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Agenda
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm
2014 Forecast
2015 Forecast
(1)% to (2)%
(3)%
(a) Excluding China and the USA
Source: PMI estimates and PMI forecasts
(2)% to (3)%
37.0%
35.7%
2010
(a) Excluding duty free
Source: PMI estimates
12mm May
2014
5
38.5
EU
EEMA
Asia(a)
LA&C
+0.4pp
+1.4pp
+0.4pp
+1.7pp
38.9
38.1
36.4
24.8
24.5
24.9
12mm May
2014
2010
12mm May
2014
23.4
2010
12mm May
2014
2010
2010
12mm May
2014
6
2010
Argentina
Brazil
Egypt
Indonesia
Mexico
Philippines
Poland
Russia
Turkey
Vietnam
(a) 12mm April
Note: Premium includes above premium
Source: PMI estimates and Nielsen
35.7%
22.2
7.4
35.5
61.3
26.4
13.5
13.4
17.8
2.6
12mm May
2014
38.5%
27.1
9.7
37.3
61.4
19.1
14.5
13.6 (a)
21.0
5.6
PMI
Share of Segment
Variance
2.8 pp
4.9
2.3
1.8
0.1
(7.3)
1.0
0.2
3.2
3.0
12mm May
2014
73.0%
34.5
96.4
65.9
91.2
99.5
80.2
37.5 (a)
92.1
53.1
EEMA
Asia(a)
LA&C
+0.5pp
+0.8pp
(0.1)pp
+0.6pp
18.5
19.0
14.3
6.4
2010
(a) Excluding China
Source: PMI estimates
12mm May
2014
2010
14.9
7.2
12mm May
2014
6.2
6.1
2010
12mm May
2014
2010
12mm May
2014
8
2,066
1,984
1,894
1,662
1,759
1,765
1,223
2008
2009
2010
2011
2012
2013
11
Provide greater visibility and predictability for governments and the industry
12
45.4
46.0
(a)
44.1
41.4
41.7
2008
2009
42.3
2010
2011
2012
2013
13
PMI
Increase vs. 2008: 4.6pp
Tobacco Peer
Group Average
Compensation Survey
Group Average
5.4pp
1.0pp
15
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm
Source: PMI estimates and PMI forecasts
16
2015
iQOS
City Tests
National
Platform 2
Final Phase of
Development
Clinical Trials
Platform 4
(current generation)
Altria / Nicocigs
Platforms 3 and 4
(next generation)
2016
2017
Geographic Expansion
City Tests
National
Geographic Expansion
Product Development
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm
Commercialization
17
Variance:
($ billion)
8.9
6.8
2008
Net Earnings
2.3
Currency
(0.4)
Working Capital
(0.2)
Others, net
0.4
Total
2.1
2013
18
28.1%
Pfizer
27.1%
Roche
PMI
28.1%
26.0%
BAT
25.5%
GlaxoSmithKline
20.1%
Novartis
20.0%
19.8%
Coca-Cola
16.9%
Diageo
16.8%
McDonald's
16.1%
Vodafone
BAT
25.5%
Lorillard
25.0%
Altria
20.9%
14.9%
Imperial Tobacco
14.2%
Heineken
Imperial Tobacco
14.7%
12.2%
Nestl
9.4%
PepsiCo
9.1%
Unilever
8.7%
Bayer
8.3%
Mondelz
Reynolds American
Japan Tobacco
14.2%
13.4%
4.6%
Note: Free cash flow as a percentage of net revenues is defined as total 2008 March 31, 2014 period free cash flow over total 2008 March 31, 2014 period net revenues. PMIs free cash flow
and net revenues for the period were $50.1 billion and $178.6 billion, respectively. Nearest comparable period is used where the 2008 March 31, 2014 comparison is not available
Source: Company filings, compiled by Centerview
19
Net Debt to
EBITDA Ratio
27.9
Net Debt
1.7
1.3
1.3
1.2
1.1
0.9
13.9
14.8
2009
2010
25.5
19.9
16.0
10.4
2008
2011
2012
2013
