Delivered 2022
Third-Quarter Reported Diluted EPS of $1.34, Adjusted Diluted EPS
of $1.53 and Pro Forma (Excluding Russia and Ukraine) Adjusted
Diluted EPS of $1.33, Representing Currency-Neutral Growth of
8.3%; Targets 2022 Full-Year Reported
Diluted EPS of $5.47 to $5.62, Adjusted Diluted EPS of $5.81 to
$5.96 and Pro Forma Adjusted Diluted EPS of $5.22 to $5.33,
Representing Currency-Neutral Growth of 10% to 12%
Regulatory News:
Philip Morris International Inc. (NYSE: PM) today announces its
2022 third-quarter and September year-to-date results. Growth rates
presented in this press release on an organic basis reflect
adjusted results, excluding currency, acquisitions and disposals.
Given the uncertainty and volatility regarding the company’s
operations in Russia and Ukraine, PMI is also providing figures and
comparisons on a pro forma basis, which exclude the company’s
operations in these two markets for all periods. A glossary of key
terms, definitions and explanatory notes is included at the end of
this press release. Adjustments, other calculations and
reconciliations to the most directly comparable U.S. GAAP measures
are included in the schedules to this press release.
2022 THIRD-QUARTER & YEAR-TO-DATE
HIGHLIGHTS
Third-Quarter
Nine Months
Year-to-Date
Reported
Pro Forma Adjusted
Reported
Pro Forma Adjusted
Total Shipment Volume Growth
0.6%
2.3%
1.7%
3.4%
HTU Shipment Volume (units billion)
27.5
22.4
77.1
62.6
- Growth
17.1%
21.9%
10.9%
15.8%
Net Revenue Growth (Decline)
(1.1)%
6.9%
(a)
1.3%
7.7%
(a)
Operating Income Growth (Decline)
(14.1)%
4.4%
(a)
(7.0)%
5.0%
(a)
OI Margin Increase (Decrease)
(5.5)pp
(1.0)pp
(a)
(3.5)pp
(1.1)pp
(a)
Diluted Earnings per Share
$1.34
$1.33
$4.27
$4.11
- Growth (Decline)
(13.5)%
8.3%
(b)
(4.7)%
9.7%
(b)
(a) On an organic basis
(b) Excluding currency
Third-Quarter
- Net revenues from smoke-free products accounted for 30.1% of
total net revenues, or 29.2% on a pro forma basis
- Market share for heated tobacco units (HTUs) in IQOS markets up
by 1.3 points to 7.7% on a pro forma basis
- Pro forma total IQOS users at quarter-end estimated at
approximately 19.5 million (up by 3.6 million or 22% versus
September 30, 2021), of which approximately 13.5 million had
switched to IQOS and stopped smoking
- Increased regular quarterly dividend by 1.6% to $1.27 per
share, or an annualized rate of $5.08 per share
Nine Months Year-to-Date
- Net revenues from smoke-free products accounted for 30.4% of
total net revenues, or 29.6% on a pro forma basis
- Market share for HTUs in IQOS markets up by 1.2 points to 7.6%
on a pro forma basis
"We delivered very strong performance in the third quarter,
driving quarterly adjusted diluted EPS of $1.53 per share despite
pressures related to currency, the supply chain and inflation,"
said Jacek Olczak, Chief Executive Officer.
"IQOS's excellent momentum continued in the quarter, with heated
tobacco unit volume and share growth across all key geographies,
driven in part by ILUMA's strong performance in initial launch
markets. This was complemented by the robust performance of our
combustible tobacco portfolio, reflecting essentially stable
shipment volume, encouraging international market share growth and
accelerated pricing."
"As a result of our strong year-to-date performance, we are
raising the low end of our full-year pro forma growth outlook for
adjusted net revenues, resulting in a range of 6.5% to 8% on an
organic basis, and continue to expect full-year pro forma adjusted
diluted EPS growth of 10% to 12%, excluding currency."
"Importantly, our smoke-free transformation continues at a rapid
pace, reinforcing our aim to become a majority smoke-free company
by net revenues in 2025. Today's exciting announcement regarding
IQOS in the U.S. furthers this ambition, giving PMI full rights to
commercialize IQOS in the largest smoke-free market globally as of
April 30, 2024."
"Furthermore, we believe the best and final price in our revised
offer for Swedish Match, announced earlier today, provides very
compelling value for both sets of shareholders. Should the offer
fail, we are well prepared to proceed autonomously to develop IQOS
and the rest of our smoke-free portfolio in the U.S."
2022 THIRD-QUARTER SUMMARY
On a pro forma basis, adjusted net revenues increased by 6.9% in
organic terms, primarily driven by total shipment volume growth of
2.3%, the continued favorable mix shift from cigarettes to
smoke-free products, and a favorable total pricing variance.
Smoke-free product pro forma net revenues increased by 14.2 on
an organic basis, mainly driven by HTU shipment volume growth of
21.9% (to reach 22.4 billion units), partly offset by lower device
revenues and the impact of HTU pricing comparisons.
Combustible product pro forma adjusted net revenues increased by
4.1% on an organic basis, driven by a favorable pricing variance of
4.9%. Pro forma cigarette shipment volume declined slightly
(-0.2%), while international cigarette share increased by 0.2
points to 25.3% on the same basis, including a 0.1 point increase
for Marlboro.
Pro forma adjusted operating income margin declined by 1.0 point
on an organic basis, primarily reflecting: (i) investment to
further expand ILUMA and match underlying demand, (ii) the higher
initial cost of ILUMA devices and related HTUs; (iii) the impact of
supply chain disruptions, notably due to the war in Ukraine; and
(iv) global cost inflation.
Despite these margin pressures, the company’s strong adjusted
net revenue growth, coupled with the positive effects from higher
pricing and operating cost efficiencies, drove pro forma adjusted
diluted EPS of $1.33, reflecting currency-neutral growth of 8.3%.
Adjusted diluted EPS of $1.53 increased by 8.2%, excluding
currency, as shown in the table below.
Quarters Ended September
30,
2022
2021
Currency
Var. excl. Currency
Reported Diluted EPS
$ 1.34
$ 1.55
$ (0.19)
(1.3)%
Asset impairment and exit costs
—
0.02
Amortization and impairment of intangibles
(a)
0.08
0.01
Equity investee ownership dilution
—
(0.02)
Asset acquisition cost
—
0.03
Costs associated with Swedish Match AB
offer
0.11
—
Adjusted Diluted EPS
$ 1.53
$ 1.59
$ (0.19)
8.2%
Less: Net earnings attributable to Russia
and Ukraine
0.20
0.15
0.04
Pro Forma Adjusted Diluted EPS
$ 1.33
$ 1.44
$ (0.23)
8.3%
(a) Includes a non-cash impairment charge
of $0.06 per share. See "Impairment of Acquired Intangibles"
section on page 7 for more information.
2022 FULL-YEAR FORECAST
Full-Year
2022 Forecast
2021
Growth
Reported Diluted EPS
$5.47
-
$5.62
$ 5.83
Adjustments:
Asset impairment and exit costs
—
0.12
Equity investee ownership dilution
—
(0.04)
Amortization and impairment of
intangibles
0.14
0.05
Saudi Arabia customs assessments
—
0.14
Charges related to the war in Ukraine
0.07
—
Fair value adj. for equity security
investments (1)
0.03
—
Asset acquisition cost
—
0.03
Costs associated with Swedish Match AB
offer
0.13
—
Tax items
(0.03)
—
Total Adjustments
0.34
0.30
Adjusted Diluted EPS
$5.81
-
$5.96
$ 6.13
Less: Net earnings attributable to Russia
and Ukraine (2)
0.59
-
0.63
0.60
Pro Forma Adjusted Diluted EPS
$5.22
-
$5.33
$ 5.53
Less: Pro Forma Currency
(0.87)
Pro Forma Adjusted Diluted EPS,
ex-currency
$6.09
-
$6.20
$ 5.53
10%
-
12%
1) Reflects the adjustment resulting from
share price movements in PMI's investments in India and Sri Lanka,
which are publicly traded entities that are not controlled or
influenced by PMI
2) Includes a favorable currency variance
of $0.07 per share for full-year 2022
Reported diluted EPS is forecast to be in a range of $5.47 to
$5.62, at prevailing exchange rates, versus reported diluted EPS of
$5.83 in 2021. Excluding (i) 2022 adjustments of $0.34 per share,
(ii) net earnings attributable to Russia and Ukraine of $0.59 to
$0.63 per share assumed for full-year 2022, and (iii) an adverse
pro forma currency impact, at prevailing exchange rates, of $0.87
per share, this forecast represents a projected increase of 10% to
12% versus pro forma adjusted diluted EPS of $5.53 in 2021, as
outlined in the above table.
2022 Full-Year Forecast Assumptions
This forecast assumes:
- The full contribution of the company's operations in Russia and
Ukraine for the entire year;
- No asset impairment costs or further other charges related to
the company's operations in Russia or Ukraine;
- No contribution from the operations of Swedish Match in 2022
following the assumed transaction close in the fourth quarter and
no further costs associated with the Swedish Match offer;
- No impact on net earnings or operating cash flow related to
PMI's agreement to obtain the full rights to IQOS in the U.S., as
PMI is currently evaluating the impact of the agreement on the
company's consolidated financial statements;
- A continued gradual improvement in PMI's duty-free business
outside Asia;
- The impact of delayed production capacity build-up for ILUMA
HTUs due to the decision to cancel manufacturing plans in
Russia;
- A pro forma estimated total international industry volume
change, excluding China and the U.S., of approximately flat to
+1%;
- Pro forma total cigarette and HTU shipment volume growth for
PMI of approximately 2% to 3%, compared to approximately 1.5% to
2.5% previously;
- Pro forma HTU shipment volume of 89 to 91 billion units
compared to 90 to 92 billion units previously (despite continued
strong expected in-market sales volume growth), reflecting the
impact of global supply chain disruptions, as well as production
constraints for ILUMA HTU consumables in the face of
better-than-anticipated performance for ILUMA;
- Pro forma adjusted net revenue growth of approximately 6.5% to
8.0% on an organic basis (compared to 6.0% to 8.0% previously),
which includes the adverse full-year impact of moving to highly
inflationary accounting in Turkey, effective April 1st, of
approximately 0.6 points;
- A pro forma adjusted operating income margin change of -50
basis points to flat on an organic basis (compared to flat to +50
basis points previously), primarily reflecting:
- the expectation of a lower gross margin primarily due to:
- the significant growth in IQOS device volumes (notably in the
first-half) as device supply constraints ease, reflecting the
replenishment of channel inventories for user acquisition and
supply for the accelerated device replacement cycle driven by
ILUMA;
- the higher initial cost of ILUMA devices and initial weight and
cost of TEREA consumables, which are expected to decline over time,
as with previous innovations;
- higher logistics costs, including costs related to the use of
air freight to support: (i) the strong up-take of ILUMA and related
HTU consumables in Japan, and (ii) the re-sourcing of select
cigarette brands for Japan due to the war in Ukraine;
- investments behind the roll-out of ILUMA and to grow production
capacity across PMI's smoke-free platforms; and
- increasing inflation in raw material and energy prices, and
additional supply chain costs due to war-related disruptions;
- continued commercial reinvestment to support the company's
growing portfolio of smoke-free alternatives;
- largely offset by the continued favorable product mix shift
from cigarettes to smoke-free products, coupled with the benefit of
further operating leverage and accelerated operating
efficiencies;
- Wellness and Healthcare segment net revenues of around $275
million (including smoking cessation products), with an adjusted
operating loss of around $100 million, primarily due to:
- investments in research and development; and
- expenses related to employee retention and recruitment
programs;
- Full-year amortization and impairment of acquired intangibles
of $0.14 per share;
- Operating cash flow of around $10.5 billion at prevailing
exchange rates, subject to year-end working capital
requirements;
- Capital expenditures of approximately $1.0 billion;
- An effective tax rate, excluding discrete tax events, of 21% to
22%; and
- The impact on diluted EPS of year-to-date 2022 share
repurchases.
Factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to
these projections.
IQOS in the U.S.
As announced in a separate press release today, PMI has reached
an agreement with Altria Group, Inc. to end the companies’
commercial relationship covering IQOS in the U.S. as of April 30,
2024. Thereafter, PMI will have the full rights to commercialize
IQOS in the U.S. As part of the agreement, PMI will pay a total
cash consideration of $2.7 billion, of which $1.0 billion was paid
at the inception of the agreement using available cash. The
remaining $1.7 billion, plus interest, will be paid by July 2023 at
the latest.
PMI is currently evaluating the impact of this agreement on its
consolidated financial statements.
For more information, please refer to the aforementioned press
release, available at www.pmi.com.
Swedish Match AB: Revised Offer with Best and Final
Price
Earlier today, Philip Morris Holland Holdings B.V. (PMHH), an
affiliate of PMI, announced an increase in the price in its
recommended public offer to the shareholders of Swedish Match AB
(Swedish Match) to SEK 116 in cash per share (compared to SEK 106
in cash per share previously).
The price in the revised offer represents a premium of 52.5%
compared to the undisturbed Swedish Match closing share price of
SEK 76.06 on May 9, 2022, and the offer price will not be further
increased by PMHH. By this statement, PMHH cannot, in accordance
with the Takeover Rules for Nasdaq Stockholm, increase the price in
the revised offer any further. The revised offer remains subject to
the 90% acceptance condition, which is critical to capture the full
potential of the combination.
The price in the revised offer primarily reflects the higher net
value to PMI related to the portion of Swedish Match’s cash flows
generated in U.S. dollars, given currency movements since the
initial offer was announced in May. PMI believes that the
deterioration in the global economic outlook, equity markets and
the interest rate environment since the time of the initial offer
strengthens yet further the attractiveness of the revised offer to
Swedish Match shareholders.
PMI expects the transaction to close in the fourth quarter of
this year, subject to the terms and conditions of the offer being
fulfilled or waived as further set out in the offer document.
Public information regarding the offer is available on the offer
website (www.smokefree-offer.com).
Should the offer fail, PMI will continue with its strategic
alternatives to the Swedish Match combination, including its
well-advanced plans for the U.S. commercialization of IQOS -- upon
regaining full control after April 30, 2024 -- as well as its
broader smoke-free portfolio.
War in Ukraine
Since the onset of the war in Ukraine, PMI's main priority has
been the safety and security of its more than 1,300 employees and
their families in the country. The company has helped to evacuate
more than 1,000 people from Ukraine and relocate over 2,700 others
from conflict zones to locations in the country away from the
heaviest fighting; provided critical aid to employees who cannot
leave or who decide to remain in Ukraine; and provided those who
have left the country with a range of support in neighboring
countries. The company is continuing to pay salaries to all its
Ukrainian employees and is also providing substantial in-kind
support to them and their families. In addition, PMI has
contributed approximately $10 million in funds and donated
essential items across the country.
On February 25th, PMI announced the temporary suspension of its
operations in Ukraine, including at its factory, in Kharkiv. The
company subsequently resumed some retail activities where safety
allowed, in order to provide product availability and service to
adult consumers, and began to supply the market from production
centers outside Ukraine, as well as through contract manufacturing
by a third party. PMI is applying increased security and safety
measures for personnel. Production at the company's factory in
Kharkiv remains suspended.
As of September 30, 2022, PMI's Ukrainian operations have
approximately $0.5 billion in total assets, excluding intercompany
balances.
PMI employs more than 3,200 people in Russia and will continue
to support its employees there, including paying their salaries,
while continuing to fulfil its legal obligations. The company will
continue to make decisions with employee safety and security as a
priority.
On March 24th, PMI announced the concrete steps it had taken to
suspend planned investments and scale down its manufacturing
operations in Russia, including: the discontinuation of a number of
cigarette products; the suspension of its marketing activities; the
cancellation of all product launches planned for 2022, including
ILUMA; and the cancellation of its plans to manufacture HTUs for
ILUMA in Russia.
As previously announced, PMI intends to exit the Russian market
in an orderly manner, as the complexities of continuing to operate
in Russia increase, such as supply chain challenges and financial
and banking sector restrictions. The company's Board of Directors
and senior executives continue to actively work on options for
doing so, in the context of an increasingly complex and rapidly
changing regulatory and operating environment, including the
requirement to obtain certain governmental approvals for any
transaction.
As of September 30, 2022, PMI's Russian operations have
approximately $2.6 billion in total assets, excluding intercompany
balances.
PMI recorded pre-tax charges related to the war in Ukraine of
approximately $6 million in the third quarter of 2022 and
approximately $128 million in the September year-to-date period.
This includes charges in Russia related to the cancellation of the
planned launch of ILUMA and the planned production of related
HTUs.
