PRESS RELEASE
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PHILIP MORRIS INTERNATIONAL INC. REPORTS 2020 FIRST-QUARTER REPORTED DILUTED EPS OF$1.17 VERSUS $0.87 IN 2019, REFLECTING CURRENCY-NEUTRAL LIKE-FOR-LIKE ADJUSTED DILUTEDEPS GROWTH OF 30.1%;
WITHDRAWS 2020 FULL-YEAR REPORTED DILUTED EPS FORECAST DUE SOLELY TO UNCERTAINTYRELATED TO COVID-19 PANDEMIC AND REPLACES WITH QUARTERLY FORECAST;PROVIDES 2020 SECOND-QUARTER REPORTED DILUTED EPS FORECAST OF $1.00 TO $1.10,
REFLECTING UNFAVORABLE CURRENCY IMPACT OF APPROXIMATELY $0.12

NEW YORK, April 21, 2020 – Philip Morris International Inc. (NYSE: PM) today announces its 2020 first-quarter
results. Comparisons presented in this press release on a "like-for-like" basis reflect pro forma 2019 results, whichhave been adjusted for the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH),
effective March 22, 2019 (the date of deconsolidation). In addition, reflecting the deconsolidation, PMI's total market
share has been restated for previous periods.
2020 FIRST-QUARTER HIGHLIGHTS•

Reported diluted EPS of $1.17, up by 34.5%; up by 49.4%, excluding currency•

Adjusted diluted EPS of $1.21, up by 11.0%; up by 30.1% on a like-for-like basis, excluding currency•

Cigarette and heated tobacco unit shipment volume down by 1.2% (reflecting cigarette shipment volume down
by 4.4%, and heated tobacco unit shipment volume up by 45.5% to 16.7 billion units); down by 0.6% on a likefor-like basis•

Market share of heated tobacco units in IQOS markets, excluding the U.S., up by 1.9 points to 6.6%•

Net revenues up by 6.0%; up by 10.0% on a like-for-like basis, excluding currency•

Operating income up by 36.0%; up by 45.6%, excluding currency•

Adjusted operating income up by 25.5% on a like-for-like basis, excluding currency•

Adjusted operating income margin up by 5.1 points to 41.3% on a like-for-like basis, excluding currency•

Total IQOS users at quarter-end estimated at approximately 14.6 million, of which approximately 10.6 million
have stopped smoking and switched to IQOS•

During the quarter, PMI declared a regular quarterly dividend of $1.17 per common share, representing anannualized rate of $4.68•

On March 30, 2020, PMI submitted a supplemental premarket tobacco product application (PMTA) for the IQOS
3 tobacco heating device with the U.S. Food and Drug Administration

"During these unprecedented times, our main focus is on the health and well-being of our employees and theirfamilies, our commercial partners and the broader communities in which we operate," said André Calantzopoulos,
Chief Executive Officer. "To that end, we recently announced a new set of guiding principles to reassure our
employees of the company’s commitment to job security. Thanks to our employees' efforts, our business continuity
measures are operating effectively.""We started the year with a very strong first quarter, reflecting continued structural growth momentum driven by oursmoke-free portfolio and favorable combustible tobacco pricing. We experienced a limited impact on our performancefrom the early stages of the COVID-19 pandemic, as the onset of government restrictions related to social distancing
and travel were generally only implemented in our key markets over the course of March.""We expect that the pandemic will have adverse impacts on our full-year 2020 business results. Those alreadyobservable relate to a severe reduction of our duty-free sales, slower IQOS user acquisition and delayed minimum
price enforcement in Indonesia. We also have to assume that, in certain markets, unemployment and related
reductions in disposable income will have a temporary impact on market dynamics or the ability of certain small
retailers to operate.""The duration of the pandemic, the magnitude of its economic impact during the government restrictions, and thesubsequent speed of recovery are today unknown. As we are currently unable to forecast with reasonable accuracy
the impact of these factors for the remainder of the year, we are withdrawing our 2020 reported diluted EPS guidanceof at least $5.50, originally provided on February 6, 2020, and are instead providing a forecast for the second
quarter, for which we have relatively better visibility.""Despite near-term uncertainty, our company is resilient with a robust financial position. I remain as confident as
ever in the underlying fundamentals of our business over time and expect PMI to emerge from the current challenges
even better positioned to deliver on our smoke-free ambition and reward our shareholders."
COVID-19: Q1 2020 Volume and Financial Impacts on Like-for-Like Change vs. Q1 2019
The estimated impacts of the COVID-19 pandemic on select PMI volume and currency-neutral financial metrics inthe first quarter of 2020 are provided in the table below and primarily reflect favorable estimated distributor andtrade inventory movements.
Like-for-Like
ChangeFav./(Unfav.) (1)Est. Impact
Attributable
to COVID-19

PMI Total Shipment Volume(0.6)%+1.7 p.p.

Net Revenues

10.0%+2.0 p.p.

Adjusted Operating Income

25.5%+5.6 p.p.

Adjusted Diluted EPS

30.1%+6.8 p.p.

(1) Changes for Net Revenues, Adjusted Operating Income and Adjusted Diluted EPS exclude currency.

Explanations and reconciliations to the most directly comparable U.S. GAAP measures are provided in Appendix
2 and Schedule 8.

