
Cigarettes | ||||||||||||||
European Union | 40,317 | 46,367 | (13.0 | )% | 80,963 | 85,855 | (5.7 | )% | ||||||
Eastern Europe | 23,657 | 27,080 | (12.6 | )% | 45,076 | 47,400 | (4.9 | )% | ||||||
Middle East & Africa | 27,188 | 31,659 | (14.1 | )% | 57,184 | 64,963 | (12.0 | )% | ||||||
South & Southeast Asia | 33,346 | 46,376 | (28.1 | )% | 70,941 | 87,868 | (19.3 | )% | ||||||
East Asia & Australia | 12,071 | 13,845 | (12.8 | )% | 24,370 | 25,958 | (6.1 | )% | ||||||
Latin America & Canada | 14,780 | 18,472 | (20.0 | )% | 29,843 | 36,052 | (17.2 | )% | ||||||
Total PMI | 151,359 | 183,799 | (17.6 | )% | 308,377 | 348,096 | (11.4 | )% | ||||||
Heated Tobacco Units | ||||||||||||||
European Union | 4,227 | 3,043 | 38.9 | % | 8,888 | 5,336 | 66.6 | % | ||||||
Eastern Europe | 5,126 | 2,807 | 82.6 | % | 9,492 | 4,355 | +100% | |||||||
Middle East & Africa | 185 | 719 | (74.3 | )% | 655 | 1,473 | (55.5 | )% | ||||||
South & Southeast Asia | — | — | — | % | — | — | — | % | ||||||
East Asia & Australia | 9,076 | 8,428 | 7.7 | % | 16,198 | 15,277 | 6.0 | % | ||||||
Latin America & Canada (1) | 94 | 59 | 59.3 | % | 202 | 113 | 78.8 | % | ||||||
Total PMI | 18,708 | 15,056 | 24.3 | % | 35,435 | 26,554 | 33.4 | % | ||||||
Cigarettes and Heated Tobacco Units | ||||||||||||||
European Union | 44,544 | 49,410 | (9.8 | )% | 89,851 | 91,191 | (1.5 | )% | ||||||
Eastern Europe | 28,783 | 29,887 | (3.7 | )% | 54,568 | 51,755 | 5.4 | % | ||||||
Middle East & Africa | 27,373 | 32,378 | (15.5 | )% | 57,839 | 66,436 | (12.9 | )% | ||||||
South & Southeast Asia | 33,346 | 46,376 | (28.1 | )% | 70,941 | 87,868 | (19.3 | )% | ||||||
East Asia & Australia | 21,147 | 22,273 | (5.1 | )% | 40,568 | 41,235 | (1.6 | )% | ||||||
Latin America & Canada | 14,874 | 18,531 | (19.7 | )% | 30,045 | 36,165 | (16.9 | )% | ||||||
Total PMI | 170,067 | 198,855 | (14.5 | )% | 343,812 | 374,650 | (8.2 | )% | ||||||
(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license. |
• | the EU, reflecting lower cigarette shipment volume, notably in Italy, Poland and Spain, partly offset by higher heated tobacco unit shipment volume across most markets, notably Germany, Italy and Poland; |
• | Eastern Europe, reflecting lower cigarette shipment volume, particularly in Russia and Ukraine, partly offset by higher heated tobacco unit shipment volume across the Region, notably in Russia; |
• | Middle East & Africa, reflecting lower cigarette shipment volume, particularly in North Africa, PMI Duty Free and Turkey, partly offset by Saudi Arabia, as well as lower heated tobacco shipment volume in PMI Duty Free; |
• | South & Southeast Asia, reflecting lower cigarette shipment volume, primarily in Indonesia, Pakistan and the Philippines; |
• | East Asia & Australia, reflecting lower cigarette shipment volume, mainly in Japan, partly offset by higher heated tobacco unit shipment volume in Japan; and |
• | Latin America & Canada, reflecting lower cigarette shipment volume, primarily in Argentina and Mexico. |
• | the EU, reflecting lower cigarette shipment volume, notably in Italy, Poland and Spain, partly offset by higher heated tobacco unit shipment volume across the Region, particularly in Italy; |
• | Middle East & Africa, reflecting lower cigarette shipment volume, notably in PMI Duty Free, Saudi Arabia and Turkey, partly offset by North Africa, as well as lower heated tobacco unit shipment volume in PMI Duty Free; |
• | South & Southeast Asia, reflecting lower cigarette shipment volume, primarily in Indonesia, Pakistan and the Philippines; |
• | East Asia & Australia, reflecting lower cigarette shipment volume, mainly in Japan, partly offset by higher heated tobacco unit shipment volume in Japan; and |
• | Latin America & Canada, reflecting lower cigarette shipment volume, primarily in Argentina, Canada (due to the impact of the deconsolidation of RBH), and Mexico. On a like-for-like basis, PMI's total shipment volume in the Region decreased by 14.6%; |
• | Eastern Europe, reflecting higher heated tobacco unit shipment volume across the Region, notably in Russia and Ukraine, partly offset by lower cigarette shipment volume, notably in Russia and Ukraine. |
• | a net favorable impact of 2.2 billion cigarettes, mainly driven by Japan, Kuwait and North Africa, partly offset by Saudi Arabia and Spain; and |
• | a net favorable impact of 0.8 billion heated tobacco units, mainly driven by Japan and Russia. |
PMI Shipment Volume by Brand | Second-Quarter | Six Months Year-to-Date | ||||||||||||
(million units) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||
Cigarettes | ||||||||||||||
Marlboro | 54,812 | 68,060 | (19.5 | )% | 114,057 | 128,024 | (10.9 | )% | ||||||
L&M | 22,385 | 23,522 | (4.8 | )% | 45,025 | 45,337 | (0.7 | )% | ||||||
Chesterfield | 12,604 | 14,202 | (11.3 | )% | 25,507 | 28,501 | (10.5 | )% | ||||||
Philip Morris | 11,106 | 12,950 | (14.2 | )% | 22,569 | 23,673 | (4.7 | )% | ||||||
Parliament | 8,462 | 9,847 | (14.1 | )% | 16,035 | 18,677 | (14.1 | )% | ||||||
Sampoerna A | 7,254 | 9,355 | (22.5 | )% | 15,802 | 17,256 | (8.4 | )% | ||||||
Bond Street | 6,428 | 7,741 | (17.0 | )% | 12,041 | 13,412 | (10.2 | )% | ||||||
Dji Sam Soe | 5,797 | 7,839 | (26.0 | )% | 11,972 | 14,490 | (17.4 | )% | ||||||
Lark | 4,189 | 5,349 | (21.7 | )% | 8,213 | 10,619 | (22.7 | )% | ||||||
Fortune | 2,263 | 3,441 | (34.2 | )% | 4,745 | 6,487 | (26.8 | )% | ||||||
Others | 16,059 | 21,493 | (25.3 | )% | 32,411 | 41,620 | (22.1 | )% | ||||||
Total Cigarettes | 151,359 | 183,799 | (17.6 | )% | 308,377 | 348,096 | (11.4 | )% | ||||||
Heated Tobacco Units (1) | 18,708 | 15,056 | 24.3 | % | 35,435 | 26,554 | 33.4 | % | ||||||
Total PMI | 170,067 | 198,855 | (14.5 | )% | 343,812 | 374,650 | (8.2 | )% | ||||||
(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. |
• | Marlboro, mainly due to Indonesia, Italy, Japan, Mexico, the Philippines and PMI Duty Free, partially offset by the GCC; |
• | L&M, mainly due to Egypt, PMI Duty Free, Poland and Thailand, partly offset by Saudi Arabia and Turkey; |
• | Chesterfield, mainly due to Mexico, Poland, Russia and Turkey, partly offset by Brazil and Saudi Arabia; |
• | Philip Morris, primarily driven by Argentina, Indonesia and Italy; |
• | Parliament, mainly due to PMI Duty Free, Russia and Turkey; |
• | Sampoerna A in Indonesia, mainly due to premium A Mild; |
• | Bond Street, mainly due to Russia and Ukraine; |
• | Dji Sam Soe in Indonesia, mainly due to Dji Sam Soe Magnum Mild; |
• | Lark, mainly due to Japan and Turkey; |
• | Fortune in the Philippines; and |
• | "Others," notably due to: mid-price Sampoerna U in Indonesia and low-price Morven in Pakistan. |
• | Total international market share for cigarettes of 25.0%, down by 1.0 point; and |
• | Total international market share for heated tobacco units of 3.0%, up by 0.9 points. |
• | Marlboro, mainly due to Indonesia, Italy, Mexico, the Philippines, PMI Duty Free, Saudi Arabia, Spain and Turkey, partially offset by Germany, Kuwait, North Africa and Russia; |
• | L&M, notably due to PMI Duty Free, Poland and Thailand, partly offset by Jordan, Mexico and Turkey; |
• | Chesterfield, notably due to Russia and Turkey, partly offset by Brazil and Saudi Arabia; |
• | Philip Morris, notably due to Argentina and Italy, partly offset by Japan, the Philippines and Russia; |
• | Parliament, mainly due to PMI Duty Free, Russia and Turkey; |
• | Sampoerna A in Indonesia, mainly due to premium A Mild; |
• | Bond Street, mainly due to Russia and Ukraine; |
• | Dji Sam Soe in Indonesia, mainly due to Dji Sam Soe Magnum Mild; |
• | Lark, mainly due to Japan and Turkey; |
• | Fortune in the Philippines; and |
• | "Others," notably due to: the impact of the deconsolidation of RBH in Canada; mid-price Sampoerna U in Indonesia and Muratti in Turkey; and low-price Baronet in Mexico and Morven in Pakistan. |
• | Total international market share for cigarettes of 24.8%, down by 1.2 points; and |
• | Total international market share for heated tobacco units of 2.9%, up by 0.8 points. |
Financial Summary - Quarters Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 6,651 | $ 7,699 | (13.6 | )% | (9.5 | )% | (1,048 | ) | (317 | ) | 172 | (904 | ) | 1 | |||||||
Cost of Sales | (2,179) | (2,665) | 18.2 | % | 14.1 | % | 486 | 111 | — | 239 | 136 | ||||||||||
Marketing, Administration and Research Costs (1) | (1,722) | (1,831) | 6.0 | % | 0.4 | % | 109 | 101 | — | — | 8 | ||||||||||
Amortization of Intangibles | (19) | (16) | (18.8 | )% | (25.0 | )% | (3 | ) | 1 | — | — | (4 | ) | ||||||||
Operating Income | $ 2,731 | $ 3,187 | (14.3 | )% | (11.0 | )% | (456 | ) | (104 | ) | 172 | (665 | ) | 141 | |||||||
Asset Impairment & Exit Costs (2) | (71 | ) | (23 | ) | -(100)% | -(100)% | (48 | ) | — | — | — | (48 | ) | ||||||||
Adjusted Operating Income | $ 2,802 | $ 3,210 | (12.7 | )% | (9.5 | )% | (408 | ) | (104 | ) | 172 | (665 | ) | 189 | |||||||
Adjusted Operating Income Margin | 42.1 | % | 41.7 | % | 0.4pp | — | |||||||||||||||
(1) Favorable Cost/Other variance includes the 2019 and 2020 asset impairment and exit costs. | |||||||||||||||||||||
(2) Included in Marketing, Administration and Research Costs above. | |||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. |
Financial Summary - Six Months Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other(1) | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 13,804 | $ 14,450 | (4.5 | )% | (1.8 | )% | (646 | ) | (391 | ) | 495 | (523 | ) | (227 | ) | ||||||
Cost of Sales | (4,581 | ) | (5,130 | ) | 10.7 | % | 7.6 | % | 549 | 160 | — | 268 | 121 | ||||||||
Marketing, Administration and Research Costs (2) | (3,666 | ) | (4,048 | ) | 9.4 | % | 11.2 | % | 382 | (70 | ) | — | — | 452 | |||||||
