- Part 2: For the preceding part double click ID:nBw5Dr1Mya
17,784 17,485 1.7 %
PMI Market Share
Marlboro 11.2 % 12.6 % (1.4 ) 10.7 % 11.6 % (0.9 )
L&M 18.6 % 19.6 % (1.0 ) 18.4 % 18.5 % (0.1 )
Chesterfield 10.0 % 9.3 % 0.7 10.4 % 9.1 % 1.3
HEETS 0.6 % — % 0.6 0.2 % — % 0.2
Others 3.0 % 2.7 % 0.3 3.0 % 3.1 % (0.1 )
Total 43.4 % 44.2 % (0.8 ) 42.7 % 42.3 % 0.4
For the full year, the estimated total market increased by 0.9%. The increase
in PMI's shipment volume was primarily driven by the higher total market and
higher market share, driven by Chesterfield , benefiting from brand support,
partly offset by Marlboro , reflecting pressure from competitive brands in the
below premium segment.
In the quarter, the estimated total market increased by 4.8%. The increase in
PMI's shipment volume primarily reflected the higher total market, partly
offset by lower market share, notably of Marlboro and L&M, impacted by the
growth of the super-low price segment, partly offset by Chesterfield and HEETS
.
In Spain , estimated industry size, PMI shipment volume and market share
performance, shown in the table below, include cigarettes and PMI's heated
tobacco units.
Spain Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Market (billion units) 10.9 11.4 (4.4 )% 45.0 46.7 (3.5 )%
PMI Shipments (million units) 3,325 3,734 (10.9 )% 14,456 16,374 (11.7 )%
PMI Market Share
Marlboro 16.2 % 17.7 % (1.5 ) 16.5 % 18.0 % (1.5 )
L&M 5.3 % 5.3 % — 5.3 % 5.4 % (0.1 )
Chesterfield 8.6 % 8.6 % — 8.6 % 8.6 % —
Others* 1.8 % 1.8 % — 1.9 % 1.9 % —
Total 31.9 % 33.4 % (1.5 ) 32.3 % 33.9 % (1.6 )
*Includes heated tobacco units.
For the full year, the estimated total market decreased by 3.5%, or by 2.5%
excluding the net impact of estimated trade inventory movements. The decline
of PMI's shipment volume, down by 8.0% excluding the net impact of distributor
inventory movements, mainly reflected the lower total market, and lower market
share, due to Marlboro , reflecting the impact of price increases,
particularly above the round €5.00 per pack price point in the vending
channel, as well as a challenging comparison with 2016 in which the market
share of Marlboro grew by 1.0 point.
In the quarter, the estimated total market decreased by 4.4%, or by 1.4%
excluding the net impact of estimated trade inventory movements. The decline
of PMI's shipment volume, down by 8.7% excluding the net impact of distributor
inventory movements, was mainly due to the lower total market and lower market
share, principally due to Marlboro , mainly reflecting the impact of price
increases.
EASTERN EUROPE, MIDDLE EAST & AFRICA REGION (EEMA)
2017 Full-Year
Net revenues, excluding excise taxes, of $6.7 billion decreased by 4.3%.
Excluding unfavorable currency of $291 million, net revenues, excluding excise
taxes, decreased by 0.1%, principally due to unfavorable volume/mix of $374
million, primarily reflecting a lower total market in Russia, and a lower
total market and market share in Saudi Arabia, mainly resulting from the
implementation of the new excise tax. The unfavorable volume/mix was partly
offset by a favorable pricing variance of $364 million, despite low price
realization in Russia, driven notably by Egypt and Ukraine.
Operating companies income of $2.9 billion decreased by 4.2%. Excluding
favorable currency of $81 million, operating companies income decreased by
6.9%, principally due to: unfavorable volume/mix of $344 million,
predominantly in Russia and Saudi Arabia, partly offset by a favorable pricing
variance.
Adjusted operating companies income and margin are shown in the table below
and detailed on Schedule 16. Adjusted operating companies income, excluding
favorable currency, decreased by 6.9%. Adjusted operating companies income
margin, excluding favorable currency, decreased by 2.9 points to 40.2%,
reflecting the factors mentioned above, as detailed on Schedule 16.
2017 Fourth-Quarter
Net revenues, excluding excise taxes, of $1.8 billion decreased by 1.9%.
Excluding unfavorable currency of $23 million, net revenues, excluding excise
taxes, decreased by 0.6%, principally due to unfavorable volume/mix of $30
million, primarily reflecting a lower total market in Russia, and a lower
total market and market share in Saudi Arabia, mainly resulting from the
implementation of the new excise tax, partly offset by Turkey and North
Africa. The unfavorable volume/mix was partly offset by a favorable pricing
variance of $19 million, driven mainly by North Africa, notably Egypt, Russia,
despite low price realization, and Ukraine, partly offset by Turkey.