-2-

COVID-19: Business Continuity Update
Since the onset of COVID-19, PMI has undertaken a number of business continuity measures to mitigate potential
disruption to its operations and route-to-market in order to preserve the availability of products to its customers andadult consumers.
Currently, PMI has sufficient access to the inputs for its products and is not facing any significant business continuity
issues with respect to key suppliers.
The large majority of PMI's manufacturing facilities globally are currently operational, including all heated tobacco
unit factories. Certain cigarette production facilities are temporarily impacted by government-mandated shutdowns
or production limitations. Such facilities account for approximately 20% of PMI's total cigarette production capacity
worldwide.
Based on current sales trends, there are adequate inventories of PMI finished goods, on average across all markets,of over two months for heated tobacco units, over three months for tobacco heating devices, and over one and ahalf months for cigarettes. While government-related restrictions have led to complexities in the company's routeto-market in select geographies, PMI does not currently anticipate out-of-stock situations in any major operating
income markets and generally expects consumers to have adequate access to its products. In certain emerging
markets, potential difficulties for some smaller general trade outlets could lead to temporary localized out-of-stock
situations given less developed route-to-market infrastructures.
Currently, PMI has ample liquidity resources through cash on hand, the ongoing cash generation of its business,and continued access to commercial paper. As of March 31, 2020, the company had approximately $3.7 billion of
cash and cash equivalents, $1.1 billion of commercial paper, with an average term of approximately 30 days, and$7.5 billion in stand-by revolving credit facilities. PMI repaid approximately $3.6 billion in bond maturities during thefirst quarter and paid approximately $3.6 billion in dividends to shareholders year-to-date April (reflecting dividends
declared in the fourth quarter of 2019 and the first quarter of 2020). The company has a well laddered bond portfolio
and $0.3 billion of bonds maturing through the end of 2020.
COVID-19: Primary Business Impacts
While the trajectory and duration of the COVID-19 pandemic -- and related government restrictions -- remain
uncertain, PMI anticipates three primary areas of impact from temporary changes to its operating environment:•

Reduced Duty-Free Sales: Government travel restrictions and related reductions in passenger travel arehaving a significant impact on the company's duty-free business, which contributed approximately 4% of
total net revenues in 2019 and has relatively high unit margins reflecting its skew to premium brands. As
a result of this premium skew, only a portion of the COVID-linked duty-free volume decline is expected tobe recovered by the company's own brand portfolio in local markets, and generally at lower margins.

•

Delayed IQOS User Acquisition: Lock-down measures and other restrictions limit PMI's ability to engage
with adult smokers through the company's field sales forces, as well as company-owned and third-party
retail touch-points, and are only partly mitigated by PMI's increasing use of digital tools that enable virtual
guided trials and other e-commerce activities. Based on trends since lock-down measures were introducedin various markets, the rate of new user acquisition is expected to be, on average, around 50% lower than
anticipated for as long as government restrictions are in place, with variation depending on the level ofrestrictions by market.
-3-•Indonesia - Minimum Retail Price Delay: The Indonesian government has announced that the enforcementof the new minimum price, originally scheduled for April 1, 2020, is delayed until June due to COVID-19
restrictions. This is expected to impact retail prices at the low end of the market and related price gaps with
PMI's cigarette brands, with a corresponding negative impact on PMI's cigarette market share and timingof pricing.

PMI also anticipates uncertainty as to the general economic impact of the global pandemic and ultimate shape ofthe recovery, particularly with respect to unemployment, disposable income, consumption and the extent of any
down-trading, as well as retail operations in certain developing markets.
2020 FULL-YEAR FORECAST WITHDRAWAL
Given the inherent uncertainty surrounding the COVID-19 pandemic and the related impact on PMI's businessglobally, the company is currently unable to forecast its full-year financial results with reasonable accuracy. PMI istherefore withdrawing its 2020 reported diluted EPS forecast of at least $5.50, originally provided on February 6,
2020.
The limited impact of COVID-19 on the company's first-quarter 2020 financial results primarily reflected the relatively
late-quarter onset of the pandemic in many of PMI's key markets. However, as an increasing number of governments
globally have now enforced self-isolation and lock-down measures -- the duration and severity of which remain
uncertain -- the company anticipates an adverse impact on its full-year results that cannot be accurately quantified
at this time.
Based on data from markets to date, particularly those that were impacted by COVID-19-related government
restrictions earlier in the year, PMI believes that the adverse impacts on its business from the pandemic are temporary
in nature, mainly subject to the duration of government lock-downs and the subsequent timing of recovery.
2020 SECOND-QUARTER FORECAST
Although the company is unable to assess with reasonable accuracy the impact of COVID-19 on its business overthe full year, it has relatively better visibility on the second quarter of 2020.
As initially communicated on February 6th, PMI anticipated a soft second quarter in 2020, notably due to an
unfavorable prior year comparison, existing dynamics in Indonesia and the phasing of certain costs. The company
now anticipates a further adverse impact related to the COVID-19 pandemic, with the largest quarterly impact thisyear expected in the second quarter.
PMI forecasts second-quarter reported diluted EPS to be in a range of $1.00 to $1.10, including an unfavorable
currency impact, at prevailing exchange rates, of approximately $0.12 per share.
This forecast assumes the following estimated unfavorable EPS impacts in the quarter related to COVID-19:•

10 cents for distributor and trade inventory movements, mainly related to reversals from the first quarter;•

9 cents for lost Duty-Free sales, net of domestic sales recapture, assuming no recovery in global travel inthe period;•

5 to 15 cents for the impact of the delay in minimum price enforcement in Indonesia and other COVID-19related factors, including temporary reductions in daily consumption and down-trading in certain developing
markets.

-4-

The forecast also assumes:•a currency-neutral net revenue decline of approximately 8% to 12%, wholly attributable to COVID-19-related
factors, including lower IQOS device sales; and•no additional disruption in the company's ability to supply its customers, based on its current operations
and inventory levels.

