pHILIP MORRIS REVIEW

7/29/2019 pHILIP MORRIS REVIEW

1/82

Annual Meeting of StockholdersNew York

May 9, 2012

Louis C. CamilleriChairman and Chief Executive Officer

Philip Morris International


2/82

2

Forward-Looking and Cautionary Statements

This presentation and related discussion contain forward-looking statements. Achievement of projectedresults is subject to risks, uncertainties and inaccurate assumptions, and PMI is identifying important

factors that, individually or in the aggregate, could cause actual results to differ materially from thosecontained in any forward-looking statements made by PMI

PMIs business risks include: significant increases in cigarette-related taxes; the imposition ofdiscriminatory excise tax structures; fluctuations in customer inventory levels due to increases in producttaxes and prices; increasing marketing and regulatory restrictions, often with the goal of preventing the useof tobacco products; health concerns relating to the use of tobacco products and exposure toenvironmental tobacco smoke; litigation related to tobacco use; intense competition; the effects of globaland individual country economic, regulatory and political developments; changes in adult smoker behavior;

lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmentalinvestigations; unfavorable currency exchange rates and currency devaluations; adverse changes inapplicable corporate tax laws; adverse changes in the cost and quality of tobacco and other agriculturalproducts and raw materials; and the integrity of its information systems. PMIs future profitability may alsobe adversely affected should it be unsuccessful in its attempts to produce products with the potential toreduce the risk of smoking-related diseases; if it is unable to successfully introduce new products, promotebrand equity, enter new markets or improve its margins through increased prices and productivity gains; ifit 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, 2012. PMI cautions that the foregoing list of important factorsis not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update anyforward-looking statement that it may make from time to time, except in the normal course of its publicdisclosure obligations

A glossary of terms and reconciliations of non-GAAP measures included in this presentation to the mostcomparable GAAP measures are provided at the end of this web cast, and are posted on our web site atwww.pmi.com


3/82

Annual Meeting of StockholdersMay 9, 2012


4/82

Outstanding Results in 2011

4

2011

Reported

2011 vs. 2010

Growth Rate (%)

Cigarette Volume (units billion) 915.3 1.7%

Net Revenues ($ billion) $31.1 14.3%

OCI ($ billion) $13.6 18.7%

Diluted EPS ($ / share) $4.85 23.7%

Source: PMI Financials


5/82

5

Outstanding Results in 2011

(a) Excluding currency and acquisitions

(b) Excluding currencySource: PMI Financials

0.5

9.2

14.0

21.2

0

22

(a)(a) (b)

(%)

Growth 2011 vs. 2010

OrganicCigaretteVolume

NetRevenues

AdjustedOCI

AdjustedDiluted

EPS


6/82

5.3

10.9

14.2

19.8

0

22


NetRevenues

AdjustedOCI

AdjustedDiluted

EPS

0.5

9.2

14.0

21.2

0

22


NetRevenues

AdjustedOCI

AdjustedDiluted

EPS

6

Outstanding Results in 2011 and Q1, 2012

(a) Excluding currency and acquisitions

(b) Excluding currencySource: PMI Financials

(a)(a) (b)

(%) (%)

(a)(a) (b)

Growth Q1, 2012 vs. Q1, 2011Growth 2011 vs. 2010


7/827

Key Growth Drivers

Our success in the Asia Region Superior brand portfolio and geographic diversity

Favorable pricing and reasonable excise tax environment

Cost controls and productivity gains


8/82

Asia Region: Key Driver of Volume Growth

8

Growing adult population Increasing consumer

purchasing power

Special situation in Japan

Strong performance ofMarlboro

Source: PMI Financials, PMI estimates, Tobacco Institute of Japan and Hankook Research

PMI Market Shares

FY Q12010 2011 2011 2012

Indonesia 29.1% 31.2% 29.9% 33.4%

Japan 24.4 30.7 25.6 28.0

Korea 16.9 19.8 17.8 20.4

7.5

12.4

2011 Q12012

Organic Cigarette

Volume Growth (%)


9/82

4.2

21.5

15.5

10.5

15.7

31.0

Russia Turkey Ukraine

EEMA Region: Consumer Uptrading

9

Economies improving Adult consumer uptrading

Parliamentkey driver ofPMI share growth

Source: PMI Financials and Nielsen

PMI Market Shares

FY Q12010 2011 2011 2012

Russia 25.6% 25.8% 25.5% 26.2%

Turkey 42.1 44.8 43.9 44.7

Ukraine 34.9 32.2 32.4 32.2

Parliament

Volume Growth (%)

2011

Q1, 2012


10/82

Q1, 2012: Solid Performance Across All Regions

% Change Q1, 2012 vs. Q1, 2011

Excluding

Results Actual CurrencyCurrency &

Acquisitions

Net Revenues

Asia Region 2.8 19.5% 16.4% 16.3%

EEMA Region 1.8 8.8% 13.1% 12.6%

EU Region 2.1 2.6% 5.3% 5.3%

LA&C Region 0.8 0.4% 5.4% 5.4%

Adjusted OCI

Asia Region 1.4 28.5% 23.7% 23.7%

EEMA Region 0.8 18.0% 18.0%EU Region 1.0 1.3% 3.7% 3.7%

LA&C Region 0.2 4.0% 4.0%

($ billion)

Note: Total Q1, 2012 results for net revenues do not add up to $7.4 billion due to rounding. Total Q1, 2012 results for adjusted OCI do not add up to