Operating companies income of $700 million increased by 11.6%. Excluding
favorable currency of $264 million, operating companies income decreased by
30.5%, principally due to unfavorable volume/mix of $45 million, and
unfavorable costs compared to the fourth quarter of 2016 due to: increased
investment behind reduced-risk products; investment income in Russia; and
other operating costs, primarily in Saudi Arabia; partly offset by a favorable
pricing variance.
Adjusted operating companies income and margin are shown in the table below
and detailed on Schedule 12. Adjusted operating companies income, excluding
favorable currency, decreased by 30.5%. Adjusted operating companies income
margin, excluding favorable currency, decreased by 10.5 points to 24.4%,
reflecting the factors mentioned above, as detailed on Schedule 12.
EEMA OCI Fourth-Quarter Full-Year
(in millions) Excl. Excl.
2017 2016 Change Curr. 2017 2016 Change Curr.
OCI $ 700 $ 627 11.6 % (30.5 )% $ 2,888 $ 3,016 (4.2 )% (6.9 )%
Asset impairment & exit costs — — — —
Adjusted OCI $ 700 $ 627 11.6 % (30.5 )% $ 2,888 $ 3,016 (4.2 )% (6.9 )%
Adjusted OCI Margin* 39.7 % 34.9 % 4.8 (10.5 ) 43.1 % 43.1 % — (2.9 )
*Margins are calculated as adjusted OCI, divided by net revenues, excluding
excise taxes.
EEMA Total Market, PMI Shipment & Market Share Commentaries
EEMA PMI Shipment Volume by Brand Fourth-Quarter Full-Year
(million units)
2017 2016 Change 2017 2016 Change
Cigarettes
Marlboro 18,314 18,813 (2.7 )% 70,122 73,818 (5.0 )%
L&M 11,004 12,672 (13.2 )% 46,923 52,183 (10.1 )%
Bond Street 8,886 11,243 (21.0 )% 36,336 42,553 (14.6 )%
Parliament 9,775 8,439 15.8 % 33,299 33,940 (1.9 )%
Philip Morris 5,273 1,235 +100.0% 19,086 2,058 +100.0%
Others 13,080 15,361 (14.8 )% 50,391 66,841 (24.6 )%
Total Cigarettes 66,332 67,763 (2.1 )% 256,157 271,393 (5.6 )%
Heated Tobacco Units 820 63 +100.0% 1,581 100 +100.0%
Total EEMA 67,152 67,826 (1.0 )% 257,738 271,493 (5.1 )%
2017 Full-Year
The estimated total market in EEMA decreased by 2.8% to 1.0 trillion units.
PMI's Regional market share decreased by 0.3 points to 24.9%.
PMI's total shipment volume decreased by 5.1% to 257.7 billion units, mainly
reflecting: lower cigarette shipment volume in Russia, Saudi Arabia - where
PMI's cigarette shipment volume declined by 35.8%, impacted by the new excise
tax implemented in June 2017 that resulted in the doubling of retail prices -
and Ukraine; partly offset by higher cigarette shipment volume in North
Africa, notably Algeria, and higher heated tobacco unit shipment volume. The
decrease in cigarette shipment volume of Marlboro was predominantly due to
Saudi Arabia, reflecting the impact of the excise tax that resulted in the
doubling of the brand's retail price from SAR 12 to SAR 24 per pack, partly
offset by North Africa, mainly Algeria and Egypt, and Turkey. The decrease in
cigarette shipment volume of L&M was mainly due to Russia, Saudi Arabia
and Turkey, partly offset by Algeria and Kazakhstan. The decrease in cigarette
shipment volume of Bond Street was mainly due to Kazakhstan, Russia and
Ukraine. The decrease in cigarette shipment volume of Parliament was mainly
due to Russia and Saudi Arabia, partly offset by Kazakhstan. The increase in
cigarette shipment volume of Philip Morris was driven mainly by Russia and
Ukraine, largely reflecting successful portfolio consolidation of local,
low-price brands in "Others."