Until PMI is able to estimate the full-year 2020 impact of COVID-19 on its business with greater certainty, thecompany plans to continue providing quarterly forecasts on a one quarter forward basis, with the exception of thefollowing items forecasted for the full year:•

capital expenditures of approximately $0.8 billion, compared to approximately $1.0 billion disclosed
previously, with the reduction unrelated to reduced-risk product investments; and•an effective tax rate of approximately 23%, subject to changes in full-year earnings mix.

The forecasts in this press release exclude the impact of any future acquisitions, unanticipated asset impairment
and exit cost charges, future changes in currency exchange rates, further developments related to the U.S. Tax
Cuts and Jobs Act, further developments pertaining to the judgment in the two Québec Class Action lawsuits andthe Companies’ Creditors Arrangement Act (CCAA) protection granted to RBH, any unusual events, and any
COVID-19-related developments different from the assumptions set forth in the company's forecasts.
Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuingrisks to these projections.
Conference Call
A conference call, hosted by André Calantzopoulos, Chief Executive Officer, and Martin King, Chief Financial Officer,
will be webcast at 9:00 a.m., Eastern Time, on April 21, 2020. Access is at www.pmi.com/2020Q1earnings. The
audio webcast may also be accessed on iOS or Android devices by downloading PMI’s free Investor Relations
Mobile Application at www.pmi.com/irapp.

-5-

CONSOLIDATED SHIPMENT VOLUME & MARKET SHAREPMI Shipment Volume by Region(million units)First-Quarter
2020

2019

ChangeCigarettes
European Union
Eastern Europe
Middle East & Africa
South & Southeast Asia
East Asia & Australia
Latin America & Canada
Total PMI

40,646
21,41929,996
37,595
12,29915,063
157,018

39,48820,32033,304
41,492
12,113
17,580164,297

2.9 %
5.4 %
(9.9)%(9.4)%
1.5 %(14.3)%(4.4)%

Heated Tobacco Units
European Union
Eastern Europe
Middle East & Africa
South & Southeast Asia
East Asia & Australia

4,661
4,366
470
—
7,122

2,293
1,548
754
—
6,849

+100%
+100%
(37.7)%—%
4.0 %Latin America & Canada (1)Total PMI

108
16,72754
11,498+100%
45.5 %

Cigarettes and Heated Tobacco Units
European Union
Eastern Europe
Middle East & Africa
South & Southeast Asia
East Asia & Australia
Latin America & Canada
Total PMI

45,30725,78530,466
37,595
19,421
15,171
173,745

41,781
21,86834,05841,492
18,962
17,634
175,795

8.4 %
17.9 %(10.5)%(9.4)%
2.4 %(14.0)%(1.2)%(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license.

During the quarter, PMI's total shipment volume decreased by 1.2%, or by 0.6% on a like-for-like basis, principally
due to:•Middle East & Africa, reflecting lower cigarette shipment volume, notably in Saudi Arabia and Turkey, partly
offset by North Africa;•

South & Southeast Asia, reflecting lower cigarette shipment volume, primarily in Indonesia, Pakistan and thePhilippines; and•Latin America & Canada, reflecting lower cigarette shipment volume, primarily in Argentina, Canada (mainly
due to the impact of the deconsolidation of RBH), and Mexico. On a like-for-like basis, PMI's total shipment
volume in the Region decreased by 8.8%;

partly offset by•

the EU, reflecting higher heated tobacco unit shipment volume across the Region, particularly in Italy, as wellas higher cigarette shipment volume, notably in Germany and Italy;•

Eastern Europe, reflecting higher heated tobacco unit shipment volume across the Region, notably in Russia
and Ukraine, as well as higher cigarette shipment volume, mainly in Russia, partly offset by Ukraine; and•East Asia & Australia, mainly reflecting higher cigarette and heated tobacco unit shipment volume in Japan.
-6-

First-Quarter Impact of Inventory Movements
On a like-for-like basis, excluding the net favorable impact of estimated distributor inventory movements ofapproximately 5.4 billion units, PMI’s total in-market sales declined by 3.7%, due to a 6.7% decline in cigarettes,
partly offset by a 35.6% increase in heated tobacco units.
The net favorable impact of estimated distributor inventory movements of approximately 5.4 billion units reflected:•

A net favorable impact of 4.7 billion cigarettes, mainly driven by the EU Region, Japan, North Africa, PMI Duty
Free and Russia, partly offset by Saudi Arabia; and•A net favorable impact of 0.7 billion heated tobacco units, mainly driven by the EU Region and Russia.

PMI Shipment Volume by Brand

PMI Shipment Volume by Brand(million units)First-Quarter
2020

2019

ChangeCigarettes
Marlboro
L&M

59,24522,641

59,963
21,816(1.2)%
3.8 %Chesterfield
Philip Morris
Sampoerna A
Parliament
Dji Sam Soe
Bond Street
Lark
FortuneOthersTotal Cigarettes
Heated Tobacco Units (1)Total PMI

12,903
11,463
8,548
7,573
6,175
5,612
4,025
2,482
16,351
157,018
16,727
173,745

14,298
10,723
7,901
8,830
6,651
5,671
5,270
3,045
20,129164,297
11,498
175,795(9.8)%
6.9 %8.2 %(14.2)%(7.2)%(1.0)%(23.6)%(18.5)%(18.8)%(4.4)%
45.5 %(1.2)%(1) Includes shipments to Altria Group, Inc., commencing in the third quarter of 2019, for sale in the United States under license.
Note: Sampoerna A includes Sampoerna; Philip Morris includes Philip Morris/Dubliss; and Lark includes Lark Harmony.