$3.5 billion due to roundingSource: PMI Financials

Q12012

(2.8)%

11.9%

10


11/82

EU Region: Improved Performance

11

PMI Market Shares

FY Q12010 2011 2011 2012

France 40.4% 40.5% 40.4% 39.6%

Germany 35.5 35.9 35.7 35.9

Italy 53.9 53.1 53.5 52.6

Spain 31.7 30.8 30.4 30.2

Underlying industryvolume trends improvingexcept whereunemployment is veryhigh

Structural excise taximprovements

Pricing remains key driverof financial performance

L&Mand Chesterfieldgrowing in low-pricesegment

Source: PMI estimates

6.2

6.5

Q12011

Q12012

EU Region Market Shares (%)

2.9

3.3

Q12011

Q12012

L&M Chesterfield


12/82

Latin America & Canada Region:MarlboroDriving Solid Results

12

PMI Market Shares

FY Q12010 2011 2011 2012

Argentina 73.6% 74.4% 74.4% 75.1%

Canada 33.3 34.1 33.9 33.9

Mexico 70.1 72.3 70.5 74.3

Mexican marketstabilized this year as noexcise tax increase

Marlborokey driver of

solid volumeperformance and profitgrowth

Source: PMI estimates

23.3

6.8

3.8

49.1

24.8

6.85.8

54.3

0

20

Argentina Brazil Colombia Mexico

MarlboroMarket Shares

20

55

10

0

(%)

2010

Q1, 20122011


13/82

0

6

Marlboro L&M Fortune BondStreet

Parl. P.M. Chest. Sam. A Lark Dji Sam Soe

All Top Ten PMI Brands Grew Volume in 2011

13

Note: Parl. is Parliament, P.M. is Philip Morris, Chest. is Chesterfield, and Sam. A is Sampoerna A. Pack designs are for illustrative purposes only

(a) March through DecemberSource: PMI Financials

(units billion)Volume Growth (2011 vs. 2010)

(a)


14/82

All Top Ten PMI Brands Grew Volume in Q1, 2012

14

0

4

Marlboro L&M Fortune BondStreet

Parl. P.M. Chest. Sam. A Lark Dji Sam Soe

Note: Parl. is Parliament, P.M. is Philip Morris, Chest. is Chesterfieldand Sam. A is Sampoerna A. Pack designs are for illustrative purposes onlySource: PMI Financials

(units billion)Volume Growth (Q1, 2012 vs. Q1, 2011)


15/82


Balanced Geographic Footprint

Asia

2011 Cigarette Volume:915.3 billion units

2011 Adjusted OCI:$13.7 billion

EEMA

EU

Latin America& Canada

Latin America& Canada

Asia

EU

EEMA

15


16/82

16

Fourth Consecutive Year of Global Market ShareGrowth

25.025.5 25.8

27.528.1

20

30

2007 2008 2009 2010 2011

PMI Market Share(a)

(a) Worldwide, excluding China and the USASource: PMI estimates

(%)

20


17/82

17

Strong Share Momentum Continued in Q1, 2012

35.5

36.637.3

30

40

2010 2011 Q1, 2012

Top 30 PMI OCI Markets

Note: Historical data adjusted for pro forma inclusion of business combination with Fortune Tobacco Corporation in the PhilippinesSource: PMI Financials and PMI estimates

(%)

30


18/82

Pricing Environment Remains Favorable

1,223

1,984

1,662

1,894

0

2,000

2008 2009 2010 2011

18

2,000


Pricing Variance

0

($ million)


19/82

Favorable Pricing and Volume/Mix Variances inQ1, 2012

369

224

0

400

Price Volume/Mix

19

00

Note: Variances at OCI levelSource: PMI Financials

400($ million)


20/82

20

Rational Excise Tax Environment

Most governments recognize that, over the longer-term,the optimization of their revenues is fostered by:- Reasonable, regular excise tax increases

- Predominantly specific excise tax structures

- Use of minimum excise taxes and other mechanisms to limitconsumption by discouraging lower prices

- Multi-year legislation or plans

No disruptively large excise tax increases so far in 2012


21/82

21

PMI Operates Successfully in Strictly RegulatedMarkets

Many of our markets have introduced:- Extensive public smoking restrictions

- Advertising bans (e.g., billboards, print media, tv and radioadvertising)

- Large graphic health warnings

- Bans on the use of "descriptors"

We generally support these regulations


22/82

22

PMI Opposes Extreme Regulatory Measures

Some governments have sought to enact measures thatare extreme in nature and are not based on rationalscientific principles, such as- Plain packaging

- Health warnings covering most of the pack

- Display bans

- Bans on the use of all ingredients

There is no sound evidence that these types of proposalswould reduce consumption among adults or youth or

would meaningfully benefit public health


23/82

Singapore

Egypt

Panama

Hong Kong

Uruguay

Health Warnings 80% Health Warnings 50%

Oversized Health Warnings are Unreasonable

PMI Opposes PMI Does Not Oppose

23


24/82

PMIsMarlboro

Mailhos CoronadoBrand

Mar. 2009

Dec. 2009

PMI Strongly Opposes Uruguays Single

Presentation Ordinance

24


25/82

25

Australia: We Oppose Plain Packaging

Law mandates so-called plain packaging from December1, 2012

Constitutional High Court challenge heard last month.Decision expected during the next six months