Impairment of Acquired Intangibles
PMI recorded a pre-tax impairment charge of $112 million as of
September 30, 2022, reflecting the impact of general economic and
market conditions resulting in a reduction in future estimated cash
flows on certain products within the Wellness and Healthcare
segment. The charge was recorded within cost of sales in the
condensed consolidated statements of earnings and is excluded from
adjusted results.
Conference Call
A conference call, hosted by Jacek Olczak, Chief Executive
Officer, and Emmanuel Babeau, Chief Financial Officer, will be
webcast at 9:00 a.m., Eastern Time, on October 20, 2022. Access the
call at www.pmi.com/2022Q3earnings.
CONSOLIDATED SHIPMENT VOLUME & MARKET
SHARE
PMI Shipment Volume by Region
Third-Quarter
Nine Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
European Union
40,745
41,965
(2.9)%
118,465
120,238
(1.5)%
Eastern Europe
22,547
25,020
(9.9)%
61,694
67,771
(9.0)%
Middle East & Africa
34,336
35,166
(2.4)%
98,351
93,155
5.6%
South & Southeast Asia
37,176
35,578
4.5%
109,391
105,787
3.4%
East Asia & Australia
10,496
11,120
(5.6)%
32,440
33,450
(3.0)%
Americas
16,666
15,994
4.2%
47,541
46,092
3.1%
Total PMI
161,966
164,843
(1.7)%
467,882
466,493
0.3%
Heated Tobacco Units
European Union
10,211
7,058
44.7%
28,130
20,405
37.9%
Eastern Europe
6,487
6,119
6.0%
18,275
18,594
(1.7)%
Middle East & Africa
1,018
577
76.4%
3,073
1,485
+100%
South & Southeast Asia
125
79
58.2%
315
151
+100%
East Asia & Australia
9,542
9,435
1.1%
27,016
28,478
(5.1)%
Americas
125
221
(43.4)%
339
466
(27.3)%
Total PMI
27,508
23,489
17.1%
77,148
69,579
10.9%
Cigarettes and Heated Tobacco
Units
European Union
50,956
49,023
3.9%
146,595
140,643
4.2%
Eastern Europe
29,034
31,139
(6.8)%
79,969
86,365
(7.4)%
Middle East & Africa
35,354
35,743
(1.1)%
101,424
94,640
7.2%
South & Southeast Asia
37,301
35,657
4.6%
109,706
105,938
3.6%
East Asia & Australia
20,038
20,555
(2.5)%
59,456
61,928
(4.0)%
Americas
16,791
16,215
3.6%
47,880
46,558
2.8%
Total PMI
189,474
188,332
0.6%
545,030
536,072
1.7%
Third-Quarter
PMI's total shipment volume increased by 0.6%, driven by a 17.1%
increase in HTU shipments, partly offset by a 1.7% decline in
cigarette shipments.
On a pro forma basis, PMI's total shipment volume increased by
2.3%, as detailed in Appendix 3, reflecting a 21.9% increase for
HTUs, partly offset by a 0.2% decrease for cigarettes. PMI's total
shipment volume in the Eastern Europe Region increased by 6.8%, on
the same basis, as shown in Appendix 4.
For additional detail on PMI's shipment volume performance by
Region, please refer to the "Total Market, PMI Shipment &
Market Share Commentaries" sections for PMI's regional operating
segments.
Impact of Inventory Movements
The net unfavorable impact of estimated distributor inventory
movements was immaterial in the quarter, with PMI’s total in-market
sales increasing by 0.8%, or by 2.5% on a pro forma basis -- both
essentially in-line with the respective shipment volumes.
PMI's total HTU in-market sales volume in the quarter was 27.9
billion units, or 22.7 billion units on a pro forma basis,
representing growth of 13.5% and 18.2%, respectively.
Nine Months Year-to-Date
PMI's total shipment volume increased by 1.7%, driven by
increases of 10.9% and 0.3% for HTUs and cigarettes,
respectively.
On a pro forma basis, PMI's total shipment volume increased by
3.4%, as detailed in Appendix 3, reflecting increases of 15.8% and
1.8% for HTUs and cigarettes, respectively. PMI's total shipment
volume in the Eastern Europe Region increased by 2.5%, on the same
basis, as shown in Appendix 4.
For additional detail on PMI's shipment volume performance by
Region, please refer to the "Total Market, PMI Shipment &
Market Share Commentaries" sections for PMI's regional operating
segments.
Impact of Inventory Movements
The net unfavorable impact of estimated distributor inventory
movements was immaterial in the period, with PMI’s total in-market
sales increasing by 1.8%, or by 3.4% on a pro forma basis -- both
essentially in-line with the respective shipment volumes.
PMI's total HTU in-market sales volume in the nine months
year-to-date was 78.5 billion units, or 63.3 billion units on a pro
forma basis, representing growth of 14.0% and 19.2%,
respectively.
PMI Shipment Volume by Brand
PMI Shipment Volume by Brand
Third-Quarter
Nine Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
Marlboro
64,041
65,139
(1.7)%
183,977
177,287
3.8%
L&M
21,037
21,564
(2.4)%
62,257
64,028
(2.8)%
Chesterfield
17,369
15,994
8.6%
50,060
43,021
16.4%
Parliament
11,890
11,556
2.9%
32,001
30,535
4.8%
Philip Morris
10,255
11,107
(7.7)%
30,325
31,881
(4.9)%
Others
37,374
39,483
(5.3)%
109,262
119,741
(8.8)%
Total Cigarettes
161,966
164,843
(1.7)%
467,882
466,493
0.3%
Heated Tobacco Units
27,508
23,489
17.1%
77,148
69,579
10.9%
Total PMI
189,474
188,332
0.6%
545,030
536,072
1.7%
Note: Philip Morris includes Philip
Morris/Dubliss.
Third-Quarter
Shipment volume for PMI's HTU brands increased, primarily driven
by the EU, Eastern Europe and Middle East & Africa Regions.
PMI's cigarette shipment volume of the following brands
increased:
- Chesterfield, mainly driven by the Eastern Europe and South
& Southeast Asia Regions, partly offset by the Middle East
& Africa Region; and
- Parliament, primarily driven by the Middle East & Africa
Region.
PMI's cigarette shipment volume of the following brands
decreased:
- Marlboro, mainly due to the EU and Eastern Europe Regions,
partly offset by the Americas Region;
- L&M, primarily due to the Eastern Europe Region; and
- Philip Morris, mainly due to the Eastern Europe Region, partly
offset by the East Asia & Australia Region.
The cigarette shipment volume decline for "Others" was mainly
due to: Bond Street (primarily Eastern Europe) and Lark (mainly
Japan and Turkey), partly offset by Dji Sam Soe (Indonesia).
On a pro forma basis, PMI's cigarette shipment volume increased
by 1.5% for Chesterfield, 7.9% for Parliament and 6.1% for Philip
Morris, and decreased by 0.4% for Marlboro and 0.5% for
L&M.
Nine Months Year-to-Date
Shipment volume for PMI's HTU brands increased, primarily driven
by the EU and Middle East & Africa Regions, partly offset by
the East Asia & Australia Region.
PMI's cigarette shipment volume of the following brands
increased:
- Marlboro, mainly driven by the Eastern Europe, Middle East
& Africa and Americas Regions, partly offset by the EU
Region;
- Chesterfield, primarily driven by the Eastern Europe and South
& Southeast Asia Regions; and
- Parliament, mainly driven by the Middle East & Africa
Region.
PMI's cigarette shipment volume of the following brands
decreased:
- L&M, primarily due to the EU, Eastern Europe and South
& Southeast Asia Regions, partly offset by the Americas Region;
and
- Philip Morris, mainly due to the Eastern Europe Region, partly
offset by the East Asia & Australia Region.
The cigarette shipment volume decline for "Others" was mainly
due to: Bond Street (primarily Eastern Europe) and Lark (mainly
Japan and Turkey), partly offset by Dji Sam Soe (Indonesia) and
Sampoerna A (Indonesia).
On a pro forma basis, PMI's cigarette shipment volume increased
by 3.3% for Marlboro, 6.8% for Chesterfield, 9.4% for Parliament
and 12.3% for Philip Morris, and decreased by 1.1% for L&M.
Pro Forma International Share of Market
Pro Forma
Third-Quarter
Nine Months
Year-to-Date
2022
2021
Change (pp)
2022
2021
Change (pp)
Total International Market Share
(1)
27.7%
27.2%
0.5
27.2%
26.6%
0.6
Cigarettes
24.1%
24.1%
—
23.7%
23.6%
0.1
HTU
3.7%
3.1%
0.6
3.6%
3.0%
0.6
Cigarette over Cigarette Market Share
(2)
25.3%
25.1%
0.2
24.8%
24.6%
0.2
Note: Excludes Russia and Ukraine
(1) Defined as PMI's cigarette and heated
tobacco unit in-market sales volume as a percentage of total
industry cigarette and heated tobacco unit sales volume, excluding
China and the U.S., including cigarillos in Japan
(2) Defined as PMI's cigarette in-market
sales volume as a percentage of total industry cigarette sales
volume, excluding China and the U.S., including cigarillos in
Japan
CONSOLIDATED FINANCIAL SUMMARY
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/
Mix
Cost/ Other
(in millions)
Net Revenues
$
8,032
$
8,122
(1.1
)%
6.7
%
(90
)
(687
)
50
216
316
15
Cost of Sales
(2,935
)
(2,596
)
(13.1
)%
(17.8
)%
(339
)
198
(74
)
—
(188
)
(275
)
Marketing, Administration and Research
Costs
(2,129
)
(2,071
)
(2.8
)%
(8.2
)%
(58
)
111
—
—
—
(169
)
Operating Income
$
2,968
$
3,455
(14.1
)%
(2.5
)%
(487
)
(378
)
(24
)
216
128
(429
)
Asset Impairment & Exit Costs (1)
—
(43
)
+100
%
+100
%
43
—
—
—
—
43
Amortization and Impairment of Intangibles
(2)
(139
)
(18
)
-(100
)%
-(100
)%
(121
)
—
(7
)
—
—
(114
)
Charges related to the war in Ukraine
(3)
(6
)
—
—
%
—
%
(6
)
—
—
—
—
(6
)
Costs associated with Swedish Match AB
offer (1)
(217
)
—
—
%
—
%
(217
)
—
—
—
—
(217
)
Asset Acquisition Cost (1)
—
(51
)
+100
%
+100
%
51
—
—
—
—
51
Adjusted Operating Income
$
3,330
$
3,567
(6.6
)%
4.4
%
(237
)
(378
)
(17
)
216
128
(186
)
Adjusted Operating Income
Margin
41.5
%
43.9
%
(2.4
)pp
(0.9
)pp
(1) Included in Marketing, Administration
and Research Costs above.
(2) Q3 2022 amount includes an impairment
charge of $112 million, which is included in cost of sales
above.
(3) Included in Marketing, Administration
and Research Costs ($6 million) above.
Net revenues increased by 6.7% on an organic basis, mainly
reflecting: favorable volume/mix, primarily driven by higher HTU
volume, partly offset by lower cigarette volume and unfavorable
device mix; and a favorable pricing variance, driven by higher
combustible tobacco pricing, partly offset by lower device pricing
and lower HTU (net) pricing.
During the quarter, Russia and Ukraine accounted for nearly 10%
of PMI's total net revenues. Pro forma adjusted net revenues
increased by 6.9% on an organic basis, as detailed in Schedule
11.
Operating income decreased by 2.5%, excluding currency and
acquisitions, primarily reflecting: the impact of 2022 costs
associated with the Swedish Match AB offer, as well as higher
amortization and impairment of intangibles, partly offset by
favorable comparisons versus the prior year period related to asset
acquisition cost and asset impairment and exit costs.
Adjusted operating income increased by 4.4% on an organic basis,
mainly reflecting: a favorable pricing variance; and favorable
volume/mix, primarily driven by higher HTU volume, partly offset by
lower cigarette volume, unfavorable HTU mix and unfavorable
cigarette mix; partly offset by higher manufacturing costs (mainly
due to higher logistics costs and other inflationary impacts,
partially offset by productivity); and higher marketing,
administration and research costs. Adjusted operating income margin
decreased by 0.9 points on an organic basis.
Pro forma adjusted operating income increased by 4.4% on an
organic basis, while pro forma adjusted operating income margin
decreased by 1.0 point, on the same basis, as detailed in Schedule
11.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
23,610
$
23,301
1.3
%
8.1
%
309
(1,778
)
199
466
1,143
279
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Adjusted Net Revenues
$
23,610
$
23,547
0.3
%
7.0
%
63
(1,778
)
199
466
1,143
33
Net Revenues (1)
$
23,610
$
23,301
1.3
%
8.1
%
309
(1,778
)
199
466
1,143
279
Cost of Sales
(8,191
)
(7,223
)
(13.4
)%
(17.2
)%
(968
)
439
(167
)
—
(768
)
(472
)
Marketing, Administration and Research
Costs
(6,097
)
(6,050
)
(0.8
)%
(3.1
)%
(47
)
247
(106
)
—
—
(188
)
Operating Income
$
9,322
$
10,028
(7.0
)%
4.6
%
(706
)
(1,092
)
(74
)
466
375
(381
)
Asset Impairment & Exit Costs (2)
—
(170
)
+100
%
+100
%
170
—
—
—
—
170
Amortization and Impairment of Intangibles
(3)
(213
)
(55
)
-(100
)%
-(100
)%
(158
)
—
(44
)
—
—
(114
)
Charges related to the war in Ukraine
(4)
(128
)
—
—
%
—
%
(128
)
—
—
—
—
(128
)
Costs associated with Swedish Match AB
offer (2)
(269
)
—
—
%
—
%
(269
)
—
—
—
—
(269
)
Saudi Arabia Customs Assessments (5)
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Asset Acquisition Cost (2)
—
(51
)
+100
%
+100
%
51
—
—
—
—
51
Adjusted Operating Income
$
9,932
$
10,550
(5.9
)%
4.8
%
(618
)
(1,092
)
(30
)
466
375
(337
)
Adjusted Operating Income
Margin
42.1
%
44.8
%
(2.7
)pp
(0.9
)pp
(1) Favorable Cost/Other variance includes
a reduction in net revenues of $246 million in 2021 related to the
Saudi Arabia customs assessments.
(2) Included in Marketing, Administration
and Research Costs above.
(3) 2022 amount includes an impairment
charge of $112 million, which is included in cost of sales
above.
(4) Included in Cost of Sales ($46
million) and Marketing, Administration and Research Costs ($82
million) above.
(5) Included in Net Revenues above.
Net revenues increased by 8.1%, excluding currency and
acquisitions, mainly reflecting: favorable volume/mix, primarily
driven by higher HTU volume and device volume, partly offset by
unfavorable device mix, cigarette mix and HTU mix; a favorable
pricing variance, driven by higher combustible tobacco pricing,
partly offset by lower device pricing and lower HTU (net) pricing;
and a favorable comparison related to the Saudi Arabia customs
assessments of $246 million in 2021, shown in "Cost/Other".
Adjusted net revenues increased by 7.0% on an organic basis.
During the September year-to-date period, Russia and Ukraine
accounted for around 8% of PMI's total net revenues. Pro forma
adjusted net revenues increased by 7.7% on an organic basis, as
detailed in Schedule 11.
Operating income increased by 4.6%, excluding currency and
acquisitions, which included: favorable comparisons versus the
prior year period related to the Saudi Arabia customs assessments
(as noted above for net revenues), asset impairment and exit costs,
and asset acquisition cost, partly offset by the impact of 2022
costs associated with the Swedish Match AB offer, higher
amortization and impairment of intangibles, and 2022 charges
related to the war in Ukraine.
Adjusted operating income increased by 4.8% on an organic basis,
mainly reflecting: a favorable pricing variance; and favorable
volume/mix, primarily driven by higher HTU volume, partly offset by
unfavorable cigarette mix, HTU mix and device mix, the unfavorable
impact on profitability of higher device volume, as well as lower
cigarette volume; partially offset by higher manufacturing costs
(primarily due to higher logistics costs and other inflationary
impacts, partly offset by productivity); and higher marketing,
administration and research costs. Adjusted operating income margin
decreased by 0.9 points on an organic basis.
Pro forma adjusted operating income increased by 5.0% on an
organic basis, while pro forma adjusted operating income margin
decreased by 1.1 points, on the same basis, as detailed in Schedule
11.
