Previous Statements by PM
» Philip Morris International's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» Philip Morris International Management Discusses Q3 2011 Results - Earnings Call Transcript
» Philip Morris International Management Discusses Q2 2011 Results - Earnings Call Transcript
During our call today, we'll be talking about results for the first quarter 2012 and comparing them with the same period in 2011, unless otherwise stated. References to volumes are to PMI shipments. Industry volume and market shares are the latest data available from a number of internal and external sources. Organic volume refers to volume excluding acquisitions. Net revenues exclude excise taxes. Operating companies income, or OCI, is defined as operating income before general corporate expenses and the amortization of intangibles. You'll find data tables showing adjustment to net revenues and OCI for currency, acquisitions, asset impairment, exit and other costs, free cash flow calculations and adjustments to earnings per share or EPS, as well as reconciliations to U.S. GAAP measures at the end of today's webcast slides, which are posted on our website.Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements. It's now my pleasure to introduce Hermann Waldemer, our Chief Financial Officer. Hermann? Hermann G. Waldemer Thank you, Nick, and good afternoon, ladies and gentlemen. We once again achieved excellent results in the first quarter of this year. Our organic cigarette volume increased by 5.3%. Net revenues, excluding currency and acquisitions, were up by 10.9%. Adjusted OCI, also excluding currency and acquisition, increased by 14.2%. And our adjusted diluted EPS, excluding currency, rose by 19.8%. Our strong business momentum continues, and this should enable us to perform well during the remainder of 2012, notwithstanding the previously disclosed difficult comparisons versus 2011 that we will face in the second quarter relating to the exceptional circumstances in the Japanese market during the post tsunami crisis. Consequently, we remain very confident in our ability to achieve the business results that we predicted when we issued our reported 2012 EPS guidance last February. However, since that time, the U.S. dollar has strengthened against a number of currencies. As a result, we are facing a slightly stronger currency headwind and are now forecasting an impact of $0.15 in unfavorable currency this year based on prevailing exchange rates compared to the $0.10 previously disclosed in February. As a result, for exchange rate reasons only, we are revising our reported diluted EPS guidance for 2012 by $0.05 to a range of $5.20 to $5.30. It should be stressed that compared to our 2011 adjusted diluted EPS of $4.88, we are maintaining our forecast growth in the reported diluted EPS for 2012 of approximately 10% to 12% on a currency-neutral basis. Our forecast growth is fully in line with our long-term growth target for adjusted diluted EPS, excluding currency.
One of the key elements favorably impacting our business is the reasonable excise tax environment. While there have been increases, most recently in Spain, we have not seen any disruptively large changes in any key markets this year. On the structural side, we continue to witness further improvements via a gradual increase in the specific proportion of excise taxes. Many governments now recognize that higher specific elements reinforce the predictability of government tobacco excise tax revenues.Pricing continues to be the most important single driver of our profitability. The pricing variance was $369 million in the quarter. The increased prices, notably in Argentina, Germany, Indonesia, Italy, Korea, Mexico, the Philippines and Russia, and continued to benefit from the annualization of higher prices from last year. We also generated a positive volume mix variance of $224 million at the OCI level as we grew volume and benefited from consumer up-trading in a wide range of non-OECD markets. The 5.3% quarterly organic cigarette volume growth is our best performance since the March 2008 spin. While boosted by the leap year and an undemanding comparison to the prior year, the improvement was notable for its wide geographic spread. The Asia region led the way with a 12.4% increase. The growth in the EEMA and Latin America and Canada regions was around 3%. And the moderate decline in the EU region of 1.5% was the best performance in many years. In fact, volume increased in the first quarter in 13 of our top 15 largest markets by volume. Read the rest of this transcript for free on seekingalpha.com