PMI pursuing arbitration claim under the Hong KongAustralia Bilateral Investment Treaty

WTO country actions


26/82

26

Costs and Productivity

Tobacco leaf markets now balanced on a global basis Leaf and direct material prices expected to increase

broadly in line with inflation

We are fully on track to achieve our 2012 pre-tax

productivity target of $300 million


27/82

6.8

7.2

8.7

9.6

5.0

10.0

2008 2009 2010 2011

27

Growing Free Cash Flowat Double-Digit Rate


($ billion) $1 billionworking capital

reduction program

CAGR 2008-2011: 12.2%


28/82

28

Very Strong Capital Structure

Growing cash flow underpins our strong balance sheet Long-term credit ratings: A2 / A / A

Short-term credit ratings: P-1 / A-1 / F1

More than $16 billion in well-laddered bonds

Attractive weighted-average all-in financing costs of 4.4%in 2011

Note: Ratings are by Moodys, Standard & Poors and FitchSource: PMI Financials


29/82

Net Debt to EBITDA

0.4x

0.8x

0.9x0.9x

0.9x

1.1x

1.1x

1.2x

1.3x

1.3x

1.4x

1.7x

1.7x

2.4x

2.5x

2.8x

2.9x

Pfizer

Novartis

GlaxoSmithKlineNestl

Roche

PMI

Coca-Cola

Bayer

BAT

Vodafone

Unilever

McDonald's

PepsiCo

Heineken

Diageo

Imperial TobaccoKraft

0.5x

0.6x

0.6x

1.1x

1.3x

1.5x

2.8x

Lorillard

Reynolds American

Japan Tobacco

PMI

BAT

Altria

Imperial Tobacco

NAJohnson & Johnson

29

Note: PMIs Net Debt and EBITDA were $15,995 million and $14,325 million for the 12 months ending December 31, 2011, respectively. Peercomparisons exclude certain one-time items and restructuring costs. McDonalds figure shown pro forma for $7 billion in operating lease liabilities.

Figures are for the 12 month period ending December 31, 2011 or nearest comparable periodSource: Company filings and FactSet, compiled by Centerview

Peer Group Tobacco Sector


30/82

30

EBITDA Interest Coverage

5.3x

5.7x

8.8x10.0x

11.7x

12.1x

12.6x

13.1x

15.5x

16.4x17.9x

20.5x

22.9x

24.6x

27.4x

36.4x

46.9x

Coca-Cola

Kraft

Imperial Tobacco

HeinekenMcDonald's

Vodafone

Roche

Diageo

BAT

GlaxoSmithKline

PepsiCoPMI

Unilever

Bayer

Pfizer

Novartis

Nestl

Johnson & Johnson

EBITDA / Net Interest

NA

Note: McDonalds figure shown pro forma for $7 billion in operating lease liabilities. Imperial Tobacco net interest excludes gains on derivative financial

instruments and underlying borrowings. Figures are for the 12 month period ending December 31, 2011 or nearest comparable periodSource: Company filings and FactSet, compiled by Centerview


31/82

31

10.7%

11.6%

11.9%

14.3%14.8%

15.2%

15.8%

16.7%

16.8%

18.4%

19.7%20.5%

21.0%

21.1%

28.2%

28.8%

29.2%

31.4%

PMI

Nestl

Johnson & Johnson

BATNovartis

Coca-Cola

Unilever

Roche

McDonald's

GlaxoSmithKline

DiageoBayer

Pfizer

PepsiCo

Kraft

Heineken

Imperial Tobacco

Vodafone

Debt to Enterprise Value

Debt / Enterprise Value

Note: Enterprise value is defined as stock price as of May 1, 2012 multiplied by December 31, 2011 outstanding shares plus net debt plus minorityinterests at December 31, 2011. McDonalds figure shown pro forma for $7 billion in operating lease liabilities. Debt figures are for December 31, 2011

or nearest comparable dateSource: Company filings and FactSet, compiled by Centerview


32/82

Focused Use of Cash Flow to EnhanceShareholder Returns

Free Cash Flow Net Debt Issuance and Other

Cash Available

Dividends(a) Share

Repurchases

Acquisitions

$32.4 billion $9.9 billion

$42.3 billion

$18.6 billion $2.3 billion$21.4 billion

44% 5%51%

2008-2011

32(a) Including dividend of $3.0 billion paid in April 2008 to Altria Group, Inc.Source: PMI Financials


33/82

5.4

5.5

5.0

5.4

Cumulative Amount

Substantial Share Repurchase Programs

5.1

6.1

4.6

3.8

Shares Outstanding at Spin

21.4

($ billion)

19.6

(million) (%)

414.1

106.8

129.7

97.1

80.5

Shares

33Note: The outstanding PMI shares at the time of the spin were 2,109 million. Totals may not add due to roundingSource: PMI Financials

2010

2009

2008

2011


34/82

5.4

5.5

5.0

5.4

1.5

Cumulative Amount

Substantial Share Repurchase Programs

5.1

6.1

4.6

3.8

0.9

Shares Outstanding at Spin

22.9

($ billion)

20.5

(million) (%)

2010

2009

2008

432.1

106.8

129.7

97.1

80.5

18.1

Shares

2011

34Note: The outstanding PMI shares at the time of the spin were 2,109 million. Totals may not add due to roundingSource: PMI Financials