EUROPEAN UNION REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
3,074
$
3,192
(3.7
)%
10.8
%
(118
)
(465
)
3
(8
)
352
—
Operating Income
$
1,395
$
1,680
(17.0
)%
2.0
%
(285
)
(318
)
—
(8
)
246
(205
)
Asset Impairment & Exit Costs
—
(12
)
+100
%
+100
%
12
—
—
—
—
12
Amortization and Impairment of
Intangibles
(9
)
(8
)
(12.5
)%
(12.5
)%
(1
)
—
—
—
—
(1
)
Costs associated with Swedish Match AB
offer
(96
)
—
—
%
—
%
(96
)
—
—
—
—
(96
)
Adjusted Operating Income
$
1,500
$
1,700
(11.8
)%
6.9
%
(200
)
(318
)
—
(8
)
246
(120
)
Adjusted Operating Income
Margin
48.8
%
53.3
%
(4.5
)pp
(1.9
)pp
Net revenues increased by 10.8% on an organic basis, reflecting:
favorable volume/mix, mainly driven by higher HTU volume and device
volume, partly offset by lower cigarette volume, unfavorable HTU
mix and unfavorable cigarette mix. Pricing variance was slightly
unfavorable, primarily reflecting lower device pricing and lower
HTU (net) pricing, partly offset by higher combustible pricing.
Operating income increased by 2.0%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer.
Adjusted operating income increased by 6.9% on an organic basis,
primarily reflecting: favorable volume/mix, mainly driven by higher
HTU volume, partly offset by lower cigarette volume, unfavorable
HTU mix, unfavorable cigarette mix and the unfavorable impact on
profitability of higher device volume; partially offset by higher
marketing, administration and research costs; and higher
manufacturing costs.
Adjusted operating income margin decreased by 1.9 points on the
same basis.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
9,229
$
9,250
(0.2
)%
10.5
%
(21
)
(998
)
10
(38
)
1,005
—
Operating Income
$
4,441
$
4,811
(7.7
)%
7.1
%
(370
)
(708
)
(2
)
(38
)
675
(297
)
Asset Impairment & Exit Costs
—
(56
)
+100
%
+100
%
56
—
—
—
—
56
Amortization and Impairment of
Intangibles
(27
)
(26
)
(3.8
)%
(3.8
)%
(1
)
—
—
—
—
(1
)
Costs associated with Swedish Match AB
offer
(119
)
—
—
%
—
%
(119
)
—
—
—
—
(119
)
Adjusted Operating Income
$
4,587
$
4,893
(6.3
)%
8.3
%
(306
)
(708
)
(2
)
(38
)
675
(233
)
Adjusted Operating Income
Margin
49.7
%
52.9
%
(3.2
)pp
(1.1
)pp
Net revenues increased by 10.5% on an organic basis, reflecting:
favorable volume/mix, mainly driven by higher HTU volume and device
volume, partly offset by lower cigarette volume, unfavorable
cigarette mix, and unfavorable HTU mix; partially offset by an
unfavorable pricing variance, mainly due to lower device pricing
and lower HTU (net) pricing, partly offset by higher combustible
pricing.
Operating income increased by 7.1%, excluding currency and
acquisitions, which included: the impact of 2022 costs associated
with the Swedish Match AB offer, partly offset by a favorable
comparison versus the prior year period related to asset impairment
and exit costs.
Adjusted operating income increased by 8.3% on an organic basis,
primarily reflecting: favorable volume/mix, mainly driven by higher
HTU volume, partly offset by lower cigarette volume, unfavorable
cigarette mix, unfavorable HTU mix and the unfavorable impact on
profitability of higher device volume; partially offset by higher
marketing, administration and research costs; higher manufacturing
costs; and an unfavorable pricing variance.
Adjusted operating income margin decreased by 1.1 points on the
same basis.
Total Market, PMI Shipment & Market Share
Commentaries
European Union Key Data
Third-Quarter
Nine Months
Year-to-Date
Change
Change
2022
2021
% / pp
2022
2021
% / pp
Total Market (billion units)
133.0
132.2
0.6
%
369.0
361.0
2.2
%
PMI Shipment Volume (million
units)
Cigarettes
40,745
41,965
(2.9
)%
118,465
120,238
(1.5
)%
Heated Tobacco Units
10,211
7,058
44.7
%
28,130
20,405
37.9
%
Total EU
50,956
49,023
3.9
%
146,595
140,643
4.2
%
PMI Market Share
Marlboro
15.7
%
16.6
%
(0.9
)
15.9
%
16.7
%
(0.8
)
L&M
5.3
%
5.6
%
(0.3
)
5.4
%
5.6
%
(0.2
)
Chesterfield
5.5
%
5.5
%
—
5.5
%
5.5
%
—
Philip Morris
2.0
%
2.2
%
(0.2
)
2.1
%
2.2
%
(0.1
)
Heated Tobacco Units
7.3
%
5.3
%
2.0
7.3
%
5.5
%
1.8
Others
2.9
%
3.0
%
(0.1
)
3.0
%
3.1
%
(0.1
)
Total EU
38.8
%
38.3
%
0.5
39.3
%
38.6
%
0.7
Note: Sum may not foot due to
roundings.
Third-Quarter
The estimated total market in the EU increased by 0.6% to 133.0
billion units, primarily driven by:
- Poland, up by 10.0%, primarily reflecting a lower estimated
prevalence of illicit trade, as well as higher border sales
(largely due to the easing of pandemic-related measures); and
- Romania, up by 8.4%, mainly reflecting a lower estimated
prevalence of illicit trade, as well as higher border sales
(largely due to the easing of pandemic-related measures);
partly offset by
- the U.K., down by 15.0%, notably reflecting the impact of
increased out-bound tourism compared to the pandemic-affected prior
year period.
PMI's total shipment volume increased by 3.9% to 51.0 billion
units, mainly driven by:
- Italy, up by 6.7%, mainly reflecting a higher market share
driven by HTUs, as well as a higher total market;
- Poland, up by 17.1%, primarily reflecting the higher total
market and a higher market share driven by HTUs; and
- Romania, up by 51.4%. Excluding the net favorable impact of
estimated distributor inventory movements, total in-market sales
volume increased by 26.8%, mainly reflecting a higher market share
driven by HTUs, as well as the higher total market.
Nine Months Year-to-Date
The estimated total market in the EU increased by 2.2% to 369.0
billion units, primarily driven by:
- Italy, up by 3.9%, mainly reflecting the impact on adult smoker
average daily consumption of the easing of pandemic-related
measures (particularly in the first half of the year);
- Poland, up by 15.3%, primarily reflecting the same factors as
in the quarter; and
- Romania, up by 9.7%, mainly reflecting the same factors as in
the quarter;
partly offset by
- Germany, down by 4.0%, primarily reflecting the impact of
excise tax-driven price increases and higher cross-border
(non-domestic) purchases due to the easing of pandemic-related
measures; and
- the U.K., down by 12.5%, primarily reflecting the same factor
as in the quarter.
PMI's total shipment volume increased by 4.2% to 146.6 billion
units, mainly driven by:
- Italy, up by 6.1%, primarily reflecting the same factors as in
the quarter;
- Poland, up by 19.1%, mainly reflecting the same factors as in
the quarter; and
- Romania, up by 42.6%. Excluding the net favorable impact of
estimated distributor inventory movements, total in-market sales
volume increased by 31.6%, mainly reflecting the same factors as in
the quarter.
EASTERN EUROPE REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,109
$
941
17.9
%
9.5
%
168
79
—
119
(30
)
—
Operating Income
$
425
$
338
25.7
%
3.8
%
87
74
—
119
(52
)
(54
)
Asset Impairment & Exit Costs
—
(2
)
+100
%
+100
%
2
—
—
—
—
2
Charges related to the war in Ukraine
(6
)
—
—
%
—
%
(6
)
—
—
—
—
(6
)
Costs associated with Swedish Match AB
offer
(23
)
—
—
%
—
%
(23
)
—
—
—
—
(23
)
Adjusted Operating Income
$
454
$
340
33.5
%
11.8
%
114
74
—
119
(52
)
(27
)
Adjusted Operating Income
Margin
40.9
%
36.1
%
4.8
pp
0.8
pp
Net revenues increased by 9.5% on an organic basis, reflecting:
a favorable pricing variance, primarily driven by higher
combustible pricing; partly offset by unfavorable volume/mix,
mainly due to lower cigarette volume, partially offset by higher
HTU volume.
During the quarter, Russia and Ukraine accounted for around 71%
of PMI's total net revenues in the Region. Pro forma net revenues
increased by 20.5% on an organic basis, as detailed in Schedule
11.
Operating income increased by 3.8%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer.
Adjusted operating income increased by 11.8% on an organic
basis, mainly reflecting: a favorable pricing variance; and lower
marketing, administration and research costs; partly offset by
unfavorable volume/mix, primarily due to the same factors as for
net revenues; and higher manufacturing costs. Adjusted operating
income margin increased by 0.8 points on an organic basis.
On an organic basis, pro forma adjusted operating income and pro
forma adjusted operating income margin increased by 33.6% and 4.2
points, respectively, as detailed in Schedule 11.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
2,733
$
2,632
3.8
%
2.9
%
101
25
—
244
(168
)
—
Operating Income
$
860
$
913
(5.8
)%
(13.5
)%
(53
)
70
—
244
(147
)
(220
)
Asset Impairment & Exit Costs
—
(11
)
+100
%
+100
%
11
—
—
—
—
11
Amortization and Impairment of
Intangibles
(1
)
(1
)
—
%
—
%
—
—
—
—
—
—
Charges related to the war in Ukraine
(128
)
—
—
%
—
%
(128
)
—
—
—
—
(128
)
Costs associated with Swedish Match AB
offer
(29
)
—
—
%
—
%
(29
)
—
—
—
—
(29
)
Adjusted Operating Income
$
1,018
$
925
10.1
%
2.5
%
93
70
—
244
(147
)
(74
)
Adjusted Operating Income
Margin
37.2
%
35.1
%
2.1
pp
(0.1
)pp
Net revenues increased by 2.9% on an organic basis, reflecting:
a favorable pricing variance, primarily driven by higher
combustible pricing; partly offset by unfavorable volume/mix,
mainly due to lower cigarette volume and unfavorable cigarette
mix.
During the September year-to-date period, Russia and Ukraine
accounted for around 69% of PMI's total net revenues in the Region.
Pro forma net revenues increased by 12.5% on an organic basis, as
detailed in Schedule 11.
Operating income decreased by 13.5%, excluding currency and
acquisitions, which included the impact of 2022 charges related to
the war in Ukraine and costs associated with the Swedish Match AB
offer.
Adjusted operating income increased by 2.5% on an organic basis,
primarily reflecting: a favorable pricing variance; partly offset
by unfavorable volume/mix, mainly due to the same factors as for
net revenues; and higher manufacturing costs. Adjusted operating
income margin decreased by 0.1 point on an organic basis.
On an organic basis, pro forma adjusted operating income and pro
forma adjusted operating income margin increased by 15.7% and 1.1
points, respectively, as detailed in Schedule 11.
Total Market, PMI Shipment & Market Share
Commentaries
Given the company's intention to exit the Russian market and the
impact of the war in Ukraine on business operations in the country,
PMI's references to the total market estimate for the Eastern
Europe Region exclude Russia and Ukraine.
The company's reported shipment volume, presented in the table
below, includes Russia and Ukraine.
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
22,547
25,020
(9.9)%
61,694
67,771
(9.0)%
Heated Tobacco Units
6,487
6,119
6.0%
18,275
18,594
(1.7)%
Total Eastern Europe
29,034
31,139
(6.8)%
79,969
86,365
(7.4)%
Third-Quarter
The pro forma estimated total market in Eastern Europe
increased, mainly driven by:
- Kazakhstan, up by 5.5%. Excluding the net unfavorable impact of
estimated trade inventory movements, total in-market sales volume
decreased by 0.9%; and
- Southeast Europe, up by 2.8%, mainly reflecting increased
in-bound travel, the impact on adult smoker average daily
consumption of the easing of pandemic-related measures and a lower
estimated prevalence of illicit trade.
PMI's total shipment volume decreased by 6.8% to 29.0 billion
units, primarily due to:
- Russia, down by 5.6%, due to cigarettes; and
- Ukraine, down by 37.0%, due to cigarettes and HTUs;
partly offset by
- Kazakhstan, up by 19.7%, or by 11.0% excluding the net
favorable impact of estimated distributor inventory movements,
primarily driven by a higher market share for cigarettes and HTUs,
as well as the higher total market.
During the quarter, Russia and Ukraine accounted for around 70%
of PMI's total shipment volume in the Region. Pro forma total
shipment volume, excluding Russia and Ukraine, increased by 6.8%,
as detailed in Appendix 4.
Nine Months Year-to-Date
The pro forma estimated total market in Eastern Europe
increased, mainly driven by:
- Southeast Europe, up by 7.5%, mainly reflecting the same
factors as in the quarter;
partly offset by
- Central Asia, down by 11.0%, primarily reflecting a higher
estimated prevalence of illicit trade following excise tax-driven
price increases in July 2021.
PMI's total shipment volume decreased by 7.4% to 80.0 billion
units, primarily due to:
- Russia, down by 6.5%, due to cigarettes and HTUs; and
- Ukraine, down by 29.6%, due to cigarettes and HTUs.
During the first nine months of 2022, Russia and Ukraine
accounted for around 71% of PMI's total shipment volume in the
Region. Pro forma total shipment volume, excluding Russia and
Ukraine, increased by 2.5%, as detailed in Appendix 4.
MIDDLE EAST & AFRICA REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
980
$
945
3.7
%
9.7
%
35
(57
)
—
22
54
16
Operating Income
$
432
$
388
11.3
%
11.9
%
44
(2
)
—
22
46
(22
)
Asset Impairment & Exit Costs
—
(3
)
+100
%
+100
%
3
—
—
—
—
3
Amortization and Impairment of
Intangibles
(2
)
(2
)
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(24
)
—
—
%
—
%
(24
)
—
—
—
—
(24
)
Adjusted Operating Income
$
458
$
393
16.5
%
17.0
%
65
(2
)
—
22
46
(1
)
Adjusted Operating Income
Margin
46.7
%
41.6
%
5.1
pp
2.8
pp
Net revenues increased by 9.7% on an organic basis, primarily
reflecting: favorable volume/mix, mainly driven by higher HTU
volume and favorable cigarette volume/mix; and a favorable pricing
variance, driven by combustible pricing.
Operating income increased by 11.9%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer.
Adjusted operating income increased by 17.0% on an organic
basis, primarily reflecting: favorable volume/mix, mainly driven by
the same factors as for net revenues; and a favorable pricing
variance. Adjusted operating income margin increased by 2.8 points
on an organic basis.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
2,977
$
2,306
29.1
%
40.0
%
671
(251
)
—
205
440
277
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Adjusted Net Revenues
$
2,977
$
2,552
16.7
%
26.5
%
425
(251
)
—
205
440
31
Net Revenues
$
2,977
$
2,306
29.1
%
40.0
%
671
(251
)
—
205
440
277
Operating Income
$
1,451
$
739
96.3
%
+100
%
712
(121
)
—
205
353
275
Asset Impairment & Exit Costs
—
(13
)
+100
%
+100
%
13
—
—
—
—
13
Amortization and Impairment of
Intangibles
(6
)
(6
)
—
%
—
%
—
—
—
—
—
—
Saudi Arabia Customs Assessments
—
(246
)
+100
%
+100
%
246
—
—
—
—
246
Costs associated with Swedish Match AB
offer
(30
)
—
—
%
—
%
(30
)
—
—
—
—
(30
)
Adjusted Operating Income
$
1,487
$
1,004
48.1
%
60.2
%
483
(121
)
—
205
353
46
Adjusted Operating Income
Margin
49.9
%
39.3
%
10.6
pp
10.5
pp
Net revenues increased by 40.0%, excluding currency and
acquisitions, notably reflecting a favorable comparison related to
the Saudi Arabia customs assessments of $246 million in 2021, shown
in "Cost/Other".
Adjusted net revenues increased by 26.5% on an organic basis, as
detailed above, reflecting: favorable volume/mix, primarily driven
by higher cigarette volume, higher HTU volume and favorable
cigarette mix; and a favorable pricing variance, mainly driven by
combustible pricing.
Operating income increased by +100%, excluding currency and
acquisitions, which included a favorable comparison related to the
Saudi Arabia customs assessments in 2021 (as noted above for net
revenues), partly offset by the impact of 2022 costs associated
with the Swedish Match AB offer.
Adjusted operating income increased by 60.2% on an organic
basis, mainly reflecting: favorable volume/mix, primarily driven by
the same factors as for net revenues; a favorable pricing variance;
and lower marketing, administration and research costs; partly
offset by higher manufacturing costs. Adjusted operating income
margin increased by 10.5 points on an organic basis.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
34,336
35,166
(2.4)%
98,351
93,155
5.6%
Heated Tobacco Units
1,018
577
76.4%
3,073
1,485
+100%
Total Middle East & Africa
35,354
35,743
(1.1)%
101,424
94,640
7.2%
Third-Quarter
The estimated total market in the Middle East & Africa
decreased, mainly due to:
- Egypt, down by 4.5%, primarily reflecting a higher estimated
prevalence of illicit trade and the impact of price increases in
the first half of 2022; and
- Turkey, down by 13.1%, mainly reflecting a higher estimated
prevalence of illicit trade, partly offset by the impact of
increased in-bound tourism;
partly offset by
- International Duty Free, up by 41.6%, primarily reflecting the
impact of reduced government travel restrictions and increased
passenger traffic in certain geographies.
