Philip Morris International, Inc. (NYSE:PM) Q3 2016 Earnings Conference Call - Final Transcript
Oct 18, 2016 • 09:00 am ET
Good day, and welcome to the Philip Morris International Third Quarter 2016 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.
Welcome and thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2016 third quarter results. You may access the release on our website at www.pmi.com or the PMI Investor Relations App.
During our call today, we will be talking about results for the third quarter of 2016 and comparing them to the same period in 2015, unless otherwise stated. A glossary of terms, adjustments and other calculations, as well as reconciliations to the most directly comparable 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. 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 Jacek Olczak, our Chief Financial Officer. Jacek.
Thank you, Nick, and welcome, ladies and gentlemen. Following the comprehensive business review that we provided during our recent Investor Day event, I will focus today on a brief summary of our 2016 full-year outlook and third-quarter results, and highlight some important developments in select geographies. A detailed discussion of our third-quarter and year-to-date September results can be found in our earnings release. Let me begin with our full-year outlook.
As announced this morning, we are reaffirming our 2016 reported diluted EPS guidance, at prevailing exchange rates, to be in a range of $4.53 to $4.58.Our guidance includes $0.35 of unfavorable currency and continues to represent a growth rate, excluding currency, of approximately 10.5% to 11.5% compared to our adjusted diluted EPS of $4.42 in 2015.As a reminder, in the fourth quarter, we anticipate strong currency-neutral net revenue growth, driven primarily by the annualization of price increases and the growth of RRPs.
We also anticipate a favorable cost comparison, driven by the significant investments that we made in the fourth quarter of 2015 behind iQOS and our cigarette brand portfolio, including those related to the implementation of the EU Tobacco Products Directive. Moving to our third-quarter results, net revenues and adjusted OCI increased by 3.6% and 4.3%, respectively, excluding currency, reflecting favorable pricing, partly offset by negative volume/mix, particularly in the EEMA Region.
Adjusted diluted EPS increased by 4.0%, excluding currency.