Note: EBITDA calculation method changed in 2013 and amounts restated back to 2008 to adjust for extraordinary, unusual or non-recurring expenses, net
Source: PMI Financials
Q1, 2014
20
5.4
10.1
10.3
4.8
4.2
8.2
3.8
2010
2011
2012
2013
3.4
7.0
2014
Forecast
2010
2011
2012
2013
2014
Forecast
Note: Weighted-average coupon of total bond portfolio is calculated based on historical exchange rates. Weighted-average time to maturity of total long-term debt excludes the current portion of the bond
portfolio and reflects the weighted-average at the respective year-end. Year-end 2014 time to maturity and total bond portfolio are based on the outstanding bonds as of May 31, 2014
21
Source: PMI Financials and PMI forecasts
($ billion)
3.5
3.0
CHF
2.5
CHF
CHF
CHF
2.0
CHF EUR
EUR
EUR
1.5
USD EUR
1.0
USD
EUR
USD
USD
USD
0.5
USD
USD
USD
USD
USD
USD
USD
CHF
EUR
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
USD
EUR
EUR
EUR
2029
2033
22
Cash Available:
$68.2 billion
Strategic Business
Development Initiatives:
$4.6 billion
7%
(a) Including dividend of $3.0 billion paid in April 2008 to Altria Group, Inc.
Source: PMI Financials
Dividends(a):
$29.7 billion
Share Repurchases:
$33.9 billion
43%
50%
23
68%
63%
62%
2008
63%
58%
56%
2009
2010
2011
Note: 2008 annualized rate is based on a quarterly dividend of $0.46 per common share, declared June 18, 2008
Source: PMI Financials
2012
Average
2008-2013
2013
24
McDonald's
PMI
Imperial Tobacco
BAT
Coca-Cola
Roche
PepsiCo
Nestl
Johnson & Johnson
Bayer
Unilever
Vodafone
Heineken
Diageo
GlaxoSmithKline
Novartis
(18.8)%
Mondelz
116.0%
104.3%
81.3%
70.1%
60.5%
56.0%
54.1%
53.6%
52.2%
50.0%
48.1%
44.9%
43.5%
42.6%
38.6%
22.5%
Pfizer
NA
Vodafone
GlaxoSmithKline
Imperial Tobacco
PMI
BAT
Pfizer
Unilever
McDonald's
Nestl
Novartis
PepsiCo
Roche
Coca-Cola
Johnson & Johnson
Diageo
Bayer
Heineken
Mondelz
5.8%
5.0%
4.5%
4.2%
4.0%
3.5%
3.5%
3.2%
3.1%
3.0%
3.0%
2.9%
2.9%
2.7%
2.7%
2.0%
1.7%
1.5%
Note: PMI reflects absolute growth in annualized announced dividends from time of first PMI dividend of $0.46 in June 2008 through June 24, 2014. Companies in the Compensation Survey Group reflect
absolute growth from FY 2008 dividends or Q2, 2008 annualized dividend through current last twelve months dividends or current last quarter annualized dividend as appropriate. Dividend yield
represents the annualized dividend on June 24, 2014, over the closing share price on that date. The share price for PMI was $89.37 as of June 24, 2014. The annualized dividend was $3.76. All peers
reflect calendar year figures
25
Source: FactSet and company filings, compiled by Centerview
571.6
27.1
Cumulative Amount
($ billion)
Shares
(million)
Note: The outstanding PMI shares at the time of the spin were 2,109 million
Source: PMI Financials
26
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm
Source: PMI forecasts
27
Note: Reduced-Risk Products ("RRPs") is the term we use to refer to products that have the potential to reduce individual risk and population harm
28
Investor Day
Lausanne, June 27, 2014