REG-Philip Morris International Inc. Philip Morris International Inc. (PMI) Reports 2017 Second-Quarter Results; Revises 2017 Full-Ye
20/07/2017 12:07
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Others 5.4 % 6.2 % (0.8 ) 5.4 % 5.9 % (0.5 )
Total 70.5 % 68.2 % 2.3 67.8 % 68.0 % (0.2 )
In the quarter, the estimated total cigarette market increased by 11.7%.
Excluding the impact of estimated trade inventory movements, the estimated
total cigarette market increased by 1.2%. The increase in PMI's cigarette
shipment volume mainly reflected the higher total cigarette market. The
increase of PMI's cigarette market share largely reflected the favorable
impact of the estimated trade inventory movements.
Year-to-date, the estimated total cigarette market increased by 0.3%, or by
1.7% excluding the impact of estimated inventory movements. PMI's flat
cigarette shipment volume mainly reflected the essentially flat 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 that
present, are likely to present, or have the potential to present less risk of
harm to smokers who switch to these products versus continued smoking. 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 (http://www.pmi.com) and www.pmiscience.com
(http://www.pmiscience.com) .
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other
forward-looking statements. 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; 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, natural
disasters and conflicts; 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,
and limitations on the ability to repatriate funds; 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 reduced-risk products or if regulation, customs classifications
or excise 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.
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 March
31, 2017. 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 June 30,
($ in millions, except per share data)
(Unaudited)
2017 2016 % Change
Net Revenues $ 19,319 $ 19,041 1.5 %
Cost of sales 2,519 2,364 6.6 %
Excise Taxes on products (1) 12,402 12,392 0.1 %
Gross profit 4,398 4,285 2.6 %
Marketing, administration and research costs 1,655 1,513
Asset impairment and exit costs — —
Amortization of intangibles 22 19
Operating Income (2) 2,721 2,753 (1.2 )%
Interest expense, net 213 223
Earnings before income taxes 2,508 2,530 (0.9 )%
Provision for income taxes 689 716 (3.8 )%
Equity (income)/loss in unconsolidated subsidiaries, net (23 ) (28 )
Net Earnings 1,842 1,842 — %
Net Earnings attributable to noncontrolling interests 61 54
Net Earnings attributable to PMI $ 1,781 $ 1,788 (0.4 )%
Per share data (3):
Basic Earnings Per Share $ 1.14 $ 1.15 (0.9 )%
Diluted Earnings Per Share $ 1.14 $ 1.15 (0.9 )%
(1) The segment detail of Excise Taxes on products sold for the quarters ended
June 30, 2017 and 2016 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:
2017 2016 % Change
Operating Income $ 2,721 $ 2,753 (1.2 )%
Excluding:
- Amortization of intangibles 22 19
- General corporate expenses (included in marketing, administration and 40 37
research costs above)
Plus: Equity (income)/loss in unconsolidated subsidiaries, net (23 ) (28 )
Operating Companies Income $ 2,806 $ 2,837 (1.1 )%
(3) Net Earnings and weighted-average shares used in the basic and diluted
earnings per share computations for the quarters ended June 30, 2017 and 2016
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 June 30,
($ in millions)
(Unaudited)
Net Revenues excluding Excise Taxes
European Union EEMA Asia Latin America & Canada Total
2017 Net Revenues (1) $ 6,921 $ 4,492 $ 5,367 $ 2,539 $ 19,319
Excise Taxes on products (4,811 ) (2,817 ) (2,983 ) (1,791 ) (12,402 )