2017 Fourth-Quarter
PMI's total shipment volume decreased by 1.0% to 67.2 billion units, mainly
reflecting: lower cigarette shipment volume in Russia, and Saudi Arabia -
where PMI's cigarette shipment volume declined by 60.3%, reflecting the impact
of the aforementioned excise tax - partly offset by North Africa, notably
Algeria, and Turkey, as well as higher heated tobacco shipment volume. The
decrease in cigarette shipment volume of Marlboro was predominantly due to
Saudi Arabia, reflecting the same dynamic as for the full year, partly offset
by North Africa, notably Algeria, and Turkey. The decrease in cigarette
shipment volume of L&M was mainly due to Russia and Saudi Arabia, partly
offset by Algeria and Kazakhstan. The decrease in cigarette shipment volume of
Bond Street was mainly due to Kazakhstan, Russia and Ukraine. The increase in
cigarette shipment volume of Parliament was mainly driven by Russia and
Turkey, partly offset by Saudi Arabia. The increase in cigarette shipment
volume of Philip Morris was mainly driven by Russia and Ukraine, largely
reflecting successful portfolio consolidation of local, low-price brands in
"Others."
Key Market Commentaries
In North Africa , estimated cigarette industry size, PMI cigarette shipment
volume and cigarette market share performance are shown in the table below.
North Africa Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Cigarette Market (billion units) 38.7 35.7 8.3 % 144.9 142.3 1.9 %
PMI Cigarette Shipments (million units) 9,131 8,141 12.2 % 35,085 34,035 3.1 %
PMI Cigarette Market Share
Marlboro 9.9 % 8.7 % 1.2 9.3 % 8.3 % 1.0
L&M 11.3 % 11.5 % (0.2 ) 11.8 % 12.2 % (0.4 )
Others 2.9 % 2.4 % 0.5 2.9 % 2.7 % 0.2
Total 24.1 % 22.6 % 1.5 24.0 % 23.2 % 0.8
For the full year, the estimated total cigarette market increased by 1.9%,
mainly driven by Egypt, partially offset by Tunisia. The increase in PMI's
cigarette shipment volume was mainly driven by the higher cigarette market, as
well as higher cigarette market share, notably of Marlboro in Algeria, partly
offset by L&M in Egypt.
In the quarter, the estimated total cigarette market increased by 8.3%, mainly
driven by Algeria and Egypt, partially offset by Tunisia. The increase in
PMI's cigarette shipment volume mainly reflected higher cigarette market and
market share, notably of Marlboro in Algeria and Egypt and L&M in Algeria.
In Russia , estimated industry size and PMI shipment volume, shown in the
table below, include cigarettes and PMI's heated tobacco units. Market share
performance, as measured by Nielsen and shown in the table below, reflects
that of cigarettes.
Russia Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Market (billion units) 66.5 71.0 (6.4 )% 260.0 280.0 (7.2 )%
PMI Shipments (million units) 19,052 20,574 (7.4 )% 72,417 79,706 (9.1 )%
PMI Cigarette Market Share
Marlboro 1.7 % 1.3 % 0.4 1.5 % 1.4 % 0.1
Parliament 3.5 % 3.7 % (0.2 ) 3.5 % 3.8 % (0.3 )
Bond Street 8.0 % 8.9 % (0.9 ) 8.6 % 8.4 % 0.2
Philip Morris 5.6 % 0.5 % 5.1 4.3 % 0.2 % 4.1
Others 7.9 % 12.8 % (4.9 ) 9.2 % 13.4 % (4.2 )
Total 26.7 % 27.2 % (0.5 ) 27.1 % 27.2 % (0.1 )
For the full year, the estimated total market decreased by 7.2%, reflecting
the impact of excise tax-driven price increases and an increase in the
prevalence of illicit trade. The decline of PMI's shipment volume was mainly
due to the lower total market. PMI's market share decreased by 0.1 point. The
decline of "Others" largely reflected the successful portfolio consolidation
of local, low-price brands into Philip Morris .
In the quarter, the estimated total market decreased by 6.4%, reflecting the
same dynamics as for the full-year. The decline of PMI's shipment volume was
mainly due to the lower total market. The decrease in PMI's market share was
mainly due to Bond Street , largely reflecting the impact of competitive
product offerings in the low price segment, partly offset by Marlboro , as
well as Philip Morris , reflecting the same dynamic as in the quarter.
In Turkey , estimated cigarette industry size, PMI cigarette shipment volume
and cigarette market share performance, as measured by Nielsen, are shown in
the table below.
Turkey Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Cigarette Market (billion units) 28.5 26.0 9.8 % 106.2 105.5 0.7 %
PMI Cigarette Shipments (million units) 13,555 12,074 12.3 % 49,649 49,624 0.1 %
PMI Cigarette Market Share
Marlboro 10.4 % 10.3 % 0.1 10.2 % 10.2 % —
Parliament 11.4 % 11.8 % (0.4 ) 11.5 % 11.7 % (0.2 )
Lark 6.9 % 7.0 % (0.1 ) 6.9 % 7.4 % (0.5 )
Others 14.7 % 15.3 % (0.6 ) 14.7 % 15.0 % (0.3 )
Total 43.4 % 44.4 % (1.0 ) 43.3 % 44.3 % (1.0 )
For the full year, the estimated total cigarette market increased by 0.7%.
Excluding the net impact of estimated trade inventory movements, the estimated
total cigarette market declined by 1.6%. The decrease in PMI's cigarette
market share, as measured by Nielsen, was mainly due to Lark , and L&M and
Muratti in "Others," partly offset by Chesterfield , principally reflecting
competitive pressure from super-low price alternatives.
In the quarter, the estimated total cigarette market increased by 9.8%.
Excluding the net impact of estimated trade inventory movements ahead of
speculated January 2018 price increases, the estimated total cigarette market
increased by 6.3%. The increase in PMI's cigarette shipments was mainly due to
the higher total market. The decrease in PMI's cigarette market share, as
measured by Nielsen, was mainly due to L&M and Muratti in "Others," partly
offset by Chesterfield , reflecting competitive pressure from super-low price
alternatives.
In Ukraine , estimated industry size and PMI shipment volume, shown in the
table below, include cigarettes and PMI's heated tobacco units. Market share
performance, as measured by Nielsen and shown in the table below, reflects
that of cigarettes.
Ukraine Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Market (billion units) 16.4 17.1 (3.8 )% 67.1 73.1 (8.2 )%
PMI Shipments (million units) 4,834 4,797 0.8 % 19,356 22,022 (12.1 )%
PMI Cigarette Market Share
Marlboro 3.0 % 3.1 % (0.1 ) 3.0 % 3.1 % (0.1 )
Parliament 3.3 % 3.0 % 0.3 3.2 % 2.9 % 0.3
Bond Street 7.7 % 9.2 % (1.5 ) 8.4 % 10.0 % (1.6 )
Philip Morris 4.0 % — % 4.0 3.1 % — % 3.1
Others 8.9 % 12.4 % (3.5 ) 9.6 % 13.2 % (3.6 )
Total 26.9 % 27.7 % (0.8 ) 27.3 % 29.2 % (1.9 )
For the full year, the estimated total market decreased by 8.2%, mainly due to
the impact of price increases and an increase in the prevalence of illicit
trade. The decrease in PMI's shipment volume was primarily due to the lower
total market, as well as lower cigarette market share, as measured by Nielsen,
notably of low-price Bond Street , reflecting competitive pressure from
lower-priced alternatives, partly offset by Parliament and Philip Morris ,
following the successful portfolio consolidation of a local, low-price brand
in "Others."
In the quarter, the estimated total market decreased by 3.8%, or by 7.0%
excluding the net impact of estimated trade inventory movements, mainly due to
the impact of price increases. The decrease in PMI's cigarette market share,
as measured by Nielsen, reflected the same dynamics as for the quarter.
ASIA REGION
2017 Full-Year
Net revenues, excluding excise taxes, of $10.8 billion increased by 24.3%.
Excluding unfavorable currency of $137 million, net revenues, excluding excise
taxes, increased by 25.9%, reflecting: a favorable pricing variance of $559
million, driven principally by Australia, Indonesia, Japan and the
Philippines; and a favorable volume/mix of $1.7 billion, driven by heated
tobacco unit volume in Japan and Korea, partly offset by unfavorable cigarette
volume/mix, notably in Australia, reflecting a lower total market impacted by
excise tax-driven price increases, and Indonesia.
Operating companies income of $4.1 billion increased by 29.8%. Excluding
unfavorable currency of $123 million, operating companies income increased by
33.7%, mainly driven by a favorable pricing variance and favorable volume/mix
of $622 million, mainly in Japan and Korea, partly offset by Australia and
Indonesia. The increase was partly offset by higher costs, principally related
to increased investment behind reduced-risk products.
Adjusted operating companies income and margin are shown in the table below
and detailed on Schedule 16. Adjusted operating companies income, excluding
unfavorable currency, increased by 33.7%. Adjusted operating companies income
margin, excluding unfavorable currency, increased by 2.3 points to 39.1%,
reflecting the factors mentioned above, as detailed on Schedule 16.
2017 Fourth-Quarter
Net revenues, excluding excise taxes, of $3.4 billion increased by 40.5%.
Excluding unfavorable currency of $104 million, net revenues, excluding excise
taxes, increased by 44.8%, reflecting: a favorable pricing variance of $166
million, driven principally by Australia, Indonesia, Japan and the
Philippines, partly offset by Korea; and a favorable volume/mix of $929
million, predominantly driven by heated tobacco unit volume in Japan and
Korea, as well as cigarette volume in the Philippines, partly offset by
cigarette volume in Australia, reflecting the same dynamic as for the full
year, and Indonesia.
Operating companies income of $1.4 billion increased by 53.7%. Excluding
unfavorable currency of $97 million, operating companies income increased by
64.4%, mainly driven by a favorable pricing variance and favorable volume/mix
of $471 million, mainly in Japan, Korea and the Philippines, partly offset by
Australia and Indonesia.
Adjusted operating companies income and margin are shown in the table below
and detailed on Schedule 12. Adjusted operating companies income, excluding
unfavorable currency, increased by 64.4%. Adjusted operating companies income
margin, excluding unfavorable currency, increased by 5.0 points to 42.2%,
reflecting the factors mentioned above, as detailed on Schedule 12.
Asia OCI Fourth-Quarter Full-Year
(in millions) Excl. Excl.
2017 2016 Change Curr. 2017 2016 Change Curr.
OCI $ 1,396 $ 908 53.7 % 64.4 % $ 4,149 $ 3,196 29.8 % 33.7 %
Asset impairment & exit costs — — — —
Adjusted OCI $ 1,396 $ 908 53.7 % 64.4 % $ 4,149 $ 3,196 29.8 % 33.7 %
Adjusted OCI Margin* 40.6 % 37.2 % 3.4 5.0 38.5 % 36.8 % 1.7 2.3
*Margins are calculated as adjusted OCI, divided by net revenues, excluding
excise taxes.
Asia Total Market, PMI Shipment & Market Share Commentaries
Asia PMI Shipment Volume by Brand Fourth-Quarter Full-Year
(million units)
2017 2016 Change 2017 2016 Change
Cigarettes
Marlboro 19,191 19,186 — % 73,446 76,463 (3.9 )%
Lark 3,078 4,178 (26.3 )% 14,474 17,600 (17.8 )%
Parliament 2,096 2,608 (19.6 )% 9,224 10,142 (9.1 )%
Others 36,869 37,843 (2.6 )% 137,109 155,824 (12.0 )%
Total Cigarettes 61,234 63,815 (4.0 )% 234,253 260,029 (9.9 )%
Heated Tobacco Units 14,032 3,510 +100.0% 32,729 7,070 +100.0%
Total Asia 75,266 67,325 11.8 % 266,982 267,099 — %
2017 Full-Year
The estimated total market in Asia, excluding China, decreased by 3.1% to 1.1
trillion units. PMI's Regional market share, excluding China, was flat at
23.8%.
PMI's total shipment volume of 267.0 billion units was flat, mainly
reflecting: lower cigarette shipment volume in Indonesia, Japan, Korea,
Pakistan - impacted by excise tax-driven price increases in 2017 and an
increase in the prevalence of illicit trade - and the Philippines, fully
offset by higher heated tobacco unit shipment volume, mainly in Japan and
Korea. The decrease in cigarette shipment volume of Marlboro was mainly due to
Japan and Korea, primarily reflecting out-switching to heated tobacco
products, partly offset by Indonesia and the Philippines. The decrease in
cigarette shipment volume of Lark was principally due to Japan. The decrease
in cigarette shipment volume of Parliament was mainly due to Japan and Korea.
The decrease in cigarette shipment volume of "Others" was mainly due to local,
low-price brands in Indonesia, Pakistan and the Philippines.
PMI's total shipment volume benefited from the favorable net impact of
estimated combustible and heated tobacco unit inventory movements, which were
driven by approximately 8.5 billion units net in Japan, reflecting: the
increasing demand for HeatSticks , anticipated to further increase in the
first quarter of 2018 following a planned lifting of the restriction on IQOS
device sales; the establishment of appropriate distributor inventory levels of
heated tobacco units, given the current high dependence on a single
manufacturing center; and the transition from air freight to sea freight of
heated tobacco units, largely completed in the fourth quarter of 2017.
Excluding the impact of total estimated net inventory movements, PMI's total
shipment volume decreased by 3.1%.
2017 Fourth-Quarter
PMI's total shipment volume increased by 11.8% to 75.3 billion units,
principally reflecting: higher heated tobacco unit shipment volume, mainly in
Japan and Korea, and higher cigarette shipment volume in Indonesia and the
Philippines, partly offset by lower cigarette shipment volume in Japan and
Korea. Cigarette shipment volume of Marlboro was flat, with growth in
Indonesia and the Philippines offset by declines in Japan and Korea,
principally reflecting out-switching to heated tobacco products . The decrease
in cigarette shipment volume of Lark was principally due to Japan. The
decrease in cigarette shipment volume of Parliament was principally due to
Japan and Korea. The decrease in cigarette shipment volume of "Others" was
mainly due to low-price brands in Indonesia and the Philippines.
