Philip Morris International, Inc. (NYSE:PM) Q1 2015 Earnings Conference Call Transcript

Apr 16, 2015 • 09:00 am ET

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Philip Morris International, Inc. (NYSE:PM) Q1 2015 Earnings Conference Call Transcript

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Presentation
Operator
operator

Good day and welcome to the Philip Morris International First Quarter 2015 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. (Operator Instructions) 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, VP of IR and Financial Communications. Please go ahead, sir.

Executive
Nick Rolli

Welcome and thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2015 first quarter 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 first quarter of 2015 and comparing them to the same period in 2014, unless otherwise stated.

A glossary of terms, data tables showing adjustments to net revenues and OCI for currency and acquisitions, asset impairment, exit and other costs, and adjustments to earnings per share, or EPS, as well as reconciliations to US GAAP measures, are at the end of today's webcast slides, which are posted on our website. Reduced-Risk Products, or RRPs, is the term we use to refer to products with the potential to reduce individual risk and population harm in comparison to smoking combustible cigarettes.

(Forward-Looking Cautionary Statements)

It's now my pleasure to introduce Jacek Olczak, our CFO. Jacek?

Executive
Jacek Olczak

Thank you Nick, and welcome ladies and gentlemen.

I am pleased to report that PMI is off to an excellent start in 2015 with robust fundamentals driving a strong business performance that is benefiting from our investments last year.

As announced in our earnings release this morning, we are raising our 2015 reported diluted EPS guidance, at prevailing exchange rates, by $0.05 to a range of $4.32 to $4.42. This increase reflects a better-than-expected volume and share performance in the first quarter and an improved outlook for the balance of the year. Our guidance continues to include approximately $1.15 per share of unfavorable currency at prevailing exchange rates. Excluding the impact of currency, our 2015 guidance represents a growth rate of 9% to 11% compared to our adjusted diluted EPS of $5.02 in 2014.

Although the total estimated unfavorable currency impact on our revised guidance remains unchanged versus our February guidance, there has been a shift since then in its composition. The positive impact of the appreciation of the Russian ruble and the depreciation of the Swiss franc has been offset by the unfavorable impact of a further strengthening of the US dollar versus most other currencies, particularly the euro. As exchange rates remain volatile, we do not foresee any share repurchases in 2015 and this is reflected in today's guidance.

Let me now take you through our first-quarter results.

Organic cigarette volume grew by 1.4%, driven by market share gains across all four regions and favorable inventory movements, notably in Italy, Spain and other markets supplied by manufacturing facilities in the EU region. This