Net Revenues excluding Excise Taxes 2,110 1,675 2,384 748 6,917
2016 Net Revenues $ 7,134 $ 4,531 $ 5,212 $ 2,164 $ 19,041
Excise Taxes on products (4,979 ) (2,867 ) (3,079 ) (1,467 ) (12,392 )
Net Revenues excluding Excise Taxes 2,155 1,664 2,133 697 6,649
Variance Currency (92 ) (62 ) (21 ) (20 ) (195 )
Acquisitions — — — — —
Operations 47 73 272 71 463
Variance Total (45 ) 11 251 51 268
Variance Total (%) (2.1 )% 0.7 % 11.8 % 7.3 % 4.0 %
Variance excluding Currency 47 73 272 71 463
Variance excluding Currency (%) 2.2 % 4.4 % 12.8 % 10.2 % 7.0 %
Variance excluding Currency & Acquisitions 47 73 272 71 463
Variance excluding Currency & Acquisitions (%) 2.2 % 4.4 % 12.8 % 10.2 % 7.0 %
(1) 2017 Currency decreased Net Revenues as follows:
European Union $ (304 )
EEMA (483 )
Asia (33 )
Latin America & Canada (76 )
$ (896 )
Schedule 3
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended June 30,
($ in millions)
(Unaudited)
Operating Companies Income
European Union EEMA Asia Latin America & Canada Total
2017 $ 969 $ 733 $ 836 $ 268 $ 2,806
2016 1,070 794 749 224 2,837
% Change (9.4 )% (7.7 )% 11.6 % 19.6 % (1.1 )%
Reconciliation:
For the quarter ended June 30, 2016 $ 1,070 $ 794 $ 749 $ 224 $ 2,837
2016 Asset impairment and exit costs — — — — —
2017 Asset impairment and exit costs — — — — —
Acquisitions — — — — —
Currency (61 ) (87 ) (25 ) (26 ) (199 )
Operations (40 ) 26 112 70 168
For the quarter ended June 30, 2017 $ 969 $ 733 $ 836 $ 268 $ 2,806
Schedule 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Diluted Earnings Per Share
For the Quarters Ended June 30,
($ in millions, except per share data)
(Unaudited)
Diluted
E.P.S.
2017 Diluted Earnings Per Share $ 1.14 ((1))
2016 Diluted Earnings Per Share $ 1.15 ((1))
Change $ (0.01 )
% Change (0.9 )%
Reconciliation:
2016 Diluted Earnings Per Share $ 1.15 ((1))
Special Items:
2016 Asset impairment and exit costs —
2016 Tax items —
2017 Asset impairment and exit costs —
2017 Tax items —
Currency (0.11 )
Interest 0.01
Change in tax rate 0.01
Operations 0.08 ((2))
2017 Diluted Earnings Per Share $ 1.14 ((1))
(1) Basic and diluted EPS were calculated using the following (in
millions):
Q2 Q2
2017 2016
Net Earnings attributable to PMI $ 1,781 $ 1,788
Less distributed and undistributed earnings attributable
to share-based payment awards 5 5
Net Earnings for basic and diluted EPS $ 1,776 $ 1,783
Weighted-average shares for basic EPS 1,553 1,551
Plus Contingently Issuable Performance Stock Units (PSUs) 1 —
Weighted-average shares for diluted EPS 1,554 1,551
(2) Includes the impact of shares outstanding and share-based
payments
Schedule 5
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Condensed Statements of Earnings
For the Six Months Ended June 30,
($ in millions, except per share data)
(Unaudited)
2017 2016 % Change
Net Revenues $ 35,875 $ 35,829 0.1 %
Cost of sales 4,696 4,460 5.3 %
Excise Taxes on products (1) 22,894 23,097 (0.9 )%
Gross profit 8,285 8,272 0.2 %
Marketing, administration and research costs 3,124 3,009
Asset impairment and exit costs — —
Amortization of intangibles 44 37
Operating Income (2) 5,117 5,226 (2.1 )%
Interest expense, net 432 470
Earnings before income taxes 4,685 4,756 (1.5 )%
Provision for income taxes 1,230 1,346 (8.6 )%
Equity (income)/loss in unconsolidated subsidiaries, net (45 ) (37 )
Net Earnings 3,500 3,447 1.5 %
Net Earnings attributable to noncontrolling interests 129 129
Net Earnings attributable to PMI $ 3,371 $ 3,318 1.6 %
Per share data (3):
Basic Earnings Per Share $ 2.17 $ 2.13 1.9 %
Diluted Earnings Per Share $ 2.17 $ 2.13 1.9 %
(1) The segment detail of Excise Taxes on products sold for the six months
ended June 30, 2017 and 2016 is shown on Schedule 6.
