Philip Morris International, Inc. (NYSE:PM) Q1 2019 Earnings Conference Call - Final Transcript

Apr 18, 2019 • 09:00 am ET


Philip Morris International, Inc. (NYSE:PM) Q1 2019 Earnings Conference Call - Final Transcript


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Good day and welcome to the Philip Morris International First Quarter 2019 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 Rolli

Welcome and thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2019 first quarter results. You may access the release on or the PMI Investor Relations App.

A glossary of terms, including the definition for reduced-risk products, or RRPs, as well as adjustments, other calculations and 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. Unless otherwise stated, all references to IQOS are to our IQOS heat-not-burn products. 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 Martin King, our Chief Financial Officer. Martin?

Martin King

Thank you, Nick, and welcome, ladies and gentlemen. We are off to a promising start in 2019, reflecting, positive momentum for our combustible tobacco and smoke-free product portfolios; strong currency-neutral adjusted financial results; and the important milestone of reaching over 10 million IQOS users globally.

As we announced in our press release this morning, we are revising our 2019 reported diluted earnings per share guidance, at prevailing exchange rates, to be at least $4.87. The $0.03 revision, compared to our prior guidance on March 22 of at least $4.90, is due to two specific factors: First, a $0.02 increase in the estimated net impact of the deconsolidation of our Canadian subsidiary, Rothmans, Benson & Hedges Incorporated RBH, representing a total charge of approximately $0.12 per share based on final quarter end figures; and second, asset impairment and exit costs of approximately $0.01 per share related to a plant closure in Pakistan, as part of our global manufacturing footprint optimization.

Our guidance continues to include an unfavorable currency impact, at prevailing exchange rates, of approximately $0.14 per share, with essentially the entire amount, or $0.13 coming in the first half of the year. After excluding the $0.22 per share of reporting adjustments outlined on this slide, our forecast represents a projected currency-neutral increase of at least 8% versus our pro forma adjusted diluted earnings per share of $4.84 in 2018.

For the year, we continue to anticipate a total industry volume decline for cigarettes and heated tobacco units of approximately 2.5% to 3.0%. Furthermore, on a like-for-like basis, adjusting for the deconsolidation of RBH, we maintain the following full-year assumptions: