REG-Philip Morris International Inc. Philip Morris International Inc. (PMI) Reports 2015 Results; Provides 2016 Earnings Per Share Forecast <Origin Href="QuoteRef">PM.N</Origin> - Part 2
01/04/2016 14:15
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notably due to Russia, partly offset by Algeria and Egypt.
EEMA Key Market Commentaries
In North Africa, estimated industry size, PMI cigarette shipment volume and
market share performance are shown in the table below.
North Africa Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 37.4 38.0 (1.6)% 138.5 143.3 (3.4)%
PMI Shipments (million units) 10,174 10,747 (5.3)% 38,111 37,782 0.9%
PMI Cigarette Market Share
Marlboro 12.4 % 16.6 % (4.2) 13.7 % 15.3 % (1.6)
L&M 13.0 % 9.7 % 3.3 11.9 % 8.9 % 3.0
Others 2.4 % 1.9 % 0.5 2.3 % 1.9 % 0.4
Total 27.8 % 28.2 % (0.4) 27.9 % 26.1 % 1.8
For the full year, the decline of the estimated total market was principally due
to Egypt, reflecting the impact of excise tax-driven price increases. The
increase in PMI's cigarette shipment volume was primarily driven by Egypt,
reflecting higher market share, mainly of L&M, resulting from improved
territorial coverage and brand building activities, partly offset by Algeria and
Tunisia.
In the quarter, the decline of the estimated total market was principally due to
the same dynamics as for the full year. The decrease in PMI's cigarette shipment
volume was primarily due to Algeria, mainly reflecting a lower total market and
the impact of price increases on market share, partly offset by Egypt.
In Russia, estimated industry size, PMI cigarette shipment volume and market
share performance, as measured by Nielsen, are shown in the table below.
Russia Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 74.6 81.4 (8.4)% 294.5 314.1 (6.2)%
PMI Shipments (million units) 18,596 21,493 (13.5)% 84,422 84,948 (0.6)%
PMI Cigarette Market Share
Marlboro 1.4 % 1.5 % (0.1) 1.4 % 1.6 % (0.2)
Parliament 3.9 % 3.9 % - 3.9 % 3.7 % 0.2
Bond Street 8.7 % 8.2 % 0.5 8.4 % 7.7 % 0.7
Others 14.5 % 14.5 % - 14.7 % 14.5 % 0.2
Total 28.5 % 28.1 % 0.4 28.4 % 27.5 % 0.9
For the full year, the decline of the estimated total cigarette market was
mainly due to the unfavorable impact of excise tax-driven price increases and
lower consumer purchasing power as a result of a weak economy. The decrease in
PMI's cigarette shipment volume mainly reflected the lower total market, largely
offset by market share gains, primarily by premium Parliament, low-price Bond
Street, notably its Compact 7.0 variant, and super-low price Next in "Others."
In the quarter, the decline of the estimated total cigarette market was mainly
due to the same dynamics as for the full year. Excluding the unfavorable net
impact of estimated distributor inventory movements related to supply chain
optimization, PMI's cigarette shipment volume declined by 7.0%, mainly
reflecting the lower total market, partially offset by a market share gain of
low-price Bond Street, notably its Compact 7.0 variant.
In Turkey, estimated industry size, PMI cigarette shipment volume and market
share performance, as measured by Nielsen, are shown in the table below.
Turkey Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 28.2 26.2 7.8% 103.2 94.7 9.0%
PMI Shipments (million units) 13,581 12,591 7.9% 49,014 46,309 5.8%
PMI Cigarette Market Share
Marlboro 9.9 % 8.7 % 1.2 9.5 % 8.6 % 0.9
Parliament 11.6 % 11.8 % (0.2) 11.6 % 11.2 % 0.4
Lark 7.9 % 7.7 % 0.2 7.6 % 9.0 % (1.4)
Others 14.8 % 15.7 % (0.9) 15.1 % 15.2 % (0.1)
Total 44.2 % 43.9 % 0.3 43.8 % 44.0 % (0.2)
For the full year, the increase in the estimated total cigarette market mainly
reflected a significantly lower prevalence of illicit trade. The increase in
PMI's cigarette shipment volume was driven by a higher total market. The decline
in PMI's market share was mainly due to low-price Lark, reflecting the impact of
price repositioning by PMI's principal competitor in May 2014, partly offset by
Marlboro, notably its Touch 7.0 variants, and Parliament, benefiting from the
growth of Parliament Night Blue KS, the leading SKU sold on the market, and from
up-trading from the mid-price segment.
In the quarter, the increase in the estimated total cigarette market mainly
reflected the same dynamics as for the full year. The increase in PMI's
cigarette shipment volume was mainly driven by a higher total market and market
share, led by Marlboro, notably its Touch 7.0 variants, partly offset by L&M and
Chesterfield in "Others" reflecting the impact of competitive price
repositioning.
In Ukraine, estimated industry size, PMI cigarette shipment volume and market
share performance, as measured by Nielsen, are shown in the table below.
Ukraine Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 18.2 16.7 9.3% 70.6 69.7 1.3%
PMI Shipments (million units) 4,813 5,501 (12.5)% 19,195 23,273 (17.5)%
PMI Cigarette Market Share
Marlboro 3.3 % 4.7 % (1.4) 3.8 % 4.9 % (1.1)
Parliament 2.7 % 3.1 % (0.4) 2.9 % 3.1 % (0.2)
Bond Street 8.9 % 8.1 % 0.8 8.3 % 8.9 % (0.6)
Others 13.8 % 16.1 % (2.3) 15.1 % 15.8 % (0.7)
Total 28.7 % 32.0 % (3.3) 30.1 % 32.7 % (2.6)
For the full year, the increase in the estimated total market was mainly driven
by a lower prevalence of illicit trade. The decrease in PMI's cigarette shipment
volume largely reflected lower market share, primarily due to Marlboro,
reflecting the impact of widened price gaps, and Bond Street, mainly resulting
from competitive price pressure in the low price segment.
In the quarter, the increase in the estimated total market was mainly driven by
a lower prevalence of illicit trade, benefiting from industry retail price
decreases that returned consumption to the tax-paid market. The decrease in
PMI's cigarette shipment volume largely reflected lower market share, primarily
due to Marlboro, reflecting the impact of widened price gaps, and Chesterfield
in "Others," mainly resulting from competitive price pressure in the low price
segment, partially offset by low price Bond Street, and L&M in "Others."
ASIA REGION
2015 Full-Year
Net revenues of $8.2 billion decreased by 6.0%. Excluding unfavorable currency
of $875 million and the impact of acquisitions, net revenues increased by 4.0%,
driven by favorable pricing of $450 million, principally in Australia, Indonesia
and Korea partly offset by unfavorable volume/mix of $100 million, mainly due to
Australia and Korea, partly offset by Japan and improved mix in the Philippines.
Reported operating companies income of $2.9 billion decreased by 9.4%. Excluding
unfavorable currency of $388 million and the impact of acquisitions, operating
companies income increased by 2.7%, driven by favorable pricing, partly offset
by: unfavorable volume/mix of $162 million, mainly due to Australia and Korea,
partly offset by improved mix in the Philippines; and higher costs, mainly
manufacturing costs in Indonesia, marketing investment behind new brand launches
in Indonesia and Japan, and investments related to the expanded
commercialization of iQOS in Japan. Excluding the impact of the asset impairment
and exit costs, primarily related to the factory closure in Australia in 2014,
operating companies income, excluding currency and acquisitions, increased by
1.6%.
Adjusted operating companies income and margin are shown in the table below and
detailed in Schedule 15. Adjusted operating companies income, excluding
unfavorable currency and the impact of acquisitions, increased by 1.6%. Adjusted
operating companies income margin, excluding currency and the impact of
acquisitions, decreased by 0.8 points to 36.1%, primarily reflecting the
above-mentioned factors.
2015 Fourth-Quarter
Reported net revenues of $1.9 billion decreased by 4.2%. Excluding unfavorable
currency of $250 million and the impact of acquisitions, net revenues increased
by 8.3%, driven by favorable pricing of $121 million, principally in Indonesia
and the Philippines, and favorable volume/mix of $45 million, mainly driven by
favorable distributor inventory movements in Japan, and improved mix in the
Philippines, partly offset by Australia and Korea.