PMI's total shipment volume benefited from the favorable net impact of
estimated combustible and heated tobacco unit inventory movements, which were
driven by approximately 5.0 billion units in Japan, reflecting the same
dynamics as for the full year. Excluding the impact of total estimated net
inventory movements, PMI's total shipment volume increased by 4.7%.
Key Market Commentaries
In Indonesia , estimated cigarette industry size, PMI cigarette shipment
volume, cigarette market share and segmentation performance are shown in the
tables below.
Indonesia Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Cigarette Market (billion units) 81.5 80.5 1.3 % 307.4 315.6 (2.6 )%
PMI Cigarette Shipments (million units) 26,903 26,732 0.6 % 101,324 105,524 (4.0 )%
PMI Cigarette Market Share
Sampoerna A 14.3 % 14.0 % 0.3 13.8 % 14.0 % (0.2 )
Dji Sam Soe 8.7 % 6.4 % 2.3 7.4 % 6.5 % 0.9
Sampoerna U 2.6 % 5.2 % (2.6 ) 4.1 % 5.2 % (1.1 )
Others 7.4 % 7.6 % (0.2 ) 7.7 % 7.7 % —
Total 33.0 % 33.2 % (0.2 ) 33.0 % 33.4 % (0.4 )
Indonesia Segmentation Data Fourth-Quarter Full-Year
Change Change
2017 2016 p.p. 2017 2016 p.p.
Segment % of Total Market
Hand-Rolled Kretek (SKT) 17.4 % 18.2 % (0.8 ) 17.6 % 18.2 % (0.6 )
Machine-Made Kretek (SKM) 77.7 % 76.3 % 1.4 77.2 % 75.8 % 1.4
Whites (SPM) 4.9 % 5.5 % (0.6 ) 5.2 % 6.0 % (0.8 )
Total 100.0 % 100.0 % — 100.0 % 100.0 % —
PMI % Share of Segment
Hand-Rolled Kretek (SKT) 37.5 % 37.8 % (0.3 ) 37.5 % 37.3 % 0.2
Machine-Made Kretek (SKM) 30.1 % 29.0 % 1.1 29.4 % 28.9 % 0.5
Whites (SPM) 63.5 % 76.3 % (12.8 ) 70.2 % 79.5 % (9.3 )
For the full year, the estimated total cigarette market decreased by 2.6%,
reflecting a soft economic environment and the impact of above-inflation
excise tax-driven price increases. The decrease in PMI's shipments was mainly
due to the lower total market and lower cigarette market share, notably due to
a decline of Sampoerna U , reflecting the impact of price increases, partly
offset by a growth of Dji Sam Soe , driven by the variant Magnum Mild .
In the quarter, the estimated total cigarette market increased by 1.3%,
reflecting a favorable comparison with the fourth quarter of 2016, which
declined by 3.1%. The increase in PMI's cigarette shipments was primarily
driven by the higher estimated total cigarette market, partly offset by lower
cigarette market share, largely reflecting the same dynamics as for the full
year.
In Japan , PMI shipments reflect cigarette and heated tobacco unit volume. The
estimated total market and PMI’s market share reflect total industry
cigarette and heated tobacco unit volume.
Japan Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Market (billion units) 43.4 45.3 (4.1 )% 171.5 179.0 (4.2 )%
PMI Shipments (million units)
Cigarettes 7,683 10,631 (27.7 )% 34,853 43,915 (20.6 )%
Heated Tobacco Units 13,134 3,510 +100% 31,291 7,069 +100%
Total 20,816 14,141 47.2 % 66,144 50,985 29.7 %
PMI Market Share
Marlboro 8.1 % 10.2 % (2.1 ) 9.3 % 10.6 % (1.3 )
HeatSticks 13.9 % 4.9 % 9.0 10.8 % 2.9 % 7.9
Parliament 1.9 % 2.2 % (0.3 ) 2.1 % 2.3 % (0.2 )
Lark 8.0 % 9.3 % (1.3 ) 8.6 % 9.6 % (1.0 )
Others 1.3 % 1.7 % (0.4 ) 1.3 % 1.7 % (0.4 )
Total 33.2 % 28.3 % 4.9 32.1 % 27.1 % 5.0
For the full year, the estimated total market decreased by 4.2%. PMI's
shipment volume increased by 13.1%, excluding the net impact of estimated
cigarette and heated tobacco unit distributor inventory movements, driven by
higher market share of HeatSticks.
In the quarter, the estimated total market decreased by 4.1%. PMI's shipment
volume increased by 11.9%, excluding the net impact of estimated cigarette and
heated tobacco unit distributor inventory movements, driven by higher market
share of HeatSticks.
In Korea , PMI shipments reflect cigarette and heated tobacco unit volume. The
estimated total market and PMI’s market share reflect total industry
cigarette and heated tobacco unit volume.