PMI's cigarette shipment volume of the following brands decreased:•

Marlboro, mainly due to the GCC, Indonesia, Mexico and Turkey, partially offset by Germany, Italy, Japan, North
Africa and Russia;•

Chesterfield, mainly due to Argentina, Russia, Saudi Arabia and Turkey, partly offset by Brazil;•

Parliament, mainly due to Russia and Turkey;•

Dji Sam Soe in Indonesia, mainly due to Dji Sam Soe Magnum Mild, reflecting adult smoker down-trading tosuper-low-price brands due to widened price gaps;•

Bond Street, mainly due to Ukraine, partly offset by Russia;•

Lark, mainly due to Japan and Turkey;•

Fortune in the Philippines, mainly reflecting the impact of the August 2019 price increase, which widened pricegaps with competitive brands; and•"Others," notably due to: the impact of the deconsolidation of RBH in Canada; mid-price Sampoerna U in
Indonesia and Muratti in Turkey; and low-price Morven in Pakistan.

-7-

The increase in PMI's heated tobacco unit shipment volume was mainly driven by the EU (notably Italy), Eastern
Europe (notably Russia and Ukraine) and Japan, partly offset by PMI Duty Free.
PMI's cigarette shipment volume of the following brands increased:•

L&M, mainly driven by Mexico and North Africa (primarily Egypt), partly offset by Saudi Arabia;•

Philip Morris, primarily driven by Japan and Russia, partly offset by Argentina; and•Sampoerna A in Indonesia, mainly driven by premium A Mild, notably reflecting reduced price gaps with directlycompetitive mid and low-price brands.

First-Quarter International Share of Market
PMI's total international market share (excluding China and the U.S.), defined as PMI's cigarette and heated tobacco
unit sales volume as a percentage of total industry cigarette and heated tobacco unit sales volume, decreased by
0.2 points to 27.9%, reflecting:•Total international market share for cigarettes of 25.0%, down by 1.1 points; and•Total international market share for heated tobacco units of 2.9%, up by 0.9 points.

PMI's total international cigarette sales volume as a percentage of total industry cigarette sales volume was downby 0.8 points to 25.9%, mainly reflecting: out-switching to heated tobacco units, as well as lower cigarette market
share, notably in Argentina, Indonesia, Mexico, Pakistan, Saudi Arabia and Turkey.
CONSOLIDATED FINANCIAL SUMMARY

ChangeFav./(Unfav.)Financial Summary Quarters Ended March 31,(in millions)

2020

2019

Total

Excl.
Curr.

Variance
Fav./(Unfav.)Cur- Price
Total rency

Vol/
Mix

Cost/
Other(1)

Net Revenues$ 7,153 $ 6,751

6.0%

7.1%

402

(74)

323

381

(228)

Cost of Sales(2,402) (2,465)

2.6%

0.6%

63

49

—

29

(15)

Marketing, Administration andResearch Costs (2)(1,944) (2,217)

12.3%

20.0%

273

(171)

—

—

444

(19)

5.3%

5.3%

1

—

—

—

1

$ 2,789 $ 2,050

36.0%

45.6%

739

(196)

323

410

202

Amortization of Intangibles
Operating Income(18)

Asset Impairment & Exit Costs (3)

—

(20)

+100% +100%

20

—

—

—

20

Canadian Tobacco LitigationRelated Expense (3)

—

(194)

+100% +100%

194

—

—

—

194

Loss on Deconsolidation of RBH (3)

—

(239)

+100% +100%

239

—

—

—

239

11.4%

19.3%

286

(196)

323

410

(251)

1.9pp

4.2pp

Adjusted Operating Income
Adjusted Operating Income
Margin(1)$ 2,789 $ 2,503
39.0%

37.1%

Cost/Other variance includes the impact of the RBH deconsolidation.

(2)

Unfavorable Cost/Other variance of $9 million, excluding 2019 asset impairment and exit costs, the 2019 Canadian tobacco litigation-related expense and the2019 Loss on deconsolidation of RBH.
(3)

Included in Marketing, Administration and Research Costs above.

Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third
quarter of 2019, for sale under license in the United States.

-8-

During the quarter, net revenues, excluding unfavorable currency, increased by 7.1%, mainly reflecting: a favorable
pricing variance, notably driven by Australia, the GCC, Germany, Mexico, the Philippines and Turkey, partly offset
by Italy; and a favorable volume/mix, primarily driven by heated tobacco unit volume (notably in the EU and Eastern
Europe, partly offset by PMI Duty Free), partially offset by lower IQOS device volume (notably in Japan) and lower
cigarette volume (mainly due to Mexico, the Philippines, Saudi Arabia and Turkey, largely offset by Germany, Italy,
Japan, North Africa and Russia). The currency-neutral growth in net revenues of 7.1% came despite the unfavorable
impact of $228 million, shown in "Cost/Other," mainly resulting from the deconsolidation of RBH. On a like-for-likebasis, net revenues, excluding unfavorable currency, increased by 10.0%, as detailed in Schedule 8.
Operating income, excluding unfavorable currency, increased by 45.6%, notably reflecting a favorable comparison
to charges recorded in the first quarter of 2019 of $453 million, shown in "Cost/Other," related to the loss on
deconsolidation of RBH, the Canadian tobacco litigation-related expense, and asset impairment and exit costs
related to a plant closure in Pakistan.
Excluding the impact of these 2019 charges, adjusted operating income, excluding unfavorable currency, increasedby 19.3%, primarily reflecting: a favorable pricing variance; and favorable volume/mix, primarily driven by heated
tobacco unit volume (notably in the EU and Eastern Europe, partly offset by PMI Duty Free); partially offset byhigher manufacturing costs; higher marketing, administration and research costs (notably reflecting increased
investment behind reduced-risk products, mainly in the EU and Eastern Europe); and the net unfavorable impact
resulting from the deconsolidation of RBH, included in "Cost/Other." On a like-for-like basis, adjusted operating
income, excluding unfavorable currency, increased by 25.5%, as detailed in Schedule 8.
Adjusted operating income margin, excluding currency, increased by 4.2 points to 41.3%, as detailed in Schedule
7, or by 5.1 points to 41.3% on a like-for-like basis, as detailed in Schedule 8.
EUROPEAN UNION REGION

ChangeFav./(Unfav.)Financial Summary Quarters Ended March 31,

Excl.
Curr.

