REG-Philip Morris International Inc. Philip Morris International Inc. (PMI) Reports 2016 First-Quarter Results; Increases, for Currency Only, 2016 Full-Year Reported Diluted EPS Forecast to a Range of $4.40 to $4.50 <Origin Href="QuoteRef">PM.N</Origin> - Part 2
19/04/2016 10:50
- Part 2: For the preceding part double click ID:nBw5y3KRba
Commentaries
PMI's cigarette shipment volume of 21.7 billion units increasedby 2.4%, mainly
driven by Mexico, partly offset by Argentina. Shipment volume of Marlboro of 8.9
billion units increased by 8.5% and its Regional market share increased by 1.2
points to an estimated 15.9%, primarily driven by Brazil, up by 0.4 points to
10.0%, Colombia, up by 0.4 points to 9.2%, and Mexico, up by 3.2 points to
48.6%, partly offset by Argentina, down by 0.6 points to 24.1%. Shipment volume
of Philip Morris of 4.6 billion units decreased by 3.8%, mainly due to
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 First-Quarter
Change
2016 2015 % / p.p.
Total Cigarette Market (billion units) 9.7 10.3 (5.5 )%
PMI Shipments (million units) 7,526 8,123 (7.4 )%
PMI Cigarette Market Share
Marlboro 24.1 % 24.7 % (0.6 )
Parliament 2.0 % 2.2 % (0.2 )
Philip Morris 44.8 % 44.7 % 0.1
Others 6.5 % 7.3 % (0.8 )
Total 77.4 % 78.9 % (1.5 )
The estimated total cigarette market decreased by 5.5%, or by 4.3% excluding the
unfavorable net impact of trade inventory movements, mainly due to a soft
economic environment and the impact of price increases. The decrease in PMI's
shipment volume reflected the impact of the same dynamics as for the total
market. PMI's lower cigarette market share primarily reflected the growth in
competitors' super-low priced products that was fueled by in-switching from
illicit trade. PMI's share of the growing capsule segment, up by 2.2 points to
represent 18.0% of the total market, increased by 1.3 points to 73.7%.
In Canada, estimated industry size, PMI cigarette shipment volume and market
share performance are shown in the table below.
Canada Key Market Data First-Quarter
Change
2016 2015 % / p.p.
Total Cigarette Market (billion units) 5.5 5.5 (0.4 )%
PMI Shipments (million units) 2,184 2,053 6.4 %
PMI Cigarette Market Share
Belmont 3.8 % 3.1 % 0.7
Canadian Classics 10.9 % 10.5 % 0.4
Next 11.8 % 10.5 % 1.3
Others 13.4 % 13.3 % 0.1
Total 39.9 % 37.4 % 2.5
The estimated total cigarette market decreased by 0.4%, or increased by 6.0%
excluding the unfavorable impact of estimated competitors' trade inventory
movements, mainly driven by improved consumer spending. The increase in PMI's
cigarette shipment volume was principally driven by higher cigarette market
share, largely benefiting from the aforementioned inventory movements.
In Mexico, estimated industry size, PMI cigarette shipment volume and market
share performance are shown in the table below.
Mexico Key Market Data First-Quarter
Change
2016 2015 % / p.p.
Total Cigarette Market (billion units) 8.7 7.5 15.2 %
PMI Shipments (million units) 5,982 4,995 19.7 %
PMI Cigarette Market Share
Marlboro 48.6 % 45.4 % 3.2
Delicados 10.1 % 10.9 % (0.8 )
Benson & Hedges 4.3 % 4.6 % (0.3 )
Others 6.0 % 5.4 % 0.6
Total 69.0 % 66.3 % 2.7
The estimated total cigarette market increased by 15.2%, or by 3.2% excluding
the favorable net impact of estimated trade inventory movements related to the
timing of price increases, primarily reflecting improved market conditions and a
lower prevalence of illicit trade. The increase in PMI's cigarette shipment
volume and market share benefited from the same dynamics as for the total
cigarette market.
About Philip Morris International Inc. ("PMI")
PMI is the world`s leading international tobacco company, with six of the
world's top 15 international brands and products sold in more than 180 markets.