Amortization of Intangibles | (37 | ) | (35 | ) | (5.7 | )% | (8.6 | )% | (2 | ) | 1 | — | — | (3 | ) | ||||||
Operating Income | $ 5,520 | $ 5,237 | 5.4 | % | 11.1 | % | 283 | (300 | ) | 495 | (255 | ) | 343 | ||||||||
Asset Impairment & Exit Costs (3) | (71 | ) | (43 | ) | (65.1 | )% | (65.1 | )% | (28 | ) | — | — | — | (28 | ) | ||||||
Canadian Tobacco Litigation-Related Expense (3) | — | (194 | ) | +100% | +100% | 194 | — | — | — | 194 | |||||||||||
Loss on Deconsolidation of RBH (3) | — | (239 | ) | +100% | +100% | 239 | — | — | — | 239 | |||||||||||
Adjusted Operating Income | $ 5,591 | $ 5,713 | (2.1 | )% | 3.1 | % | (122 | ) | (300 | ) | 495 | (255 | ) | (62 | ) | ||||||
Adjusted Operating Income Margin | 40.5 | % | 39.5 | % | 1.0pp | 2.0pp | |||||||||||||||
(1) Cost/Other variance includes the impact of the RBH deconsolidation. | |||||||||||||||||||||
(2) Favorable Cost/Other variance includes the 2019 Canadian tobacco litigation-related expense, the 2019 loss on deconsolidation of RBH, the 2019 and 2020 asset impairment and exit costs, and the impact of the RBH deconsolidation. | |||||||||||||||||||||
(3) Included in Marketing, Administration and Research Costs above. | |||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. |
Financial Summary - Quarters Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 2,475 | $ 2,577 | (4.0 | )% | (0.1 | )% | (102 | ) | (100 | ) | 44 | (46 | ) | — | |||||||
Operating Income | $ 1,178 | $ 1,195 | (1.4 | )% | 4.0 | % | (17 | ) | (65 | ) | 44 | (2 | ) | 6 | |||||||
Asset Impairment & Exit Costs (1) | (27 | ) | — | — | % | — | % | (27 | ) | — | — | — | (27 | ) | |||||||
Adjusted Operating Income | $ 1,205 | $ 1,195 | 0.8 | % | 6.3 | % | 10 | (65 | ) | 44 | (2 | ) | 33 | ||||||||
Adjusted Operating Income Margin | 48.7 | % | 46.4 | % | 2.3pp | 2.9pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Financial Summary - Six Months Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 5,010 | $ 4,736 | 5.8 | % | 9.4 | % | 274 | (170 | ) | 60 | 384 | — | |||||||||
Operating Income | $ 2,336 | $ 2,091 | 11.7 | % | 17.9 | % | 245 | (130 | ) | 60 | 376 | (61 | ) | ||||||||
Asset Impairment & Exit Costs (1) | (27 | ) | — | — | % | — | % | (27 | ) | — | — | — | (27 | ) | |||||||
Adjusted Operating Income | $ 2,363 | $ 2,091 | 13.0 | % | 19.2 | % | 272 | (130 | ) | 60 | 376 | (34 | ) | ||||||||
Adjusted Operating Income Margin | 47.2 | % | 44.2 | % | 3.0pp | 3.9pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
European Union Key Data | Second-Quarter | Six Months Year-to-Date | ||||||||||||
Change | Change | |||||||||||||
2020 | 2019 | % / pp | 2020 | 2019 | % / pp | |||||||||
Total Market (billion units) | 115.5 | 124.5 | (7.3 | )% | 224.6 | 231.8 | (3.1 | )% | ||||||
PMI Shipment Volume (million units) | ||||||||||||||
Cigarettes | 40,317 | 46,367 | (13.0 | )% | 80,963 | 85,855 | (5.7 | )% | ||||||
Heated Tobacco Units | 4,227 | 3,043 | 38.9 | % | 8,888 | 5,336 | 66.6 | % | ||||||
Total EU | 44,544 | 49,410 | (9.8 | )% | 89,851 | 91,191 | (1.5 | )% | ||||||
PMI Market Share | ||||||||||||||
Marlboro | 17.8 | % | 18.0 | % | (0.2 | ) | 17.7 | % | 18.1 | % | (0.4 | ) | ||
L&M | 6.5 | % | 6.9 | % | (0.4 | ) | 6.5 | % | 6.8 | % | (0.3 | ) | ||
Chesterfield | 5.6 | % | 5.8 | % | (0.2 | ) | 5.6 | % | 5.9 | % | (0.3 | ) | ||
Philip Morris | 2.6 | % | 2.7 | % | (0.1 | ) | 2.6 | % | 2.8 | % | (0.2 | ) | ||
HEETS | 3.9 | % | 2.4 | % | 1.5 | 3.9 | % | 2.3 | % | 1.6 | ||||
Others | 3.0 | % | 3.0 | % | — | 3.1 | % | 3.0 | % | 0.1 | ||||
Total EU | 39.4 | % | 38.8 | % | 0.6 | 39.4 | % | 38.9 | % | 0.5 |
• | Czech Republic, down by 16.7%, mainly reflecting lower border sales due to lockdown measures; |
• | Denmark, down by 78.5%, mainly reflecting the net unfavorable impact of estimated trade inventory movements related to a significant excise tax increase on April 1, 2020. Excluding these movements, the total estimated market increased by 0.3%; |
• | Poland, down by 13.6%, notably reflecting lower border sales due to lockdown measures, as well as the impact of price increases in the first quarter of 2020; |
• | Romania, down by 16.6%, mainly reflecting the impact of lockdown measures; and |
• | Spain, down by 17.2%, mainly reflecting lower in-bound tourism and border sales due to lockdown measures; |
• | Germany, up by 5.9%, or by 4.2% excluding the net favorable impact of estimated trade inventory movements, primarily reflecting the favorable impact of reduced out-bound tourism and lower cross-border (non-domestic) purchases due to lockdown measures, partly offset by the impact of price increases in April and May 2020. |
• | lower cigarette shipment volume, mainly due to the lower total market, lower market share (notably in Italy and Poland, partly reflecting out-switching to heated tobacco units) and the net unfavorable impact of estimated distributor inventory movements (partially due to distributor inventory decreases, following increases in the first quarter related to COVID-19, notably in Italy and Spain); |
• | higher heated tobacco unit shipment volume, driven by higher market share (notably in Germany, Italy and Poland). |
• | Czech Republic, down by 11.5%, primarily reflecting the same factor as in the quarter; |
• | Poland, down by 6.4%, mainly reflecting the same factors as in the quarter; |
• | Romania, down by 8.7%, primarily reflecting the same factor as in the quarter; and |
• | Spain, down by 8.2%, mainly reflecting the same factors as in the quarter; |
• | Germany, up by 4.9%, or by 2.3% excluding the net favorable impact of estimated trade inventory movements, primarily reflecting the same factors as in the quarter. |
• | lower cigarette shipment volume, mainly due to the lower total market, as well as lower cigarette market share (notably in Italy and Poland, partly reflecting out-switching to heated tobacco units); |
• | higher heated tobacco unit shipment volume across the Region (notably in Germany, Italy and Poland), driven by higher market share. |
Financial Summary - Quarters Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 783 | $ 822 | (4.7 | )% | 5.6 | % | (39 | ) | (85 | ) | 27 | 19 | — | ||||||||
Operating Income | $ 266 | $ 256 | 3.9 | % | 8.2 | % | 10 | (11 | ) | 27 | 10 | (16 | ) | ||||||||
Asset Impairment & Exit Costs (1) | (7 | ) | — | — | % | — | % | (7 | ) | — | — | — | (7 | ) | |||||||
Adjusted Operating Income | $ 273 | $ 256 | 6.6 | % | 10.9 | % | 17 | (11 | ) | 27 | 10 | (9 | ) | ||||||||
Adjusted Operating Income Margin | 34.9 | % | 31.1 | % | 3.8pp | 1.6pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Financial Summary - Six Months Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 1,571 | $ 1,401 | 12.1 | % | 17.8 | % | 170 | (79 | ) | 41 | 208 | — | |||||||||
Operating Income | $ 365 | $ 385 | (5.2 | )% | 21.6 | % | (20 | ) | (103 | ) | 41 | 139 | (97 | ) | |||||||
Asset Impairment & Exit Costs (1) | (7 | ) | — | — | % | — | % | (7 | ) | — | — | — | (7 | ) | |||||||
Adjusted Operating Income | $ 372 | $ 385 | (3.4 | )% | 23.4 | % | (13 | ) | (103 | ) | 41 | 139 | (90 | ) | |||||||
Adjusted Operating Income Margin | 23.7 | % | 27.5 | % | (3.8)pp | 1.3pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
PMI Shipment Volume | Second-Quarter | Six Months Year-to-Date | ||||||||||||
(million units) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||
Cigarettes | 23,657 | 27,080 | (12.6 | )% | 45,076 | 47,400 | (4.9 | )% | ||||||
Heated Tobacco Units | 5,126 | 2,807 | 82.6 | % | 9,492 | 4,355 | +100% | |||||||
Total Eastern Europe | 28,783 | 29,887 | (3.7 | )% | 54,568 | 51,755 | 5.4 | % |
• | Russia, down by 4.1%, or by 6.6% excluding the net favorable impact of estimated trade inventory movements, primarily reflecting the impact of price increases, partly offset by the impact of a decrease in the prevalence of illicit trade due to lockdown measures; and |
• | Ukraine, down by 15.0%, mainly reflecting the impact of excise tax-driven price increases and reduced adult smoker average daily consumption due to lockdown measures. |
• | Ukraine, down by 14.7%, or by 11.1% excluding the net unfavorable impact of estimated distributor inventory movements, mainly reflecting the lower total market, partly offset by a higher market share, driven by heated tobacco units. |
• | Russia, down by 2.1%, or by 6.4% excluding the net favorable impact of estimated trade inventory movements, primarily reflecting the same factors as in the quarter; and |
• | Ukraine, down by 10.9%, mainly reflecting the same factors as in the quarter. |
• | Russia, up by 10.3%, primarily reflecting a higher market share, driven by heated tobacco units, partly offset by the lower total market; |
• | Ukraine, down by 5.7%, mainly due to the same factors as in the quarter. |
Financial Summary - Quarters Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 704 | $ 1,004 | (29.9 | )% | (28.3 | )% | (300 | ) | (16 | ) | 45 | (335 | ) | 6 | |||||||
Operating Income | $ 237 | $ 441 | (46.3 | )% | (47.4 | )% | (204 | ) | 5 | 45 | (264 | ) | 10 | ||||||||
Asset Impairment & Exit Costs (1) | (9 | ) | — | — | % | — | % | (9 | ) | — | — | — | (9 | ) | |||||||
Adjusted Operating Income | $ 246 | $ 441 | (44.2 | )% | (45.4 | )% | (195 | ) | 5 | 45 | (264 | ) | 19 | ||||||||
Adjusted Operating Income Margin | 34.9 | % | 43.9 | % | (9.0)pp | (10.4)pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Financial Summary - Six Months Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 1,580 | $ 1,931 | (18.2 | )% | (17.2 | )% | (351 | ) | (18 | ) | 117 | (411 | ) | (39 | ) | ||||||
Operating Income | $ 558 | $ 785 | (28.9 | )% | (27.1 | )% | (227 | ) | (14 | ) | 117 | (294 | ) | (36 | ) | ||||||