PMI's total shipment volume decreased by 1.1% to 35.4 billion
units, mainly due to:
- Turkey, down by 6.9%, primarily reflecting the lower total
market, partially offset by a higher market share, driven by
cigarettes;
partly offset by
- PMI Duty Free, up by 30.6%, or by 42.2% excluding the net
unfavorable impact of estimated distributor inventory movements,
reflecting the higher total market and a higher market share.
Excluding the net unfavorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume increased
by 3.5%.
Nine Months Year-to-Date
The estimated total market in the Middle East & Africa
decreased, mainly due to:
- Algeria, down by 11.5%, primarily reflecting industry supply
chain disruptions, as well as the impact of excise tax-driven price
increases in the first quarter of 2021; and
- Turkey, down by 5.7%, mainly reflecting a higher estimated
prevalence of illicit trade, partly offset by the impact on adult
smoker average daily consumption of the easing of pandemic-related
measures, coupled with increased in-bound tourism;
partly offset by
- International Duty Free, up by 42.1%, reflecting the same
factors as in the quarter.
PMI's total shipment volume increased by 7.2% to 101.4 billion
units, mainly driven by:
- PMI Duty Free, up by 94.4%, or by 47.6% excluding the net
favorable impact of estimated distributor inventory movements
(primarily due to cigarettes), reflecting the same factors as in
the quarter.
SOUTH & SOUTHEAST ASIA REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,138
$
1,065
6.9
%
13.9
%
73
(75
)
—
68
80
—
Operating Income
$
384
$
348
10.3
%
19.3
%
36
(31
)
—
68
(5
)
4
Asset Impairment & Exit Costs
—
(4
)
+100
%
+100
%
4
—
—
—
—
4
Amortization and Impairment of
Intangibles
(4
)
(5
)
20.0
%
20.0
%
1
—
—
—
1
Costs associated with Swedish Match AB
offer
(24
)
—
—
%
—
%
(24
)
—
—
—
(24
)
Adjusted Operating Income
$
412
$
357
15.4
%
24.1
%
55
(31
)
—
68
(5
)
23
Adjusted Operating Income
Margin
36.2
%
33.5
%
2.7
pp
3.0
pp
Net revenues increased by 13.9% on an organic basis, reflecting:
favorable volume/mix, primarily driven by favorable cigarette mix
and higher cigarette volume; and a favorable pricing variance,
driven by combustible pricing.
Operating income increased by 19.3%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer.
Adjusted operating income increased by 24.1% on an organic
basis, primarily reflecting: a favorable pricing variance and lower
marketing, administration and research costs.
Adjusted operating income margin increased by 3.0 points on the
same basis.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
3,295
$
3,284
0.3
%
5.1
%
11
(158
)
—
(60
)
229
—
Operating Income
$
1,135
$
1,208
(6.0
)%
0.4
%
(73
)
(78
)
—
(60
)
46
19
Asset Impairment & Exit Costs
—
(17
)
+100
%
+100
%
17
—
—
—
—
17
Amortization and Impairment of
Intangibles
(13
)
(13
)
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(29
)
—
—
%
—
%
(29
)
—
—
—
—
(29
)
Adjusted Operating Income
$
1,177
$
1,238
(4.9
)%
1.4
%
(61
)
(78
)
—
(60
)
46
31
Adjusted Operating Income
Margin
35.7
%
37.7
%
(2.0
)pp
(1.4
)pp
Net revenues increased by 5.1% on an organic basis, reflecting:
favorable volume/mix, primarily driven by higher cigarette volume
and favorable cigarette mix; partly offset by an unfavorable
pricing variance, mainly due to combustible pricing.
Operating income increased by 0.4%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer, partly offset by a favorable
comparison versus the prior year period related to asset impairment
and exit costs.
Adjusted operating income increased by 1.4% on an organic basis,
primarily reflecting: favorable volume/mix, mainly driven by higher
cigarette volume, partly offset by lower cigarette mix; and lower
marketing, administration and research costs; partly offset by an
unfavorable pricing variance.
Adjusted operating income margin decreased by 1.4 points on the
same basis.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
37,176
35,578
4.5%
109,391
105,787
3.4%
Heated Tobacco Units
125
79
58.2%
315
151
+100%
Total South & Southeast
Asia
37,301
35,657
4.6%
109,706
105,938
3.6%
Third-Quarter
The estimated total market in South & Southeast Asia
increased, mainly driven by:
- India, up by 21.3%, primarily reflecting a favorable comparison
versus the prior year period, during which pandemic-related
restrictions impacted the movement of certain products, including
tobacco; and
- Indonesia, up by 11.5%, mainly reflecting the impact on adult
smoker consumption of the easing of pandemic-related measures,
which drove growth in the tax-advantaged 'below tier one'
segment;
partly offset by
- Bangladesh, down by 9.6%, primarily reflecting the impact of
second-quarter 2022 excise tax-driven price increases; and
- the Philippines, down by 9.7%, mainly reflecting the impact of
first-quarter 2022 excise tax-driven price increases.
PMI's total shipment volume increased by 4.6% to 37.3 billion
units, mainly driven by:
- Indonesia, up by 12.1%, primarily reflecting the higher total
market and a higher market share (mainly driven by share growth for
PMI's premium and hand-rolled portfolio, partly offset by adult
smoker down-trading to the 'below tier one' segment as a result of
significantly lower retail prices);
partly offset by
- the Philippines, down by 12.8%, primarily reflecting the lower
total market and a lower market share for cigarettes.
Nine Months Year-to-Date
The estimated total market in South & Southeast Asia
increased, mainly driven by:
- India, up by 17.5%, primarily reflecting the same factor as in
the quarter; and
- Indonesia, up by 8.0%, mainly reflecting the same factor as in
the quarter;
partly offset by
- Bangladesh, down by 13.0%, primarily reflecting the impact of
pandemic-related restrictions on mobility during February 2022, as
well as the impact of second-quarter 2022 excise tax-driven price
increases.
PMI's total shipment volume increased by 3.6% to 109.7 billion
units, mainly driven by:
- India, up by 78.4%, primarily reflecting a higher market share
(driven by geographic expansion) and the higher total market;
and
- Indonesia, up by 7.9%, mainly reflecting the higher total
market;
partly offset by
- the Philippines, down by 4.5%, primarily reflecting the same
factors as in the quarter.
EAST ASIA & AUSTRALIA REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,200
$
1,523
(21.2
)%
(10.6
)%
(323
)
(161
)
—
(26
)
(136
)
—
Operating Income
$
398
$
631
(36.9
)%
(20.3
)%
(233
)
(105
)
—
(26
)
(110
)
8
Asset Impairment & Exit Costs
—
(21
)
+100
%
+100
%
21
—
—
—
—
21
Amortization and Impairment of
Intangibles
(1
)
(1
)
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(39
)
—
—
%
—
%
(39
)
—
—
—
—
(39
)
Adjusted Operating Income
$
438
$
653
(32.9
)%
(16.8
)%
(215
)
(105
)
—
(26
)
(110
)
26
Adjusted Operating Income
Margin
36.5
%
42.9
%
(6.4
)pp
(3.0
)pp
Net revenues decreased by 10.6% on an organic basis, reflecting:
unfavorable volume/mix, mainly due to unfavorable device mix
(primarily due to ILUMA ONE), lower cigarette volume (largely due
to an unfavorable comparison versus Q3 2021 related to the October
2021 excise tax-driven price increases) and lower device volume
(mainly due to an unfavorable comparison versus Q3 2021 associated
with the initial launch of ILUMA); and an unfavorable pricing
variance.
Operating income decreased by 20.3%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer, partly offset by a favorable
comparison versus the prior year period related to asset impairment
and exit costs.
Adjusted operating income decreased by 16.8% on an organic
basis, mainly reflecting: unfavorable volume/mix, primarily due to
lower cigarette volume and unfavorable HTU mix; higher
manufacturing costs (mainly due to higher logistics costs); and an
unfavorable pricing variance; partly offset by lower marketing,
administration and research costs.
Adjusted operating income margin decreased by 3.0 points on an
organic basis.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
3,810
$
4,509
(15.5
)%
(7.1
)%
(699
)
(379
)
—
31
(351
)
—
Operating Income
$
1,315
$
2,041
(35.6
)%
(22.8
)%
(726
)
(261
)
—
31
(547
)
51
Asset Impairment & Exit Costs
—
(67
)
+100
%
+100
%
67
—
—
—
—
67
Amortization and Impairment of
Intangibles
(2
)
(2
)
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(49
)
—
—
%
—
%
(49
)
—
—
—
—
(49
)
Adjusted Operating Income
$
1,366
$
2,110
(35.3
)%
(22.9
)%
(744
)
(261
)
—
31
(547
)
33
Adjusted Operating Income
Margin
35.9
%
46.8
%
(10.9
)pp
(8.0
)pp
Net revenues decreased by 7.1% on an organic basis, reflecting:
unfavorable volume/mix, mainly due to lower HTU volume (primarily
in Japan, as the company manages temporary production and supply
chain impacts), unfavorable device mix, unfavorable cigarette mix
and lower cigarette volume, partly offset by higher device volume.
Pricing variance in the period was favorable.
Operating income decreased by 22.8%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer, more than offset by a favorable
comparison versus the prior year period related to asset impairment
and exit costs.
Adjusted operating income decreased by 22.9% on an organic
basis, mainly reflecting: unfavorable volume/mix, primarily due to
lower HTU volume, unfavorable mix for cigarettes, devices and HTUs,
and lower cigarette volume; and higher manufacturing costs; partly
offset by lower marketing, administration and research costs; and a
favorable pricing variance.
Adjusted operating income margin decreased by 8.0 points on an
organic basis. The margin decline was primarily due to the impact
of higher device sales; the growth of ILUMA within the Region's
smoke-free product portfolio mix, with its higher initial unit cost
of devices and consumables; the timing of HTU shipments to Japan;
and higher logistics costs, including costs related to the use of
air freight to Japan.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
10,496
11,120
(5.6)%
32,440
33,450
(3.0)%
Heated Tobacco Units
9,542
9,435
1.1%
27,016
28,478
(5.1)%
Total East Asia & Australia
20,038
20,555
(2.5)%
59,456
61,928
(4.0)%
Third-Quarter
The estimated total market in East Asia & Australia,
excluding China, decreased, mainly due to:
- Japan, down by 10.4%, primarily reflecting the impact of the
October 2021 excise tax-driven price increase.
PMI's total shipment volume decreased by 2.5% to 20.0 billion
units, mainly due to:
- Japan, down by 3.2%, primarily reflecting the lower total
market, partly offset by a higher market share (driven by
HTUs).
Nine Months Year-to-Date
The estimated total market in East Asia & Australia,
excluding China, decreased, mainly due to:
- Japan, down by 5.4%, primarily reflecting the same factor as in
the quarter;
partly offset by
- South Korea, up by 1.7%, primarily reflecting a favorable
comparison versus the prior year period due to the easing of
pandemic-related measures.
PMI's total shipment volume decreased by 4.0% to 59.5 billion
units, mainly due to:
- Japan, down by 5.1%. Excluding the net unfavorable impact of
estimated distributor inventory movements (primarily due to HTUs),
total in-market sales volume decreased by 0.1%, reflecting the
lower total market, essentially offset by a higher market
share.
Excluding the net unfavorable impact of estimated distributor
inventory movements, PMI's total in-market sales volume decreased
by 0.7%.
AMERICAS REGION
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
474
$
456
3.9
%
5.5
%
18
(7
)
—
30
(4
)
(1
)
Operating Income
$
85
$
121
(29.8
)%
(31.4
)%
(36
)
2
—
30
3
(71
)
Asset Impairment & Exit Costs
—
(1
)
+100
%
+100
%
1
—
—
—
—
1
Amortization and Impairment of
Intangibles
(2
)
(2
)
—
%
—
%
—
—
—
—
—
—
Costs associated with Swedish Match AB
offer
(11
)
—
—
%
—
%
(11
)
—
—
—
—
(11
)
Adjusted Operating Income
$
98
$
124
(21.0
)%
(22.6
)%
(26
)
2
—
30
3
(61
)
Adjusted Operating Income
Margin
20.7
%
27.2
%
(6.5
)pp
(7.2
)pp
Net revenues increased by 5.5% on an organic basis, primarily
reflecting: a favorable pricing variance, driven by combustible
pricing. Volume/mix was slightly unfavorable, mainly reflecting
unfavorable cigarette mix and lower device volume, largely offset
by higher cigarette volume.
Operating income decreased by 31.4%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer.
Adjusted operating income decreased by 22.6% on an organic
basis, mainly reflecting: higher marketing, administration and
research costs; and higher manufacturing costs; partly offset by a
favorable pricing variance. Volume/mix was slightly favorable,
reflecting higher cigarette volume, largely offset by unfavorable
cigarette mix.
Adjusted operating income margin decreased by 7.2 points on the
same basis. The margin decline was primarily due to incremental
investments in the U.S. market, including expenses related to
domestic manufacturing.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
1,367
$
1,320
3.6
%
4.8
%
47
(16
)
—
73
(12
)
2
Operating Income
$
336
$
367
(8.4
)%
(9.5
)%
(31
)
4
—
73
(5
)
(103
)
Asset Impairment & Exit Costs
—
(6
)
+100
%
+100
%
6
—
—
—
—
6
Amortization and Impairment of
Intangibles
(6
)
(7
)
14.3
%
14.3
%
1
—
—
—
—
1
Costs associated with Swedish Match AB
offer
(13
)
—
—
%
—
%
(13
)
—
—
—
—
(13
)
Adjusted Operating Income
$
355
$
380
(6.6
)%
(7.6
)%
(25
)
4
—
73
(5
)
(97
)
Adjusted Operating Income
Margin
26.0
%
28.8
%
(2.8
)pp
(3.4
)pp
Net revenues increased by 4.8% on an organic basis, primarily
reflecting: a favorable pricing variance, driven by combustible
pricing; partly offset by unfavorable volume/mix, mainly due to
unfavorable cigarette mix and lower device volume, partially offset
by higher cigarette volume.
Operating income decreased by 9.5%, excluding currency and
acquisitions, which included the impact of 2022 costs associated
with the Swedish Match AB offer, partly offset by a favorable
comparison versus the prior year period related to asset impairment
and exit costs.
Adjusted operating income decreased by 7.6% on an organic basis,
mainly reflecting: higher manufacturing costs; and higher
marketing, administration and research costs; partly offset by a
favorable pricing variance. Volume/mix was slightly unfavorable,
mainly due to unfavorable cigarette mix, largely offset by higher
cigarette volume.
Adjusted operating income margin decreased by 3.4 points on the
same basis.
Total Market, PMI Shipment & Market Share
Commentaries
PMI Shipment Volume
Third-Quarter
Nine Months
Year-to-Date
(million units)
2022
2021
Change
2022
2021
Change
Cigarettes
16,666
15,994
4.2%
47,541
46,092
3.1%
Heated Tobacco Units
125
221
(43.4)%
339
466
(27.3)%
Total Americas
16,791
16,215
3.6%
47,880
46,558
2.8%
Third-Quarter
The estimated total market in Americas, excluding the U.S.,
increased, primarily driven by:
- Argentina, up by 5.4%, mainly reflecting a favorable comparison
due to the impact on adult smoker average daily consumption of
strict pandemic-related measures implemented during 2021;
- Brazil, up by 5.8%, primarily reflecting a lower estimated
prevalence of illicit trade; and
- Mexico, up by 4.3%, mainly reflecting the impact on adult
smoker average daily consumption of the easing of pandemic-related
measures, coupled with the impact of increased in-bound
tourism;
partly offset by
- Canada, down by 10.1%, notably reflecting the impact of price
increases and out-switching from cigarettes to e-vapor
products.
PMI's total shipment volume increased by 3.6% to 16.8 billion
units, mainly driven by:
- Brazil, up by 17.5%, mainly reflecting the higher total market
and a higher market share driven by Chesterfield; and
- Mexico, up by 4.8%, primarily reflecting the higher total
market.
Nine Months Year-to-Date
The estimated total market in Americas, excluding the U.S.,
increased, primarily driven by:
- Argentina, up by 4.9% mainly reflecting the same factor as in
the quarter; and
- Brazil, up by 7.5%, primarily reflecting the same factor as in
the quarter;
partly offset by
- Canada, down by 13.4%, notably reflecting the same factors as
in the quarter.