Q1, 2012


35/82

Very Significant Dividend Increases

$1.84 +17.4%

+10.3%

+20.3%

$3.08

2008 Aug Sept Sept Sept 2011

+7.4%

2008 2009 2010

+67.4%

2011

35

Note: Dividends for 2008 and 2011 are annualized rates. 2008 annualized rate is based on a quarterly dividend of $0.46 per common share,declared June 18, 2008. The annualized rate for 2011 is based on a quarterly dividend of $0.77 per common share, declared September 14, 2011Source: PMI Financials


36/82

38.8%

41.4%

43.7%

51.1%

66.7%

67.4%

68.5%

Reynolds American

Altria

Imperial Tobacco

BAT

Japan Tobacco

PMI

Lorillard

Note: PMI reflects absolute growth in annualized announced dividends from time of first PMI dividend of $0.46 in June 2008 until present. Peercompanies reflect absolute growth from FY 2008 dividends or Q2, 2008 annualized dividend through current last twelve months dividends or current

last quarter annualized as appropriateSource: FactSet, compiled by Centerview

Peer Group

(31.3)%

7.4%

12.5%

17.9%

19.9%

20.8%

22.8%

26.2%

26.5%

32.6%

33.9%

34.2%

36.0%

39.3%

43.7%

51.1%

67.4%

86.7%

Kraft

Novartis

Bayer

Vodafone

Diageo

GlaxoSmithKline

Unilever

PepsiCo

Heineken

Coca-Cola

Roche

Nestl

BAT

PMI

McDonald's

Tobacco Sector

Imperial Tobacco

Johnson & Johnson

Pfizer

36

Superior Dividend Growth (Since 2008)

PMI O f d All S k i h D J


37/82

Share Price Performance

Source: FactSet, compiled by Centerview 37

(58.3)%

(43.8)%

(38.8)%

(21.6)%

(10.6)%

(8.2)%

(7.2)%

(7.0)%

(5.3)%

(3.3)%

(2.1)%

(0.0)%

2.9%

3.7%

4.6%

6.0%

6.2%

6.4%

9.9%

10.8%

12.1%

12.4%

15.3%

15.9%

16.6%

18.6%

19.9%

23.6%

25.3%

30.7%34.1%

AT&T

Procter & Gamble

Merck

Johnson & Johnson

Travelers

Coca-Cola

American Express

Wal-Mart Stores

Verizon

Boeing

Intel

Exxon Mobil

Chevron

Kraft Foods

Home Depot

Pfizer

IBM

McDonald'sPMI

Caterpillar

3M

Microsoft

United Technologies

DuPont

Cisco Systems

JPMorgan Chase

Hewlett-Packard

Alcoa

Bank of America

Walt Disney

GE

Total Shareholder Return

(58.1)%

(43.3)%

(37.9)%

(20.0)%

(9.6)%

(5.2)%

(5.0)%

(4.5)%

(2.8)%

(1.5)%

1.3%

1.7%

7.0%

9.0%

9.3%

9.4%

9.5%

9.9%

11.6%

13.9%

15.2%

18.2%

18.7%

19.3%

20.3%

22.6%

23.4%

27.4%

28.8%

34.7%39.8%

GE

Walt Disney

Procter & Gamble

AT&T

Travelers

Coca-Cola

Merck

Johnson & Johnson

American Express

Wal-Mart Stores

Boeing

Verizon

Exxon Mobil

Intel

Chevron

Kraft Foods

Home Depot

IBM

Pfizer

McDonald'sPMI

Caterpillar

3M

Microsoft

United Technologies

DuPont

Cisco Systems

JPMorgan Chase

Hewlett-Packard

Alcoa

Bank of America

PMI Outperformed All 30 Stocks in the Dow JonesIndustrial Average in 2011


38/82

(4.2)%

16.8%

29.6%

56.8%

111.6%

S&P 500

PMI

Superior Shareholder Returns

TobaccoPeer Group

CompanyPeer Group

March 28, 2008 April 30, 2012

Note: Peer groups represent the market weighted average return of the group. PMI pro forma for additional $0.46 per share dividend paid in April2008 impacts the period March 28, 2008 April 30, 2012. Exchange rates are as of March 28, 2008 and April 30, 2012. A list of the Tobacco andCompany Peer Groups is available in the reconciliation sectionSource: FactSet, compiled by Centerview

FTSE 100

38


39/82

39

Valuation: Further Room for Improvement

9.2x10.0x10.5x10.9x11.6x12.2x12.3x12.7x12.9x13.7x14.6x14.7x15.0x15.1x

15.4x15.8x16.0x16.3x16.3x16.8x17.0x17.0x18.8x

NovartisPfizer

VodafoneBayer

GlaxoSmithKlineRoche

Imperial TobaccoJohnson & Johnson

Japan TobaccoReynolds American

HeinekenAltria

BATLorillard

Procter & GambleKraft

UnileverPepsiCo

DiageoNestl

PMIMcDonald'sCoca-Cola

2012 P/E

Note: Average excludes PMISource: FactSet as of May 1, 2012. Compiled by Centerview

Average: 14.0x


40/82

40


9.2x10.0x10.5x10.9x11.6x12.2x12.3x12.7x12.9x13.7x14.6x14.7x15.0x15.1x

15.4x15.8x16.0x16.3x16.3x16.8x17.0x17.0x18.8x

NovartisPfizer

VodafoneBayer




HeinekenAltria

BATLorillard


UnileverPepsiCo

DiageoNestl


2012 P/EMarket Cap. to

Free Cash Flow(a) Ratio

(a) Free cash flow figures are for the 12 month period ending December 31, 2011 or nearest comparable periodNote: Averages exclude PMISource: FactSet as of May 1, 2012. Compiled by Centerview