(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:
2017 2016 % Change
Operating Income $ 5,117 $ 5,226 (2.1 )%
Excluding:
- Amortization of intangibles 44 37
- General corporate expenses (included in marketing, administration and 91 83
research costs above)
Plus: Equity (income)/loss in unconsolidated subsidiaries, net (45 ) (37 )
Operating Companies Income $ 5,297 $ 5,383 (1.6 )%
(3) Net Earnings and weighted-average shares used in the basic and diluted
Earnings Per Share computations for the six months ended June 30, 2017 and
2016 are shown on Schedule 8, Footnote 1.
Schedule 6
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Six Months Ended June 30,
($ in millions)
(Unaudited)
Net Revenues excluding Excise Taxes
European Union EEMA Asia Latin America & Canada Total
2017 Net Revenues (1) $ 12,810 $ 8,187 $ 10,205 $ 4,673 $ 35,875
Excise Taxes on products (8,960 ) (5,035 ) (5,580 ) (3,319 ) (22,894 )
Net Revenues excluding Excise Taxes 3,850 3,152 4,625 1,354 12,981
2016 Net Revenues $ 13,277 $ 8,528 $ 9,901 $ 4,123 $ 35,829
Excise Taxes on products (9,259 ) (5,262 ) (5,800 ) (2,776 ) (23,097 )
Net Revenues excluding Excise Taxes 4,018 3,266 4,101 1,347 12,732
Variance Currency (147 ) (161 ) 35 (42 ) (315 )
Acquisitions — — — — —
Operations (21 ) 47 489 49 564
Variance Total (168 ) (114 ) 524 7 249
Variance Total (%) (4.2 )% (3.5 )% 12.8 % 0.5 % 2.0 %
Variance excluding Currency (21 ) 47 489 49 564
Variance excluding Currency (%) (0.5 )% 1.4 % 11.9 % 3.6 % 4.4 %
Variance excluding Currency & Acquisitions (21 ) 47 489 49 564
Variance excluding Currency & Acquisitions (%) (0.5 )% 1.4 % 11.9 % 3.6 % 4.4 %
(1) 2017 Currency increased / (decreased) Net Revenues as follows:
European Union $ (507 )
EEMA (1,024 )
Asia 63
Latin America & Canada (214 )
$ (1,682 )
Schedule 7
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Six Months Ended June 30,
($ in millions)
(Unaudited)
Operating Companies Income
European Union EEMA Asia Latin America & Canada Total
2017 $ 1,741 $ 1,423 $ 1,688 $ 445 $ 5,297
2016 1,976 1,427 1,527 453 5,383
% Change (11.9 )% (0.3 )% 10.5 % (1.8 )% (1.6 )%
Reconciliation:
For the six months ended June 30, 2016 $ 1,976 $ 1,427 $ 1,527 $ 453 $ 5,383
2016 Asset impairment and exit costs — — — — —
2017 Asset impairment and exit costs — — — — —
Acquisitions — — — — —
Currency (89 ) (99 ) 29 (52 ) (211 )
Operations (146 ) 95 132 44 125
For the six months ended June 30, 2017 $ 1,741 $ 1,423 $ 1,688 $ 445 $ 5,297
Schedule 8
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Diluted Earnings Per Share
For the Six Months Ended June 30,
($ in millions, except per share data)
(Unaudited)
Diluted
E.P.S.
2017 Diluted Earnings Per Share $ 2.17 ((1))
2016 Diluted Earnings Per Share $ 2.13 ((1))
Change $ 0.04
% Change 1.9 %
Reconciliation:
2016 Diluted Earnings Per Share $ 2.13
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