Korea Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Market (billion units) 16.4 18.0 (9.1 )% 70.6 73.6 (4.1 )%
PMI Shipments (million units)
Cigarettes 3,079 3,937 (21.8 )% 13,499 15,490 (12.9 )%
Heated Tobacco Units 898 — — % 1,438 — — %
Total 3,977 3,937 1.0 % 14,937 15,490 (3.6 )%
PMI Market Share
Marlboro 8.6 % 10.0 % (1.4 ) 8.7 % 9.6 % (0.9 )
Parliament 7.9 % 8.9 % (1.0 ) 8.0 % 7.9 % 0.1
HEETS 5.5 % — % 5.5 2.0 % — % 2.0
Virginia S. 2.0 % 2.4 % (0.4 ) 2.0 % 3.0 % (1.0 )
Others 0.4 % 0.4 % — 0.5 % 0.5 % —
Total 24.4 % 21.7 % 2.7 21.2 % 21.0 % 0.2
For the full year, the estimated total market decreased by 4.1%, or by 3.3%
excluding the net impact of estimated cigarette trade inventory movements. The
decrease in PMI's shipment volume was due to the lower total market, partly
offset by higher market share driven by the May 2017 launch of HEETS .
In the quarter, the estimated total market decreased by 9.1%, or by 3.0%
excluding the net impact of estimated cigarette trade inventory movements
notably related to inventory movements in the fourth quarter of 2016 ahead of
the implementation of graphic health warnings. The increase in PMI's shipment
volume mainly reflected higher market share, mainly driven by the same
dynamics as for the full year, despite PMI's principal competitors' new
product launches.
In the Philippines , estimated cigarette industry size, PMI cigarette shipment
volume and cigarette market share performance are shown in the table below.
Philippines Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Cigarette Market (billion units) 20.7 19.2 7.8 % 74.9 79.3 (5.6 )%
PMI Cigarette Shipments (million units) 14,315 13,053 9.7 % 50,618 56,611 (10.6 )%
PMI Cigarette Market Share
Marlboro 35.6 % 29.9 % 5.7 33.0 % 28.4 % 4.6
Fortune 17.9 % 20.5 % (2.6 ) 18.0 % 23.4 % (5.4 )
Jackpot 5.6 % 6.8 % (1.2 ) 6.1 % 7.9 % (1.8 )
Others 10.2 % 11.0 % (0.8 ) 10.5 % 11.6 % (1.1 )
Total 69.3 % 68.2 % 1.1 67.6 % 71.3 % (3.7 )
For the full year, the decline of the estimated total cigarette market of
6.7%, excluding the net impact of estimated trade inventory movements, was
mainly due to the impact of excise tax-driven price increases. The decline in
PMI's cigarette shipment volume was due to the lower total cigarette market,
as well as lower cigarette market share, particularly of PMI's low and
super-low price brands as a result of the timing of competitors' price
increases, which initially widened the price gaps to PMI's principal
competitor's discounted brands, partly offset by Marlboro , which benefited
from in-switching from lower-priced brands.
In the quarter, the estimated total cigarette market increased by 7.8%, or by
1.1% excluding the net impact of estimated trade inventory movements regarding
an anticipated Marlboro price increase in January 2018. The increase in PMI's
cigarette shipment volume reflected the higher total cigarette market, as well
as higher cigarette market share, particularly of Marlboro , which benefited
from in-switching from lower-priced brands following significant competitor
price increases in the quarter.
LATIN AMERICA & CANADA REGION
2017 Full-Year
Net revenues, excluding excise taxes, of $2.9 billion increased by 3.5%.
Excluding unfavorable currency of $54 million, net revenues, excluding excise
taxes, increased by 5.4%, primarily reflecting a favorable pricing variance of
$307 million across the Region, notably Argentina, Canada and Mexico, partly
offset by unfavorable volume/mix of $154 million, notably due to Argentina,
Brazil, Canada and Mexico.
Operating companies income of $1.0 billion increased by 6.8%. Excluding
unfavorable currency of $70 million, operating companies income increased by
14.3%, primarily reflecting a favorable pricing variance, partly offset by
unfavorable volume/mix of $152 million, notably due to Argentina, Brazil,
Canada and Mexico.
Adjusted operating companies income and margin are shown in the table below
and detailed on Schedule 16. Adjusted operating companies income, excluding
unfavorable currency, increased by 14.3%. Adjusted operating companies income
margin, excluding unfavorable currency, increased by 2.8 points to 35.8%,
principally driven by the factors mentioned above, as detailed on Schedule 16.
2017 Fourth-Quarter
Net revenues, excluding excise taxes, of $831 million increased by 5.9%.