Reported operating companies income of $465 million decreased by 18.8%.
Excluding unfavorable currency of $90 million and the impact of acquisitions,
operating companies income decreased by 3.1%, mainly due to higher costs,
principally related to the same factors as for the full year, partly offset by
favorable pricing, as well as favorable volume/mix of $12 million, principally
driven by favorable inventory movements in Japan and improved mix in the
Philippines, partly offset by Australia and Korea. Excluding the impact of asset
impairment and exit costs, primarily related to the factory closure in Australia
in 2014, operating companies income, excluding currency and acquisitions,
decreased by 5.0%.
Adjusted operating companies income and margin are shown in the table below and
detailed on Schedule 11. Adjusted operating companies income, excluding
unfavorable currency and the impact of acquisitions, decreased by 5.0%. Adjusted
operating companies income margin, excluding unfavorable currency and the impact
of acquisitions, decreased by 3.6 points to 25.6%, reflecting the
above-mentioned factors.
Asia OCI Fourth-Quarter Full-Year
(in millions) Excl. Excl.
2015 2014 Change Curr. 2015 2014 Change Curr.
Reported OCI $ 465 $ 573 (18.8 )% (3.1 )% $ 2,886 $ 3,187 (9.4 )% 2.7 %
Asset impairment & exit costs - (11 ) - (35 )
Adjusted OCI $ 465 $ 584 (20.4 )% (5.0 )% $ 2,886 $ 3,222 (10.4 )% 1.6 %
Adjusted OCI Margin* 24.2 % 29.2 % (5.0 ) (3.6 ) 35.2 % 36.9 % (1.7 ) (0.8 )
*Margins are calculated as adjusted OCI, divided by net revenues, excluding
excise taxes.
Asia PMI Shipment Commentaries
2015 Full-Year
PMI's cigarette shipment volume of 281.4 billion units decreased by 2.4%, mainly
due to: Korea; Pakistan, reflecting a lower total estimated market resulting
from the June and December 2015 excise tax-driven price increases, coupled with
an increase in the prevalence of illicit trade and lower market share; and the
Philippines. Excluding distributor inventory movements in Japan, reflecting a
favorable comparison in 2015 resulting from the correction in 2014 of
distributor inventory movements related to the VAT increase of April 2014, PMI's
cigarette shipment volume decreased by 3.1%. Cigarette shipment volume of
Marlboro of 73.5 billion units increased by 3.0%, mainly driven by the
Philippines and Vietnam, partly offset by Japan and Korea. Cigarette shipment
volume of Parliament of 9.4 billion units decreased by 11.5%, primarily due to
Korea, partly offset by Japan. Cigarette shipment volume of Lark of 18.3 billion
units increased by 3.3%, principally driven by Japan, partly offset by Korea.
2015 Fourth-Quarter
PMI's cigarette shipment volume of 68.2 billion units decreased by 1.6%, mainly
due to: Korea; Pakistan, reflecting the same dynamics as for the full year; and
the Philippines; partly offset by Japan. Excluding favorable distributor
inventory movements in Japan, reflecting the same dynamics as for the full year,
PMI's cigarette shipment volume decreased by 4.6%. Cigarette shipment volume of
Marlboro of 18.3 billion units increased by 8.3%, predominantly driven by the
Philippines. Cigarette shipment volume of Parliament of 2.5 billion units
increased by 10.5%, driven by Japan, partly offset by Korea. Cigarette shipment
volume of Lark of 3.7 billion units increased by 16.0%, mainly reflecting the
favorable estimated distributor inventory movements in Japan compared to the
fourth quarter of 2014.
Asia Key Market Commentaries
In Indonesia, estimated industry size, PMI cigarette shipment volume, market
share and segmentation performance are shown in the tables below.
