REG-Philip Morris International Inc. Philip Morris International Inc. (PMI) Reports 2017 Third-Quarter Results; Revises 2017 Full-Yea
19/10/2017 12:00
- Part 3: For the preceding part double click ID:nBw4NKJMb
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 or taxation do not
differentiate between such products and cigarettes; if it is unable to
successfully introduce new products, promote brand equity, enter new markets
or improve its margins through increased prices and productivity gains; if it
is unable to expand its brand portfolio internally or through acquisitions and
the development of strategic business relationships; or if it is unable to
attract and retain the best global talent.
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 June
30, 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 September 30,
($ in millions, except per share data)
(Unaudited)
2017 2016 % Change
Net Revenues $ 20,638 $ 19,935 3.5 %
Cost of sales 2,735 2,432 12.5 %
Excise Taxes on products (1) 13,165 12,953 1.6 %
Gross profit 4,738 4,550 4.1 %
Marketing, administration and research costs 1,649 1,554
Asset impairment and exit costs — —
Amortization of intangibles 21 19
Operating Income (2) 3,068 2,977 3.1 %
Interest expense, net 223 220
Earnings before income taxes 2,845 2,757 3.2 %
Provision for income taxes 812 764 6.3 %
Equity (income)/loss in unconsolidated subsidiaries, net (12 ) (35 )
Net Earnings 2,045 2,028 0.8 %
Net Earnings attributable to noncontrolling interests 75 90
Net Earnings attributable to PMI $ 1,970 $ 1,938 1.7 %
Per share data (3):
Basic Earnings Per Share $ 1.27 $ 1.25 1.6 %
Diluted Earnings Per Share $ 1.27 $ 1.25 1.6 %
(1) The segment detail of Excise Taxes on products sold for the quarters ended
September 30, 2017 and 2016 is shownon 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,
plusequity (income)/loss in unconsolidated subsidiaries, net. The
reconciliation from operating income to operatingcompanies income is as
follows:
2017 2016 % Change
Operating Income $ 3,068 $ 2,977 3.1 %
Excluding:
- Amortization of intangibles 21 19
- General corporate expenses (included in marketing, administrationand 35 36
research costs above)
Plus: Equity (income)/loss in unconsolidated subsidiaries, net (12 ) (35 )
Operating Companies Income $ 3,136 $ 3,067 2.2 %
(3) Net Earnings and weighted-average shares used in the basic and diluted
earnings per share computations for thequarters ended September 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 September 30,
($ in millions)
(Unaudited)
Net Revenues excluding Excise Taxes
EuropeanUnion EEMA Asia LatinAmerica &Canada Total
2017 Net Revenues (1) $ 7,346 $ 4,990 $ 5,846 $ 2,456 $ 20,638
Excise Taxes on products (5,142 ) (3,207 ) (3,116 ) (1,700 ) (13,165 )
Net Revenues excluding Excise Taxes 2,204 1,783 2,730 756 7,473
2016 Net Revenues $ 7,387 $ 5,122 $ 5,113 $ 2,313 $ 19,935
Excise Taxes on products (5,187 ) (3,186 ) (2,977 ) (1,603 ) (12,953 )
Net Revenues excluding Excise Taxes 2,200 1,936 2,136 710 6,982
Variance Currency 53 (107 ) (68 ) (14 ) (136 )
Acquisitions — — — — —
Operations (49 ) (46 ) 662 60 627
Variance Total 4 (153 ) 594 46 491
Variance Total (%) 0.2 % (7.9 )% 27.8 % 6.5 % 7.0 %
Variance excluding Currency (49 ) (46 ) 662 60 627
Variance excluding Currency (%) (2.2 )% (2.4 )% 31.0 % 8.5 % 9.0 %
Variance excluding Currency & Acquisitions (49 ) (46 ) 662 60 627
Variance excluding Currency & Acquisitions (%) (2.2 )% (2.4 )% 31.0 % 8.5 % 9.0 %
(1) 2017 Currency increased / (decreased) Net Revenues as follows:
European Union $ 191
EEMA (608 )
Asia (87 )
Latin America & Canada (112 )
$ (616 )
Schedule 3
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Quarters Ended September 30,
($ in millions)
(Unaudited)
Operating Companies Income
EuropeanUnion EEMA Asia LatinAmerica &Canada Total
2017 Operating Companies Income $ 1,042 $ 765 $ 1,065 $ 264 $ 3,136
2016 Operating Companies Income 1,120 962 761 224 3,067
Variance
2016 Asset impairment and exit costs — — — — —
2017 Asset impairment and exit costs — — — — —
Currency 7 (84 ) (55 ) (8 ) (140 )
Acquisitions — — — — —
Operations (85 ) (113 ) 359 48 209
Variance Total (78 ) (197 ) 304 40 69
Variance Total (%) (7.0 )% (20.5 )% 39.9 % 17.9 % 2.2 %
Variance excluding Currency (85 ) (113 ) 359 48 209
Variance excluding Currency (%) (7.6 )% (11.7 )% 47.2 % 21.4 % 6.8 %
Variance excluding Currency & Acquisitions (85 ) (113 ) 359 48 209
Variance excluding Currency & Acquisitions (%) (7.6 )% (11.7 )% 47.2 % 21.4 % 6.8 %
Schedule 4
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Diluted Earnings Per Share
For the Quarters Ended September 30,
($ in millions, except per share data)
(Unaudited)
Diluted
E.P.S.