Asset Impairment & Exit Costs (1) | (9 | ) | — | — | % | — | % | (9 | ) | — | — | — | (9 | ) | |||||||
Adjusted Operating Income | $ 567 | $ 785 | (27.8 | )% | (26.0 | )% | (218 | ) | (14 | ) | 117 | (294 | ) | (27 | ) | ||||||
Adjusted Operating Income Margin | 35.9 | % | 40.7 | % | (4.8)pp | (4.3)pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
PMI Shipment Volume | Second-Quarter | Six Months Year-to-Date | ||||||||||||
(million units) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||
Cigarettes | 27,188 | 31,659 | (14.1 | )% | 57,184 | 64,963 | (12.0 | )% | ||||||
Heated Tobacco Units | 185 | 719 | (74.3 | )% | 655 | 1,473 | (55.5 | )% | ||||||
Total Middle East & Africa | 27,373 | 32,378 | (15.5 | )% | 57,839 | 66,436 | (12.9 | )% |
• | Egypt, down by 19.6%, notably reflecting pandemic-related supply-chain shortages involving competitors' products and reductions in adult smoker average daily consumption during lockdown; |
• | International Duty Free, down by 82.9%, reflecting the impact of government travel restrictions and reduced passenger traffic due to the pandemic; |
• | South Africa, down by 100%, reflecting the impact of the pandemic-related ban on all tobacco sales effective March 27, 2020; and |
• | Turkey, down by 6.8%, or by 16.9% excluding the net favorable impact of estimated trade inventory movements, mainly reflecting the impact of lockdown measures on adult smoker average daily consumption, as well as a higher prevalence of illicit trade related to cut tobacco following significant industry-wide price increases in 2019. |
• | Egypt, down by 15.6%, or by 12.1% excluding the net unfavorable impact of estimated distributor inventory movements, mainly reflecting the lower total market, partly offset by a higher market share, primarily driven by the impact of supply chain shortages for competitors' products; |
• | PMI Duty Free, down by 94.4%, or by 82.1% excluding the net unfavorable impact of estimated distributor inventory movements (driven by cigarettes), mainly reflecting the lower total market; and |
• | Turkey, down by 6.6%, mainly reflecting the lower total market; |
• | Saudi Arabia, up by +100%. Excluding the net favorable impact of estimated distributor inventory movements of 1.7 billion cigarettes, largely attributable to the timing of shipments in 2019, PMI's in-market sales increased by 11.2%, mainly driven by the reduced prevalence of non-domestic products and the shift from duty-free to domestic sales due to the impact of pandemic-related government travel restrictions and reduced passenger traffic. |
• | Egypt, down by 6.9%, notably reflecting the same factors as in the quarter; |
• | International Duty Free, down by 57.8%, reflecting the same factors as in the quarter; |
• | South Africa, down by 50.8%, primarily reflecting the same factor as in the quarter; and |
• | Turkey, down by 9.3%, mainly reflecting the same factors as in the quarter. |
• | PMI Duty Free, down by 55.9%, mainly reflecting the lower total market; and |
• | Turkey, down by 17.4%, mainly reflecting the lower total market and lower market share, due primarily to adult smoker down-trading following the 2019 price increases. |
Financial Summary - Quarters Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 889 | $ 1,248 | (28.8 | )% | (25.1 | )% | (359 | ) | (46 | ) | (15 | ) | (298 | ) | — | ||||||
Operating Income | $ 289 | $ 492 | (41.3 | )% | (38.0 | )% | (203 | ) | (16 | ) | (15 | ) | (218 | ) | 46 | ||||||
Asset Impairment & Exit Costs (1) | (11 | ) | — | — | % | — | % | (11 | ) | — | — | — | (11 | ) | |||||||
Adjusted Operating Income | $ 300 | $ 492 | (39.0 | )% | (35.8 | )% | (192 | ) | (16 | ) | (15 | ) | (218 | ) | 57 | ||||||
Adjusted Operating Income Margin | 33.7 | % | 39.4 | % | (5.7)pp | (5.6)pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Financial Summary - Six Months Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 2,140 | $ 2,361 | (9.4 | )% | (8.2 | )% | (221 | ) | (27 | ) | 144 | (338 | ) | — | |||||||
Operating Income | $ 888 | $ 932 | (4.7 | )% | (5.0 | )% | (44 | ) | 3 | 144 | (236 | ) | 45 | ||||||||
Asset Impairment & Exit Costs (1) | (11 | ) | (20 | ) | 45.0 | % | 45.0 | % | 9 | — | — | — | 9 | ||||||||
Adjusted Operating Income | $ 899 | $ 952 | (5.6 | )% | (5.9 | )% | (53 | ) | 3 | 144 | (236 | ) | 36 | ||||||||
Adjusted Operating Income Margin | 42.0 | % | 40.3 | % | 1.7pp | 1.0pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
PMI Shipment Volume | Second-Quarter | Six Months Year-to-Date | ||||||||||||
(million units) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||
Cigarettes | 33,346 | 46,376 | (28.1 | )% | 70,941 | 87,868 | (19.3 | )% | ||||||
Heated Tobacco Units | — | — | — | % | — | — | — | % | ||||||
Total South & Southeast Asia | 33,346 | 46,376 | (28.1 | )% | 70,941 | 87,868 | (19.3 | )% |
• | Bangladesh, down by 29.9%, or by 5.3% excluding the net unfavorable impact of estimated trade inventory movements, primarily reflecting the impact of lockdown restrictions on tobacco product availability; |
• | India, down by 37.6%, primarily reflecting the impact of lockdown restrictions on the movement of certain products, including tobacco; |
• | Indonesia, down by 17.5%, or by 22.1% excluding the net favorable impact of estimated trade inventory movements, mainly reflecting the impact of pandemic-related measures on adult smoker average daily consumption, as well as the impact of excise tax-driven price increases; |
• | Pakistan, down by 25.8%, mainly reflecting the impact of excise tax-driven price increases in June 2019 and value brand price increases in February 2020, coupled with the impact of trade supply disruption on tobacco product availability, due to lockdown measures; and |
• | the Philippines, down by 24.6%, mainly reflecting the impact of the strict enforcement of nationwide quarantine, as well as industry-wide price increases in the third quarter of 2019. |
• | Indonesia, down by 27.7%, reflecting the lower total market, as well as a lower market share, mainly due to: the impact of elevated price gaps in the tier one segment (partly due to the delay in minimum price enforcement), adult smoker down-trading to the tax-advantaged 'below tier one' segment, and the disproportionate impact of stricter public mobility restrictions in urban areas, where PMI’s share is higher; |
• | Pakistan, down by 39.2%, due to the lower total market and a lower market share; and |
• | the Philippines, down by 25.7%, mainly reflecting the lower total market. |
• | Bangladesh, down by 5.6%, primarily reflecting the same factor as in the quarter; |
• | India, down by 23.5%, mainly reflecting the same factor as in the quarter; |
• | Indonesia, down by 9.5%, or by 14.8% excluding the net favorable impact of estimated trade inventory movements, primarily reflecting the same factors as in the quarter; |
• | Pakistan, down by 25.6%, mainly due to the same factors as in the quarter; and |
• | the Philippines, down by 17.1%, mainly reflecting the same factors as in the quarter. |
• | Indonesia, down by 18.2%, reflecting the lower total market, as well as a lower market share, mainly due to the same factors as in the quarter; |
• | Pakistan, down by 37.4%, mainly due to the same factors as in the quarter; and |
• | the Philippines, down by 17.7%, mainly reflecting the same factor as in the quarter. |
Financial Summary - Quarters Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 1,432 | $ 1,521 | (5.9 | )% | (5.1 | )% | (89 | ) | (12 | ) | 30 | (107 | ) | — | |||||||
Operating Income | $ 669 | $ 642 | 4.2 | % | 5.9 | % | 27 | (11 | ) | 30 | (85 | ) | 93 | ||||||||
Asset Impairment & Exit Costs (1) | (13 | ) | — | — | % | — | % | (13 | ) | — | — | — | (13 | ) | |||||||
Adjusted Operating Income | $ 682 | $ 642 | 6.2 | % | 7.9 | % | 40 | (11 | ) | 30 | (85 | ) | 106 | ||||||||
Adjusted Operating Income Margin | 47.6 | % | 42.2 | % | 5.4pp | 5.8pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
Financial Summary - Six Months Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 2,687 | $ 2,842 | (5.5 | )% | (4.7 | )% | (155 | ) | (21 | ) | 43 | (177 | ) | — | |||||||
Operating Income | $ 1,155 | $ 1,069 | 8.0 | % | 9.4 | % | 86 | (15 | ) | 43 | (96 | ) | 154 | ||||||||
Asset Impairment & Exit Costs (1) | (13 | ) | — | — | % | — | % | (13 | ) | — | — | — | (13 | ) | |||||||
Adjusted Operating Income | $ 1,168 | $ 1,069 | 9.3 | % | 10.7 | % | 99 | (15 | ) | 43 | (96 | ) | 167 | ||||||||
Adjusted Operating Income Margin | 43.5 | % | 37.6 | % | 5.9pp | 6.1pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. |
PMI Shipment Volume | Second-Quarter | Six Months Year-to-Date | ||||||||||||
(million units) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||
Cigarettes | 12,071 | 13,845 | (12.8 | )% | 24,370 | 25,958 | (6.1 | )% | ||||||
Heated Tobacco Units | 9,076 | 8,428 | 7.7 | % | 16,198 | 15,277 | 6.0 | % | ||||||
Total East Asia & Australia | 21,147 | 22,273 | (5.1 | )% | 40,568 | 41,235 | (1.6 | )% |
• | Japan, down by 12.7%, mainly reflecting the impact of reduced adult smoker social consumption occasions due to pandemic-related measures, as well as adult smoker out-switching from cigarettes to the cigarillo category; |
• | Korea, up by 3.9%, notably driven by the shift of adult smokers from duty-free to domestic purchases due to the pandemic-related decline in international travel. |
• | Japan, down by 6.4%, mainly due to the lower total market, partly offset by a higher market share driven by heated tobacco units. |
• | Japan, down by 9.4%, mainly reflecting the same factors as in the quarter; |
• | Korea, up by 3.8%, notably due the same factor as in the quarter. |