PMI's total shipment volume increased by 2.8% to 47.9 billion
units, mainly driven by:
- Brazil, up by 13.7%, primarily reflecting the same factors as
in the quarter; and
- Mexico, up by 2.7%, mainly reflecting a higher market share for
cigarettes;
partly offset by
- Argentina, down by 1.2%, primarily reflecting a lower market
share due to adult smoker downtrading to ultra-low-price brands
produced by local manufacturers.
WELLNESS AND HEALTHCARE
In the third quarter of 2021, PMI acquired Fertin Pharma A/S,
Vectura Group plc. and OtiTopic, Inc. On March 31, 2022, PMI
launched a new Wellness and Healthcare business -- Vectura Fertin
Pharma -- consolidating these entities. The operating results of
this business are reported in the Wellness and Healthcare segment
(formerly the Other category).
Third-Quarter
Financial Summary
-
Quarters Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
57
$
—
—
%
—
%
57
(1
)
47
11
—
—
Operating Income / (Loss)
$
(151
)
$
(51
)
-(100
)%
-(100
)%
(100
)
2
(24
)
11
—
(89
)
Asset Acquisition Cost
—
(51
)
+100
%
+100
%
51
—
—
—
—
51
Amortization and Impairment of
Intangibles
(121
)
—
—
%
—
%
(121
)
—
(7
)
—
—
(114
)
Adjusted Operating Income /
(Loss)
$
(30
)
$
—
—
%
—
%
(30
)
2
(17
)
11
—
(26
)
Adjusted Operating Income / (Loss)
Margin
(52.6
)%
n/a
—
pp
—
pp
PMI recorded net revenues of $57 million in the Wellness and
Healthcare segment, with an operating loss of $151 million,
primarily reflecting a $112 million impairment on acquired
intangibles (see "Impairment of Acquired Intangibles" section on
page 7 for additional information), partly offset by a
favorable comparison versus the prior year period related to asset
acquisition cost. PMI recorded an adjusted operating loss of $30
million in the segment, partly reflecting investments in research
and development, with an adjusted operating loss margin of
52.6%.
Nine Months Year-to-Date
Financial Summary
-
Nine Months Ended
September 30,
Change
Fav./(Unfav.)
Variance
Fav./(Unfav.)
2022
2021
Total
Excl. Curr. &
Acquis.
Total
Cur- rency
Acqui- sitions
Price
Vol/ Mix
Cost/ Other
(in millions)
Net Revenues
$
199
$
—
—
%
—
%
199
(1
)
189
11
—
—
Operating Income / (Loss)
$
(216
)
$
(51
)
-(100
)%
-(100
)%
(165
)
2
(72
)
11
—
(106
)
Asset Acquisition Cost
—
(51
)
+100
%
+100
%
51
—
—
—
—
51
Amortization and Impairment of
Intangibles
(158
)
—
—
%
—
%
(158
)
—
(44
)
—
—
(114
)
Adjusted Operating Income /
(Loss)
$
(58
)
$
—
—
%
—
%
(58
)
2
(28
)
11
—
(43
)
Adjusted Operating Income / (Loss)
Margin
(29.1
)%
n/a
—
pp
—
pp
PMI recorded net revenues of $199 million in the Wellness and
Healthcare segment, with an operating loss of $216 million,
primarily reflecting a $112 million impairment on acquired
intangibles (as noted above for the quarter), partly offset by a
favorable comparison versus the prior year period related to asset
acquisition cost. PMI recorded an adjusted operating loss of $58
million in the segment, partly reflecting investments in research
and development, as well as expenses related to employee retention
programs, with an adjusted operating loss margin of 29.1%.
Philip Morris International: Delivering a Smoke-Free
Future
Philip Morris International (PMI) is a leading international
tobacco company working to deliver a smoke-free future and evolving
its portfolio for the long term to include products outside of the
tobacco and nicotine sector. The company’s current product
portfolio primarily consists of cigarettes and smoke-free products,
including heat-not-burn, vapor and oral nicotine products, which
are sold in markets outside the U.S. Since 2008, PMI has invested
more than USD 9 billion to develop, scientifically substantiate and
commercialize innovative smoke-free products for adults who would
otherwise continue to smoke, with the goal of completely ending the
sale of cigarettes. This includes the building of world-class
scientific assessment capabilities, notably in the areas of
pre-clinical systems toxicology, clinical and behavioral research,
as well as post-market studies. The U.S. Food and Drug
Administration (FDA) has authorized the marketing of versions of
PMI’s IQOS Platform 1 devices and consumables as Modified Risk
Tobacco Products (MRTPs), finding that exposure modification orders
for these products are appropriate to promote the public health. As
of September 30, 2022, excluding Russia and Ukraine, PMI's
smoke-free products were available for sale in 70 markets, and PMI
estimates that approximately 13.5 million adults around the world
had already switched to IQOS and stopped smoking. With a strong
foundation and significant expertise in life sciences, in February
2021 PMI announced its ambition to expand into wellness and
healthcare areas and deliver innovative products and solutions that
aim to address unmet consumer and patient needs. For more
information, please visit www.pmi.com and www.pmiscience.com.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and
other forward-looking statements, including statements regarding
business plans and strategies. Achievement of future results is
subject to risks, uncertainties and inaccurate assumptions. In the
event that risks or uncertainties materialize, or underlying
assumptions prove inaccurate, actual results could vary materially
from those contained in such forward-looking statements. Pursuant
to the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995, PMI is identifying important factors
that, individually or in the aggregate, could cause actual results
and outcomes to differ materially from those contained in any
forward-looking statements made by PMI.
PMI's business risks include: excise tax increases and
discriminatory tax structures; increasing marketing and regulatory
restrictions that could reduce our competitiveness, eliminate our
ability to communicate with adult consumers, or ban certain of our
products in certain markets or countries; health concerns relating
to the use of tobacco and other nicotine-containing products and
exposure to environmental tobacco smoke; litigation related to
tobacco use and intellectual property; intense competition; the
effects of global and individual country economic, regulatory and
political developments, natural disasters and conflicts; the impact
and consequences of Russia's invasion of Ukraine; changes in adult
smoker behavior; the impact of COVID-19 on PMI's business; lost
revenues as a result of counterfeiting, contraband and cross-border
purchases; governmental investigations; unfavorable currency
exchange rates and currency devaluations, and limitations on the
ability to repatriate funds; adverse changes in applicable
corporate tax laws; adverse changes in the cost, availability, and
quality of tobacco and other agricultural products and raw
materials, as well as components and materials for our electronic
devices; and the integrity of its information systems and
effectiveness of its data privacy policies. PMI's future
profitability may also be adversely affected should it be
unsuccessful in its attempts to produce and commercialize
reduced-risk products or if regulation or taxation do not
differentiate between such products and cigarettes; if it is unable
to successfully introduce new products, promote brand equity, enter
new markets or improve its margins through increased prices and
productivity gains; if it is unable to expand its brand portfolio
internally or through acquisitions and the development of strategic
business relationships; or if it is unable to attract and retain
the best global talent, including women or diverse candidates.
Future results are also subject to the lower predictability of our
reduced-risk product category's performance.
In addition, important factors that could cause actual results
to differ materially from those indicated by forward-looking
statements include risks and uncertainties related to: the
agreement with Altria and the benefits of the transaction; the
possibility that expected benefits related to recent or pending
acquisitions, including the proposed transaction with Swedish
Match, may not materialize as expected; the proposed transaction
with Swedish Match not being timely completed, if completed at all;
regulatory approvals required for the Swedish Match transaction not
being timely obtained, if obtained at all, or being obtained
subject to conditions; prior to the completion of the transaction,
Swedish Match’s business experiencing disruptions due to
transaction-related uncertainty or other factors making it more
difficult to maintain relationships with employees, customers,
licensees, other business partners or governmental entities;
difficulty retaining key Swedish Match employees; the outcome of
any legal proceedings related to the proposed transaction with
Swedish Match; and the parties being unable to successfully
implement integration strategies or to achieve expected synergies
and operating efficiencies within the expected time-frames or at
all.
Important information for U.S. Swedish Match shareholders: The
offer described in this release is made for the issued and
outstanding shares of Swedish Match, a company incorporated under
Swedish law, and is subject to Swedish disclosure and procedural
requirements, which may be different from those of the United
States. The offer is made in the United States pursuant to Section
14(e) of the U.S. Securities Exchange Act of 1934, as amended, and
Regulation 14E thereunder, to the extent applicable, and otherwise
in compliance with the disclosure and procedural requirements of
Swedish law, including with respect to withdrawal rights, the offer
timetable, notices of extensions, announcements of results,
settlement procedures (including as regards to the time when
payment of the consideration is rendered) and waivers of
conditions, which may be different from requirements or customary
practices in relation to U.S. domestic tender offers. Swedish
Match’s financial statements, including any included in any
documents relating to the offer, have been or will be prepared in
accordance with IFRS and may not be comparable to the financial
statements or financial information of companies in the United
States or other companies whose financial statements are prepared
in accordance with U.S. GAAP. To the extent permissible under
applicable law or regulations, PMI and its affiliates or its
brokers and its brokers' affiliates (acting as agents for PMI or
its affiliates, as applicable) may from time to time and during the
pendency of the offer, and other than pursuant to the offer,
directly or indirectly purchase or arrange to purchase shares of
Swedish Match outside the United States, or any securities that are
convertible into, exchangeable for or exercisable for such shares.
These purchases may occur either in the open market at prevailing
prices or in private transactions at negotiated prices, and
information about such purchases will be disclosed by means of a
press release or other means reasonably calculated to inform
shareholders of Swedish Match domiciled in the U.S. (“U.S.
Holders”) of such information, to the extent required by applicable
laws and regulations. The receipt of cash pursuant to the offer by
a U.S. Holder may be a taxable transaction for U.S. federal income
tax purposes and under applicable U.S. state and local, as well as
foreign and other, tax laws. Each shareholder is urged to consult
an independent professional adviser regarding the tax consequences
of accepting the offer.
PMI is further subject to other risks detailed from time to time
in its publicly filed documents, including PMI's Annual Report on
Form 10-K for the fourth quarter and year ended December 31, 2021,
the Form 10-Q for the quarter ended June 30, 2022, and the Form
10-Q for the quarter ended September 30, 2022, which will be filed
in the coming days. PMI cautions that the foregoing list of
important factors is not a complete discussion of all potential
risks and uncertainties. PMI does not undertake to update any
forward-looking statement that it may make from time to time,
except in the normal course of its public disclosure
obligations.
Key Terms, Definitions and Explanatory Notes
General
- "PMI" refers to Philip Morris International Inc. and its
subsidiaries. Trademarks and service marks that are the registered
property of, or licensed by, the subsidiaries of PMI, are
italicized.
- Comparisons are made to the same prior-year period unless
otherwise stated.
- References to total industry, total market, PMI shipment volume
and PMI market share performance reflect cigarettes and heated
tobacco units, unless otherwise stated.
- As of the first quarter of 2022, total industry volume, PMI
in-market sales volume and PMI market share for the following
geographies include the cigarillo category in Japan: the total
international market, East Asia & Australia Region, and
Japanese domestic market.
- References to total international market, defined as worldwide
cigarette and heated tobacco unit volume excluding the U.S., total
industry, total market and market shares are PMI estimates for
tax-paid products based on the latest available data from a number
of internal and external sources and may, in defined instances,
exclude the People's Republic of China and/or PMI's duty free
business.
- 2021 and 2022 estimates for total industry volume and market
share in certain geographies reflect limitations on the
availability and accuracy of industry data during pandemic-related
restrictions.
- "Combustible products" is the term PMI uses to refer to
cigarettes and other tobacco products, combined.
- In-market sales, or "IMS," is defined as sales to the retail
channel, depending on the market and distribution model.
- "Total shipment volume" is defined as the combined total of
cigarette shipment volume and heated tobacco unit shipment
volume.
- "Americas" refers to the former Latin America & Canada
segment, which was renamed as the Americas segment as of the third
quarter of 2021. References to "Americas" may, in defined
instances, exclude the U.S.
- "Central Asia" is defined as Kyrgyzstan, Mongolia, Tajikistan
and Uzbekistan.
- "North Africa" is defined as Algeria, Egypt, Libya, Morocco and
Tunisia.
- "The GCC" (Gulf Cooperation Council) is defined as Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates
(UAE).
- "Southeast Europe" is defined as Albania, Bosnia &
Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.
- In the third quarter of 2021, PMI acquired Fertin Pharma A/S,
Vectura Group plc. and OtiTopic, Inc. On March 31, 2022, PMI
launched a new Wellness and Healthcare business consolidating these
entities, Vectura Fertin Pharma. The operating results of this new
business are reported in the Wellness and Healthcare segment. The
business operations of PMI's Wellness and Healthcare segment are
managed and evaluated separately from the geographical
segments.
- Following the deconsolidation of PMI's Canadian subsidiary,
Rothmans, Benson & Hedges, Inc. (RBH) on March 22, 2019, PMI
continues to report the volume of brands sold by RBH for which
other PMI subsidiaries are the trademark owner. These include
HEETS, Next, Philip Morris and Rooftop.
- From time to time, PMI’s shipment volumes are subject to the
impact of distributor inventory movements, and estimated total
industry/market volumes are subject to the impact of inventory
movements in various trade channels that include estimated trade
inventory movements of PMI’s competitors arising from
market-specific factors that significantly distort reported volume
disclosures. Such factors may include changes to the manufacturing
supply chain, shipment methods, consumer demand, timing of excise
tax increases or other influences that may affect the timing of
sales to customers. In such instances, in addition to reviewing PMI
shipment volumes and certain estimated total industry/market
volumes on a reported basis, management reviews these measures on
an adjusted basis that excludes the impact of distributor and/or
estimated trade inventory movements. Management also believes that
disclosing PMI shipment volumes and estimated total industry/market
volumes in such circumstances on a basis that excludes the impact
of distributor and/or estimated trade inventory movements, such as
on an IMS basis, improves the comparability of performance and
trends for these measures over different reporting periods.
Financial
- Net revenues related to combustible products refer to the
operating revenues generated from the sale of these products,
including shipping and handling charges billed to customers, net of
sales and promotion incentives, and excise taxes. PMI recognizes
revenue when control is transferred to the customer, typically
either upon shipment or delivery of goods.
- Net revenues related to RRPs represent the sale of heated
tobacco units, heat-not-burn devices and related accessories, and
other nicotine-containing products, primarily e-vapor and oral
nicotine products, including shipping and handling charges billed
to customers, net of sales and promotion incentives, and excise
taxes. PMI recognizes revenue when control is transferred to the
customer, typically either upon shipment or delivery of goods.
- Net revenues related to Wellness and Healthcare products
primarily consist of operating revenues generated from the sale of
inhaled therapeutics and oral and intra-oral delivery systems that
are included in the operating results of PMI's new Wellness and
Healthcare business, Vectura Fertin Pharma.
- Net revenues related to Smoke-Free Products include RRP net
revenues and Wellness and Healthcare net revenues.
- Adjusted net revenues exclude the impact related to the Saudi
Arabia customs assessments.
- "Cost of sales" consists principally of: tobacco leaf,
non-tobacco raw materials, labor and manufacturing costs; shipping
and handling costs; and the cost of devices produced by third-party
electronics manufacturing service providers. Estimated costs
associated with device warranty programs are generally provided for
in cost of sales in the period the related revenues are
recognized.
- "Marketing, administration and research costs" include the
costs of marketing and selling our products, other costs generally
not related to the manufacture of our products (including general
corporate expenses), and costs incurred to develop new products.
The most significant components of our marketing, administration
and research costs are marketing and sales expenses and general and
administrative expenses.
- "Cost/Other" in the Consolidated Financial Summary table of
total PMI and the six geographical segments of this release
reflects the currency-neutral variances of: cost of sales
(excluding the volume/mix cost component); marketing,
administration and research costs (including asset impairment and
exit costs); and amortization and impairment of intangibles.
“Cost/Other” also includes the currency-neutral net revenue
variance, unrelated to volume/mix and price components,
attributable to: fees for certain distribution rights billed to
customers in certain markets in the Middle East & Africa Region
and the Saudi Arabia customs assessment net revenue
adjustment.
- "Adjusted Operating Income Margin" is calculated as adjusted
operating income, divided by adjusted net revenues.
- "Adjusted EBITDA" is defined as earnings before interest,
taxes, depreciation, amortization and equity (income)/loss in
unconsolidated subsidiaries, excluding asset impairment and exit
costs, impairment of intangibles, and unusual items.
- "Net debt" is defined as total debt, less cash and cash
equivalents.
- Figures and comparisons presented on a pro forma basis exclude
PMI’s operations in Russia and Ukraine.
- Growth rates presented on an organic basis reflect adjusted
results, excluding currency, acquisitions and disposals.