Variance
Fav./(Unfav.)Cur- Price
Total rency

Vol/
Mix

Cost/
Other

16

430

—

(65)

16

378

(67)

—

—

—

—

—

262

(65)

16

378

(67)

2020

2019

Total

Net Revenues$ 2,535$ 2,159

17.4% 20.7%

376

(70)

Operating Income$ 1,158$ 896

29.2% 36.5%

262

Asset Impairment & Exit Costs

—

—

—%

Adjusted Operating Income$ 1,158$ 896

29.2% 36.5%

Adjusted Operating Income
Margin

45.7%

41.5%

4.2pp

(in millions)

—%

5.4pp

During the quarter, net revenues, excluding unfavorable currency, increased by 20.7%, primarily reflecting favorable
volume/mix, mainly driven by higher heated tobacco unit volume across the Region (notably in the Czech Republic,
Germany, Italy and Poland), as well as higher cigarette volume (notably in Germany and Italy). The favorable pricing
variance reflected higher combustible pricing across the Region (notably in Germany), partly offset by lower heated
tobacco unit pricing (notably in Italy) and lower IQOS device pricing.
Operating income, excluding unfavorable currency, increased by 36.5%, mainly reflecting: favorable volume/mix,
driven by the same factors as for net revenues noted above; and a favorable pricing variance; partly offset by higher-9-manufacturing costs; and higher marketing, administration and research costs, largely related to increased
investments behind reduced-risk products.
Adjusted operating income margin, excluding currency, increased by 5.4 points to 46.9%, as detailed in Schedule
7.
Total Market, PMI Shipment & Market Share Commentaries

European Union Key DataFirst-Quarter

Total Market (billion units)

2020
109.3

2019
107.4

Change% / pp
1.8%

PMI Shipment Volume (million units)
Cigarettes
Heated Tobacco Units
Total EU

40,646
4,661
45,30739,4882,293
41,781

2.9%
+100%
8.4%

17.7%
6.5%
5.7%
2.6%
3.9%
3.0%
39.4%

18.2%
6.7%
5.9%
2.8%
2.1%
3.2%
38.9%

(0.5)
(0.2)
(0.2)
(0.2)
1.8
(0.2)
0.5

PMI Market Share
Marlboro
L&M
Chesterfield
Philip Morris
HEETS
OthersTotal EU

In the quarter, the estimated total market in the EU increased by 1.8% to 109.3 billion units, mainly driven by:•

Denmark, up by +100%, mainly reflecting the net favorable impact of estimated trade inventory movements inadvance of a significant excise tax increase on April 1, 2020. Excluding these movements, the total estimatedmarket decreased by 2.0%; and•Germany, up by 3.7%, or down by 1.8% excluding the net favorable impact of estimated trade inventory
movements, primarily reflecting the impact of price increases in March 2019;

partly offset by•France, down by 8.7%, primarily reflecting the impact of significant excise tax-driven price increases in November
2019 and March 2020, and a higher prevalence of illicit trade.

Excluding the net favorable impact of estimated trade inventory movements, the estimated total market in the EU
was down by 0.4%.
PMI's total shipment volume increased by 8.4% to 45.3 billion units, reflecting:•higher heated tobacco unit shipment volume across the Region, driven by higher market share (notably inGermany, Italy and Poland) and the net favorable impact of estimated distributor inventory movements (partly
driven by distributor inventory increases related to COVID-19, notably in Italy); and•higher cigarette shipment volume, mainly driven by the net favorable impact of estimated distributor inventory
movements (partly driven by distributor inventory increases related to COVID-19, notably in Italy and Spain),- 10 -

partly offset by lower market share (notably in Italy and Poland, partially reflecting out-switching to heated
tobacco units).
Excluding the net favorable impact of estimated distributor inventory movements, PMI's total in-market sales in the
Region increased by 3.1%.
EASTERN EUROPE REGION

ChangeFav./(Unfav.)Financial Summary Quarters Ended March 31,

Variance
Fav./(Unfav.)

2020

2019

Total

Excl.
Curr.

Net Revenues

$ 788

$ 579

36.1 %

35.1%

209

6

Operating Income

$ 99

$ 129

(23.3)%

48.1%

(30)

Asset Impairment & Exit Costs

—

—

—%

—%

Adjusted Operating Income

$ 99

$ 129

(23.3)%

48.1%

Adjusted Operating Income
Margin

12.6%

22.3%

(9.7)pp

2.1pp(in millions)Cur- Price
Total rency

Vol/
Mix

Cost/
Other

14

189

—

(92)

14

129

(81)

—

—

—

—

—

(30)

(92)

14

129

(81)

During the quarter, net revenues, excluding favorable currency, increased by 35.1%, mainly reflecting: favorable
volume/mix, predominantly driven by higher heated tobacco unit volume in Russia and Ukraine; and a favorable
pricing variance, driven mainly by higher combustible pricing (notably in Russia and Ukraine), partly offset by lower
IQOS device pricing (predominantly in Russia).
Operating income, excluding unfavorable currency (primarily related to an adverse transaction currency impact
from the revaluation of foreign currency payables in Russia), increased by 48.1%, mainly reflecting: favorable
volume/mix, reflecting the same drivers as for net revenues noted above; and a favorable pricing variance; partially
offset by higher manufacturing costs and higher marketing, administration and research costs (primarily related toreduced-risk products in Russia and Ukraine).
Adjusted operating income margin, excluding currency, increased by 2.1 points to 24.4%, as detailed in Schedule
7.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in Eastern Europe decreased, notably due to:•

Russia, down by 0.1%, or by 3.9% excluding the net favorable impact of estimated trade inventory movements,
primarily reflecting the impact of price increases, as well as an increase in the prevalence of illicit trade; and•Ukraine, down by 6.5%, mainly reflecting the impact of excise tax-driven price increases.