• | Japan, down by 1.0%, or by 3.6% excluding the net favorable impact of estimated distributor inventory movements, mainly due to the same factors as in the quarter; and |
• | Korea, down by 4.6%, mainly due to a lower market share, primarily reflecting the unfavorable impact of the growth of the cigarette new taste dimension segment, in which PMI has a relatively low share, partly offset by the higher total market. |
Financial Summary - Quarters Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 368 | $ 527 | (30.2 | )% | (19.2 | )% | (159 | ) | (58 | ) | 41 | (137 | ) | (5 | ) | ||||||
Operating Income | $ 92 | $ 161 | (42.9 | )% | (39.1 | )% | (69 | ) | (6 | ) | 41 | (106 | ) | 2 | |||||||
Asset Impairment & Exit Costs (1) | (4 | ) | (23 | ) | 82.6 | % | 82.6 | % | 19 | — | — | — | 19 | ||||||||
Adjusted Operating Income | $ 96 | $ 184 | (47.8 | )% | (44.6 | )% | (88 | ) | (6 | ) | 41 | (106 | ) | (17 | ) | ||||||
Adjusted Operating Income Margin | 26.1 | % | 34.9 | % | (8.8)pp | (11.0)pp | |||||||||||||||
(1) Included in marketing, administration and research costs at the consolidated operating income level. | |||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. |
Financial Summary - Six Months Ended June 30, | Change Fav./(Unfav.) | Variance Fav./(Unfav.) | |||||||||||||||||||
2020 | 2019 | Total | Excl. Curr. | Total | Cur- rency | Price | Vol/ Mix | Cost/ Other(1) | |||||||||||||
(in millions) | |||||||||||||||||||||
Net Revenues | $ 816 | $ 1,179 | (30.8 | )% | (24.3 | )% | (363 | ) | (76 | ) | 90 | (189 | ) | (188 | ) | ||||||
Operating Income (Loss) | $ 218 | $ (25) | +100% | +100% | 243 | (41 | ) | 90 | (144 | ) | 338 | ||||||||||
Asset Impairment & Exit Costs (2) | (4 | ) | (23 | ) | 82.6 | % | 82.6 | % | 19 | — | — | — | 19 | ||||||||
Canadian Tobacco Litigation-Related Expense (2) | — | (194 | ) | +100% | +100% | 194 | — | — | — | 194 | |||||||||||
Loss on Deconsolidation of RBH (2) | — | (239 | ) | +100% | +100% | 239 | — | — | — | 239 | |||||||||||
Adjusted Operating Income | $ 222 | $ 431 | (48.5 | )% | (39.0 | )% | (209 | ) | (41 | ) | 90 | (144 | ) | (114 | ) | ||||||
Adjusted Operating Income Margin | 27.2 | % | 36.6 | % | (9.4)pp | (7.1)pp | |||||||||||||||
(1) Cost/Other variance includes the impact of the RBH deconsolidation. | |||||||||||||||||||||
(2) Included in marketing, administration and research costs at the consolidated operating income level. | |||||||||||||||||||||
Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. |
PMI Shipment Volume | Second-Quarter | Six Months Year-to-Date | ||||||||||||
(million units) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||
Cigarettes | 14,780 | 18,472 | (20.0 | )% | 29,843 | 36,052 | (17.2 | )% | ||||||
Heated Tobacco Units | 94 | 59 | 59.3 | % | 202 | 113 | 78.8 | % | ||||||
Total Latin America & Canada | 14,874 | 18,531 | (19.7 | )% | 30,045 | 36,165 | (16.9 | )% |
• | Argentina, down by 7.4%, mainly reflecting retail out-of-stock (particularly of PMI brands) due to temporary factory shutdowns related to the pandemic, as well as the impact of price increases, partly offset by the net favorable impact of estimated trade inventory movements; |
• | Colombia, down by 25.6%, primarily reflecting reduced product availability and adult smoker average daily consumption due to lockdown measures; and |
• | Mexico, down by 24.4%, or by 16.8% excluding the net unfavorable impact of estimated trade inventory movements (primarily related to July 2019 price increases), mainly due to the impact of excise tax-driven price increases in January 2020, as well as the impact of pandemic-related measures on adult smoker average daily consumption; |
• | Brazil, up by 8.7%, mainly reflecting a lower estimated prevalence of illicit trade due to: reduced price gaps with legal products and the impact of border restrictions imposed as a result of the pandemic. |
• | Argentina, down by 15.2%, primarily reflecting the lower total market and a lower market share, mainly due to the impact of retail out-of-stock of PMI brands, as well as adult smoker down-trading to ultra-low-price brands produced by local manufacturers; and |
• | Mexico, down by 32.5%, mainly due to the lower total market (partly reflecting the net unfavorable impact of estimated trade inventory movements noted above) and lower market share, primarily reflecting adult smoker down-trading and the impact of the pandemic on adult smoker consumption patterns. |
• | Argentina, down by 6.3%, mainly reflecting the same factors as in the quarter; |
• | Colombia, down by 15.3%, primarily due to the same factors as in the quarter; and |
• | Mexico, down by 18.4%, or by 13.6% excluding the net unfavorable impact of estimated trade inventory movements, mainly due to the same factors as in the quarter; |
• | Brazil, up by 9.5%, mainly reflecting the same factors as in the quarter. |
• | Argentina, down by 14.2%, primarily reflecting the same factors as in the quarter; |
• | Canada, down by 34.3%, due to the unfavorable impact of the deconsolidation of RBH; and |
• | Mexico, down by 25.0%, mainly due the same factors as in the quarter. |
• | "PMI" refers to Philip Morris International Inc. and its subsidiaries. Trademarks and service marks that are the registered property of, or licensed by, the subsidiaries of PMI, are italicized. |
• | Comparisons are made to the same prior-year period unless otherwise stated. |
• | Unless otherwise stated, references to total industry, total market, PMI shipment volume and PMI market share performance reflect cigarettes and heated tobacco units. |
• | References to total international market, defined as worldwide cigarette and heated tobacco unit volume excluding the U.S., total industry, total market and market shares are PMI estimates for tax-paid products based on the latest available data from a number of internal and external sources and may, in defined instances, exclude the People's Republic of China and/or PMI's duty free business. In addition, to reflect the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019, PMI's total market share has been restated for previous periods. |
• | Estimates for second-quarter 2020 and six months year-to-date 2020 total industry volume and market share in certain geographies reflect limitations on the availability and accuracy of industry data during pandemic-related restrictions. |
• | "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. |
• | 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. |
• | 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 |
• | "Marketing, administration and research costs" include the costs of marketing and selling our products, other costs generally not related to the manufacture of our products (including general corporate expenses), and costs incurred to develop new products. The most significant components of our marketing, administration and research costs are marketing and sales expenses and general and administrative expenses. |
• | "Cost/Other" in the Consolidated Financial Summary table of total PMI and the six operating segments of this release reflects the currency-neutral variances of: cost of sales (excluding the volume/mix cost component); marketing, administration and research costs (including asset impairment and exit costs, the Canadian tobacco litigation-related expense and the charge related to the deconsolidation of RBH in Canada); and amortization of intangibles. “Cost/Other” also includes the currency-neutral net revenue variance, unrelated to volume/mix and price components, attributable to fees for certain distribution rights billed to customers in certain markets in the ME&A Region, as well as the impact of the deconsolidation in RBH. |
• | "Adjusted Operating Income Margin" is calculated as adjusted operating income, divided by net revenues. |
• | "Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization and equity (income)/loss in unconsolidated subsidiaries, excluding asset impairment and exit costs, and unusual items. |
• | "Net debt" is defined as total debt, less cash and cash equivalents. |
• | Management reviews net revenues, OI, OI margins, operating cash flow and earnings per share, or "EPS," on an adjusted basis, which may exclude the impact of currency and other items such as acquisitions, asset impairment and exit costs, tax items and other special items. For example, PMI’s adjusted diluted EPS and other impacted results reflect the loss on deconsolidation of RBH and the Canadian tobacco litigation-related expense, recorded in the first quarter of 2019, asset impairment and exit costs associated with plant closures in Pakistan and Colombia, recorded in the first and second quarters of 2019, respectively, and asset impairment and exit costs associated with organizational design optimization, recorded in the second quarter of 2020. 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 second-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. |
• | "Fair value adjustment for equity security investments" reflects the adjustment resulting from share price movements in passive investments for publicly traded entities that are not controlled or influenced by PMI. Under U.S. GAAP, such adjustments are required, since January 1, 2018, to be reflected directly in the income statement. |
• | Reduced Risk Products (“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 Creations, HEETS Marlboro and HEETS FROM MARLBORO, defined collectively as HEETS, as well as Marlboro HeatSticks and Parliament HeatSticks. |
• | Market share for HTUs is defined as the total sales volume for HTUs as a percentage of the total estimated sales volume for cigarettes and HTUs. |