- Management reviews net revenues, operating income, operating
income margin, operating cash flow and earnings per share, or
"EPS," on an adjusted basis, which may exclude the impact of
currency and other items such as acquisitions, asset impairment and
exit costs, tax items and other special items. Additionally,
starting in 2022 and on a comparative basis, for these measures
other than net revenues and operating cash flow, PMI will include
adjustments to add back amortization expense on acquisition related
intangible assets that are recorded as part of purchase accounting
and contribute to PMI’s revenue generation, as well as impairment
of intangible assets, if any. Currency-neutral and organic growth
rates reflect the way management views underlying performance for
these measures. PMI believes that such measures provide useful
insight into underlying business trends and results. Management
reviews these measures because they exclude changes in currency
exchange rates and other factors that may distort underlying
business trends, thereby improving the comparability of PMI’s
business performance between reporting periods. Furthermore, PMI
uses several of these measures in its management compensation
program to promote internal fairness and a disciplined assessment
of performance against company targets. PMI discloses these
measures to enable investors to view the business through the eyes
of management.
- Non-GAAP measures used in this release should neither be
considered in isolation nor as a substitute for the financial
measures prepared in accordance with U.S. GAAP. For a
reconciliation of non-GAAP measures to the most directly comparable
U.S. GAAP measures, see the relevant schedules provided with this
press release.
- U.S. GAAP Treatment of a country as a Highly Inflationary
Economy. Following the categorization of a country by the
International Practices Task Force of the Center for Audit Quality
as having a three-year cumulative inflation rate greater than 100%,
the country is considered highly inflationary in accordance with
U.S. GAAP. For such countries, PMI accounts for the operations of
its local affiliates as highly inflationary, and to treat the U.S.
dollar as the functional currency of the affiliates. Such treatment
was effective July 1, 2018, for Argentina, and April 1, 2022, for
Turkey.
- "Fair value adjustment for equity security investments"
reflects the adjustment resulting from share price movements in
passive investments for publicly traded entities that are not
controlled or influenced by PMI. Under U.S. GAAP, such adjustments
are required, since January 1, 2018, to be reflected directly in
the income statement.
Reduced-Risk Products
- Reduced-risk products (“RRPs”) is the term PMI uses to refer to
products that present, are likely to present, or have the potential
to present less risk of harm to smokers who switch to these
products versus continuing smoking. PMI has a range of RRPs in
various stages of development, scientific assessment and
commercialization. PMI's RRPs are smoke-free products that contain
and/or generate far lower quantities of harmful and potentially
harmful constituents than found in cigarette smoke.
- "Heated tobacco units," or "HTUs," is the term PMI uses to
refer to heated tobacco consumables, which include the company's
HEETS, HEETS Creations, HEETS Dimensions, HEETS Marlboro and HEETS
FROM MARLBORO (defined collectively as HEETS), Marlboro Dimensions,
Marlboro HeatSticks, Parliament HeatSticks, SENTIA and TEREA, as
well as the KT&G-licensed brands, Fiit and Miix (outside of
South Korea).
- Market share for HTUs is defined as the in-market sales volume
for HTUs as a percentage of the total estimated industry sales
volume for cigarettes and HTUs. For Japan, total estimated industry
sales volume also includes cigarillos.
- Unless otherwise stated, all references to IQOS are to PMI's
Platform 1 IQOS devices and heated tobacco consumables.
- IQOS heat-not-burn devices are precisely controlled heating
devices into which a specially designed and proprietary tobacco
units are inserted and heated to generate an aerosol.
- "PMI heat-not-burn products" include licensed KT&G
heat-not-burn products.
- "PMI HTUs" include licensed KT&G HTUs.
- “Total IQOS users” is defined as the estimated number of Legal
Age (minimum 18 years) users of PMI heat-not-burn products, for
which PMI HTUs represented at least a portion of their daily
tobacco consumption over the past seven days. The estimated number
of adults who have "switched to IQOS and stopped smoking" reflects:
- for markets where there are no heat-not-burn products other
than PMI heat-not-burn products: daily individual consumption of
PMI HTUs represents the totality of their daily tobacco consumption
in the past seven days;
- for markets where PMI heat-not-burn products are among other
heat-not-burn products: daily individual consumption of HTUs
represents the totality of their daily tobacco consumption in the
past seven days, of which at least 70% is PMI HTUs.
Note: The above IQOS user metrics reflect PMI estimates, which
are based on consumer claims and sample-based statistical
assessments with an average margin of error of +/-5% at a 95%
Confidence Interval in key volume markets. The accuracy and
reliability of IQOS user metrics may vary based on individual
market maturity and availability of information.
As of December 2020, PMI heat-not-burn products and HTUs include
licensed KT&G heat-not-burn products and HTUs,
respectively.
Appendix 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Key Market Data
Quarters Ended September
30,
Market
Total Market,
bio units
PMI Shipments, bio
units
PMI Market Share, %(2)
Total
Cigarette
HTU
Total
HTU
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
2022
2021
pp Change
2022
2021
pp Change
Total (1) (3)
616.8
612.2
0.8
189.5
188.3
0.6
162.0
164.8
(1.7)
27.5
23.5
17.1
27.7
27.2
0.5
3.7
3.1
0.6
European Union
France
8.5
9.0
(5.7)
3.5
3.7
(7.1)
3.4
3.6
(6.7)
0.1
0.1
(27.7)
43.3
44.0
(0.7)
0.7
0.6
0.1
Germany
20.2
20.5
(1.5)
7.3
7.3
(0.1)
6.6
6.8
(2.8)
0.7
0.6
31.9
36.3
35.8
0.5
3.7
2.8
0.9
Italy
19.4
19.2
1.2
10.0
9.4
6.7
7.2
7.3
(0.8)
2.8
2.1
32.7
53.9
52.9
1.0
13.7
10.8
2.9
Poland
15.4
14.0
10.0
6.2
5.3
17.1
4.7
4.5
5.9
1.5
0.8
76.8
40.4
38.0
2.4
9.7
6.0
3.7
Spain
12.4
12.1
2.8
3.6
3.4
5.8
3.3
3.2
2.0
0.3
0.1
+100
30.5
32.1
(1.6)
1.7
1.1
0.6
Eastern Europe
Russia
n/a
59.5
—
17.7
18.8
(5.6)
13.7
15.0
(8.5)
4.0
3.8
5.8
n/a
31.9
—
n/a
6.8
—
Middle East & Africa
Egypt
22.9
24.0
(4.5)
5.0
4.8
4.7
4.8
4.7
2.3
0.2
0.1
+100
21.8
19.7
2.1
0.9
0.2
0.7
Turkey
30.6
35.2
(13.1)
14.9
16.0
(6.9)
14.9
16.0
(6.9)
—
—
—
48.4
45.3
3.1
—
—
—
South & Southeast Asia
Indonesia
82.9
74.3
11.5
23.3
20.8
12.1
23.3
20.8
12.1
—
—
—
28.2
28.0
0.2
—
—
—
Philippines
13.0
14.4
(9.7)
7.8
8.9
(12.8)
7.7
8.9
(13.0)
0.1
—
—
59.9
62.0
(2.1)
0.5
0.3
0.2
East Asia & Australia
Australia
2.1
2.3
(8.5)
0.7
0.8
(4.5)
0.7
0.8
(4.5)
—
—
—
35.1
33.7
1.4
—
—
—
Japan (3)
38.6
43.1
(10.4)
13.2
13.6
(3.2)
4.9
5.4
(9.6)
8.3
8.2
1.0
37.9
35.4
2.5
24.1
21.1
3.0
South Korea
19.4
19.2
1.3
3.7
3.7
0.9
2.6
2.5
1.6
1.2
1.2
(0.8)
19.0
19.2
(0.2)
5.9
6.1
(0.2)
Americas
Argentina
7.7
7.3
5.4
4.8
4.8
0.2
4.8
4.8
0.2
—
—
—
62.5
65.7
(3.2)
—
—
—
Mexico
8.1
7.8
4.3
5.3
5.0
4.8
5.2
5.0
4.7
—
—
—
65.1
64.8
0.3
0.4
0.3
0.1
(1) Total market and market share
estimates exclude Russia & Ukraine
(2) Market share estimates are calculated
using IMS data
(3) Total market and market share
estimates include cigarillos in Japan
Appendix 2
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Key Market Data
Nine Months Ended September
30,
Market
Total Market,
bio units
PMI Shipments, bio
units
PMI Market Share, %
(2)
Total
Cigarette
HTU
Total
HTU
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
2022
2021
pp Change
2022
2021
pp Change
Total (1) (3)
1,778.6
1,755.7
1.3
545.0
536.1
1.7
467.9
466.5
0.3
77.1
69.6
10.9
27.2
26.6
0.6
3.6
3.0
0.6
European Union
France
24.8
26.3
(5.6)
10.8
11.6
(7.4)
10.6
11.4
(7.3)
0.2
0.2
(10.9)
43.7
43.7
—
0.7
0.6
0.1
Germany
54.2
56.5
(4.0)
21.1
21.6
(2.5)
19.0
20.0
(5.0)
2.1
1.7
27.2
38.9
38.3
0.6
4.0
3.0
1.0
Italy
55.0
53.0
3.9
30.7
28.9
6.1
22.2
22.4
(1.1)
8.5
6.5
31.1
54.0
52.9
1.1
14.3
11.1
3.2
Poland
42.9
37.2
15.3
16.6
13.9
19.1
13.0
11.7
11.1
3.6
2.2
61.7
38.7
37.4
1.3
8.3
5.9
2.4
Spain
34.0
32.2
5.7
10.6
10.2
3.8
9.9
9.8
0.9
0.7
0.4
81.4
30.3
31.5
(1.2)
1.6
1.2
0.4
Eastern Europe
Russia
n/a
163.9
—
48.6
52.0
(6.5)
37.3
40.4
(7.5)
11.3
11.7
(3.2)
n/a
31.5
—
n/a
7.2
—
Middle East & Africa
Egypt
68.9
70.2
(1.8)
15.2
14.7
3.2
14.6
14.6
0.2
0.5
0.1
+100
22.3
20.7
1.6
0.8
0.1
0.7
Turkey
86.1
91.2
(5.7)
40.4
40.4
(0.1)
40.4
40.4
(0.1)
—
—
—
46.9
44.3
2.6
—
—
—
South & Southeast Asia
Indonesia
234.8
217.4
8.0
65.6
60.8
7.9
65.6
60.8
7.9
—
—
—
28.0
28.0
—
—
—
—
Philippines
40.0
41.2
(3.0)
24.5
25.6
(4.5)
24.3
25.5
(4.7)
0.2
0.1
37.4
61.3
62.2
(0.9)
0.4
0.3
0.1
East Asia & Australia
Australia
6.6
7.1
(7.0)
2.2
2.3
(3.5)
2.2
2.3
(3.5)
—
—
—
33.6
32.4
1.2
—
—
—
Japan (3)
110.4
116.7
(5.4)
39.5
41.6
(5.1)
16.1
16.8
(4.3)
23.3
24.7
(5.7)
37.5
35.6
1.9
23.4
21.1
2.3
South Korea
55.0
54.1
1.7
10.6
10.7
(1.2)
7.2
7.2
0.1
3.4
3.5
(4.0)
19.2
19.7
(0.5)
6.1
6.4
(0.3)
Americas
Argentina
22.8
21.8
4.9
14.4
14.6
(1.2)
14.4
14.6
(1.2)
—
—
—
63.1
66.9
(3.8)
—
—
—
Mexico
22.6
22.5
0.2
14.5
14.1
2.7
14.4
14.1
2.6
0.1
0.1
32.5
64.3
62.8
1.5
0.4
0.3
0.1
(1) Total market and market share
estimates excludes Russia & Ukraine
(2) Market share estimates are calculated
using IMS data
(3) Total market and market share
estimates include cigarillos in Japan
Appendix 3
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
PMI Shipment Volume Adjusted
for the Impact of Russia and Ukraine
(in million units) /
(Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2022
2021
% Change
2022
2021
% Change
Cigarettes
161,966
164,843
(1.7)%
Shipment Volume
467,882
466,493
0.3%
13,691
14,959
Russia
37,334
40,354
1,628
3,009
Ukraine
5,170
8,167
146,647
146,874
(0.2)%
Pro Forma Shipment
Volume
425,378
417,972
1.8%
Heated Tobacco Units
27,508
23,489
17.1%
Shipment Volume
77,148
69,579
10.9%
4,016
3,797
Russia
11,283
11,661
1,101
1,320
Ukraine
3,298
3,866
22,391
18,373
21.9%
Pro Forma Shipment
Volume
62,567
54,053
15.8%
Cigarettes & HTU
189,474
188,332
0.6%
Shipment Volume
545,030
536,072
1.7%
17,707
18,756
Russia
48,616
52,015
2,729
4,329
Ukraine
8,468
12,032
169,038
165,247
2.3%
Pro Forma Shipment
Volume
487,945
472,025
3.4%
Note: Sum of product categories might not
foot to total due to roundings.
Appendix 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Eastern Europe Shipment Volume
Adjusted for the Impact of Russia and Ukraine
(in million units) /
(Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2022
2021
% Change
2022
2021
% Change
Cigarettes
22,547
25,020
(9.9)%
Shipment Volume
61,694
67,771
(9.0)%
13,691
14,959
Russia
37,334
40,354
1,628
3,009
Ukraine
5,170
8,167
7,228
7,051
2.5%
Pro Forma Shipment
Volume
19,190
19,250
(0.3)%
Heated Tobacco Units
6,487
6,119
6.0%
Shipment Volume
18,275
18,594
(1.7)%
4,016
3,797
Russia
11,283
11,661
1,101
1,320
Ukraine
3,298
3,866
1,370
1,003
36.6%
Pro Forma Shipment
Volume
3,694
3,068
20.4%
Cigarettes & HTU
29,034
31,139
(6.8)%
Shipment Volume
79,969
86,365
(7.4)%
17,707
18,756
Russia
48,616
52,015
2,729
4,329
Ukraine
8,468
12,032
8,598
8,054
6.8%
Pro Forma Shipment
Volume
22,884
22,318
2.5%
Note: Sum of product categories might not
foot to total due to roundings.