In addition to the manufacture and sale of cigarettes, including Marlboro, the
number one global cigarette brand, and other tobacco products, PMI is engaged in
the development and commercialization of Reduced-Risk Products ("RRPs"). RRPs is
the term PMI uses to refer to products with the potential to reduce individual
risk and population harm in comparison to smoking cigarettes. Through
multidisciplinary capabilities in product development, state-of-the-art
facilities, and industry-leading scientific substantiation, PMI aims to provide
an RRP portfolio that meets a broad spectrum of adult smoker preferences and
rigorous regulatory requirements. For more information, see www.pmi.com and
www.pmiscience.com.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other
forward-looking statements. Achievement of 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-K for the year ended December 31, 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 March 31,
($ in millions, except per share data)
(Unaudited)
2016 2015 % Change
Net Revenues $ 16,788 $ 17,352 (3.3 )%
Cost of sales 2,096 2,229 (6.0 )%
Excise Taxes on products (1) 10,705 10,736 (0.3 )%
Gross profit 3,987 4,387 (9.1 )%
Marketing, administration and research costs 1,496 1,494
Asset impairment and exit costs - -
Amortization of intangibles 18 22
Operating Income (2) 2,473 2,871 (13.9 )%
Interest expense, net 247 275
Earnings before income taxes 2,226 2,596 (14.3 )%
Provision for income taxes 630 785 (19.7 )%
Equity (income)/loss in unconsolidated subsidiaries, net (9 ) (23 )
Net Earnings 1,605 1,834 (12.5 )%
Net Earnings attributable to noncontrolling interests 75 39
Net Earnings attributable to PMI $ 1,530 $ 1,795 (14.8 )%
Per share data (3):
Basic Earnings Per Share $ 0.98 $ 1.16 (15.5 )%
Diluted Earnings Per Share $ 0.98 $ 1.16 (15.5 )%
(1) The segment detail of Excise Taxes on products sold for the quarters ended March 31, 2016 and 2015 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:
2016 2015 % Change
Operating Income $ 2,473 $ 2,871 (13.9 )%
Excluding:
- Amortization of intangibles 18 22
- General corporate expenses (included in marketing, administration 46 41
and research costs above)
Plus: Equity (income)/loss in unconsolidated subsidiaries, net (9 ) (23 )
Operating Companies Income $ 2,546 $ 2,957 (13.9 )%
(3) Net Earnings and weighted-average shares used in the basic and diluted earnings per share computations for the quarters ended March 31, 2016 and 2015 are shown on Schedule 4, Footnote 1.
Schedule 2
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended March 31,
($ in millions)
(Unaudited)
Net Revenues excluding Excise Taxes
European EEMA Asia Latin Total
Union America
& Canada
2016 Net Revenues (1) $ 6,143 $ 3,997 $ 4,689 $ 1,959 $ 16,788
Excise Taxes on products (4,280 ) (2,395 ) (2,721 ) (1,309 ) (10,705 )
Net Revenues excluding Excise Taxes 1,863 1,602 1,968 650 6,083
2015 Net Revenues $ 6,222 $ 4,147 $ 4,764 $ 2,219 $ 17,352
Excise Taxes on products (4,271 ) (2,363 ) (2,609 ) (1,493 ) (10,736 )
Net Revenues excluding Excise Taxes 1,951 1,784 2,155 726 6,616
Variance Currency (155 ) (203 ) (150 ) (183 ) (691 )
Acquisitions - - - - -
Operations 67 21 (37 ) 107 158
Variance Total (88 ) (182 ) (187 ) (76 ) (533 )
Variance Total (%) (4.5 )% (10.2 )% (8.7 )% (10.5 )% (8.1 )%
Variance excluding Currency 67 21 (37 ) 107 158
Variance excluding Currency (%) 3.4 % 1.2 % (1.7 )% 14.7 % 2.4 %
Variance excluding Currency & Acquisitions 67 21 (37 ) 107 158
Variance excluding Currency & Acquisitions (%) 3.4 % 1.2 % (1.7 )% 14.7 % 2.4 %
(1) 2016 Currency decreased Net Revenues as follows:
European Union $ (506 )
EEMA (668 )
Asia (400 )
Latin America & Canada (641 )
$ (2,215 )
Schedule 3
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended March 31,
($ in millions)
(Unaudited)
Operating Companies Income
European EEMA Asia Latin Total
Union America
& Canada
2016 $ 906 $ 633 $ 778 $ 229 $ 2,546
2015 927 866 934 230 2,957
% Change (2.3 )% (26.9 )% (16.7 )% (0.4 )% (13.9 )%
Reconciliation:
For the quarter ended March 31, 2015 $ 927 $ 866 $ 934 $ 230 $ 2,957
2015 Asset impairment and exit costs - - - - -
2016 Asset impairment and exit costs - - - - -
Acquired businesses - - - - -
Currency (54 ) (177 ) (63 ) (89 ) (383 )
Operations 33 (56 ) (93 ) 88 (28 )
For the quarter ended March 31, 2016 $ 906 $ 633 $ 778 $ 229 $ 2,546
Schedule 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Diluted Earnings Per Share
For the Quarters Ended March 31,
($ in millions, except per share data)
(Unaudited)
Diluted
E.P.S.