PMI Shipment Volume(million units)First-Quarter
2020

2019

ChangeCigarettes
Heated Tobacco Units
Total Eastern Europe

21,4194,366
25,78520,3201,548
21,868

5.4%
+100%
17.9%

PMI's total shipment volume increased by 17.9% to 25.8 billion units, mainly driven by:- 11 -

•

Kazakhstan, up by 15.6%, mainly reflecting a higher market share of heated tobacco units; and•Russia, up by 24.0%, or by 14.5% excluding the net favorable impact of estimated distributor inventory
movements (primarily for cigarettes and driven by distributor inventory increases due to COVID-19), mainlyreflecting a higher market share of heated tobacco units.
MIDDLE EAST & AFRICA REGION
ChangeFav./(Unfav.)Financial Summary Quarters Ended March 31,

Variance
Fav./(Unfav.)

2020

2019

Total

Excl.
Curr.

Net Revenues

$ 876

$ 927

(5.5)%(5.3)%

(51)

(2)

72

(76)

(45)

Operating Income

$ 321

$ 344

(6.7)%(1.2)%

(23)

(19)

72

(30)

(46)

Asset Impairment & Exit Costs

—

—

—%

—%

—

—

—

—

—

Adjusted Operating Income

$ 321

$ 344

(6.7)%(1.2)%

(23)

(19)

72

(30)

(46)

Adjusted Operating Income
Margin36.6%

37.1% (0.5)pp

1.6pp(in millions)Cur- Price
Total rency

Vol/
Mix

Cost/
Other

During the quarter, net revenues, excluding unfavorable currency, decreased by 5.3%, reflecting: unfavorable
volume/mix, mainly due to lower heated tobacco unit and IQOS device volume in PMI Duty Free and lower cigarettevolume (notably in Saudi Arabia and Turkey, partly offset by Kuwait and North Africa); and lower fees for certain
distribution rights billed to customers in certain markets, shown in "Cost/Other"; partially offset by a favorable pricing
variance, driven predominantly by the GCC and Turkey.
Operating income, excluding unfavorable currency, decreased by 1.2%, reflecting: unfavorable volume/mix, mainly
due to lower heated tobacco unit volume in PMI Duty Free and lower cigarette volume (notably in Saudi Arabia,
partly offset by Kuwait and North Africa); and unfavorable "Cost/Other," mainly due to lower fees for certain
distribution rights, as for net revenues noted above, and higher manufacturing costs, partly offset by lower marketing,administration and research costs; partially offset by a favorable pricing variance.
Adjusted operating income margin, excluding currency, increased by 1.6 points to 38.7%, as detailed in Schedule
7.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in the Middle East & Africa decreased, mainly due to:•International Duty Free, down by 33.0%, primarily reflecting the impact of government travel restrictions andreduced passenger traffic due to the COVID-19 pandemic;•

Saudi Arabia, down by 18.6%, notably reflecting the increased prevalence of non-domestic products following
the implementation of plain packaging in the fourth quarter of 2019; and•Turkey, down by 24.1%, mainly reflecting a higher prevalence of illicit trade related to cut tobacco following
significant industry-wide price increases in 2019;

partly offset by•

Egypt, up by 5.9%, partly reflecting a lower prevalence of illicit trade and in-switching to cigarettes from othertobacco products.
- 12 -

PMI Shipment Volume(million units)First-Quarter

Cigarettes
Heated Tobacco Units
Total Middle East & Africa

2020

2019

Change29,996470
30,46633,304754
34,058(9.9)%(37.7)%(10.5)%

PMI's total shipment volume decreased by 10.5% to 30.5 billion units, notably due to:•

PMI Duty Free, down by 12.8%, or by 28.1% excluding the net favorable impact of estimated distributor inventory
movements (driven by cigarettes), mainly reflecting the lower total market;•

Saudi Arabia, down by 72.6%. Excluding the net unfavorable impact of estimated distributor inventory
movements of 2.3 billion cigarettes, largely attributable to the timing of shipments in 2019, PMI's in-market
sales decreased by 20.4%, mainly due to the lower total market; and•Turkey, down by 27.0%, mainly reflecting the lower total market and lower market share due primarily to adultsmoker down-trading following the price increases;

partly offset by•

Egypt, up by 17.1%, or by 6.1% excluding the net favorable impact of estimated distributor inventory movements,
mainly reflecting the higher total market.
SOUTH & SOUTHEAST ASIA REGION

ChangeFav./(Unfav.)Financial Summary Quarters Ended March 31,

Variance
Fav./(Unfav.)

2020

2019

Total

Excl.
Curr.

$ 1,251$ 1,113

12.4%

10.7%

138

19

159

(40)

—

$ 599

$ 440

36.1%

31.8%

159

19

159

(18)

(1)

—

(20)

+100% +100%

20

—

—

—

20

Adjusted Operating Income

$ 599

$ 460

30.2%

26.1%

139

19

159

(18)

(21)

Adjusted Operating Income
Margin

47.9%

41.3%

6.6pp

5.8pp

(in millions)
Net Revenues
Operating Income
Asset Impairment & Exit Costs (1)(1)

Cur- Price
Total rency

Vol/
Mix

Cost/
Other

Included in marketing, administration and research costs at the consolidated operating income level.