9.3x9.9x10.0x11.2x11.7x12.8x12.8x13.0x13.4x15.5x15.6x15.6x16.1x18.3x

18.6x18.8x18.9x

21.8x22.5x

25.6x26.5x27.1x

35.4x

PfizerJapan Tobacco

NovartisHeineken

Imperial TobaccoVodafone

BayerRoche

GlaxoSmithKlineLorillard

Johnson & JohnsonBATPMI

Procter & Gamble

PepsiCoAltria

Reynolds AmericanUnilever

McDonald'sKraft

Coca-ColaDiageoNestl

Average: 14.0x Average: 17.4x


41/82

41


9.2x10.0x10.5x10.9x11.6x12.2x12.3x12.7x12.9x13.7x14.6x14.7x15.0x15.1x

15.4x15.8x16.0x16.3x16.3x16.8x17.0x17.0x18.8x

NovartisPfizer

VodafoneBayer




HeinekenAltria

BATLorillard


UnileverPepsiCo

DiageoNestl


2012 P/EMarket Cap. to

Free Cash Flow(a) Ratio

(a) Free cash flow figures are for the 12 month period ending December 31, 2011 or nearest comparable period(b) Based on I/B/E/S consensus for peers and PMI. PEG ratio defined as 2012 price/earnings ratio, divided by long-term EPS growth rate, and thendivided by 100Note: Averages exclude PMISource: FactSet and Institutional Brokers Estimate System (I/B/E/S) as of May 1, 2012. Compiled by Centerview

PEG(b)(LT EPS Growth Rate)

9.3x9.9x10.0x11.2x11.7x12.8x12.8x13.0x13.4x15.5x15.6x15.6x16.1x18.3x

18.6x18.8x18.9x

21.8x22.5x

25.6x26.5x27.1x

35.4x

PfizerJapan Tobacco

NovartisHeineken

Imperial TobaccoVodafone

BayerRoche

GlaxoSmithKlineLorillard

Johnson & JohnsonBATPMI

Procter & Gamble

PepsiCoAltria

Reynolds AmericanUnilever

McDonald'sKraft

Coca-ColaDiageoNestl

0.8x1.2x1.3x1.4x1.5x1.6x1.6x1.7x1.7x1.7x1.8x1.8x1.9x2.0x

2.0x2.1x2.2x2.3x2.6x

3.0x3.3x3.6x

4.2x

Japan TobaccoBayer

LorillardImperial Tobacco

BATGlaxoSmithKline

PMIKraft

HeinekenMcDonald's

DiageoRoche

UnileverReynolds American

AltriaProcter & Gamble

Johnson & JohnsonCoca-Cola

NestlNovartisPepsiCo

PfizerVodafone

Average: 14.0x Average: 17.4x Average: 2.1x


42/82


Question and Comment Session


43/82



44/82

44

Harold Brown


45/82

45

Mathis Cabiallavetta


46/82

46

Louis C. Camilleri


47/82

47

J. Dudley Fishburn


48/82


49/82

49

Graham Mackay


50/82

50

Sergio Marchionne


51/82

51

Kalpana Morparia


52/82

52

Lucio A. Noto


53/82

53

Robert B. Polet


54/82

54

Carlos Slim Hel


55/82

55

Stephen M. Wolf


56/82



57/82

57

PMIs Charitable Giving Programs

Five areas of giving on which we focus:- Disaster relief- Domestic violence

- Education

- Hunger and extreme poverty

- Rural living conditions

Critical issues affecting many of the 180 countries inwhich we operate

Source: PMI Contributions


58/82

Disaster Relief

Following the catastrophicevents in Japan in March2011, PMI donated asubstantial amount tosupport:

Immediate relief activities

A number of longer-termrecovery programs

Many of our own staffbecame volunteers anddonors

58Source: PMI Contributions


59/82

59

Domestic Violence

PMI was one of the firstcorporations to becomeinvolved in the fightagainst domestic violence

In Germany, we havebeen supporting the BerlinInitiative against Violenceagainst Women since2001



60/82

60

Education

Crucial factor ineradicating poverty andinequality

Through our charitablecontributions, we strive:- To ensure access to

schooling

- To improve the quality ofeducation



61/82

61

Education: Improving Teachers' Skills in Russia

PMI has been fundingtraining courses forsecondary school teachersat the Russian Federal

Academy in Moscow

PMI grants helped 880teachers and schoolprincipals to attend courses



62/82

Hunger and Extreme Poverty

We also support programsthat provide direct relief tothe poor and hungry allover the world



63/82

Hunger and Extreme Poverty

We also support programsthat provide direct relief tothe poor and hungry allover the world

In Indonesia, we havejoined forces with a localNGO to train farmers in theSystem of RiceIntensification



64/82

Rural Living Conditions

Finally, we support programs to:- Protect and enhance natural resources

- Reforest the land

- Implement conservation agriculture

- Provide clean water

- Ensure food security

- Improve the livelihoods of people living in rural communities


Rural Living Conditions: Malawi, Tanzania and


65/82

g ,Mozambique

In Malawi, small maize andtobacco farmers are caughtin a vicious cycle ofincreasing poverty