Excluding favorable currency of $2 million, net revenues, excluding excise
taxes, increased by 5.6%, primarily reflecting a favorable pricing variance of
$83 million across the Region, notably Argentina, Canada and Mexico, partly
offset by unfavorable volume/mix of $39 million, mainly due to Brazil and
Canada, partly offset by Mexico.
Operating companies income of $293 million increased by 12.3%. Excluding
unfavorable currency of $10 million, operating companies income increased by
16.1%, primarily reflecting a favorable pricing variance, partly offset by
unfavorable volume/mix of $36 million, mainly due to Brazil and Canada, partly
offset by Mexico.
Adjusted operating companies income and margin are shown in the table below
and detailed on Schedule 12. Adjusted operating companies income, excluding
unfavorable currency, increased by 16.1%. Adjusted operating companies income
margin, excluding unfavorable currency, increased by 3.4 points to 36.6%,
principally driven by the factors mentioned above, as detailed on Schedule 12.
Latin America & Canada OCI Fourth-Quarter Full-Year
(in millions) Excl. Excl.
2017 2016 Change Curr. 2017 2016 Change Curr.
OCI $ 293 $ 261 12.3 % 16.1 % $ 1,002 $ 938 6.8 % 14.3 %
Asset impairment & exit costs — — — —
Adjusted OCI $ 293 $ 261 12.3 % 16.1 % $ 1,002 $ 938 6.8 % 14.3 %
Adjusted OCI Margin* 35.3 % 33.2 % 2.1 3.4 34.1 % 33.0 % 1.1 2.8
*Margins are calculated as adjusted OCI, divided by net revenues, excluding
excise taxes.
Latin America & Canada Total Market, PMI Shipment & Market Share
Commentaries
Latin America & Canada PMI Shipment Volume by Brand Fourth-Quarter Full-Year
(million units)
2017 2016 Change 2017 2016 Change
Cigarettes
Marlboro 9,429 9,632 (2.1 )% 33,711 35,194 (4.2 )%
Philip Morris 3,335 3,912 (14.8 )% 13,320 16,463 (19.1 )%
Chesterfield 3,317 1,565 +100.0% 9,852 2,626 +100.0%
Others 6,841 8,685 (21.2 )% 27,340 33,655 (18.8 )%
Total Cigarettes 22,922 23,794 (3.7 )% 84,223 87,938 (4.2 )%
Heated Tobacco Units 15 — — % 27 — — %
Total Latin America & Canada 22,937 23,794 (3.6 )% 84,250 87,938 (4.2 )%
2017 Full-Year
The estimated total market in Latin America & Canada decreased by 3.8% to
213.0 billion units. PMI's Regional market share decreased by 0.1 point to
39.6%.
PMI's total shipment volume decreased by 4.2% to 84.3 billion units, mainly
due to lower cigarette shipment volume in Argentina, Brazil, Canada, Colombia
and Mexico. The decrease in cigarette shipment volume of Marlboro was mainly
due to Argentina and Brazil. The decrease in cigarette shipment volume of
Philip Morris was mainly due to Argentina. The increase in cigarette shipment
volume of Chesterfield was driven by Argentina, Brazil, Colombia and
Venezuela, partly offset by Mexico. The decrease in cigarette shipment volume
of "Others" was principally due to mainly local brands in Argentina, Brazil,
Colombia and Venezuela, largely reflecting successful brand portfolio
consolidation, Canada and Mexico.
2017 Fourth-Quarter
PMI's total shipment volume decreased by 3.6% to 22.9 billion units, mainly
due to Argentina, Brazil and Colombia, partly offset by Mexico and Venezuela.
The decrease in cigarette shipment volume of Marlboro was mainly due to
Argentina and Brazil, partly offset by Mexico. The decrease in cigarette
shipment volume of Philip Morris was mainly due to Argentina. The increase in
cigarette shipment volume of Chesterfield was mainly driven by Argentina,
Brazil, Colombia and Venezuela. The decrease in cigarette shipment volume of
"Others" was principally due to mainly local brands in Brazil and Colombia,
reflecting successful brand portfolio consolidation.
Key Market Commentaries
In Argentina , estimated cigarette industry size, PMI cigarette shipment
volume and cigarette market share performance are shown in the table below.
Argentina Key Market Data Fourth-Quarter Full-Year
Change Change
2017 2016 % / p.p. 2017 2016 % / p.p.
Total Cigarette Market (billion units) 9.2 9.4 (2.5 )% 36.2 36.1 0.2 %
PMI Cigarette Shipments (million units) 6,859 7,123 (3.7 )% 27,002 27,512 (1.9 )%
PMI Cigarette Market Share
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