• | Unless otherwise stated, all references to IQOS are to PMI's heat-not-burn products. |
• | The IQOS heat-not-burn device is a precisely controlled heating device into which a specially designed and proprietary tobacco unit is inserted and heated to generate an aerosol. |
• | “Total IQOS users” is defined as the estimated number of Legal Age (minimum 18 years) IQOS users that used PMI HTUs for at least 5% of their daily tobacco consumption over the past seven days. |
• | The estimated number of people who have "stopped smoking and switched to IQOS" is defined as: for markets where IQOS is the only heat-not-burn product, daily individual consumption of PMI HTUs represents the totality of their daily tobacco consumption in the past seven days; for markets where IQOS is one among other heat-not-burn products, daily individual consumption of HTUs represents the totality of their daily tobacco consumption in the past seven days, of which at least 70% are PMI HTUs. |
• | On April 30, 2019, the U.S. Food and Drug Administration (FDA) announced that the marketing of a version of IQOS, PMI's heat-not-burn product, together with its heated tobacco units (the term PMI uses to refer to heated tobacco consumables), is appropriate for the protection of public health and authorized it for sale in the U.S. The FDA’s decision follows its comprehensive assessment of PMI’s premarket tobacco product applications (PMTAs) submitted to the Agency in 2017. In the third quarter of 2019, PMI brought a version of its IQOS Platform 1 device and three variants of its heated tobacco units to the U.S. through its license with Altria Group, Inc., whose subsidiary, Philip Morris USA Inc., is responsible for marketing the product and complying with the provisions set forth in the FDA's marketing order. On March 30, 2020, PMI submitted a supplemental PMTA for the IQOS 3 tobacco heating device with the FDA. |
• | On July 7, 2020, the FDA authorized the marketing of a version of IQOS, together with its heated tobacco units, as a modified risk tobacco product (MRTP). In doing so, the agency found that an IQOS exposure modification order is appropriate to promote the public health. The decision follows a review of the extensive scientific evidence package PMI submitted to the FDA in December 2016 to support its MRTP applications. |
• | Shipment volume of heated tobacco units to the U.S. is included in the heated tobacco unit shipment volume of the Latin America & Canada segment. Revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc. for sale under license in the U.S. are included in Net Revenues of the Latin America & Canada segment. |
Appendix 1 | |||||||||||||||||||||||||||||||||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||||||||||||||||||||||||||||||||
Key Market Data | |||||||||||||||||||||||||||||||||||||||||||
Quarters Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||
Market | Total Market, bio units | PMI Shipments, bio units | PMI Market Share, % (1) | ||||||||||||||||||||||||||||||||||||||||
Total | Cigarette | HTU | Total | HTU | |||||||||||||||||||||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | pp Change | 2020 | 2019 | pp Change | ||||||||||||||||||||||||||
Total | 609.2 | 700.3 | (13.0 | ) | 170.1 | 198.9 | (14.5 | ) | 151.4 | 183.8 | (17.6 | ) | 18.7 | 15.1 | 24.3 | 28.0 | 28.1 | (0.1 | ) | 3.0 | 2.1 | 0.9 | |||||||||||||||||||||
European Union | |||||||||||||||||||||||||||||||||||||||||||
France | 9.8 | 9.8 | 0.7 | 4.5 | 4.5 | 0.3 | 4.4 | 4.5 | (0.4 | ) | — | — | — | 44.9 | 44.7 | 0.2 | 0.5 | 0.2 | 0.3 | ||||||||||||||||||||||||
Germany | 20.0 | 18.9 | 5.9 | 7.8 | 7.3 | 6.9 | 7.4 | 7.1 | 4.4 | 0.4 | 0.2 | 89.4 | 38.9 | 38.5 | 0.4 | 2.0 | 1.1 | 0.9 | |||||||||||||||||||||||||
Italy | 16.3 | 17.2 | (4.8 | ) | 7.9 | 9.3 | (15.5 | ) | 6.8 | 8.5 | (20.1 | ) | 1.1 | 0.8 | 32.3 | 52.1 | 51.7 | 0.4 | 7.7 | 4.6 | 3.1 | ||||||||||||||||||||||
Poland | 10.6 | 12.3 | (13.6 | ) | 4.2 | 5.0 | (16.8 | ) | 3.7 | 4.8 | (22.2 | ) | 0.5 | 0.3 | 85.9 | 39.3 | 40.8 | (1.5 | ) | 4.4 | 2.0 | 2.4 | |||||||||||||||||||||
Spain | 9.6 | 11.6 | (17.2 | ) | 2.7 | 3.9 | (29.5 | ) | 2.7 | 3.8 | (29.7 | ) | 0.1 | 0.1 | (23.9 | ) | 31.3 | 31.2 | 0.1 | 1.0 | 0.7 | 0.3 | |||||||||||||||||||||
Eastern Europe | |||||||||||||||||||||||||||||||||||||||||||
Russia | 57.2 | 59.6 | (4.1 | ) | 17.9 | 17.7 | 0.8 | 14.3 | 15.9 | (10.1 | ) | 3.6 | 1.8 | 95.5 | 32.4 | 29.6 | 2.8 | 5.9 | 2.9 | 3.0 | |||||||||||||||||||||||
Middle East & Africa | |||||||||||||||||||||||||||||||||||||||||||
Saudi Arabia | 6.0 | 5.4 | 12.0 | 2.7 | 0.8 | +100 | 2.7 | 0.8 | +100 | — | — | — | 38.6 | 38.9 | (0.3 | ) | 0.2 | — | 0.2 | ||||||||||||||||||||||||
Turkey | 29.9 | 32.1 | (6.8 | ) | 11.7 | 12.5 | (6.6 | ) | 11.7 | 12.5 | (6.6 | ) | — | — | — | 38.9 | 38.9 | — | — | — | — | ||||||||||||||||||||||
South & Southeast Asia | |||||||||||||||||||||||||||||||||||||||||||
Indonesia | 64.0 | 77.6 | (17.5 | ) | 18.0 | 24.9 | (27.7 | ) | 18.0 | 24.9 | (27.7 | ) | — | — | — | 28.2 | 32.2 | (4.0 | ) | — | — | — | |||||||||||||||||||||
Philippines | 14.0 | 18.6 | (24.6 | ) | 9.7 | 13.1 | (25.7 | ) | 9.7 | 13.1 | (25.7 | ) | — | — | — | 69.5 | 70.6 | (1.1 | ) | — | — | — | |||||||||||||||||||||
East Asia & Australia | |||||||||||||||||||||||||||||||||||||||||||
Australia | 2.6 | 2.9 | (11.2 | ) | 0.8 | 0.9 | (12.0 | ) | 0.8 | 0.9 | (12.0 | ) | — | — | — | 30.8 | 31.0 | (0.2 | ) | — | — | — | |||||||||||||||||||||
Japan | 35.4 | 40.6 | (12.7 | ) | 14.1 | 15.1 | (6.4 | ) | 6.3 | 8.0 | (20.9 | ) | 7.8 | 7.1 | 10.0 | 36.5 | 34.0 | 2.5 | 20.0 | 16.6 | 3.4 | ||||||||||||||||||||||
Korea | 18.4 | 17.7 | 3.9 | 3.8 | 4.1 | (6.2 | ) | 2.6 | 2.8 | (6.1 | ) | 1.2 | 1.3 | (6.4 | ) | 21.1 | 23.1 | (2.0 | ) | 6.6 | 7.3 | (0.7 | ) | ||||||||||||||||||||
Latin America & Canada | |||||||||||||||||||||||||||||||||||||||||||
Argentina | 7.3 | 7.8 | (7.4 | ) | 4.8 | 5.6 | (15.2 | ) | 4.8 | 5.6 | (15.2 | ) | — | — | — | 65.4 | 71.8 | (6.4 | ) | — | — | — | |||||||||||||||||||||
Mexico | 7.6 | 10.0 | (24.4 | ) | 4.7 | 7.0 | (32.5 | ) | 4.7 | 7.0 | (32.7 | ) | — | — | — | 62.1 | 69.5 | (7.4 | ) | 0.2 | — | 0.2 | |||||||||||||||||||||
(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 | |||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||
Market | Total Market, bio units | PMI Shipments, bio units | PMI Market Share, % (1) | ||||||||||||||||||||||||||||||||||||||||
Total | Cigarette | HTU | Total | HTU | |||||||||||||||||||||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | pp Change | 2020 | 2019 | pp Change | ||||||||||||||||||||||||||
Total | 1,224.1 | 1,325.0 | (7.6 | ) | 343.8 | 374.7 | (8.2 | ) | 308.4 | 348.1 | (11.4 | ) | 35.4 | 26.6 | 33.4 | 27.7 | 28.1 | (0.4 | ) | 2.9 | 2.1 | 0.8 | |||||||||||||||||||||
European Union | |||||||||||||||||||||||||||||||||||||||||||
France | 18.2 | 18.9 | (3.9 | ) | 8.5 | 8.6 | (1.3 | ) | 8.4 | 8.6 | (2.1 | ) | 0.1 | — | — | 44.7 | 44.9 | (0.2 | ) | 0.4 | 0.2 | 0.2 | |||||||||||||||||||||
Germany | 36.0 | 34.3 | 4.9 | 14.5 | 13.4 | 8.7 | 13.7 | 13.0 | 5.7 | 0.8 | 0.4 | +100 | 40.4 | 38.9 | 1.5 | 2.2 | 1.1 | 1.1 | |||||||||||||||||||||||||
Italy | 32.0 | 32.8 | (2.2 | ) | 17.1 | 17.0 | 0.2 | 14.6 | 15.6 | (6.9 | ) | 2.5 | 1.4 | 78.6 | 52.0 | 51.4 | 0.6 | 7.5 | 4.2 | 3.3 | |||||||||||||||||||||||
Poland | 21.4 | 22.9 | (6.4 | ) | 8.5 | 9.2 | (8.0 | ) | 7.6 | 8.8 | (14.0 | ) | 0.9 | 0.4 | +100 | 39.7 | 40.4 | (0.7 | ) | 4.3 | 1.9 | 2.4 | |||||||||||||||||||||
Spain | 20.0 | 21.8 | (8.2 | ) | 6.4 | 7.5 | (14.4 | ) | 6.2 | 7.3 | (15.5 | ) | 0.2 | 0.1 | 39.8 | 31.1 | 31.4 | (0.3 | ) | 1.0 | 0.6 | 0.4 | |||||||||||||||||||||
Eastern Europe | |||||||||||||||||||||||||||||||||||||||||||
Russia | 104.1 | 106.3 | (2.1 | ) | 32.9 | 29.9 | 10.3 | 26.7 | 27.2 | (1.8 | ) | 6.2 | 2.7 | +100 | 32.4 | 29.1 | 3.3 | 6.2 | 3.0 | 3.2 | |||||||||||||||||||||||
Middle East & Africa | |||||||||||||||||||||||||||||||||||||||||||
Saudi Arabia | 10.3 | 10.6 | (2.9 | ) | 3.8 | 4.7 | (19.0 | ) | 3.8 | 4.7 | (19.6 | ) | — | — | — | 39.4 | 40.3 | (0.9 | ) | 0.1 | — | 0.1 | |||||||||||||||||||||
Turkey | 55.9 | 61.6 | (9.3 | ) | 21.8 | 26.4 | (17.4 | ) | 21.8 | 26.4 | (17.4 | ) | — | — | — | 38.9 | 42.9 | (4.0 | ) | — | — | — | |||||||||||||||||||||
South & Southeast Asia | |||||||||||||||||||||||||||||||||||||||||||
Indonesia | 131.4 | 145.2 | (9.5 | ) | 38.5 | 47.1 | (18.2 | ) | 38.5 | 47.1 | (18.2 | ) | — | — | — | 29.3 | 32.4 | (3.1 | ) | — | — | — | |||||||||||||||||||||
Philippines | 29.3 | 35.3 | (17.1 | ) | 20.5 | 24.9 | (17.7 | ) | 20.5 | 24.9 | (17.7 | ) | — | — | — | 69.9 | 70.4 | (0.5 | ) | — | — | — | |||||||||||||||||||||
East Asia & Australia | |||||||||||||||||||||||||||||||||||||||||||
Australia | 5.1 | 6.0 | (15.3 | ) | 1.5 | 1.7 | (9.8 | ) | 1.5 | 1.7 | (9.8 | ) | — | — | — | 29.4 | 27.6 | 1.8 | — | — | — | ||||||||||||||||||||||
Japan | 70.9 | 78.2 | (9.4 | ) | 26.9 | 27.2 | (1.0 | ) | 13.1 | 14.4 | (9.1 | ) | 13.8 | 12.7 | 8.1 | 36.4 | 34.2 | 2.2 | 19.6 | 16.8 | 2.8 | ||||||||||||||||||||||
Korea | 34.6 | 33.3 | 3.8 | 7.4 | 7.7 | (4.6 | ) | 5.1 | 5.3 | (3.8 | ) | 2.3 | 2.4 | (6.3 | ) | 21.4 | 23.2 | (1.8 | ) | 6.6 | 7.3 | (0.7 | ) | ||||||||||||||||||||
Latin America & Canada | |||||||||||||||||||||||||||||||||||||||||||
Argentina | 15.3 | 16.3 | (6.3 | ) | 10.0 | 11.7 | (14.2 | ) | 10.0 | 11.7 | (14.2 | ) | — | — | — | 65.7 | 72.1 | (6.4 | ) | — | — | — | |||||||||||||||||||||
Mexico | 14.2 | 17.4 | (18.4 | ) | 8.8 | 11.7 | (25.0 | ) | 8.7 | 11.7 | (25.2 | ) | — | — | — | 61.6 | 67.0 | (5.4 | ) | 0.2 | — | 0.2 | |||||||||||||||||||||
(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 June 30, | Six Months Ended June 30, | ||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||