Funding over the lastdecade has assisted:- More than 6,700 villages

- 153,000 households

- Over 765,000 people acrossMalawi, Tanzania andMozambique



66/82

PMIs Charitable Contributions in 2011

66

In 2011, PMI supported over 270 charitable projectsacross 58 countries

Over 3.5 million people were impacted globally by ourcharitable giving programs



67/82

Senior Management Changes

67

Hermann Waldemer


68/82

Senior Management Changes

68

Jacek Olczak


69/82



70/82

Glossary and Reconciliation ofNon-GAAP Measures


71/82

71

Glossary

PMI stands for Philip Morris International Inc. and its subsidiaries

References to PMI volumes refer to PMI cigarette shipment data,unless otherwise stated

Industry volume and market shares are the latest data available from anumber of internal and external sources

Organic volume refers to volume excluding acquisitions

Acquisitions, for the purposes of this presentation, also include ourbusiness combination with Fortune Tobacco Corporation in thePhilippines

Net revenues exclude excise taxes

OCI stands for Operating Companies Income, which is defined asoperating income before general corporate expenses and theamortization of intangibles. OCI growth rates are on an adjusted basiswhich excludes asset impairment, exit and other costs

Free cash flow equals net cash provided by operating activities lesscapital expenditures


72/82

72

Glossary

EEMA refers to the Eastern Europe, Middle East & Africa Region

EU refers to the European Union Region

LA&C refers to the Latin America & Canada Region

NGO refers to non-governmental organizations


73/82

73

PMI Peer Groups

- Bayer

- BAT

- Coca-Cola

- Diageo

- GlaxoSmithKline

- Heineken

- Imperial Tobacco- Johnson & Johnson

- Kraft

- McDonalds

- Nestl

- Novartis

- PepsiCo

- Pfizer

- Roche

- Unilever

- Vodafone

Company Peer Group

- Altria

- BAT

- Imperial Tobacco

- Japan Tobacco

- Lorillard

- Reynolds American

Tobacco Peer Group

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries


74/82

74

Reconciliation of Non-GAAP Measures

Reported Net

Revenues

Less

Excise

Taxes

Reported Net

Revenues

excluding

Excise Tax es

Less

Currency

Reported Net

Revenues

excluding

Excise Taxes &

Currency

Less

Acquisi-

tions

Reported Net

Revenues

excluding

Excise Taxes,

Currency &

Acquisitions

Reported

Net

Revenues

Less

Excise

Taxes

Reported Net

Revenues

excluding

Excise Taxes Reported

Reported

excluding

Currency

Reported

excluding

Currency &

Acquisitions

29,768$ 20,556$ 9,212$ 440$ 8,772$ -$ 8,772$ European Union 28,050$ 19,239$ 8,811$ 4.6% (0.4)% (0.4)%

17,452 9,571 7,881 49 7,832 25 7,807 EEMA 15,928 8,519 7,409 6.4% 5.7% 5.4%

19,590 8,885 10,705 690 10,015 112 (a) 9,903 Asia 15,235 7,300 7,935 34.9% 26.2% 24.8%

9,536 6,237 3,299 70 3,229 - 3,229 Lat in A merica & Canada 8,500 5,447 3,053 8.1% 5.8% 5.8%

76,346$ 45,249$ 31,097$ 1,249$ 29,848$ 137$ 29,711$ PMI Total 67,713$ 40,505$ 27,208$ 14.3% 9.7% 9.2%

Reported

Operating

Companies

Income

Less

Currency

Reported

Operating

Companies

Income

excluding

Currency

Less

Acquisi-

tions

Reported

Operating

Companies

Income

excluding

Currency &

Acquisitions

Reported

Operating

Companies

Income

Reported

Reported

excluding

Currency

Reported

excluding

Currency &

Acquisitions

4,560$ 277$ 4,283$ (1)$ 4,284$ European Union 4,311$ 5.8% (0.6)% (0.6)%

3,229 (97) 3,326 (13) 3,339 EEMA 3,152 2.4% 5.5% 5.9%

4,836 400 4,436 28 (b) 4,408 Asia 3,049 58.6% 45.5% 44.6%

988 (2) 990 - 990 Latin America & Canada 953 3.7% 3.9% 3.9%

13,613$ 578$ 13,035$ 14$ 13,021$ PMI Total 11,465$ 18.7% 13.7% 13.6%

2011 2010

% Change in Reported Operating

Companies Income

2011 2010

% Change in Reported Net Revenues

excluding Excise Taxe s

Adjustments for the Impact of Currency and AcquisitionsFor the Years Ended December 31,

($ in millions)

(Unaudited)

(a) Includes the business combination in the Philippines ($105)

(b) Includes the business combination in the Philippines ($23)



75/82

75


Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income &Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions

For the Years Ended December 31,

($ in millions)(Unaudited)

(a) Includes the business combination in the Philippines ($23)

(b) For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to previous slide

Reported

Operating

Companies

Income

Less

Asset

Impairment &

Exit Costs

Adjusted

Operating

Companies

Income

Less

Currency

Adjusted

Operating

Companies

Income

excluding

Currency

Less

Acquisi-

tions

Adjusted

Operating

Companies

Income

excluding

Currency &

Acquisitions

Reported

Operating

Companies

Income

Less

Asset Impairment &

Exit Costs

Adjusted

Operating

Companies

I ncom e Adj uste d

Adjusted

excluding

Currency

Adjusted

excluding

Currency &

Acquisitions

4,560$ (45)$ 4,605$ 277$ 4,328$ (1)$ 4,329$ European Union 4,311$ (27)$ 4,338$ 6.2% (0.2)% (0.2)%

