Philip Morris International, Inc. (NYSE:PM) Q4 2015 Earnings Conference Call Transcript
Feb 04, 2016 • 09:00 am ET
Good day, and welcome to the Philip Morris International Fourth Quarter 2015 Year-End 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, Vice President of Investor Relations and Financial Communications. Please go ahead, sir.
Nicholas M. Rolli
Welcome, and thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2015 fourth quarter and full-year results. You may access the release on our website at www.pmi.com, or the PMI Investor Relations App.
During our call today, we'll be talking about results for the fourth quarter and full-year 2015 and comparing them to the same period in 2014, unless otherwise stated. A glossary of terms, adjustments and other calculations as well as reconciliations to U.S. 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 cigarettes.
(Forward-looking Cautionary Statements)
It's now my pleasure to introduce Andre Calantzopoulos, our Chief Executive Officer. Jacek Olczak, our Chief Financial Officer, will join Andre for the question-and-answer period. Andre.
Thank you, Nick, and welcome, ladies and gentlemen. 2015 was an excellent year for PMI. Moderating declines in cigarette industry volume, notably in the EU region, coupled with market share gains, enabled us to record a full-year organic cigarette shipment volume decline of only 1%, our best performance since 2012. Of particular note were the performances of Marlboro and L&M, which grew cigarette volume by 0.9% and 3.9% respectively.
Strong pricing across all regions combined with substantially lower and favorable volume/mix compared to recent years resulted in net revenue and adjusted OCI growth, excluding currency and acquisitions, of 5.8% and 6.6% respectively.
Despite significant incremental investments behind both iQOS and our cigarette brand portfolio announced last July and disclosed in today's press release, our adjusted OCI margin increased by 0.3 percentage points to 42.6%, excluding currency and acquisitions. The increase was driven by the EEMA and Latin America & Canada regions. Our adjusted diluted EPS, excluding currency, grew by a very strong 12%, at the high end of the raised guidance range that we reaffirmed last November.
The strengthening of the U.S. dollar against virtually all of our key operating currencies was an unprecedented headwind for our business in 2015 and resulted in a full-year adverse currency impact of $1.20 on our adjusted diluted EPS.
In the fourth quarter, our organic cigarette volume declined by 2.4% due to lower cigarette industry volumes and lower market share, notably in the Asia region. Our cigarette volume was impacted by a one-time distributor inventory adjustment in Russia related to supply chain optimization. Excluding this adjustment, our