Total Shipment Volume | 170,067 | 198,855 | (14.5 | )% | 343,812 | 374,650 | (8.2 | )% | ||||||||||
Shipment Volume for RBH-owned brands (1) | — | (1,008 | ) | (2) | ||||||||||||||
Total Shipment Volume | 170,067 | 198,855 | (14.5 | )% | 343,812 | 373,642 | (3) | (8.0 | )% | |||||||||
Total Cigarette Shipment Volume | 151,359 | 183,799 | (17.6 | )% | 308,377 | 348,096 | (11.4 | )% | ||||||||||
Shipment Volume for RBH-owned brands (1) | — | (1,008 | ) | (2) | ||||||||||||||
Total Cigarette Shipment Volume | 151,359 | 183,799 | (17.6 | )% | 308,377 | 347,088 | (3) | (11.2 | )% | |||||||||
Total HTU Shipment Volume | 18,708 | 15,056 | 24.3 | % | 35,435 | 26,554 | 33.4 | % | ||||||||||
Latin America & Canada | ||||||||||||||||||
Total Shipment Volume | 14,874 | 18,531 | (19.7 | )% | 30,045 | 36,165 | (16.9 | )% | ||||||||||
Shipment Volume for RBH-owned brands | — | (995 | ) | (2) | ||||||||||||||
Total Shipment Volume | 14,874 | 18,531 | (19.7 | )% | 30,045 | 35,170 | (3) | (14.6 | )% | |||||||||
(1) Includes Duty Free sales in Canada | ||||||||||||||||||
(2) Represents volume for RBH-owned brands from January 1, 2019 through March 21, 2019 | ||||||||||||||||||
(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 | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||
$ | 1.25 | 2020 Diluted Earnings Per Share (1) | $ | 2.42 | ||||||||||||||||||||||
$ | 1.49 | 2019 Diluted Earnings Per Share (1) | $ | 2.36 | ||||||||||||||||||||||
$ | (0.24 | ) | Change | $ | 0.06 | |||||||||||||||||||||
(16.1 | )% | % Change | 2.5 | % | ||||||||||||||||||||||
Reconciliation: | ||||||||||||||||||||||||||
$ | 1.49 | 2019 Diluted Earnings Per Share (1) | $ | 2.36 | ||||||||||||||||||||||
0.01 | 2019 Asset impairment and exit costs | 0.02 | ||||||||||||||||||||||||
— | 2019 Canadian tobacco litigation-related expense | 0.09 | ||||||||||||||||||||||||
— | 2019 Loss on deconsolidation of RBH | 0.12 | ||||||||||||||||||||||||
(0.04 | ) | 2019 Tax items | (0.04 | ) | ||||||||||||||||||||||
(0.04 | ) | 2020 Asset impairment and exit costs | (0.04 | ) | ||||||||||||||||||||||
— | 2020 Fair value adjustment for equity security investments | (0.04 | ) | |||||||||||||||||||||||
— | 2020 Tax items | — | ||||||||||||||||||||||||
(0.06 | ) | Currency | (0.19 | ) | ||||||||||||||||||||||
(0.01 | ) | Interest | — | |||||||||||||||||||||||
0.03 | Change in tax rate | 0.02 | ||||||||||||||||||||||||
(0.13 | ) | Operations (2) | 0.12 | |||||||||||||||||||||||
$ | 1.25 | 2020 Diluted Earnings Per Share (1) | $ | 2.42 | ||||||||||||||||||||||
(1) Basic and diluted EPS were calculated using the following (in millions): | ||||||||||||||||||||||||||
Quarters Ended | Six Months Ended | |||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
$ 1,947 | $ 2,319 | Net Earnings attributable to PMI | $ 3,773 | $ 3,673 | ||||||||||||||||||||||
5 | 5 | Less: Distributed and undistributed earnings attributable to share-based payment awards | 10 | 8 | ||||||||||||||||||||||
$ 1,942 | $ 2,314 | Net Earnings for basic and diluted EPS | $ 3,763 | $ 3,665 | ||||||||||||||||||||||
1,558 | 1,556 | Weighted-average shares for basic EPS | 1,557 | 1,556 | ||||||||||||||||||||||
— | — | Plus Contingently Issuable Performance Stock Units | — | — | ||||||||||||||||||||||
1,558 | 1,556 | Weighted-average shares for diluted EPS | 1,557 | 1,556 | ||||||||||||||||||||||
(2) Includes the impact of shares outstanding and share-based payments |
Schedule 2 | |||||||||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||||||||
Reconciliation of Non-GAAP Measures | |||||||||||||||||||
Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency, | |||||||||||||||||||
and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Quarters Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||
$ 1.25 | $ 1.49 | (16.1 | )% | Reported Diluted EPS | $ 2.42 | $ 2.36 | 2.5 | % | |||||||||||
(0.06 | ) | Less: Currency | (0.19 | ) | |||||||||||||||
$ 1.31 | $ 1.49 | (12.1 | )% | Reported Diluted EPS, excluding Currency | $ 2.61 | $ 2.36 | 10.6 | % | |||||||||||
Quarters Ended June 30, | Six Months Ended June 30, | Year Ended | |||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | 2019 | |||||||||||||
$ 1.25 | $ 1.49 | (16.1 | )% | Reported Diluted EPS | $ 2.42 | $ 2.36 | 2.5 | % | $ 4.61 | ||||||||||
0.04 | 0.01 | Asset impairment and exit costs | 0.04 | 0.02 | 0.23 | ||||||||||||||
— | — | Canadian tobacco litigation-related expense | — | 0.09 | 0.09 | ||||||||||||||
— | — | Loss on deconsolidation of RBH | — | 0.12 | 0.12 | ||||||||||||||
— | — | Russia excise and VAT audit charge | — | — | 0.20 | ||||||||||||||
— | — | Fair value adjustment for equity security investments | 0.04 | — | (0.02 | ) | |||||||||||||
— | (0.04 | ) | Tax items | — | (0.04 | ) | (0.04 | ) | |||||||||||
$ 1.29 | $ 1.46 | (11.6 | )% | Adjusted Diluted EPS | $ 2.50 | $ 2.55 | (2.0 | )% | $ 5.19 | ||||||||||
(0.06 | ) | Less: Currency | (0.19 | ) | |||||||||||||||
$ 1.35 | $ 1.46 | (7.5 | )% | Adjusted Diluted EPS, excluding Currency | $ 2.69 | $ 2.55 | 5.5 | % | |||||||||||
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 | ||||||||||||||||||
March 31, | June 30, | June 30, | September 30, | September 30, | December 31, | December 31, | ||||||||||||||||||
2019 | 2019 | 2019 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||||
Reported Diluted EPS | $ 0.87 | $ 1.49 | $ 2.36 | $ 1.22 | $ 3.57 | $ 1.04 | $ | 4.61 | ||||||||||||||||
Asset impairment and exit costs | 0.01 | 0.01 | 0.02 | 0.01 | 0.03 | 0.20 | 0.23 | |||||||||||||||||
Canadian tobacco litigation-related expense | 0.09 | — | 0.09 | — | 0.09 | — | 0.09 | |||||||||||||||||
Loss on deconsolidation of RBH | 0.12 | — | 0.12 | — | 0.12 | — | 0.12 | |||||||||||||||||
Russia excise and VAT audit charge | — | — | — | 0.20 | 0.20 | — | 0.20 | |||||||||||||||||
Fair value adjustment for equity security investments | — | — | — | — | — | (0.02 | ) | (0.02 | ) | |||||||||||||||
Tax items | — | (0.04 | ) | (0.04 | ) | — | (0.04 | ) | — | (0.04 | ) | |||||||||||||
Adjusted Diluted EPS | $ 1.09 | $ 1.46 | $ 2.55 | $ 1.43 | $ 3.97 | $ 1.22 | $ 5.19 | |||||||||||||||||
Net earnings attributable to RBH | (0.06 | ) | (1) | — | (0.06 | ) | (1) | — | (0.06 | ) | (1) | — | (0.06 | ) | (1) | |||||||||
Pro Forma Adjusted Diluted EPS | $ 1.03 | $ 1.46 | $ 2.49 | $ 1.43 | $ 3.91 | $ 1.22 | $ 5.13 | |||||||||||||||||
(1) Represents the impact 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 June 30, | Net Revenues | Total | Excluding Currency | Excluding Currency & Acquisitions | ||||||||||||
2020 | Combustible Products | 2019 | % Change | ||||||||||||||||||
$ 1,945 | $ (75) | $ 2,020 | — | $ 2,020 | European Union | $ 2,149 | (9.5 | )% | (6.0 | )% | (6.0 | )% | |||||||||
522 | (52 | ) | 575 | — | 575 | Eastern Europe | 640 | (18.3 | )% | (10.1 | )% | (10.1 | )% | ||||||||
696 | (16 | ) | 712 | — | 712 | Middle East & Africa | 918 | (24.2 | )% | (22.4 | )% | (22.4 | )% | ||||||||
889 | (46 | ) | 935 | — | 935 | South & Southeast Asia | 1,248 | (28.8 | )% | (25.1 | )% | (25.1 | )% | ||||||||
630 | (15 | ) | 645 | — | 645 | East Asia & Australia | 756 | (16.7 | )% | (14.7 | )% | (14.7 | )% | ||||||||
363 | (57 | ) | 420 | — | 420 | Latin America & Canada | 522 | (30.5 | )% | (19.6 | )% | (19.6 | )% | ||||||||
$ 5,045 | $ (262) | $ 5,307 | — | $ 5,307 | Total Combustible | $ 6,233 | (19.1 | )% | (14.9 | )% | (14.9 | )% | |||||||||
2020 | Reduced-Risk Products | 2019 | % Change | ||||||||||||||||||
$ 530 | $ (25) | $ 555 | — | $ 555 | European Union | $ 428 | 23.9 | % | 29.7 | % | 29.7 | % | |||||||||
261 | (33 | ) | 293 | — | 293 | Eastern Europe | 182 | 42.9 | % | 60.8 | % | 60.8 | % | ||||||||
8 | — | 8 | — | 8 | Middle East & Africa | 86 | (90.6 | )% | (90.7 | )% | (90.7 | )% | |||||||||
— | — | — | — | — | South & Southeast Asia | — | — | % | — | % | — | % | |||||||||
802 | 3 | 799 | — | 799 | East Asia & Australia | 765 | 4.9 | % | 4.5 | % | 4.5 | % | |||||||||
5 | (1 | ) | 6 | — | 6 | Latin America & Canada(1) | 5 | 7.9 | % | 24.4 | % | 24.4 | % | ||||||||
$ 1,606 | $ (55) | $ 1,661 | — | $ 1,661 | Total RRPs | $ 1,466 | 9.5 | % | 13.3 | % | 13.3 | % | |||||||||
2020 | PMI | 2019 | % Change | ||||||||||||||||||
$ 2,475 | $ (100) | $ 2,575 | — | $ 2,575 | European Union | $ 2,577 | (4.0 | )% | (0.1 | )% | (0.1 | )% | |||||||||
783 | (85 | ) | 868 | — | 868 | Eastern Europe | 822 | (4.7 | )% | 5.6 | % | 5.6 | % | ||||||||
704 | (16 | ) | 720 | — | 720 | Middle East & Africa | 1,004 | (29.9 | )% | (28.3 | )% | (28.3 | )% | ||||||||
889 | (46 | ) | 935 | — | 935 | South & Southeast Asia | 1,248 | (28.8 | )% | (25.1 | )% | (25.1 | )% | ||||||||
1,432 | (12 | ) | 1,444 | — | 1,444 | East Asia & Australia | 1,521 | (5.9 | )% | (5.1 | )% | (5.1 | )% | ||||||||
368 | (58 | ) | 426 | — | 426 | Latin America & Canada | 527 | (30.2 | )% | (19.2 | )% | (19.2 | )% | ||||||||
$ 6,651 | $ (317) | $ 6,968 | — | $ 6,968 | Total PMI | $ 7,699 | (13.6 | )% | (9.5 | )% | (9.5 | )% | |||||||||
(1) Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. | |||||||||||||||||||||
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 | Six Months Ended June 30, | Net Revenues | Total | Excluding Currency | Excluding Currency & Acquisitions | ||||||||||||
2020 | Combustible Products | 2019 | % Change | ||||||||||||||||||
$ 3,855 | $ (128) | $ 3,983 | — | $ 3,983 | European Union | $ 3,961 | (2.7 | )% | 0.6 | % | 0.6 | % | |||||||||
1,045 | (56 | ) | 1,101 | — | 1,101 | Eastern Europe | 1,110 | (5.9 | )% | (0.8 | )% | (0.8 | )% | ||||||||
1,528 | (18 | ) | 1,547 | — | 1,547 | Middle East & Africa | 1,746 | (12.5 | )% | (11.4 | )% | (11.4 | )% | ||||||||
2,140 | (27 | ) | 2,167 | — | 2,167 | South & Southeast Asia | 2,361 | (9.4 | )% | (8.2 | )% | (8.2 | )% | ||||||||