Indonesia Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 81.6 79.0 3.3% 314.0 314.0 -%
PMI Shipments (million units) 27,945 27,874 0.3% 109,840 109,694 0.1%
PMI Cigarette Market Share
Sampoerna A 14.6 % 14.8 % (0.2) 14.9 % 14.4 % 0.5
Dji Sam Soe 6.9 % 6.8 % 0.1 7.0 % 6.3 % 0.7
U Mild 4.6 % 5.3 % (0.7) 4.8 % 5.4 % (0.6)
Others 8.2 % 8.4 % (0.2) 8.3 % 8.8 % (0.5)
Total 34.3 % 35.3 % (1.0) 35.0 % 34.9 % 0.1
Indonesia Segmentation Data Fourth-Quarter Full-Year
Change Change
2015 2014 p.p. 2015 2014 p.p.
Segment % of Total Market
Hand-Rolled Kretek (SKT) 18.6 % 19.8 % (1.2 ) 18.7 % 20.1 % (1.4 )
Machine-Made Kretek (SKM) 75.2 % 74.0 % 1.2 75.1 % 73.5 % 1.6
Whites (SPM) 6.2 % 6.2 % - 6.2 % 6.4 % (0.2 )
Total 100.0 % 100.0 % - 100.0 % 100.0 % -
PMI % Share of Segment
Hand-Rolled Kretek (SKT) 40.7 % 38.6 % 2.1 39.2 % 39.0 % 0.2
Machine-Made Kretek (SKM) 28.9 % 30.6 % (1.7 ) 30.1 % 29.9 % 0.2
Whites (SPM) 80.7 % 80.3 % 0.4 80.9 % 79.7 % 1.2
For the full year, the estimated total cigarette market was essentially flat
reflecting a soft economic environment. The slight increase in PMI's market
share reflected a strong performance from its machine-made kretek brands,
notably Sampoerna A, Dji Sam Soe Magnum and Dji Sam Soe Magnum Blue, largely
offset by U Mild,and a decline in its hand-rolled kretek portfolio, notably due
to Sampoerna Hijau in "Others," down by 0.4 points to 3.0%.
In the quarter, the increase of the estimated total cigarette market mainly
reflected a favorable comparison with the fourth quarter of 2014, which was
negatively impacted by the elimination of fuel subsidies and higher commodity
costs. The decrease in PMI's market share was mainly due to the muted
performance of A Mild 16s and U Mild following their crossing of critical retail
pack price points, ahead of competition, in advance of the January 2016 excise
tax increase, as well as a decline in its hand-rolled kretek portfolio, notably
due to Sampoerna Hijau in "Others," down by 0.2 points to 3.0%.
In Japan, estimated industry size, PMI cigarette shipment volume and market
share performance are shown in the table below.
Japan Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 46.5 47.3 (1.8)% 182.3 186.2 (2.1)%
PMI Shipments (million units) 9,496 8,140 16.7% 45,690 45,556 0.3%
PMI Cigarette Market Share
Marlboro 11.0 % 11.6 % (0.6) 11.3 % 11.6 % (0.3)
Parliament 2.3 % 2.3 % - 2.3 % 2.2 % 0.1
Lark 9.9 % 10.2 % (0.3) 9.9 % 10.0 % (0.1)
Others 1.7 % 1.9 % (0.2) 1.8 % 2.1 % (0.3)
Total 24.9 % 26.0 % (1.1) 25.3 % 25.9 % (0.6)
For the full year, the decrease of the estimated total cigarette market
moderated to 2.1%. Excluding estimated inventory movements, driven principally
by a favorable comparison as a result of the 2014 correction of distributor
inventory movements partly related to the VAT increase of April 2014, PMI's
cigarette shipment volume decreased by 4.3%. The decline was mainly due to a
lower total market, and lower market share principally reflecting the impact of
competitive retail price and new menthol taste product offerings.
In the quarter, the decrease of the estimated total cigarette market moderated
to 1.8%. Excluding favorable distributor inventory movements, reflecting the
same dynamic as for the full year, PMI's total cigarette shipment volume
decreased by 9.1%. The decline was mainly due to the same dynamics as for the
full year.
In Korea, estimated industry size, PMI cigarette shipment volume and market
share performance are shown in the table below.
Korea Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 17.9 22.7 (21.1)% 67.3 88.1 (23.6)%
PMI Shipments (million units) 3,848 4,486 (14.2)% 14,201 17,346 (18.1)%
PMI Cigarette Market Share
Marlboro 9.7 % 7.8 % 1.9 9.6 % 7.8 % 1.8
Parliament 7.6 % 7.1 % 0.5 7.2 % 7.1 % 0.1
Virginia S. 3.7 % 4.2 % (0.5) 3.8 % 4.1 % (0.3)
Others 0.5 % 0.7 % (0.2) 0.6 % 0.7 % (0.1)
Total 21.5 % 19.8 % 1.7 21.2 % 19.7 % 1.5
For the full year, the decline of the estimated total cigarette market reflected
the impact of the January 2015 excise tax increase and related retail price
increases. Excluding the impact of estimated inventory movements associated with
the timing of the excise tax increase, the total cigarette market declined by
approximately 17.3%. The decline in PMI's cigarette shipment volume reflected
the lower estimated total market, partly offset by share growth, driven by
Marlboro, benefiting from the positive impact of pricing for PMI's principal
domestic competitor's main brands.
In the quarter, the decline of the estimated total cigarette market reflected
the same dynamics as for the full year. Excluding the impact of estimated
inventory movements associated with the timing of the excise tax increase, the
total cigarette market declined by approximately 12.4%. The decline in PMI's
cigarette shipment volume was mainly due to the lower estimated total market,
partly offset by share growth, reflecting the same trends as for the full year.
In the Philippines, estimated industry size, PMI cigarette shipment volume and
market share performance, as measured by Nielsen, are shown in the table below.
Data for the total cigarette market have been restated to reflect estimated
total market consumption compared to the previous methodology of reporting only
estimated tax-paid industry volumes.
Philippines Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 22.1 24.3 (9.3)% 90.2 94.9 (4.9)%
PMI Shipments (million units) 16,415 17,494 (6.2)% 66,236 68,358 (3.1)%
PMI Cigarette Market Share
Marlboro 23.0 % 18.4 % 4.6 21.1 % 18.4 % 2.7
Fortune 31.6 % 30.7 % 0.9 31.1 % 30.4 % 0.7
Jackpot 8.8 % 11.4 % (2.6) 9.9 % 10.7 % (0.8)
Others 11.0 % 11.3 % (0.3) 11.3 % 12.5 % (1.2)
Total 74.4 % 71.8 % 2.6 73.4 % 72.0 % 1.4
For the full year, estimated total consumption decreased by 4.9%, mainly due to
the impact of price increases. The decline in PMI's cigarette shipment volume
reflected the lower total market combined with lower consumption of PMI's low
and super-low price brands, following price increases in late 2014 and early
2015, partly offset by higher market share, driven by adult smoker uptrading to
Marlboro, combined with market share growth of Fortune, reflecting the narrowing
of retail price gaps with brands at the bottom end of the market.
In the quarter, estimated total consumption decreased by 9.3%, mainly due to the
impact of price increases. The decline in PMI's cigarette shipment volume
reflected the same dynamics as for the full year, partly offset by higher market
share, as described for the full year.
LATIN AMERICA & CANADA REGION
2015 Full-Year
Net revenues of $3.2 billion decreased by 3.6%. Excluding unfavorable currency
of $505 million and the impact of acquisitions, net revenues increased by 11.7%,
driven by favorable pricing of $525 million, principally in Argentina, Brazil,
Canada and Mexico, partially offset by unfavorable volume/mix of $143 million,
principally due to Brazil, Canada and Mexico.
Reported operating companies income of $1.1 billion increased by 5.3%. Excluding
unfavorable currency of $210 million and the impact of acquisitions, operating
companies income increased by 25.4%, primarily driven by favorable pricing,
partially offset by unfavorable volume/mix of $141 million, mainly due to
Brazil, Canada and Mexico, and higher inflation-driven costs in Argentina.
