http://www.morningstar.com/earnings/48148088-philip-morris-international-inc-pm-q4-2012.aspx

Philip Morris International Inc PM
Q4 2012 Earnings Call Transcript

Transcript Call Date 02/07/2013

Operator: Good day and welcome to the Philip Morris International Fourth Quarter 2012 Yearend Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Philip Morris International management and the question-and-answer session. Media representatives on the call will also be invited to ask questions at the conclusion of questions from the investment community.

I will now turn the call over to Mr. Nick Rolli, Vice President of Investor Relations and Financial Communications. Please go ahead, sir.

Nicholas Rolli - VP, IR and Financial Communications: Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2012 fourth quarter and full year results. You may access the release on our website at www.pmi.com.

During our call today, we will be talking about results for the fourth quarter and full year 2012, and comparing them to the same periods in 2011, unless otherwise stated. References to volumes or 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 adjustments 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, 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 Louis Camilleri, our Chairman and Chief Executive Officer; and Jacek Olczak, our Chief Financial Officer, who will join Louis for the question-and-answer period.

Louis?

Louis C. Camilleri - Chairman and CEO: Thank you, Nick, and good afternoon ladies and gentlemen. As expected, we finished 2012 on a very strong note with fourth quarter organic cigarette volume growth of 2.9%, net revenues and adjusted operating companies income or OCI, both excluding currency and acquisitions, increasing by 6.4% and 12.3%, respectively, and adjusted diluted earnings per share growing by 16.4%, excluding currency. Our strong volume performance was partially flattered by some favorable inventory movements, which we estimate added some 60 basis points to our 2.9% growth rate.

Cigarette volume for the full year reached 927 billion units, an increase of 1.3% on an organic basis. This solid performance reflects the breadth of our geographic coverage, our excellent balance between emerging and developed markets and our superior brand portfolio. The key volume drivers were the EEMA and Asia regions, where we realized organic volume growth of 4.6% and 4.2%, respectively, which more than offset a 13.5 billion unit, or 6.4%, volume erosion in the European Union region, reflecting a decline in cigarette industry volume due to continued economic woes particularly in Southern European markets.

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