2016 Diluted Earnings Per Share $ 0.98 (1)
2015 Diluted Earnings Per Share $ 1.16 (1)
Change $ (0.18 )
% Change (15.5 )%
Reconciliation:
2015 Diluted Earnings Per Share $ 1.16 (1)
Special Items:
2015 Asset impairment and exit costs -
2015 Tax items -
2016 Asset impairment and exit costs -
2016 Tax items -
Currency (0.19 )
Interest 0.01
Change in tax rate 0.03
Impact of shares outstanding and share-based payments (0.01 )
Operations (0.02 )
2016 Diluted Earnings Per Share $ 0.98 (1)
(1) Basic and diluted EPS were calculated using the following (in millions):
Q1 Q1
2016 2015
Net Earnings attributable to PMI $ 1,530 $ 1,795
Less distributed and undistributed earnings attributable
to share-based payment awards 5 7
Net Earnings for basic and diluted EPS $ 1,525 $ 1,788
Weighted-average shares for basic and diluted EPS 1,550 1,548
Schedule 5
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Balance Sheets
($ in millions, except ratios)
(Unaudited)
March 31, December 31,
2016 2015
Assets
Cash and cash equivalents $ 2,944 $ 3,417
All other current assets 12,984 12,387
Property, plant and equipment, net 5,865 5,721
Goodwill 7,683 7,415
Other intangible assets, net 2,664 2,623
Investments in unconsolidated subsidiaries 942 890
Other assets 1,539 1,503
Total assets $ 34,621 $ 33,956
Liabilities and Stockholders' (Deficit) Equity
Short-term borrowings $ 673 $ 825
Current portion of long-term debt 2,437 2,405
All other current liabilities 10,981 12,156
Long-term debt 26,683 25,250
Deferred income taxes 1,378 1,543
Other long-term liabilities 3,363 3,253
Total liabilities 45,515 45,432
Total PMI stockholders' deficit (12,753 ) (13,244 )
Noncontrolling interests 1,859 1,768
Total stockholders' deficit (10,894 ) (11,476 )
Total liabilities and stockholders' (deficit) equity $ 34,621 $ 33,956
Total debt $ 29,793 $ 28,480
Total debt to Adjusted EBITDA 2.70 (1) 2.49 (1)
Net debt to Adjusted EBITDA 2.43 (1) 2.19 (1)
(1) For the calculation of Total Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA ratios, refer to Schedule 10.
Schedule 6
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of Currency and Acquisitions
For the Quarters Ended March 31,
($ in millions)
(Unaudited)
2016 2015 % Change in Reported Net
Revenues excluding Excise Taxes
Reported Less Reported Less Reported Less Reported Reported Less Reported Reported Reported Reported
Net Excise Net Currency Net Acquisitions Net Net Excise Net excluding excluding
Revenues Taxes Revenues Revenues Revenues Revenues Taxes Revenues Currency Currency &
excluding excluding excluding excluding Acquisitions
Excise Excise Excise Excise
Taxes Taxes & Taxes, Taxes
Currency Currency &
Acquisitions
$ 6,143 $ 4,280 $ 1,863 $ (155 ) $ 2,018 $ - $ 2,018 European Union $ 6,222 $ 4,271 $ 1,951 (4.5 )% 3.4 % 3.4 %
3,997 2,395 1,602 (203 ) 1,805 - 1,805 EEMA 4,147 2,363 1,784 (10.2 )% 1.2 % 1.2 %
4,689 2,721 1,968 (150 ) 2,118 - 2,118 Asia 4,764 2,609 2,155 (8.7 )% (1.7 )% (1.7 )%
1,959 1,309 650 (183 ) 833 - 833 Latin America & Canada 2,219 1,493 726 (10.5 )% 14.7 % 14.7 %
$ 16,788 $ 10,705 $ 6,083 $ (691 ) $ 6,774 $ - $ 6,774 PMI Total $ 17,352 $ 10,736 $ 6,616 (8.1 )% 2.4 % 2.4 %
2016 2015 % Change in Reported Operating
Companies Income
Reported Less Reported Less Reported Reported Reported Reported Reported
Operating Currency Operating Acquisitions Operating Operating excluding excluding
Companies Companies Companies Companies Currency Currency &
Income Income Income Income Acquisitions
excluding excluding
Currency Currency &
Acquisitions
$ 906 $ (54 ) $ 960 $ - $ 960 European Union $ 927 (2.3 )% 3.6 % 3.6 %
633 (177 ) 810 - 810 EEMA 866 (26.9 )% (6.5 )% (6.5 )%
778 (63 ) 841 - 841 Asia 934 (16.7 )% (10.0 )% (10.0 )%
229 (89 ) 318 - 318 Latin America & Canada 230 (0.4 )% 38.3 % 38.3 %
$ 2,546 $ (383 ) $ 2,929 $ - $ 2,929 PMI Total $ 2,957 (13.9 )% (0.9 )% (0.9 )%
Schedule 7
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
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