Adjusted operating companies income and margin are shown in the table below and
detailed in Schedule 15. Adjusted operating companies income, excluding
unfavorable currency and the impact of acquisitions, increased by 24.5%.
Adjusted operating companies income margin, excluding currency and the impact of
acquisitions, increased by 3.6 points to 35.3%, reflecting the factors mentioned
above.
2015 Fourth-Quarter
Reported net revenues of $822 million decreased by 10.8%. Excluding unfavorable
currency of $160 million and the impact of acquisitions, net revenues increased
by 6.5%, driven by favorable pricing of $132 million, principally in Argentina,
Brazil and Canada, partially offset by unfavorable volume/mix of $72 million,
mainly due to Brazil, Canada and Mexico.
Reported operating companies income of $236 million decreased by 20.3%.
Excluding unfavorable currency of $63 million and the impact of acquisitions,
operating companies income increased by 1.0%, principally reflecting favorable
pricing, partly offset by unfavorable volume/mix of $63 million, mainly due to
Brazil, Canada and Mexico, and higher inflation-driven costs in Argentina.
Adjusted operating companies income and margin are shown in the table below and
detailed on Schedule 11. Adjusted operating companies income, excluding
unfavorable currency and the impact of acquisitions, increased by 0.7%. Adjusted
operating companies income margin, excluding unfavorable currency and the impact
of acquisitions, decreased by 1.8 points to 30.4%, principally due to the
above-mentioned factors as well as the timing of trade purchases ahead of price
increases compared to the fourth quarter of 2014 in Mexico.
Latin America & Canada OCI Fourth-Quarter Full-Year
(in millions) Excl. Excl.
2015 2014 Change Curr. 2015 2014 Change Curr.
Reported OCI $ 236 $ 296 (20.3 )% 1.0 % $ 1,085 $ 1,030 5.3 % 25.7 %
Asset impairment & exit costs - (1 ) - (8 )
Adjusted OCI $ 236 $ 297 (20.5 )% 0.7 % $ 1,085 $ 1,038 4.5 % 24.8 %
Adjusted OCI Margin* 28.7 % 32.2 % (3.5 ) (1.8 ) 34.3 % 31.7 % 2.6 3.6
*Margins are calculated as adjusted OCI, divided by net revenues, excluding
excise taxes.
Latin America & Canada PMI Shipment Commentaries
2015 Full-Year
PMI's cigarette shipment volume of 91.9 billion units decreasedby 2.9%, mainly
due to Argentina, Brazil, Canada and Mexico. Although shipment volume of
Marlboro of 35.8 billion units decreased by 3.2%, its Regional market share
increased by 0.2 points to an estimated 15.2%. Market share of Marlboro
increased notably in Brazil and Colombia, by 0.3 and 1.1 points to 9.5% and
9.0%, respectively. Shipment volume of Philip Morris of 19.4 billion units
increased by 1.7%, driven mainly by Canada.
2015 Fourth-Quarter
PMI's cigarette shipment volume of 25.1 billion units decreasedby 6.0%, mainly
due to Brazil and Mexico, partly offset by Argentina. Shipment volume of
Marlboro of 10.0 billion units decreased by 7.5%, and its Regional market share
decreased by 0.5 points to an estimated 15.7%, primarily due to a decline in
Mexico of 1.6 points to 50.3%, respectively, partly offset by an increase in
Argentina and Colombia of 0.1 and 0.7 points to 24.7% and 9.0%, respectively.
Shipment volume of Philip Morris of 5.3 billion units increased by 3.1%, driven
mainly by Argentina.
Latin America & Canada Key Market Commentaries
In Argentina, estimated industry size, PMI cigarette shipment volume and market
share performance are shown in the table below.