Schedule 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Diluted Earnings Per Share
(EPS)
($ in millions, except per share
data) / (Unaudited)
Quarters Ended
Diluted EPS
Nine Months Ended
September 30,
September 30,
$
1.34
2022 Diluted Earnings Per
Share (1)
$
4.27
$
1.55
2021 Diluted Earnings Per
Share (1)
$
4.48
$
(0.21
)
Change
$
(0.21
)
(13.5
)%
% Change
(4.7
)%
Reconciliation:
$
1.55
2021 Diluted Earnings Per
Share (1)
$
4.48
0.02
2021 Asset impairment and exit
costs
0.09
0.01
2021 Amortization and impairment
of intangibles
0.03
0.03
2021 Asset acquisition cost
0.03
(0.02
)
2021 Equity investee ownership
dilution
(0.02
)
—
2021 Saudi Arabia customs
assessments
0.14
(0.08
)
2022 Amortization and impairment
of intangibles
(0.12
)
(0.11
)
2022 Costs associated with
Swedish Match AB offer
(0.13
)
—
2022 Charges related to the war
in Ukraine
(0.07
)
—
2022 Fair value adjustment for
equity security investments
(0.03
)
—
2022 Tax Items
0.03
(0.19
)
Currency
(0.58
)
0.01
Interest
0.03
—
Change in tax rate
0.03
0.12
Operations (2)
0.36
$
1.34
2022 Diluted Earnings Per
Share (1)
$
4.27
(1) Basic and diluted EPS were calculated
using the following (in millions):
Quarters Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
$
2,087
$
2,426
Net Earnings attributable to
PMI
$
6,651
$
7,016
5
7
Less: Distributed and
undistributed earnings
attributable to share-based
payment awards
18
21
$
2,082
$
2,419
Net Earnings for basic and
diluted EPS
$
6,633
$
6,995
1,550
1,558
Weighted-average shares for basic
EPS
1,550
1,558
2
2
Plus Contingently Issuable
Performance Stock Units
2
2
1,552
1,560
Weighted-average shares for
diluted EPS
1,552
1,560
(2) Includes the impact of shares
outstanding and share-based payments
Schedule 2
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Reported
Diluted EPS to Reported Diluted EPS, excluding Currency,
and Reconciliation of Reported
Diluted EPS to Adjusted Diluted EPS, excluding Currency
(Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2022
2021
% Change
2022
2021
% Change
$
1.34
$
1.55
(13.5)%
Reported Diluted EPS
$
4.27
$
4.48
(4.7)%
(0.19
)
Less: Currency
(0.58
)
$
1.53
$
1.55
(1.3)%
Reported Diluted EPS,
excluding Currency
$
4.85
$
4.48
8.3%
Quarters Ended September
30,
Nine Months Ended September
30,
Year Ended
2022
2021
% Change
2022
2021
% Change
2021
$
1.34
$
1.55
(13.5)%
Reported Diluted EPS
$
4.27
$
4.48
(4.7)%
$
5.83
—
0.02
Asset impairment and exit
costs
—
0.09
0.12
0.08
0.01
Amortization and impairment of
intangibles
0.12
0.03
0.05
—
—
Saudi Arabia customs
assessments
—
0.14
0.14
—
(0.02
)
Equity investee ownership
dilution
—
(0.02
)
(0.04
)
—
0.03
Asset acquisition cost
—
0.03
0.03
0.11
—
Costs associated with Swedish
Match AB offer
0.13
—
—
—
—
Charges related to the war in
Ukraine
0.07
—
—
—
—
Fair value adjustment for equity
security investments
0.03
—
—
—
—
Tax items
(0.03
)
—
—
$
1.53
$
1.59
(3.8)%
Adjusted Diluted EPS
$
4.59
$
4.75
(3.4)%
$
6.13
(0.19
)
Less: Currency
(0.58
)
$
1.72
$
1.59
8.2%
Adjusted Diluted EPS,
excluding Currency
$
5.17
$
4.75
8.8%
Schedule 3
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Net Revenues by Product
Category and Adjustments of Net Revenues for the Impact of Currency
and Acquisitions
($ in millions) / (Unaudited)
Net Revenues
Currency
Net Revenues
excluding Currency
Acqui- sitions
Net Revenues excluding
Currency & Acquisitions
Quarters Ended
September 30,
Net Revenues
Total
Excluding Currency
Excluding Currency &
Acquisitions
2022
Combustible Products
2021
% Change
$ 1,862
$ (276)
$ 2,139
$ 1
$ 2,138
European Union
$ 2,170
(14.2)%
(1.5)%
(1.5)%
732
46
686
—
686
Eastern Europe
635
15.4%
8.1%
8.1%
909
(51)
960
—
960
Middle East & Africa
901
0.9%
6.6%
6.6%
1,132
(75)
1,206
—
1,206
South & Southeast Asia
1,061
6.6%
13.7%
13.7%
515
(57)
572
—
572
East Asia & Australia
591
(13.0)%
(3.3)%
(3.3)%
463
(7)
470
—
470
Americas
438
5.8%
7.3%
7.3%
$ 5,613
$ (419)
$ 6,032
$ 1
$ 6,032
Total Combustible
$ 5,796
(3.2)%
4.1%
4.1%
2022
Reduced-Risk Products
2021
% Change
$ 1,212
$ (189)
$ 1,400
$ 2
$ 1,398
European Union
$ 1,022
18.6%
37.1%
36.8%
377
33
344
—
344
Eastern Europe
306
23.0%
12.4%
12.4%
71
(6)
77
—
77
Middle East & Africa
44
60.2%
73.1%
73.1%
6
—
7
—
7
South & Southeast Asia
4
63.0%
71.8%
71.8%
685
(104)
789
—
789
East Asia & Australia
932
(26.4)%
(15.3)%
(15.3)%
11
—
11
—
11
Americas
18
(39.9)%
(37.5)%
(37.5)%
$ 2,362
$ (267)
$ 2,629
$ 2
$ 2,626
Total RRPs
$ 2,326
1.6%
13.0%
12.9%
2022
Wellness and
Healthcare
2021
% Change
$ 57
$ (1)
$58
$47
$ 11
Wellness and
Healthcare
$ —
—%
—%
—%
2022
PMI
2021
% Change
$ 3,074
$ (465)
$ 3,539
$ 3
$ 3,536
European Union
$ 3,192
(3.7)%
10.9%
10.8%
1,109
79
1,030
—
1,030
Eastern Europe
941
17.9%
9.5%
9.5%
980
(57)
1,037
—
1,037
Middle East & Africa
945
3.7%
9.7%
9.7%
1,138
(75)
1,213
—
1,213
South & Southeast Asia
1,065
6.9%
13.9%
13.9%
1,200
(161)
1,361
—
1,361
East Asia & Australia
1,523
(21.2)%
(10.6)%
(10.6)%
474
(7)
481
—
481
Americas
456
3.9%
5.5%
5.5%
57
(1)
58
47
11
Wellness and Healthcare
—
—%
—%
—%
$ 8,032
$ (687)
$ 8,719
$50
$ 8,669
Total PMI
$ 8,122
(1.1)%
7.4%
6.7%
Note: Sum of product categories or Regions
might not foot to Total PMI due to roundings. "-" indicates amounts
between -$0.5 million and +$0.5 million
Schedule 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Net Revenues by Product
Category and Adjustments of Net Revenues for the Impact of Currency
and Acquisitions
($ in millions) / (Unaudited)
Net Revenues
Currency
Net Revenues
excluding Currency
Acquisitions
Net Revenues excluding
Currency & Acquisitions
Nine Months Ended
September 30,
Net Revenues
Total
Excluding Currency
Excluding Currency &
Acquisitions
2022
Combustible Products
2021
% Change
$ 5,625
$ (600)
$ 6,226
$ —
$ 6,226
European Union
$ 6,283
(10.5)%
(0.9)%
(0.9)%
1,774
15
1,759
—
1,759
Eastern Europe
1,681
5.5%
4.6%
4.6%
2,771
(241)
3,011
—
3,011
Middle East & Africa
2,208
(1)
25.5%
36.4%
36.4%
3,279
(157)
3,436
—
3,436
South & Southeast Asia
3,277
0.1%
4.9%
4.9%
1,644
(138)
1,782
—
1,782
East Asia & Australia
1,850
(11.2)%
(3.7)%
(3.7)%
1,339
(15)
1,354
—
1,354
Americas
1,278
4.8%
6.0%
6.0%
$ 16,432
$ (1,137)
$ 17,569
$ —
$ 17,569
Total Combustible
$ 16,577
(0.9)%
6.0%
6.0%
2022
Reduced-Risk Products
2021
% Change
$ 3,604
$ (398)
$ 4,001
$ 10
$ 3,991
European Union
$ 2,967
21.4%
34.9%
34.5%
959
10
949
—
949
Eastern Europe
951
0.9%
(0.2)%
(0.2)%
206
(10)
217
—
217
Middle East & Africa
98
+100%
+100%
+100%
16
(1)
17
—
17
South & Southeast Asia
7
+100%
+100%
+100%
2,166
(241)
2,407
—
2,407
East Asia & Australia
2,659
(18.5)%
(9.5)%
(9.5)%
28
(1)
29
—
29
Americas
42
(34.2)%
(31.9)%
(31.9)%
$ 6,979
$ (640)
$ 7,619
$ 10
$ 7,609
Total RRPs
$ 6,724
3.8%
13.3%
13.2%
2022
Wellness and
Healthcare
2021
% Change
$ 199
$ (1)
$200
$189
$ 11
Wellness and
Healthcare
$ —
—%
—%
—%
2022
PMI
2021
% Change
$ 9,229
$ (998)
$ 10,227
$ 10
$ 10,217
European Union
$ 9,250
(0.2)%
10.6%
10.5%
2,733
25
2,708
—
2,708
Eastern Europe
2,632
3.8%
2.9%
2.9%
2,977
(251)
3,228
—
3,228
Middle East & Africa
2,306
(1)
29.1%
40.0%
40.0%
3,295
(158)
3,453
—
3,453
South & Southeast Asia
3,284
0.3%
5.1%
5.1%
3,810
(379)
4,189
—
4,189
East Asia & Australia
4,509
(15.5)%
(7.1)%
(7.1)%
1,367
(16)
1,383
—
1,383
Americas
1,320
3.6%
4.8%
4.8%
199
(1)
200
189
11
Wellness and Healthcare
—
—%
—%
—%
$ 23,610
$ (1,778)
$ 25,388
$199
$ 25,189
Total PMI
$ 23,301
1.3%
9.0%
8.1%
(1) Includes a reduction in net revenues
of $246 million related to the Saudi Arabia customs assessments
Note: Sum of product categories or Regions
might not foot to Total PMI due to roundings. "-" indicates amounts
between -$0.5 million and +$0.5 million
Schedule 5
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Net Revenues
to Adjusted Net Revenues, excluding Currency and
Acquisitions
($ in millions) / (Unaudited)
Net Revenues
Special Items
Adjusted Net
Revenues
Currency
Adjusted Net Revenues
excluding Currency
Acqui- sitions
Adjusted Net
Revenues excluding Currency & Acqui-
sitions
Net Revenues
Special Items
Adjusted Net
Revenues
Total
Excluding Currency
Excluding Currency
& Acqui- sitions
2022
Quarters Ended
September 30,
2021
% Change
$ 3,074
$ —
$ 3,074
$ (465)
$ 3,539
$ 3
$ 3,536
European Union
$ 3,192
$ —
$ 3,192
(3.7)%
10.9%
10.8%
1,109
—
1,109
79
1,030
—
1,030
Eastern Europe
941
—
941
17.9%
9.5%
9.5%
980
—
980
(57)
1,037
—
1,037
Middle East & Africa
945
—
945
3.7%
9.7%
9.7%
1,138
—
1,138
(75)
1,213
—
1,213
South & Southeast Asia
1,065
—
1,065
6.9%
13.9%
13.9%
1,200
—
1,200
(161)
1,361
—
1,361
East Asia & Australia
1,523
—
1,523
(21.2)%
(10.6)%
(10.6)%
474
—
474
(7)
481
—
481
Americas
456
—
456
3.9%
5.5%
5.5%
57
—
57
(1)
58
47
11
Wellness and Healthcare
—
—
—
—%
—%
—%
$ 8,032
$ —
$ 8,032
$ (687)
$ 8,719
$ 50
$ 8,669
Total PMI
$ 8,122
$ —
$ 8,122
(1.1)%
7.4%
6.7%
2022
Nine Months Ended
September 30,
2021
% Change
$ 9,229
$ —
$ 9,229
$ (998)
$ 10,227
$ 10
$ 10,217
European Union
$ 9,250
$ —
$ 9,250
(0.2)%
10.6%
10.5%
2,733
—
2,733
25
2,708
—
2,708
Eastern Europe
2,632
—
2,632
3.8%
2.9%
2.9%
2,977
—
2,977
(251)
3,228
—
3,228
Middle East & Africa
2,306
(246)
(1)
2,552
16.7%
26.5%
26.5%
3,295
—
3,295
(158)
3,453
—
3,453
South & Southeast Asia
3,284
—
3,284
0.3%
5.1%
5.1%
3,810
—
3,810
(379)
4,189
—
4,189
East Asia & Australia
4,509
—
4,509
(15.5)%
(7.1)%
(7.1)%
1,367
—
1,367
(16)
1,383
—
1,383
Americas
1,320
—
1,320
3.6%
4.8%
4.8%
199
—
199
(1)
200
189
11
Wellness and Healthcare
—
—
—
—%
—%
—%
$ 23,610
$ —
$ 23,610
$ (1,778)
$ 25,388
$ 199
$ 25,189
Total PMI
$ 23,301
$ (246)
$ 23,547
0.3%
7.8%
7.0%
(1) Represents the Saudi Arabia customs
assessments
Schedule 6
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Adjustments of Operating
Income for the Impact of Currency and Acquisitions
($ in millions) / (Unaudited)
Operating Income
Currency
Operating Income excluding
Currency
Acqui- sitions
Operating Income excluding
Currency & Acquisitions
Operating Income
Total
Excluding Currency
Excluding Currency &
Acquisitions
2022
Quarters Ended
September 30,
2021
% Change
$ 1,395
$ (318)
$ 1,713
$ —
$ 1,713
European Union
$ 1,680
(17.0)%
2.0%
2.0%
425
74
351
—
351
Eastern Europe
338
25.7%
3.8%
3.8%
432
(2)
434
—
434
Middle East & Africa
388
11.3%
11.9%
11.9%
384
(31)
415
—
415
South & Southeast Asia
348
10.3%
19.3%
19.3%
398
(105)
503
—
503
East Asia & Australia
631
(36.9)%
(20.3)%
(20.3)%
85
2
83
—
83
Americas
121
(29.8)%
(31.4)%
(31.4)%
(151)
2
(153)
(24)
(129)
Wellness and Healthcare
(51)
-(100)%
-(100)%
-(100)%
$ 2,968
$ (378)
$ 3,346
$ (24)
$ 3,370
Total PMI
$ 3,455
(14.1)%
(3.2)%
(2.5)%
2022
Nine Months Ended
September 30,
2021
% Change
$ 4,441
$ (708)
$ 5,149
$ (2)
$ 5,151
European Union
$ 4,811
(7.7)%
7.0%
7.1%
860
70
790
—
790
Eastern Europe
913
(5.8)%
(13.5)%
(13.5)%
1,451
(121)
1,572
—
1,572
Middle East & Africa
739
96.3%
+100%
+100%
1,135
(78)
1,213
—
1,213
South & Southeast Asia
1,208
(6.0)%
0.4%
0.4%
1,315
(261)
1,576
—
1,576
East Asia & Australia
2,041
(35.6)%
(22.8)%
(22.8)%
336
4
332
—
332
Americas
367
(8.4)%
(9.5)%
(9.5)%
(216)
2
(218)
(72)
(146)
Wellness and Healthcare
(51)
-(100)%
-(100)%
-(100)%
$ 9,322
$ (1,092)
$ 10,414
$ (74)
$ 10,488
Total PMI
$ 10,028
(7.0)%
3.8%
4.6%
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 (1)
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 (2)
Adjusted Operating
Income
Total
Excluding Currency
Excluding Currency
& Acqui- sitions
2022
Quarters Ended
September 30,
2021
% Change
$ 1,395
$ (105)
$ 1,500
$ (318)
$ 1,818
$ —
$ 1,818
European Union
$ 1,680
$ (20)
$ 1,700
(11.8)%
6.9%
6.9%
425
(29)
454
74
380
—
380
Eastern Europe
338
(2)
340
33.5%
11.8%
11.8%
432
(26)
458
(2)
460
—
460
Middle East & Africa
388
(5)
393
16.5%
17.0%
17.0%
384
(28)
412
(31)
443
—
443
South & Southeast Asia
348
(9)
357
15.4%
24.1%
24.1%
398
(40)
438
(105)
543
—
543
East Asia & Australia
631
(22)
653
(32.9)%
(16.8)%
(16.8)%
85
(13)
98
2
96
—
96
Americas
121
(3)
124
(21.0)%
(22.6)%
(22.6)%
(151)
(121)
(30)
2
(32)
(17)
(15)
Wellness and Healthcare
(51)
(51)
—
—%
—%
—%
$ 2,968
$ (362)
$ 3,330
$ (378)
$ 3,708
$ (17)
$ 3,725
Total PMI
$ 3,455
$ (112)
$ 3,567
(6.6)%
4.0%
4.4%
2022
Nine Months Ended
September 30,
2021
% Change
$ 4,441
$ (146)
$ 4,587
$ (708)
$ 5,295
$ (2)
$ 5,297
European Union
$ 4,811
$ (82)
$ 4,893
(6.3)%
8.2%
8.3%
860
(158)
1,018
70
948
—
948
Eastern Europe
913
(12)
925
10.1%
2.5%
2.5%
1,451
(36)
1,487
(121)
1,608
—
1,608
Middle East & Africa
739
(265)
1,004
48.1%
60.2%
60.2%
1,135
(42)
1,177
(78)
1,255
—
1,255
South & Southeast Asia
1,208
(30)
1,238
(4.9)%
1.4%
1.4%
1,315
(51)
1,366
(261)
1,627
—
1,627
East Asia & Australia
2,041
(69)
2,110
(35.3)%
(22.9)%
(22.9)%
336
(19)
355
4
351
—
351
Americas
367
(13)
380
(6.6)%
(7.6)%
(7.6)%
(216)
(158)
(58)
2
(60)
(28)
(32)
Wellness and Healthcare
(51)
(51)
—
—%
—%
—%
$ 9,322
$ (610)
$ 9,932
$ (1,092)
$ 11,024
$ (30)
$ 11,054
Total PMI
$ 10,028
$ (522)
$ 10,550
(5.9)%
4.5%
4.8%
(1) Third-Quarter 2022: charges related to
the war in Ukraine ($6 million), amortization and impairment of
intangibles ($139 million) and cost associated with Swedish Match
AB offer ($217 million). Nine Months Year-to-Date 2022: charges
related to the war in Ukraine ($128 million), amortization and
impairment of intangibles ($213 million) and cost associated with
Swedish Match AB offer ($269 million).
(2) Third-Quarter 2021: asset impairment
and exit costs ($43 million), amortization and impairment of
intangibles ($18 million) and asset acquisition cost ($51 million).