During the quarter, net revenues, excluding favorable currency, increased by 10.7%, reflecting a favorable pricing
variance, principally driven by the Philippines, partly offset by unfavorable volume/mix, mainly due to lower cigarettevolume in Indonesia and the Philippines, partially offset by favorable cigarette mix in Indonesia.
Operating income, excluding favorable currency, increased by 31.8%, partly reflecting a favorable comparison toa charge recorded in the first quarter of 2019, shown in "Cost/Other," for asset impairment and exit costs related
to a plant closure in Pakistan.
Excluding the impact of the 2019 charge, adjusted operating income, excluding favorable currency, increased by
26.1%, reflecting a favorable pricing variance, partly offset by unfavorable volume/mix, due to the same factors as
for net revenues noted above, and higher marketing, administration and research costs.

- 13 -

Adjusted operating income margin, excluding currency, increased by 5.8 points to 47.1%, as detailed in Schedule
7.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in South & Southeast Asia decreased, notably due to:•Indonesia, down by 0.6%, or by approximately 7% excluding the net favorable impact of estimated trade inventory
movements, mainly reflecting the impact of excise tax-driven price increases;•

Pakistan, down by 25.3%, or by 41.9% excluding the net favorable impact of estimated trade inventory
movements, mainly due to the impact of excise tax-driven price increases in June 2019; and•the Philippines, down by 8.9%, or by 13.2% excluding the net favorable impact of estimated trade inventory
movements, mainly reflecting the impact of industry-wide price increases in the third quarter of 2019 and theimplementation of quarantines related to COVID-19 in select geographies beginning in mid-March 2020.

PMI Shipment Volume(million units)First-Quarter
2020

2019

ChangeCigarettes

37,59541,492(9.4)%

Heated Tobacco Units
Total South & Southeast Asia—
37,595—41,492—%(9.4)%

PMI's total shipment volume decreased by 9.4% to 37.6 billion units, notably due to:•Indonesia, down by 7.6%, primarily reflecting lower market share, mainly due to Marlboro and Dji Sam Soe
Magnum Mild, partly offset by Sampoerna A;•

Pakistan, down by 35.0%, mainly due to the lower total market; and•the Philippines, down by 8.8%, mainly reflecting the lower total market.
EAST ASIA & AUSTRALIA REGION

ChangeFav./(Unfav.)Financial Summary Quarters Ended March 31,

Variance
Fav./(Unfav.)

2020

2019

Total

Excl.
Curr.

$ 1,255$ 1,321(5.0)%(4.3)%

(66)

(9)

13

(70)

—

$ 486

$ 427

13.8 % 14.8 %

59

(4)

13

(11)

61

Asset Impairment & Exit Costs

—

—

—%

—

—

—

—

—

Adjusted Operating Income

$ 486

$ 427

13.8 % 14.8 %

59

(4)

13

(11)

61

Adjusted Operating Income
Margin

38.7%

32.3%

6.4pp

(in millions)
Net Revenues
Operating Income—%

Cur- Price
Total rency

Vol/
Mix

Cost/
Other

6.5pp

During the quarter, net revenues, excluding unfavorable currency, decreased by 4.3%, reflecting: unfavorable
volume/mix, mainly due to lower IQOS device volume in Japan and unfavorable cigarette volume/mix in Australia,
partly offset by higher cigarette and heated tobacco unit volume in Japan. The unfavorable volume/mix was partly
offset by a favorable pricing variance, mainly driven by Australia.

- 14 -

Operating income, excluding unfavorable currency, increased by 14.8%, mainly reflecting lower manufacturingcosts related to Japan; lower marketing, administration and research costs; and a favorable pricing variance; partly
offset by unfavorable volume/mix, notably due to unfavorable cigarette volume/mix in Australia, partially offset byhigher cigarette volume in Japan.
Adjusted operating income margin, excluding currency, increased by 6.5 points to 38.8%, as detailed in Schedule
7.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in East Asia & Australia, excluding China, decreased, notably due to:•Australia, down by 19.1%, or by 7.9% excluding the net unfavorable impact of estimated trade inventory
movements, mainly due to the impact of excise tax-driven retail price increases;•

Japan, down by 5.7%, mainly reflecting adult smoker out-switching from cigarettes to the cigarillo category;and•Taiwan, down by 14.4%, or by 3.2% excluding the net unfavorable impact of estimated trade inventory
movements, notably due to an increase in the prevalence of illicit trade.

PMI Shipment Volume(million units)First-Quarter

Cigarettes
Heated Tobacco Units
Total East Asia & Australia

2020

2019

Change12,2997,122
19,421

12,113
6,849
18,962

1.5%
4.0%
2.4%

PMI's total shipment volume increased by 2.4% to 19.4 billion units, notably in:•Japan, up by 5.6%, reflecting the net favorable impact of estimated distributor inventory movements ofapproximately 0.8 billion units (driven by a 0.9 billion favorable impact for cigarettes), partly due to accelerated
cigarette and heated tobacco unit shipments to the distributor related to COVID-19. Excluding the impact ofthese inventory movements, PMI's in-market sales decreased by 0.9%, mainly due to the lower total market,
partly offset by higher heated tobacco unit market share.

- 15 -LATIN AMERICA & CANADA REGION

ChangeFav./(Unfav.)Financial Summary Quarters Ended March 31,

Excl.
Curr.