Argentina Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 11.0 11.0 (0.1)% 40.8 41.9 (2.5)%
PMI Shipments (million units) 8,676 8,578 1.1% 31,910 32,323 (1.3)%
PMI Cigarette Market Share
Marlboro 24.7 % 24.6 % 0.1 24.3 % 24.3 % -
Parliament 2.1 % 2.2 % (0.1) 2.1 % 2.2 % (0.1)
Philip Morris 45.1 % 43.7 % 1.4 44.7 % 43.4 % 1.3
Others 6.7 % 7.1 % (0.4) 7.1 % 7.3 % (0.2)
Total 78.6 % 77.6 % 1.0 78.2 % 77.2 % 1.0
For the full year, the decline of the estimated total cigarette market was
mainly due to the impact of price increases and a challenging economic
environment. The decrease in PMI's shipment volume was mainly due to a lower
estimated total market, partly offset by market share growth, driven primarily
by Philip Morris, reflecting the positive impact of the brand's capsule
variants. PMI's share of the growing capsule segment, representing 16.4% of the
total market, grew by 4.4 points to 73.5%.
In the quarter, the estimated total cigarette market declined by 0.1%. Excluding
the favorable impact of estimated trade inventory movements, the total cigarette
market declined by 1.4%. The increase in PMI's shipment volume reflected market
share growth, driven primarily by Philip Morris, reflecting the positive impact
of the brand's capsule variants. PMI's share of the growing capsule segment,
representing 17.3% of the total market, grew by 4.0 points to 74.3%.
In Canada, estimated industry size, PMI cigarette shipment volume and market
share performance are shown in the table below.
Canada Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 6.9 6.9 (0.1)% 26.7 27.3 (2.3)%
PMI Shipments (million units) 2,502 2,585 (3.2)% 9,926 10,275 (3.4)%
PMI Cigarette Market Share
Belmont 3.4 % 3.0 % 0.4 3.3 % 3.0 % 0.3
Canadian Classics 9.8 % 10.4 % (0.6) 10.3 % 10.4 % (0.1)
Next 10.6 % 10.1 % 0.5 10.6 % 10.6 % -
Others 12.3 % 13.4 % (1.1) 13.1 % 13.6 % (0.5)
Total 36.1 % 36.9 % (0.8) 37.3 % 37.6 % (0.3)
For the full year, the estimated total cigarette market decreased by 2.3%.
Excluding the favorable impact of estimated competitors' trade inventory
movements, the total market declined by 4.6%, mainly due to the impact of
tax-driven price increases. The decrease in PMI's cigarette shipment volume was
principally due to a lower estimated total market. PMI's market share was also
negatively impacted by the above-mentioned estimated competitors' trade
inventory movements.
In the quarter, the estimated total cigarette market was essentially flat.
Excluding the favorable impact of estimated competitors' trade inventory
movements, the total market declined by 4.1%, mainly due to the impact of
tax-driven price increases. The decrease in PMI's cigarette shipment volume was
principally due to the lower total market.
In Mexico, estimated industry size, PMI cigarette shipment volume and market
share performance are shown in the table below.
Mexico Key Market Data Fourth-Quarter Full-Year
Change Change
2015 2014 % / p.p. 2015 2014 % / p.p.
Total Cigarette Market (billion units) 9.0 9.6 (6.2)% 33.6 33.5 0.4%
PMI Shipments (million units) 6,380 7,120 (10.4)% 23,246 23,861 (2.6)%
PMI Cigarette Market Share
Marlboro 50.3 % 51.9 % (1.6) 48.1 % 49.7 % (1.6)
Delicados 10.5 % 11.5 % (1.0) 10.7 % 11.1 % (0.4)
Benson & Hedges 4.5 % 5.4 % (0.9) 4.6 % 5.2 % (0.6)
Others 5.8 % 5.6 % 0.2 5.8 % 5.3 % 0.5
Total 71.1 % 74.4 % (3.3) 69.2 % 71.3 % (2.1)
For the full year, the estimated total cigarette market increased by 0.4%.
Excluding the unfavorable impact of estimated trade inventory movements, the
total market increased by 2.8%, primarily reflecting a lower prevalence of
illicit trade. The decrease in PMI's cigarette shipment volume was mainly driven
by: lower market share, mainly due to Marlboro, reflecting adult smoker
down-trading; and the timing of price increases by PMI's principal competitor in
the first quarter of 2015; partly offset by gains for certain low price local
trademark brands.
In the quarter, the estimated total cigarette market decreased by 6.2%.