Nine Months Year-to-Date 2021: asset impairment and exit costs
($170 million), amortization and impairment of intangibles ($55
million), asset acquisition cost ($51 million) and Saudi Arabia
customs assessment ($246 million).
Schedule 8
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Adjusted
Operating Income Margin, excluding Currency and
Acquisitions
($ in millions) / (Unaudited)
Adjusted Operating Income
(1)
Adjusted Net
Revenues (2)
Adjusted Operating Income
Margin
Adjusted Operating Income
excluding Currency (1)
Adjusted Net Revenues
excluding Currency (2)
Adjusted Operating Income
Margin excluding Currency
Adjusted Operating Income
excluding Currency & Acqui- sitions
(1)
Adjusted Net Revenues
excluding Currency & Acqui- sitions
(2)
Adjusted Operating Income
Margin excluding Currency & Acqui-
sitions
Adjusted Operating Income
(1)
Adjusted Net
Revenues (2)
Adjusted Operating Income
Margin
Adjusted Operating Income
Margin
Adjusted Operating Income
Margin excluding Currency
Adjusted Operating Income
Margin excluding Currency & Acqui-
sitions
2022
Quarters Ended
September 30,
2021
% Points Change
$ 1,500
$ 3,074
48.8%
$ 1,818
$ 3,539
51.4%
$ 1,818
$ 3,536
51.4%
European Union
$ 1,700
$ 3,192
53.3%
(4.5)
(1.9)
(1.9)
454
1,109
40.9%
380
1,030
36.9%
380
1,030
36.9%
Eastern Europe
340
941
36.1%
4.8
0.8
0.8
458
980
46.7%
460
1,037
44.4%
460
1,037
44.4%
Middle East & Africa
393
945
41.6%
5.1
2.8
2.8
412
1,138
36.2%
443
1,213
36.5%
443
1,213
36.5%
South & Southeast Asia
357
1,065
33.5%
2.7
3.0
3.0
438
1,200
36.5%
543
1,361
39.9%
543
1,361
39.9%
East Asia & Australia
653
1,523
42.9%
(6.4)
(3.0)
(3.0)
98
474
20.7%
96
481
20.0%
96
481
20.0%
Americas
124
456
27.2%
(6.5)
(7.2)
(7.2)
(30)
57
(52.6)%
(32)
58
(55.2)%
(15)
11
-(100)%
Wellness and Healthcare
—
—
—%
—
—
—
$ 3,330
$ 8,032
41.5%
$ 3,708
$ 8,719
42.5%
$ 3,725
$ 8,669
43.0%
Total PMI
$ 3,567
$ 8,122
43.9%
(2.4)
(1.4)
(0.9)
2022
Nine Months Ended
September 30,
2021
% Points Change
$ 4,587
$ 9,229
49.7%
$ 5,295
$ 10,227
51.8%
$ 5,297
$ 10,217
51.8%
European Union
$ 4,893
$ 9,250
52.9%
(3.2)
(1.1)
(1.1)
1,018
2,733
37.2%
948
2,708
35.0%
948
2,708
35.0%
Eastern Europe
925
2,632
35.1%
2.1
(0.1)
(0.1)
1,487
2,977
49.9%
1,608
3,228
49.8%
1,608
3,228
49.8%
Middle East & Africa
1,004
2,552
39.3%
10.6
10.5
10.5
1,177
3,295
35.7%
1,255
3,453
36.3%
1,255
3,453
36.3%
South & Southeast Asia
1,238
3,284
37.7%
(2.0)
(1.4)
(1.4)
1,366
3,810
35.9%
1,627
4,189
38.8%
1,627
4,189
38.8%
East Asia & Australia
2,110
4,509
46.8%
(10.9)
(8.0)
(8.0)
355
1,367
26.0%
351
1,383
25.4%
351
1,383
25.4%
Americas
380
1,320
28.8%
(2.8)
(3.4)
(3.4)
(58)
199
(29.1)%
(60)
200
(30.0)%
(32)
11
-(100)%
Wellness and Healthcare
—
—
—%
—
—
—
$ 9,932
$ 23,610
42.1%
$ 11,024
$ 25,388
43.4%
$ 11,054
$ 25,189
43.9%
Total PMI
$ 10,550
$ 23,547
44.8%
(2.7)
(1.4)
(0.9)
(1) For the calculation of Adjusted
Operating Income and Adjusted Operating Income excluding currency
and acquisitions refer to Schedule 7
(2) For the calculation of Adjusted Net
Revenues excluding currency and acquisitions refer to Schedule
5
Schedule 9
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Statements of
Earnings
($ in millions, except per share
data) / (Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2022
2021
Change
Fav./(Unfav.)
2022
2021
Change
Fav./(Unfav.)
$
20,888
$
21,617
(3.4
)%
Revenues including Excise
Taxes
$
60,638
$
61,393
(1.2
)%
12,856
13,495
4.7
%
Excise Taxes on products
37,028
38,092
2.8
%
8,032
8,122
(1.1
)%
Net Revenues
23,610
23,301
1.3
%
2,935
2,596
(13.1
)%
Cost of sales
8,191
7,223
(13.4
)%
5,097
5,526
(7.8
)%
Gross profit
15,419
16,078
(4.1
)%
2,129
2,071
(2.8
)%
Marketing, administration and
research costs
6,097
6,050
(0.8
)%
2,968
3,455
(14.1
)%
Operating Income
9,322
10,028
(7.0
)%
138
154
10.4
%
Interest expense, net
418
482
13.3
%
7
27
74.1
%
Pension and other employee
benefit costs
16
82
80.5
%
2,823
3,274
(13.8
)%
Earnings before income taxes
8,888
9,464
(6.1
)%
622
735
15.4
%
Provision for income taxes
1,835
2,078
11.7
%
(21
)
(49
)
57.1
%
Equity investments and securities
(income)/loss, net
20
(95
)
+100
%
2,222
2,588
(14.1
)%
Net Earnings
7,033
7,481
(6.0
)%
135
162
(16.7
)%
Net Earnings attributable to
noncontrolling interests
382
465
(17.8
)%
$
2,087
$
2,426
(14.0
)%
Net Earnings attributable to
PMI
$
6,651
$
7,016
(5.2
)%
Per share data: (1)
$
1.34
$
1.55
(13.5
)%
Basic Earnings Per
Share
$
4.28
$
4.49
(4.7
)%
$
1.34
$
1.55
(13.5
)%
Diluted Earnings Per
Share
$
4.27
$
4.48
(4.7
)%
(1) Net Earnings and weighted-average
shares used in the basic and diluted Earnings Per Share
computations for the quarters and for the nine months ended
September 30, 2022 and 2021 are shown on Schedule 1, Footnote 1
Schedule 10
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Adjustments for the Impact of
Russia and Ukraine, excluding Currency
(Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2022
2021
Currency
Variance excluding
Currency
2022
2021
Currency
Variance excluding
Currency
$
1.53
$
1.59
$
(0.19
)
8.2
%
Adjusted Diluted EPS
(1)
$
4.59
$
4.75
$
(0.58
)
8.8
%
0.20
0.15
0.04
Net Earnings attributable to
Russia and Ukraine
0.48
0.43
0.05
$
1.33
$
1.44
$
(0.23
)
8.3
%
Pro Forma Adjusted Diluted
EPS
$
4.11
$
4.32
$
(0.63
)
9.7
%
(1) For the calculation of Adjusted
Diluted EPS, see Schedule 2
Schedule 11
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
PMI & EE Region -
Adjustments for the Impact of Russia and Ukraine, excluding
Currency and Acquisitions
($ in millions) / (Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2022
2021
Currency
Acqui- sitions
Variance excluding
Curr. & Acquis.
2022
2021
Currency
Acqui- sitions
Variance excluding
Currency & Acqui- sitions
PMI
$ 8,032
$ 8,122
$ (687)
$ 50
6.7%
Adjusted Net Revenues
(1)
$ 23,610
$ 23,547
$ (1,778)
$ 199
7.0%
786
653
103
—
Net Revenues attributable to
Russia and Ukraine
1,874
1,826
73
—
$ 7,246
$ 7,469
$ (790)
$ 50
6.9%
Pro Forma Adjusted Net
Revenues
$ 21,736
$ 21,721
$ (1,851)
$ 199
7.7%
$ 3,330
$ 3,567
$ (378)
$ (17)
4.4%
Adjusted Operating Income
(2)
$ 9,932
$ 10,550
$ (1,092)
$ (30)
4.8%
376
288
75
—
Operating Income attributable to
Russia and Ukraine
870
772
87
—
$ 2,954
$ 3,279
$ (453)
$ (17)
4.4%
Pro Forma Adjusted Operating
Income
$ 9,062
$ 9,778
$ (1,179)
$ (30)
5.0%
41.5%
43.9%
(1.0)pp
(0.5)pp
(0.9)pp
Adjusted Operating Income
Margin
42.1%
44.8%
(1.3)pp
(0.5)pp
(0.9)pp
0.7pp
—pp
Adjusted OI margin attributable
to Russia and Ukraine
0.4pp
(0.2)pp
40.8%
43.9%
(1.6)pp
(0.5)pp
(1.0)pp
Pro Forma Adjusted Operating
Income Margin
41.7%
45.0%
(1.7)pp
(0.5)pp
(1.1)pp
Eastern Europe
$ 1,109
$ 941
$ 79
$ —
9.5%
Adjusted Net Revenues
(1)
$ 2,733
$ 2,632
$ 25
$ —
2.9%
786
653
103
—
Net Revenues attributable to
Russia and Ukraine
1,874
1,826
73
—
$ 323
$ 288
$ (24)
$ —
20.5%
Pro Forma Adjusted Net
Revenues
$ 859
$ 806
$ (48)
$ —
12.5%
$ 454
$ 340
$ 74
$ —
11.8%
Adjusted Operating Income
(2)
$ 1,018
$ 925
$ 70
$ —
2.5%
376
288
75
—
Operating Income attributable to
Russia and Ukraine
870
772
87
—
(63)
(58)
5
—
Corporate expenses apportioned to
Russia and Ukraine
(195)
(166)
9
—
$ 141
$ 110
$ (6)
$ —
33.6%
Pro Forma Adjusted Operating
Income
$ 343
$ 319
$ (26)
$ —
15.7%
40.9%
36.1%
4.0pp
—pp
0.8pp
Adjusted Operating Income
Margin
37.2%
35.1%
2.2pp
—pp
(0.1)pp
(2.8)pp
(2.1)pp
Adjusted OI margin attributable
to Russia and Ukraine (3)
(2.7)pp
(4.5)pp
43.7%
38.2%
1.3pp
—pp
4.2pp
Pro Forma Adjusted Operating
Income Margin
39.9%
39.6%
(0.8)pp
—pp
1.1pp
(1) For the calculation of Adjusted Net
Revenues, see Schedule 5
(2) For the calculation of Adjusted
Operating Income, see Schedule 7
(3) Includes also impact of corporate
expenses apportioned to Russia and Ukraine
Note: Sum might not foot to Total due to
roundings, which could impact variance %
Schedule 12
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Net Revenues by Product
Category and Adjustments for the Impact of Russia and
Ukraine
($ in millions) / (Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2022
2021
Currency
Acqui- sitions
Variance excluding
Currency & Acqui- sitions
2022
2021
Currency
Acqui- sitions
Variance excluding
Currency & Acqui- sitions
Combustible Products
$ 5,613
$ 5,796
$ (419)
$ 1
4.1%
Adjusted Net Revenues
$ 16,432
$ 16,823
$ (1,137)
$ —
4.4%
482
403
65
—
Net Revenues attributable to
Russia and Ukraine
1,119
1,047
50
—
$ 5,131
$ 5,393
$ (484)
$ 1
4.1%
Pro Forma Adjusted Net
Revenues
$ 15,313
$ 15,776
$ (1,186)
$ —
4.6%
Reduced-Risk Products
$ 2,362
$ 2,326
$ (267)
$ 2
12.9%
Adjusted Net Revenues
$ 6,979
$ 6,724
$ (640)
$ 10
13.2%
304
250
38
—
Net Revenues attributable to
Russia and Ukraine
755
779
23
—
$ 2,058
$ 2,076
$ (305)
$ 2
13.7%
Pro Forma Adjusted Net
Revenues
$ 6,224
$ 5,945
$ (664)
$ 10
15.7%
Wellness and
Healthcare
$ 57
$ —
$ (1)
$ 47
—%
Adjusted Net Revenues
$ 199
$ —
$ (1)
$ 189
—%
—
—
—
—
Net Revenues attributable to
Russia and Ukraine
—
—
—
—
$ 57
$ —
$ (1)
$ 47
—%
Pro Forma Adjusted Net
Revenues
$ 199
$ —
$ (1)
$ 189
—%
PMI
$ 8,032
$ 8,122
$ (687)
$ 50
6.7%
Adjusted Net Revenues
(1)
$ 23,610
$ 23,547
$ (1,778)
$ 199
7.0%
786
653
103
—
Net Revenues attributable to
Russia and Ukraine
1,874
1,826
73
—
$ 7,246
$ 7,469
$ (790)
$ 50
6.9%
Pro Forma Adjusted Net
Revenues
$ 21,736
$ 21,721
$ (1,851)
$ 199
7.7%
(1) For the calculation of Adjusted Net
Revenues, see Schedule 5
Note: Sum of product categories might not
foot to Total PMI due to roundings. "-" indicates amounts between
-$0.5 million and +$0.5 million
Schedule 13
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Balance
Sheets
($ in millions) / (Unaudited)
September 30,
December 31,
2022
2021
Assets
Cash and cash equivalents
$
5,368
$
4,496
All other current assets
13,667
13,221
Property, plant and equipment, net
5,610
6,168
Goodwill
6,127
6,680
Other intangible assets, net
2,224
2,818
Equity investments
4,087
4,463
Other assets
3,634
3,444
Total assets
$
40,717
$
41,290
Liabilities and Stockholders' (Deficit)
Equity
Short-term borrowings
$
2,818
$
225
Current portion of long-term debt
2,641
2,798
All other current liabilities
15,313
16,232
Long-term debt
21,762
24,783
Deferred income taxes
923
726
Other long-term liabilities
4,663
4,734
Total liabilities
48,120
49,498
Total PMI stockholders' deficit
(9,137
)
(10,106
)
Noncontrolling interests
1,734
1,898
Total stockholders' (deficit)
equity
(7,403
)
(8,208
)
Total liabilities and stockholders'
(deficit) equity
$
40,717
$
41,290
Schedule 14
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Calculation of Total Debt to
Adjusted EBITDA and Net Debt to Adjusted EBITDA Ratios
($ in millions, except ratios) /
(Unaudited)
Year Ended September 30,
2022
Year Ended December 31,
2021
October ~ December
January ~ September
12 months
2021
2022
rolling
Net Earnings
$
2,229
$
7,033
$
9,262
$
9,710
Equity investments and securities
(income)/loss, net
(54
)
20
(34
)
(149
)
Provision for income taxes
593
1,835
2,428
2,671
Interest expense, net
146
418
564
628
Depreciation, amortization and impairment
of intangibles
279
898
1,177
998
Asset impairment and exit costs and Others
(1)
46
397
443
513
Adjusted EBITDA
$
3,239
$
10,601
$
13,840
$
14,371
September 30,
December 31,
2022
2021
Short-term borrowings
$
2,818
$
225
Current portion of long-term debt
2,641
2,798
Long-term debt
21,762
24,783
Total Debt
$
27,221
$
27,806
Cash and cash equivalents
5,368
4,496
Net Debt
$
21,853
$
23,310
Ratios:
Total Debt to Adjusted EBITDA
1.97
1.93
Net Debt to Adjusted EBITDA
1.58
1.62
(1) For the period January 2022 to
September 2022 "Others" includes $128 million of charges related to
the war in Ukraine and $269 million of costs associated with
Swedish Match AB offer. For the year ended December 31, 2021
"Others" includes a reduction in net revenues of $246 million
related to the Saudi Arabia customs assessments and $51 million
related to asset acquisition cost.
Schedule 15
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP
Measures
Reconciliation of Operating
Cash Flow to Operating Cash Flow, excluding Currency
($ in millions) / (Unaudited)
Quarters Ended September
30,
Nine Months Ended September
30,
2022
2021
% Change
2022
2021
% Change
$
3,068
$
3,870
(20.7)%
Net cash provided by operating
activities (1)
$
7,710
$
7,935
(2.8)%
(250
)
Less: Currency
(737
)
$
3,318
$
3,870
(14.3)%
Net cash provided by operating
activities, excluding currency
$
8,447
$
7,935
6.5%
(1) Operating cash flow
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221019006123/en/
Philip Morris International Investor Relations: New York:
+1 (917) 663 2233 Lausanne: +41 (0)58 242 4666
InvestorRelations@pmi.com
Media: Lausanne: +41 (0)58 242 4500 David.Fraser@pmi.com
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