Philip Morris International, Inc. PM
Q4 2011 Earnings Call Transcript

Operator: David Adelman, Morgan Stanley.

David Adelman - Morgan Stanley: I wanted to ask you about two markets, one is Japan and then Russia let me start with Japan. Can you talk to us how you envision the 28.2 share entering the year, how you see that evolving throughout 2012. What type of impact if any do you think you'll see from (JP) plethora of pending product launches and also as your share has gone up have you been able to capture a greater share of convenient store shelf space?

Louis C. Camilleri - Chairman and CEO: Well our ambition is to continue to grow our share David. In January our share was 28.3 fourth quarter was 28.2. We also have a plethora of new products coming up. So in terms of share our ambition certainly is to continue to grow share in this important market. I think we have a number of exciting programs there. I think also in terms of a macro picture, the markets performed much more strongly than we had originally anticipated at this time last year. Ultimately volume was only down about 10.5% last year, and you may recall that our concern was to be down about double that. So it's not just a shift or also volume story. And I think in terms of our presence in convenience, vending generally in terms of consumer engagement and trade engagement, we are very competitive. As I said in my remarks, we have increased our spending in Japan.

David Adelman - Morgan Stanley: Then in Russia, Louis, can you speak to the execution plan behind Marlboro, how long do you think it's really going to take to have a meaningful increase in market share? Have you done anything in test markets or in smaller cities that has some promising indications?

Louis C. Camilleri - Chairman and CEO: You're right to point out, that Marlboro in Russia has been an issue for us and we've clearly devoted lot of resources to try to find the solution for Marlboro in Russia. We have beefed our organization considerably and the good news is that last year starting last summer, we did one main test in the city particularly focused on Russia and Marlboro's potential there, and I must say the results of all the activities that we did in that city in Russia, provided excellent results and really moved the needle quite considerably in terms of Marlboro. It also pointed out some of Marlboro's weaknesses to us. I would say that probably for PMI that market test was not only important for Russia, but a lot of the learnings of what we did there will be applied elsewhere in the world. But going back to Russia, what we did in Yekaterinburg, you will see that there will be expansion this year and we anticipate more spending in Russia. Marlboro's been losing share for some time now, I think we now have focus on its issues, we know what to do. I am hopeful that we can grow share, whether it will be a significant brand, will take a lot of time David.

Operator: Judy Hong, Goldman Sachs.

Judy Hong - Goldman Sachs: Louis, so if I just take your volume guidance for 2012, sort of flat, even if you are lapping the Japan impact, so that implies that if you take Japan out you are probably looking for an acceleration in terms of other markets outside of Japan. So, I am just curious, if you can just walk through where do you feel confidence that the volume can actually accelerate, can Indonesia continue to grow at this 20% rate?