Excluding the unfavorable net impact of estimated trade inventory movements
related to the different timing of price increases in 2014 and 2015, the total
market increased by 2.2%, primarily reflecting a lower prevalence of illicit
trade. The decrease in PMI's cigarette shipment volume was mainly driven by the
lower market share, mainly due to the same dynamics as for the full year. PMI's
market share was also negatively impacted by the above-mentioned estimated trade
inventory movements.
Philip Morris International Inc. Profile
Philip Morris International Inc. (PMI) is the leading international tobacco
company, with six of the world's top 15 international brands, including
Marlboro, the number one cigarette brand worldwide. PMI's products are sold in
more than 180 markets. In 2015, the company held an estimated 15.6% share of the
estimated total international cigarette market outside of the U.S., or 28.7%
excluding the People's Republic of China and the U.S. For more information, see
www.pmi.com.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other
forward-looking statements. Achievement of projected 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: significant increases in cigarette-related taxes;
the imposition of discriminatory excise tax structures; fluctuations in customer
inventory levels due to increases in product taxes and prices; increasing
marketing and regulatory restrictions, often with the goal of reducing or
preventing the use of tobacco products; health concerns relating to the use of
tobacco products and exposure to environmental tobacco smoke; litigation related
to tobacco use; intense competition; the effects of global and individual
country economic, regulatory and political developments; changes in adult smoker
behavior; lost revenues as a result of counterfeiting, contraband and
cross-border purchases; governmental investigations; unfavorable currency
exchange rates and currency devaluations; adverse changes in applicable
corporate tax laws; adverse changes in the cost and quality of tobacco and other
agricultural products and raw materials; and the integrity of its information
systems. PMI's future profitability may also be adversely affected should it be
unsuccessful in its attempts to produce and commercialize products that have the
potential to reduce individual risk and population harm; 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.
PMI is further subject to other risks detailed from time to time in its publicly
filed documents, including the Form 10-Q for the quarter ended September 30,
2015. 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.
Schedule 1
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Statements of Earnings
For the Quarters Ended December 31,
($ in millions, except per share data)
(Unaudited)
2015 2014 % Change
Net revenues $ 18,371 $ 19,941 (7.9)%
Cost of sales 2,375 2,632 (9.8)%
Excise taxes on products (1) 11,979 12,744 (6.0)%
Gross profit 4,017 4,565 (12.0)%
Marketing, administration and research costs 2,028 1,975
Asset impairment and exit costs 68 32
Amortization of intangibles 20 26
Operating income (2) 1,901 2,532 (24.9)%
Interest expense, net 227 263
Earnings before income taxes 1,674 2,269 (26.2)%
Provision for income taxes 412 651 (36.7)%
Equity (income)/loss in unconsolidated subsidiaries, net (36 ) (31 )
Net earnings 1,298 1,649 (21.3)%
Net earnings attributable to noncontrolling interests 49 37
Net earnings attributable to PMI $ 1,249 $ 1,612 (22.5)%
Per share data (3):
Basic earnings per share $ 0.80 $ 1.03 (22.3)%
Diluted earnings per share $ 0.80 $ 1.03 (22.3)%
(1) The segment detail of excise taxes on products sold for the quarters ended December 31, 2015 and 2014 is shown on Schedule 2.
(2) PMI's management evaluates segment performance and allocates resources based on operating companies income, which PMI defines as operating income, excluding general corporate expenses and amortization of intangibles, plus equity (income)/loss in unconsolidated subsidiaries, net. The reconciliation from operating income to operating companies income is as follows:
2015 2014 % Change
Operating Income $ 1,901 $ 2,532 (24.9)%
Excluding:
- Amortization of Intangibles 20 26
- General corporate expenses (included in marketing, administration and research costs above) 47 35
Plus: Equity (income)/loss in unconsolidated subsidiaries, net (36 ) (31 )
Operating Companies Income $ 2,004 $ 2,624 (23.6)%
(3) Net earnings and weighted-average shares used in the basic and diluted earnings per share computations for the quarters ended December 31, 2015 and 2014 are shown on Schedule 4, Footnote 1.
Schedule 2
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
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