2017 Diluted Earnings Per Share $ 1.27 ((1))
2016 Diluted Earnings Per Share $ 1.25 ((1))
Change $ 0.02
% Change 1.6 %
Reconciliation:
2016 Diluted Earnings Per Share $ 1.25 ((1))
Special Items:
2016 Asset impairment and exit costs —
2016 Tax items —
2017 Asset impairment and exit costs —
2017 Tax items —
Currency (0.12 )
Interest —
Change in tax rate (0.02 )
Operations 0.16 ((2))
2017 Diluted Earnings Per Share $ 1.27 ((1))
(1) Basic and diluted EPS were calculated using the following (in
millions):
Q32017 Q32016
Net Earnings attributable to PMI $ 1,970 $ 1,938
Less distributed and undistributed earnings attributable
to share-based payment awards 4 5
Net Earnings for basic and diluted EPS $ 1,966 $ 1,933
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 Nine Months Ended September 30,
($ in millions, except per share data)
(Unaudited)
2017 2016 % Change
Net Revenues $ 56,513 $ 55,764 1.3 %
Cost of sales 7,431 6,892 7.8 %
Excise Taxes on products (1) 36,059 36,050 — %
Gross profit 13,023 12,822 1.6 %
Marketing, administration and research costs 4,773 4,563
Asset impairment and exit costs — —
Amortization of intangibles 65 56
Operating Income (2) 8,185 8,203 (0.2 )%
Interest expense, net 655 690
Earnings before income taxes 7,530 7,513 0.2 %
Provision for income taxes 2,042 2,110 (3.2 )%
Equity (income)/loss in unconsolidated subsidiaries, net (57 ) (72 )
Net Earnings 5,545 5,475 1.3 %
Net Earnings attributable to noncontrolling interests 204 219
Net Earnings attributable to PMI $ 5,341 $ 5,256 1.6 %
Per share data (3):
Basic Earnings Per Share $ 3.43 $ 3.38 1.5 %
Diluted Earnings Per Share $ 3.43 $ 3.38 1.5 %
(1) The segment detail of Excise Taxes on products sold for the nine months
ended September 30, 2017 and 2016 isshown 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,
plusequity (income)/loss in unconsolidated subsidiaries, net. The
reconciliation from operating income to operatingcompanies income is as
follows:
2017 2016 % Change
Operating Income $ 8,185 $ 8,203 (0.2 )%
Excluding:
- Amortization of intangibles 65 56
- General corporate expenses (included in marketing, administrationand 126 119
research costs above)
Plus: Equity (income)/loss in unconsolidated subsidiaries, net (57 ) (72 )
Operating Companies Income $ 8,433 $ 8,450 (0.2 )%
(3) Net Earnings and weighted-average shares used in the basic and diluted
Earnings Per Share computations for thenine months ended September 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 Nine Months Ended September 30,
($ in millions)
(Unaudited)
Net Revenues excluding Excise Taxes
EuropeanUnion EEMA Asia LatinAmerica &Canada Total
2017 Net Revenues (1) $ 20,156 $ 13,177 $ 16,051 $ 7,129 $ 56,513
Excise Taxes on products (14,102 ) (8,242 ) (8,696 ) (5,019 ) (36,059 )
Net Revenues excluding Excise Taxes 6,054 4,935 7,355 2,110 20,454
2016 Net Revenues $ 20,664 $ 13,650 $ 15,014 $ 6,436 $ 55,764
Excise Taxes on products (14,446 ) (8,448 ) (8,777 ) (4,379 ) (36,050 )
Net Revenues excluding Excise Taxes 6,218 5,202 6,237 2,057 19,714
Variance Currency (94 ) (268 ) (33 ) (56 ) (451 )
Acquisitions — — — — —
Operations (70 ) 1 1,151 109 1,191
Variance Total (164 ) (267 ) 1,118 53 740
Variance Total (%) (2.6 )% (5.1 )% 17.9 % 2.6 % 3.8 %
Variance excluding Currency (70 ) 1 1,151 109 1,191
Variance excluding Currency (%) (1.1 )% — % 18.5 % 5.3 % 6.0 %
Variance excluding Currency & Acquisitions (70 ) 1 1,151 109 1,191
Variance excluding Currency & Acquisitions (%) (1.1 )% — % 18.5 % 5.3 % 6.0 %
(1) 2017 Currency decreased Net Revenues as follows:
European Union $ (316 )
EEMA (1,632 )
Asia (24 )
Latin America & Canada (326 )
$ (2,298 )
Schedule 7
PHILIP MORRIS INTERNATIONAL INC.
and Subsidiaries
Selected Financial Data by Business Segment
For the Nine Months Ended September 30,
($ in millions)
(Unaudited)
Operating Companies Income
EuropeanUnion EEMA Asia LatinAmerica &Canada Total
2017 Operating Companies Income $ 2,783 $ 2,188 $ 2,753 $ 709 $ 8,433
2016 Operating Companies Income 3,096 2,389 2,288 677 8,450
Variance
2016 Asset impairment and exit costs — — — — —
2017 Asset impairment and exit costs — — — — —
Currency (82 ) (183 ) (26 ) (60 ) (351 )
Acquisitions — — — — —
Operations (231 ) (18 ) 491 92 334
Variance Total (313 ) (201 ) 465 32 (17 )
Variance Total (%) (10.1 )% (8.4 )% 20.3 % 4.7 % (0.2 )%
Variance excluding Currency (231 ) (18 ) 491 92 334
Variance excluding Currency (%) (7.5 )% (0.8 )% 21.5 % 13.6 % 4.0 %
Variance excluding Currency & Acquisitions (231 ) (18 ) 491 92 334
Variance excluding Currency & Acquisitions (%) (7.5 )% (0.8 )% 21.5 % 13.6 % 4.0 %
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