1,272 | (22 | ) | 1,294 | — | 1,294 | East Asia & Australia | 1,394 | (8.8 | )% | (7.2 | )% | (7.2 | )% | ||||||||
803 | (75 | ) | 878 | — | 878 | Latin America & Canada | 1,168 | (31.3 | )% | (24.9 | )% | (24.9 | )% | ||||||||
$ 10,643 | $ (327) | $ 10,970 | — | $ 10,970 | Total Combustible | $ 11,741 | (9.4 | )% | (6.6 | )% | (6.6 | )% | |||||||||
2020 | Reduced-Risk Products | 2019 | % Change | ||||||||||||||||||
$ 1,155 | $ (42) | $ 1,197 | — | $ 1,197 | European Union | $ 775 | 49.0 | % | 54.4 | % | 54.4 | % | |||||||||
526 | (23 | ) | 549 | — | 549 | Eastern Europe | 291 | 81.0 | % | 88.9 | % | 88.9 | % | ||||||||
52 | — | 51 | — | 51 | Middle East & Africa | 185 | (72.0 | )% | (72.2 | )% | (72.2 | )% | |||||||||
— | — | — | — | — | South & Southeast Asia | — | — | % | — | % | — | % | |||||||||
1,415 | 1 | 1,414 | — | 1,414 | East Asia & Australia | 1,448 | (2.3 | )% | (2.3 | )% | (2.3 | )% | |||||||||
13 | (1 | ) | 14 | — | 14 | Latin America & Canada(1) | 11 | 24.4 | % | 33.5 | % | 33.5 | % | ||||||||
$ 3,161 | $ (64) | $ 3,225 | — | $ 3,225 | Total RRPs | $ 2,709 | 16.7 | % | 19.1 | % | 19.1 | % | |||||||||
2020 | PMI | 2019 | % Change | ||||||||||||||||||
$ 5,010 | $ (170) | $ 5,180 | — | $ 5,180 | European Union | $ 4,736 | 5.8 | % | 9.4 | % | 9.4 | % | |||||||||
1,571 | (79 | ) | 1,650 | — | 1,650 | Eastern Europe | 1,401 | 12.1 | % | 17.8 | % | 17.8 | % | ||||||||
1,580 | (18 | ) | 1,598 | — | 1,598 | Middle East & Africa | 1,931 | (18.2 | )% | (17.2 | )% | (17.2 | )% | ||||||||
2,140 | (27 | ) | 2,167 | — | 2,167 | South & Southeast Asia | 2,361 | (9.4 | )% | (8.2 | )% | (8.2 | )% | ||||||||
2,687 | (21 | ) | 2,708 | — | 2,708 | East Asia & Australia | 2,842 | (5.5 | )% | (4.7 | )% | (4.7 | )% | ||||||||
816 | (76 | ) | 892 | — | 892 | Latin America & Canada | 1,179 | (30.8 | )% | (24.3 | )% | (24.3 | )% | ||||||||
$ 13,804 | $ (391) | $ 14,195 | — | $ 14,195 | Total PMI | $ 14,450 | (4.5 | )% | (1.8 | )% | (1.8 | )% | |||||||||
(1) Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States. | |||||||||||||||||||||
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 | |||||||||||||||
2020 | Quarters Ended June 30, | 2019 | % Change | ||||||||||||||||||||
$ 1,178 | (1) | $ (65) | $ 1,243 | — | $ 1,243 | European Union | $ 1,195 | (1.4 | )% | 4.0 | % | 4.0 | % | ||||||||||
266 | (1) | (11 | ) | 277 | — | 277 | Eastern Europe | 256 | 3.9 | % | 8.2 | % | 8.2 | % | |||||||||
237 | (1) | 5 | 232 | — | 232 | Middle East & Africa | 441 | (46.3 | )% | (47.4 | )% | (47.4 | )% | ||||||||||
289 | (1) | (16 | ) | 305 | — | 305 | South & Southeast Asia | 492 | (41.3 | )% | (38.0 | )% | (38.0 | )% | |||||||||
669 | (1) | (11 | ) | 680 | — | 680 | East Asia & Australia | 642 | 4.2 | % | 5.9 | % | 5.9 | % | |||||||||
92 | (1) | (6 | ) | 98 | — | 98 | Latin America & Canada | 161 | (2) | (42.9 | )% | (39.1 | )% | (39.1 | )% | ||||||||
$ 2,731 | $ (104) | $ 2,835 | — | $ 2,835 | Total PMI | $ 3,187 | (14.3 | )% | (11.0 | )% | (11.0 | )% | |||||||||||
2020 | Six Months Ended June 30, | 2019 | % Change | ||||||||||||||||||||
$ 2,336 | (1) | $ (130) | $ 2,466 | — | $ 2,466 | European Union | $ 2,091 | 11.7 | % | 17.9 | % | 17.9 | % | ||||||||||
365 | (1) | (103 | ) | 468 | — | 468 | Eastern Europe | 385 | (5.2 | )% | 21.6 | % | 21.6 | % | |||||||||
558 | (1) | (14 | ) | 572 | — | 572 | Middle East & Africa | 785 | (28.9 | )% | (27.1 | )% | (27.1 | )% | |||||||||
888 | (1) | 3 | 885 | — | 885 | South & Southeast Asia | 932 | (3) | (4.7 | )% | (5.0 | )% | (5.0 | )% | |||||||||
1,155 | (1) | (15 | ) | 1,170 | — | 1,170 | East Asia & Australia | 1,069 | 8.0 | % | 9.4 | % | 9.4 | % | |||||||||
218 | (1) | (41 | ) | 259 | — | 259 | Latin America & Canada | (25 | ) | (4) | +100% | +100% | +100% | ||||||||||
$ 5,520 | $ (300) | $ 5,820 | — | $ 5,820 | Total PMI | $ 5,237 | 5.4 | % | 11.1 | % | 11.1 | % | |||||||||||
(1) Includes asset impairment and exit costs ($71 million): EU ($27 million), EE ($7 million), ME&A ($9 million), S&SA ($11 million), EA&A ($13 million) and LA&C ($4 million) | |||||||||||||||||||||||
(2) Includes asset impairment and exit costs ($23 million) | |||||||||||||||||||||||
(3) Includes asset impairment and exit costs ($20 million) | |||||||||||||||||||||||
(4) Includes asset impairment and exit costs ($23 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 and Others | Adjusted Operating Income | Total | Excluding Currency | Excluding Currency & Acqui-sitions | |||||||||||||||||||
2020 | Quarters Ended June 30, | 2019 | % Change | ||||||||||||||||||||||||||||
$ 1,178 | $ (27) | (1) | $ 1,205 | $ (65) | $ 1,270 | — | $ 1,270 | European Union | $ 1,195 | — | $ 1,195 | 0.8 | % | 6.3 | % | 6.3 | % | ||||||||||||||
266 | (7 | ) | (1) | 273 | (11 | ) | 284 | — | 284 | Eastern Europe | 256 | — | 256 | 6.6 | % | 10.9 | % | 10.9 | % | ||||||||||||
237 | (9 | ) | (1) | 246 | 5 | 241 | — | 241 | Middle East & Africa | 441 | — | 441 | (44.2 | )% | (45.4 | )% | (45.4 | )% | |||||||||||||
289 | (11 | ) | (1) | 300 | (16 | ) | 316 | — | 316 | South & Southeast Asia | 492 | — | 492 | (39.0 | )% | (35.8 | )% | (35.8 | )% | ||||||||||||
669 | (13 | ) | (1) | 682 | (11 | ) | 693 | — | 693 | East Asia & Australia | 642 | — | 642 | 6.2 | % | 7.9 | % | 7.9 | % | ||||||||||||
92 | (4 | ) | (1) | 96 | (6 | ) | 102 | — | 102 | Latin America & Canada | 161 | (23 | ) | (1) | 184 | (47.8 | )% | (44.6 | )% | (44.6 | )% | ||||||||||
$ 2,731 | $ (71) | $ 2,802 | $ (104) | $ 2,906 | — | $ 2,906 | Total PMI | $ 3,187 | $ (23) | $ 3,210 | (12.7 | )% | (9.5 | )% | (9.5 | )% | |||||||||||||||
2020 | Six Months Ended June 30, | 2019 | % Change | ||||||||||||||||||||||||||||
$ 2,336 | $ (27) | (1) | $ 2,363 | $ (130) | $ 2,493 | — | $ 2,493 | European Union | $ 2,091 | — | $ 2,091 | 13.0 | % | 19.2 | % | 19.2 | % | ||||||||||||||
365 | (7 | ) | (1) | 372 | (103 | ) | 475 | — | 475 | Eastern Europe | 385 | — | 385 | (3.4 | )% | 23.4 | % | 23.4 | % | ||||||||||||
558 | (9 | ) | (1) | 567 | (14 | ) | 581 | — | 581 | Middle East & Africa | 785 | — | 785 | (27.8 | )% | (26.0 | )% | (26.0 | )% | ||||||||||||
888 | (11 | ) | (1) | 899 | 3 | 896 | — | 896 | South & Southeast Asia | 932 | (20 | ) | (1) | 952 | (5.6 | )% | (5.9 | )% | (5.9 | )% | |||||||||||
1,155 | (13 | ) | (1) | 1,168 | (15 | ) | 1,183 | — | 1,183 | East Asia & Australia | 1,069 | — | 1,069 | 9.3 | % | 10.7 | % | 10.7 | % | ||||||||||||
218 | (4 | ) | (1) | 222 | (41 | ) | 263 | — | 263 | Latin America & Canada | (25 | ) | (456 | ) | (2) | 431 | (48.5 | )% | (39.0 | )% | (39.0 | )% | |||||||||
$ 5,520 | $ (71) | $ 5,591 | $ (300) | $ 5,891 | — | $ 5,891 | Total PMI | $ 5,237 | $ (476) | $ 5,713 | (2.1 | )% | 3.1 | % | 3.1 | % | |||||||||||||||
(1) Represents asset impairment and exit costs | |||||||||||||||||||||||||||||||
(2) Includes asset impairment and exit costs ($23 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 | |||||||||||||
2020 | Quarters Ended June 30, | 2019 | % Points Change | ||||||||||||||||||||||||
$ 1,205 | $ 2,475 | 48.7 | % | $ 1,270 | $ 2,575 | 49.3 | % | $ 1,270 | $ 2,575 | 49.3 | % | European Union | $ 1,195 | $ 2,577 | 46.4 | % | 2.3 | 2.9 | 2.9 | ||||||||
273 | 783 | 34.9 | % | 284 | 868 | 32.7 | % | 284 | 868 | 32.7 | % | Eastern Europe | 256 | 822 | 31.1 | % | 3.8 | 1.6 | 1.6 | ||||||||
246 | 704 | 34.9 | % | 241 | 720 | 33.5 | % | 241 | 720 | 33.5 | % | Middle East & Africa | 441 | 1,004 | 43.9 | % | (9.0 | ) | (10.4 | ) | (10.4 | ) | |||||
300 | 889 | 33.7 | % | 316 | 935 | 33.8 | % | 316 | 935 | 33.8 | % | South & Southeast Asia | 492 | 1,248 | 39.4 | % | (5.7 | ) | (5.6 | ) | (5.6 | ) | |||||
682 | 1,432 | 47.6 | % | 693 | 1,444 | 48.0 | % | 693 | 1,444 | 48.0 | % | East Asia & Australia | 642 | 1,521 | 42.2 | % | 5.4 | 5.8 | 5.8 | ||||||||
96 | 368 | 26.1 | % | 102 | 426 | 23.9 | % | 102 | 426 | 23.9 | % | Latin America & Canada | 184 | 527 | 34.9 | % | (8.8 | ) | (11.0 | ) | (11.0 | ) | |||||
$ 2,802 | $ 6,651 | 42.1 | % | $ 2,906 | $ 6,968 | 41.7 | % | $ 2,906 | $ 6,968 | 41.7 | % | Total PMI | $ 3,210 | $ 7,699 | 41.7 | % | 0.4 | — | — | ||||||||
2020 | Six Months Ended June 30, | 2019 | % Points Change | ||||||||||||||||||||||||
$ 2,363 | $ 5,010 | 47.2 | % | $ 2,493 | $ 5,180 | 48.1 | % | $ 2,493 | $ 5,180 | 48.1 | % | European Union | $ 2,091 | $ 4,736 | 44.2 | % | 3.0 | 3.9 | 3.9 | ||||||||
372 | 1,571 | 23.7 | % | 475 | 1,650 | 28.8 | % | 475 | 1,650 | 28.8 | % | Eastern Europe | 385 | 1,401 | 27.5 | % | (3.8 | ) | 1.3 | 1.3 | |||||||
567 | 1,580 | 35.9 | % | 581 | 1,598 | 36.4 | % | 581 | 1,598 | 36.4 | % | Middle East & Africa | 785 | 1,931 | 40.7 | % | (4.8 | ) | (4.3 | ) | (4.3 | ) | |||||
899 | 2,140 | 42.0 | % | 896 | 2,167 | 41.3 | % | 896 | 2,167 | 41.3 | % | South & Southeast Asia | 952 | 2,361 | 40.3 | % | 1.7 | 1.0 | 1.0 | ||||||||
1,168 | 2,687 | 43.5 | % | 1,183 | 2,708 | 43.7 | % | 1,183 | 2,708 | 43.7 | % | East Asia & Australia | 1,069 | 2,842 | 37.6 | % | 5.9 | 6.1 | 6.1 | ||||||||
222 | 816 | 27.2 | % | 263 | 892 | 29.5 | % | 263 | 892 | 29.5 | % | Latin America & Canada | 431 | 1,179 | 36.6 | % | (9.4 | ) | (7.1 | ) | (7.1 | ) | |||||
$ 5,591 | $ 13,804 | 40.5 | % | $ 5,891 | $ 14,195 | 41.5 | % | $ 5,891 | $ 14,195 | 41.5 | % | Total PMI | $ 5,713 | $ 14,450 | 39.5 | % | 1.0 | 2.0 | 2.0 | ||||||||
(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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||
Net Revenues | $ 6,651 | $ 7,699 | (13.6 | )% | $ 13,804 | $ 14,450 | (4.5 | )% | |||||||||||||
Net Revenues attributable to RBH | — | (181 | ) | (1) | |||||||||||||||||
Net Revenues | $ 6,651 | $ 7,699 | (13.6 | )% | $ 13,804 | $ 14,269 | (2) | (3.3 | )% | ||||||||||||
Less: Currency | (317 | ) | (392 | ) | |||||||||||||||||