3,229 (25) 3,254 (97) 3,351 (1) 3,352 EEMA 3,152 - 3,152 3.2% 6.3% 6.3%

4,836 (15) 4,851 400 4,451 28 (a) 4,423 Asia 3,049 (20) 3,069 58.1% 45.0% 44.1%

988 (24) 1,012 (2) 1,014 - 1,014 Latin America & Canada 953 - 953 6.2% 6.4% 6.4%

13,613$ (109)$ 13,722$ 578$ 13,144$ 26$ 13,118$ PMI Total 11,465$ (47)$ 11,512$ 19.2% 14.2% 14.0%

% Points Change

Adjusted

Operating

Companies

Income

excluding

Currency

Net Revenues

excluding

Excise Taxes &

Currency(b)

Adjusted

Operating

Companies

Income

Margin

excluding

Currency

Adjusted

Operating

Companies

Income

excluding

Currency &

Acquisitions

Net Revenues

excluding

Excise Taxes,

Currency &

Acquisitions(b)

Adjusted

Operating

Companies

Income

Margin

excluding

Currency &

Acquisitions

Adjusted

Operating

Companies

Income

Net Revenues

excluding Excise

Taxes(b)

Adjusted

Operating

Companies

Income

Margin

Adjusted

Operating

Companies

Income

Margin

excluding

Currency

Adjusted

Operating

Companies

Income Margin

excluding

Currency &

Acquisitions

4,328$ 8,772$ 49.3% 4,329$ 8,772$ 49.4% European Union 4,338$ 8,811$ 49.2% 0.1 0.23,351 7,832 42.8% 3,352 7,807 42.9% EEMA 3,152 7,409 42.5% 0.3 0.4

4,451 10,015 44.4% 4,423 9,903 44.7% Asia 3,069 7,935 38.7% 5.7 6.0

1,014 3,229 31.4% 1,014 3,229 31.4% Latin America & Canada 953 3,053 31.2% 0.2 0.2

13,144$ 29,848$ 44.0% 13,118$ 29,711$ 44.2% PMI Total 11,512$ 27,208$ 42.3% 1.7 1.9

2010

2011 2010

2011

% Change in Adjusted Operating

Companies Income



76/82

76


Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, excluding CurrencyFor the Years Ended December 31,

(Unaudited)

2011 2010 % Change

Reported Diluted EPS 4.85$ 3.92$ 23.7%

Adjustments:

Asset impairment and exit costs 0.05 0.02

Tax items (0.02) (0.07)

Adjusted Diluted EPS 4.88$ 3.87$ 26.1%

Less:

Currency impact 0.19

Adjusted Diluted EPS, excluding Currency 4.69$ 3.87$ 21.2%



77/82

77


Adjustments for the Impact of Currency and AcquisitionsFor the Quarters Ended March 31,

($ in millions)

(Unaudited)

Reported Net

Revenues

Less

Excise

Taxes

Reported Net

Revenues

excluding

Excise Taxe s

Less

Currency

Reported Net

Revenues

excluding

Excise Taxes &

Currency

Less

Acquisi-

tions

Reported Net

Revenues

excluding

Excise Taxes,

Currency &

Acquisitions

Reported

Net

Revenues

Less

Excise

Taxes

Reported Net

Revenues

excluding

Excise Taxe s Reported

Reported

excluding

Currency

Reported

excluding

Currency &

Acquisitions

6,470$ 4,417$ 2,053$ (54)$ 2,107$ -$ 2,107$ European Union 6,415$ 4,414$ 2,001$ 2.6% 5.3% 5.3%

4,069 2,234 1,835 (73) 1,908 9 1,899 EEMA 3,671 1,984 1,687 8.8% 13.1% 12.6%

5,177 2,400 2,777 74 2,703 1 2,702 Asia 4,288 1,965 2,323 19.5% 16.4% 16.3%

2,306 1,523 783 (39) 822 - 822 Lat in A meric a & Canada 2,156 1,376 780 0.4% 5.4% 5.4%

18,022$ 10,574$ 7,448$ (92)$ 7,540$ 10$ 7,530$ PMI Total 16,530$ 9,739$ 6,791$ 9.7% 11.0% 10.9%

Reported

Operating

Companies

Income

Less

Currency

Reported

Operating

Companies

Income

excluding

Currency

Less

Acquisi-

tions

Reported

Operating

Companies

Income

excluding

Currency &

Acquisitions

Reported

Operating

Companies

Income

Reported

Reported

excluding

Currency

Reported

excluding

Currency &

Acquisitions

1,030$ (25)$ 1,055$ -$ 1,055$ European Union 1,006$ 2.4% 4.9% 4.9%

810 (44) 854 - 854 EEMA 722 12.2% 18.3% 18.3%

1,407 53 1,354 - 1,354 Asia 1,093 28.7% 23.9% 23.9%

237 (17) 254 - 254 Latin America & Canada 251 (5.6)% 1.2% 1.2%

3,484$ (33)$ 3,517$ -$ 3,517$ PMI Total 3,072$ 13.4% 14.5% 14.5%

2012 2011

% Change in Reported Operating

Companies Income

2012 2011

% Change in Reported Net Revenues

excluding Excise Tax es



78/82

78


Reconciliation of Reported Operating Companies Income to Adjusted Operating Companies Income &Reconciliation of Adjusted Operating Companies Income Margin, excluding Currency and Acquisitions

For the Quarters Ended March 31,

($ in millions)(Unaudited)

Reported

Operating

Companies

Income

Less

Asset

Impairment &

Exit Costs

Adjusted

Operating

Companies

Income

Less

Currency

Adjusted

Operating

Companies

Income

excluding

Currency

Less

Acquisi-

tions

Adjusted

Operating

Companies

Income

excluding

Currency &

Acquisitions

Reported

Operating

Companies

Income

Less

Asset Impairment &

Exit Costs

Adjusted

Operating

Companies

I ncome Adj uste d

Adjusted

excluding

Currency

Adjusted

excluding

Currency &

Acquisitions

1,030$ -$ 1,030$ (25)$ 1,055$ -$ 1,055$ European Union 1,006$ (11)$ 1,017$ 1.3% 3.7% 3.7%

810 - 810 (44) 854 - 854 EEMA 722 (2) 724 11.9% 18.0% 18.0%

1,407 - 1,407 53 1,354 - 1,354 Asia 1,093 (2) 1,095 28.5% 23.7% 23.7%

237 (8) 245 (17) 262 - 262 Latin America & Canada 251 (1) 252 (2.8)% 4.0% 4.0%

3,484$ (8)$ 3,492$ (33)$ 3,525$ -$ 3,525$ PMI Total 3,072$ (16)$ 3,088$ 13.1% 14.2% 14.2%

% Points Change

Adjusted

Operating

Companies

Income

excluding

Currency

Net Revenues

excluding

Excise Taxes &

Currency(a)

Adjusted

Operating

Companies

Income

Margin

excluding

Currency

Adjusted

Operating

Companies

Income

excluding

Currency &

Acquisitions

Net Revenues

excluding

Excise Taxes,

Currency &

Acquisitions(a)

Adjusted

Operating

Companies

Income

Margin

excluding

Currency &

Acquisitions

Adjusted

Operating

Companies

Income

Net Revenues

excluding Excise

Taxes(a)

Adjusted

Operating

Companies

Income

Margin

Adjusted

Operating

Companies

Income

Margin

excluding

Currency

Adjusted

Operating

Companies

Income Margin

excluding

Currency &

Acquisitions

1,055$ 2,107$ 50.1% 1,055$ 2,107$ 50.1% European Union 1,017$ 2,001$ 50.8% (0.7) (0.7)854 1,908 44.8% 854 1,899 45.0% EEMA 724 1,687 42.9% 1.9 2.1

1,354 2,703 50.1% 1,354 2,702 50.1% Asia 1,095 2,323 47.1% 3.0 3.0

262 822 31.9% 262 822 31.9% Latin America & Canada 252 780 32.3% (0.4) (0.4)

3,525$ 7,540$ 46.8% 3,525$ 7,530$ 46.8% PMI Total 3,088$ 6,791$ 45.5% 1.3 1.3

2012 2011

2012 2011

% Change in Adjusted Operating

Companies Income

(a) For the calculation of net revenues excluding excise taxes, currency and acquisitions, refer to previous slide



79/82

79


Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS and Adjusted Diluted EPS, Excluding CurrencyFor the Quarters Ended March 31,

(Unaudited)

2012 2011 % Change

Reported Diluted EPS 1.25$ 1.06$ 17.9%

Adjustments:

Asset impairment and exit costs - 0.01

Tax items - (0.01)

Adjusted Diluted EPS 1.25$ 1.06$ 17.9%

Less:

Currency impact (0.02)

Adjusted Diluted EPS, excluding Currency 1.27$ 1.06$ 19.8%



80/82

80

Cumulative Total

2011 2010 2009 2008 2008 ~ 2011

Net cash provided by operating activities(a) 10,529$ 9,437$ 7,884$ 7,935$ 35,785$

Less:

Capital expenditures 897 713 715 1,099 3,424

Free cash flow 9,632$ 8,724$ 7,169$ 6,836$ 32,361$

For the Years Ended

December 31,

Reconciliation of Operating Cash Flow to Free Cash Flow($ in millions)(Unaudited)


(a) Operating Cash Flow



81/82

81


Calculation of Total Debt to EBITDA and Net Debt to EBITDA Ratios($ in millions, except ratios)

(Unaudited)

For the Year Ended For the Year Ended

December 31, December 31,

2011 2010

Earnings before income taxes 12,532$ 10,324$

Interest expense, net 800 876

Depreciation and amortization 993 932

EBITDA 14,325$ 12,132$

December 31, December 31,

2011 2010

Short-term borrowings 1,511$ 1,747$

Current portion of long-term debt 2,206 1,385

Long-term debt 14,828 13,370

Total Debt 18,545$ 16,502$Less: Cash and cash equivalents 2,550 1,703

Net Debt 15,995$ 14,799$

Ratios

Total Debt to EBITDA 1.29 1.36

Net Debt to EBITDA 1.12 1.22



82/82


Calculation of EBITDA to Net Interest Ratio($ in millions, except ratio)

(Unaudited)

For the Year Ended

December 31,

2011

Earnings before income taxes 12,532$

Interest expense, net 800

Depreciation and amortization 993

EBITDA 14,325$

Interest expense, net 800$

Ratio

EBITDA to Net Interest 17.9

Documents

pHILIP MORRIS REVIEW