Net Revenues, ex. currency | $ 6,968 | $ 7,699 | (9.5 | )% | $ 14,196 | $ 14,269 | (2) | (0.5 | )% | ||||||||||||
Adjusted Operating Income (3) | $ 2,802 | $ 3,210 | (12.7 | )% | $ 5,591 | $ 5,713 | (2.1 | )% | |||||||||||||
Operating Income attributable to RBH | — | (126 | ) | (1) | |||||||||||||||||
Adjusted Operating Income | $ 2,802 | $ 3,210 | (12.7 | )% | $ 5,591 | $ 5,587 | (2) | 0.1 | % | ||||||||||||
Less: Currency | (104 | ) | (299 | ) | |||||||||||||||||
Adjusted Operating Income, ex. currency | $ 2,906 | $ 3,210 | (9.5 | )% | $ 5,890 | $ 5,587 | (2) | 5.4 | % | ||||||||||||
Adjusted OI Margin | 42.1 | % | 41.7 | % | 0.4 | 40.5 | % | 39.5 | % | 1.0 | |||||||||||
Adjusted OI Margin attributable to RBH | — | (0.3 | ) | (1) | |||||||||||||||||
Adjusted OI Margin | 42.1 | % | 41.7 | % | 0.4 | 40.5 | % | 39.2 | % | (2) | 1.3 | ||||||||||
Less: Currency | — | — | |||||||||||||||||||
Adjusted OI Margin, ex. currency | 41.7 | % | 41.7 | % | — | 41.5 | % | 39.2 | % | (2) | 2.3 | ||||||||||
Adjusted Diluted EPS (4) | $ 1.29 | $ 1.46 | (11.6 | )% | $ 2.50 | $ 2.55 | (2.0 | )% | |||||||||||||
Net earnings attributable to RBH | — | (0.06 | ) | (1) | |||||||||||||||||
Adjusted Diluted EPS | $ 1.29 | $ 1.46 | (11.6 | )% | $ 2.50 | $ 2.49 | (2) | 0.4 | % | ||||||||||||
Less: Currency | (0.06 | ) | (0.19 | ) | |||||||||||||||||
Adjusted Diluted EPS, ex. currency | $ 1.35 | $ 1.46 | (7.5 | )% | $ 2.69 | $ 2.49 | (2) | 8.0 | % | ||||||||||||
(1) Represents the impact attributable to RBH from January 1, 2019 through March 21, 2019 | |||||||||||||||||||||
(2) Pro forma | |||||||||||||||||||||
(3) For the calculation of Adjusted Operating Income, see Schedule 7 | |||||||||||||||||||||
(4) 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 June 30, | Six Months Ended June 30, | |||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||
Net Revenues | $ 368 | $ 527 | (30.2 | )% | $ 816 | $ 1,179 | (30.8 | )% | |||||||||||||
Net Revenues attributable to RBH | — | (179 | ) | (1) | |||||||||||||||||
Net Revenues | $ 368 | $ 527 | (30.2 | )% | $ 816 | $ 1,000 | (2) | (18.4 | )% | ||||||||||||
Less: Currency | (58 | ) | (77 | ) | |||||||||||||||||
Net Revenues, ex. currency | $ 426 | $ 527 | (19.2 | )% | $ 893 | $ 1,000 | (2) | (10.7 | )% | ||||||||||||
Operating Income | $ 92 | $ 161 | (42.9 | )% | $ 218 | $ (25) | +100% | ||||||||||||||
Less: | |||||||||||||||||||||
Asset impairment and exit costs | (4 | ) | (23 | ) | (4 | ) | (23 | ) | |||||||||||||
Canadian tobacco litigation-related expense | — | — | — | (194 | ) | ||||||||||||||||
Loss on deconsolidation of RBH | — | — | — | (239 | ) | ||||||||||||||||
Adjusted Operating Income | $ 96 | $ 184 | (47.8 | )% | $ 222 | $ 431 | (48.5 | )% | |||||||||||||
Operating Income attributable to RBH | — | (125 | ) | (1) | |||||||||||||||||
Adjusted Operating Income | $ 96 | $ 184 | (47.8 | )% | $ 222 | $ 306 | (2) | (27.5 | )% | ||||||||||||
Less: Currency | (6 | ) | (39 | ) | |||||||||||||||||
Adjusted Operating Income, ex. currency | $ 102 | $ 184 | (44.6 | )% | $ 261 | $ 306 | (2) | (14.7 | )% | ||||||||||||
Adjusted OI Margin | 26.1 | % | 34.9 | % | (8.8 | ) | 27.2 | % | 36.6 | % | (9.4 | ) | |||||||||
Adjusted OI Margin attributable to RBH | — | (6.0 | ) | (1) | |||||||||||||||||
Adjusted OI Margin | 26.1 | % | 34.9 | % | (8.8 | ) | 27.2 | % | 30.6 | % | (2) | (3.4 | ) | ||||||||
Less: Currency | 2.2 | (2.0 | ) | ||||||||||||||||||
Adjusted OI Margin, ex. currency | 23.9 | % | 34.9 | % | (11.0 | ) | 29.2 | % | 30.6 | % | (2) | (1.4 | ) | ||||||||
(1) Represents the impact attributable to RBH from January 1, 2019 through March 21, 2019 | |||||||||||||||||||||
(2) Pro forma |
Schedule 11 | |||||||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | |||||||||||||||
Condensed Statements of Earnings | |||||||||||||||
($ in millions, except per share data) / (Unaudited) | |||||||||||||||
Quarters Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | Change Fav./(Unfav.) | 2020 | 2019 | Change Fav./(Unfav.) | ||||||||||
$ 17,819 | $ 19,987 | (10.8 | )% | Revenues including Excise Taxes | $ 36,072 | $ 37,692 | (4.3 | )% | |||||||
11,168 | 12,288 | 9.1 | % | Excise Taxes on products | 22,268 | 23,242 | 4.2 | % | |||||||
6,651 | 7,699 | (13.6 | )% | Net Revenues | 13,804 | 14,450 | (4.5 | )% | |||||||
2,179 | 2,665 | 18.2 | % | Cost of sales | 4,581 | 5,130 | 10.7 | % | |||||||
4,472 | 5,034 | (11.2 | )% | Gross profit | 9,223 | 9,320 | (1.0 | )% | |||||||
1,722 | 1,831 | 6.0 | % | Marketing, administration and research costs (1) | 3,666 | 4,048 | 9.4 | % | |||||||
19 | 16 | Amortization of intangibles | 37 | 35 | |||||||||||
2,731 | 3,187 | (14.3 | )% | Operating Income | 5,520 | 5,237 | 5.4 | % | |||||||
162 | 150 | (8.0 | )% | Interest expense, net | 291 | 302 | 3.6 | % | |||||||
22 | 20 | (10.0 | )% | Pension and other employee benefit costs | 45 | 41 | (9.8 | )% | |||||||
2,547 | 3,017 | (15.6 | )% | Earnings before income taxes | 5,184 | 4,894 | 5.9 | % | |||||||
528 | 611 | 13.6 | % | Provision for income taxes | 1,124 | 1,035 | (8.6 | )% | |||||||
(30 | ) | (30 | ) | Equity investments and securities (income)/loss, net | 24 | (41 | ) | ||||||||
2,049 | 2,436 | (15.9 | )% | Net Earnings | 4,036 | 3,900 | 3.5 | % | |||||||
102 | 117 | Net Earnings attributable to noncontrolling interests | 263 | 227 | |||||||||||
$ 1,947 | $ 2,319 | (16.0 | )% | Net Earnings attributable to PMI | $ 3,773 | $ 3,673 | 2.7 | % | |||||||
Per share data (2): | |||||||||||||||
$ 1.25 | $ 1.49 | (16.1 | )% | Basic Earnings Per Share | $ 2.42 | $ 2.36 | 2.5 | % | |||||||
$ 1.25 | $ 1.49 | (16.1 | )% | Diluted Earnings Per Share | $ 2.42 | $ 2.36 | 2.5 | % | |||||||
(1) Six months ended and quarter ended June 30, 2020 includes asset impairment and exit costs ($71 million). Six months ended June 30, 2019 includes asset impairment and exit costs ($43 million), Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million). Quarter ended June 30, 2019 includes asset impairment and exit costs ($23 million). | |||||||||||||||
(2) Net Earnings and weighted-average shares used in the basic and diluted Earnings Per Share computations for the quarters and for the six months ended June 30, 2020 and 2019 are shown on Schedule 1, Footnote 1. |
Schedule 12 | ||||||||||
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries | ||||||||||
Condensed Balance Sheets | ||||||||||
($ in millions, except ratios) / (Unaudited) | ||||||||||
June 30, | December 31, | |||||||||
2020 | 2019 | |||||||||
Assets | ||||||||||
Cash and cash equivalents | $ | 4,200 | $ | 6,861 | ||||||
All other current assets | 13,576 | 13,653 | ||||||||
Property, plant and equipment, net | 6,184 | 6,631 | ||||||||
Goodwill | 5,653 | 5,858 | ||||||||
Other intangible assets, net | 1,948 | 2,113 | ||||||||
Investments in unconsolidated subsidiaries and equity securities | 4,516 | 4,635 | ||||||||
Other assets | 3,085 | 3,124 | ||||||||
Total assets | $ | 39,162 | $ | 42,875 | ||||||
Liabilities and Stockholders' (Deficit) Equity | ||||||||||
Short-term borrowings | $ | 281 | $ | 338 | ||||||
Current portion of long-term debt | 2,304 | 4,051 | ||||||||
All other current liabilities | 13,207 | 14,444 | ||||||||
Long-term debt | 27,043 | 26,656 | ||||||||
Deferred income taxes | 775 | 908 | ||||||||
Other long-term liabilities | 5,672 | 6,077 | ||||||||
Total liabilities | 49,282 | 52,474 | ||||||||
Total PMI stockholders' deficit | (11,997 | ) | (11,577 | ) | ||||||
Noncontrolling interests | 1,877 | 1,978 | ||||||||
Total stockholders' (deficit) equity | (10,120 | ) | (9,599 | ) | ||||||
Total liabilities and stockholders' (deficit) equity | $ | 39,162 | $ | 42,875 |
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 June 30, 2020 | Year Ended December 31, 2019 | |||||||||||||||||
July ~ December | January ~ June | 12 months | ||||||||||||||||
2019 | 2020 | rolling | ||||||||||||||||
Net Earnings | $ | 3,828 | $ | 4,036 | $ | 7,864 | $ | 7,728 | ||||||||||
Equity investments and securities (income)/loss, net | (108 | ) | 24 | (84 | ) | (149 | ) | |||||||||||
Provision for income taxes | 1,258 | 1,124 | 2,382 | 2,293 | ||||||||||||||
Interest expense, net | 268 | 291 | 559 | 570 | ||||||||||||||
Depreciation and amortization | 492 | 470 | 962 | 964 | ||||||||||||||
Asset impairment and exit costs and Others (1) | 753 | 71 | 824 | 1,229 | ||||||||||||||
Adjusted EBITDA | $ | 6,491 | $ | 6,016 | $ | 12,507 | $ | 12,635 | ||||||||||
June 30, | December 31, | |||||||||||||||||
2020 | 2019 | |||||||||||||||||
Short-term borrowings | $ | 281 | $ | 338 | ||||||||||||||
Current portion of long-term debt | 2,304 | 4,051 | ||||||||||||||||
Long-term debt | 27,043 | 26,656 | ||||||||||||||||
Total Debt | $ | 29,628 | $ | 31,045 | ||||||||||||||
Cash and cash equivalents | 4,200 | 6,861 | ||||||||||||||||
Net Debt | $ | 25,428 | $ | 24,184 | ||||||||||||||
Ratios: | ||||||||||||||||||
Total Debt to Adjusted EBITDA | 2.37 | 2.46 | ||||||||||||||||
Net Debt to Adjusted EBITDA | 2.03 | 1.91 | ||||||||||||||||
(1) For the period July to December 2019, Others include the Russia excise and VAT charge ($374 million). For the year ended December 31, 2019, 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 June 30, | Six Months Ended June 30, | |||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||
$ 1,925 | $ 3,442 | (44.1 | )% | Net cash provided by operating activities (1) | $ 3,036 | $ 4,683 | (35.2 | )% | ||||
(198 | ) | Less: Currency | (248 | ) | ||||||||
$ 2,123 | $ 3,442 | (38.3 | )% | Net cash provided by operating activities, excluding currency | $ 3,284 | $ 4,683 | (29.9 | )% | ||||
(1) Operating cash flow |
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