Variance
Fav./(Unfav.)Cur- Price
Total rency

Vol/
Mix

Cost/
Other

2020

2019

Total

Net Revenues

$ 448

$ 652

(31.3)% (28.5)%

(204)

(18)

49

(52)

(183)

Operating Income$ 126$ (186)

+100%

+100%

312

(35)

49

(38)

336

Asset Impairment & Exit
Costs
Canadian Tobacco LitigationRelated Expense (2)Loss on Deconsolidation of
RBH (2)

—

—

—%

—%

—

—

—

—

—

—

(194)

+100%

+100%

194

—

—

—

194

—

(239)

+100%

+100%

239

—

—

—

239

Adjusted Operating Income

$ 126

$ 247

(49.0)% (34.8)%

(121)

(35)

49

(38)

(97)

Adjusted Operating Income
Margin

28.1%

37.9%

(9.8)pp(in millions)(1)(3.4)pp(1)

Unfavorable Cost/Other variance includes the impact of the RBH deconsolidation.

(2)

Included in marketing, administration and research costs at the consolidated operating income level.

Note: Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third
quarter of 2019, for sale under license in the United States.

During the quarter, net revenues, excluding unfavorable currency, decreased by 28.5%, reflecting: the unfavorable
impact of the deconsolidation of RBH shown in "Cost/Other"; and unfavorable volume/mix, notably due to lower
cigarette volume in Argentina and Mexico; partly offset by a favorable pricing variance, driven by Mexico. On a likefor-like basis, net revenues, excluding unfavorable currency, decreased by 1.3%, as detailed in Schedule 9.
Operating income, excluding unfavorable currency, increased by +100%, notably reflecting a favorable comparison
to charges recorded in the first quarter of 2019 of $433 million, included in "Cost/Other," related to the loss on
deconsolidation of RBH and the Canadian tobacco litigation-related expense.
Excluding the impact of these 2019 charges, adjusted operating income, excluding unfavorable currency, decreased
by 34.8%, reflecting: the unfavorable impact of the deconsolidation of RBH, included in "Cost/Other"; and unfavorable
volume/mix, due to the same factors as for net revenues noted above; partly offset by a favorable pricing varianceand lower marketing, administration and research costs. On a like-for-like basis, excluding unfavorable currency,
adjusted operating income increased by 30.3%, as detailed in Schedule 9.
Adjusted operating income margin, excluding currency, decreased by 3.4 points to 34.5%, as detailed in Schedule
7, or increased by 8.2 points to 34.0% on a like-for-like basis, as detailed in Schedule 9.
Total Market, PMI Shipment & Market Share Commentaries
In the quarter, the estimated total market in Latin America & Canada decreased, notably due to:•Argentina, down by 5.7%, mainly reflecting the impact of price increases; and•Mexico, down by 10.5%, mainly due to the impact of excise tax-driven price increases in January 2020;

partly offset by•

Brazil, up by 10.3%, mainly reflecting a lower prevalence of illicit trade due to reduced price gaps with legal
products and improved macro-economic conditions.
- 16 -

PMI Shipment Volume(million units)First-Quarter

Cigarettes
Heated Tobacco Units
Total Latin America & Canada

2020

2019

Change15,063108
15,171

17,58054
17,634(14.3)%+100%(14.0)%

PMI's total shipment volume decreased by 14.0% to 15.2 billion units, or by 8.8% on a like-for-like basis, notably
due to:•Argentina, down by 13.2%, primarily reflecting a lower market share due to adult smoker down-trading to ultralow-price brands produced by local manufacturers, as well as the lower total market; and•Mexico, down by 14.0%, mainly due to the lower total market and lower market share due to adult smoker
down-trading.

- 17 -

Philip Morris International: Delivering a Smoke-Free Future
Philip Morris International (PMI) is leading a transformation in the tobacco industry to create a smoke-free future
and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue
to smoke, society, the company and its shareholders. PMI is a leading international tobacco company engaged in
the manufacture and sale of cigarettes, as well as smoke-free products and associated electronic devices andaccessories, and other nicotine-containing products in markets outside the United States. In addition, PMI ships a
version of its IQOS Platform 1 device and its consumables authorized by the U.S. Food and Drug Administration
to Altria Group, Inc. for sale in the U.S. under license. PMI is building a future on a new category of smoke-free
products that, while not risk-free, are a much better choice than continuing to smoke. Through multidisciplinary
capabilities in product development, state-of-the-art facilities and scientific substantiation, PMI aims to ensure thatits smoke-free products meet adult consumer preferences and rigorous regulatory requirements. PMI's smoke-free
IQOS product portfolio includes heat-not-burn and nicotine-containing vapor products. As of March 31, 2020, PMI
estimates that approximately 10.6 million adult smokers around the world have already stopped smoking andswitched to PMI's heat-not-burn product, available for sale in 53 markets in key cities or nationwide under the IQOS
brand. For more information, please visit www.pmi.com and www.pmiscience.com.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other forward-looking statements. Achievement of
future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties
materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those containedin such forward-looking statements. Pursuant to the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual
results and outcomes to differ materially from those contained in any forward-looking statements made by PMI.
PMI's business risks include: excise tax increases and discriminatory tax structures; increasing marketing andregulatory restrictions that could reduce our competitiveness, eliminate our ability to communicate with adultconsumers, or ban certain of our products; health concerns relating to the use of tobacco and other nicotinecontaining products and exposure to environmental tobacco smoke; litigation related to tobacco use; intensecompetition; the effects of global and individual country economic, regulatory and political developments, natural
disasters and conflicts; changes in adult smoker behavior; lost revenues as a result of counterfeiting, contraband
and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency
devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws;
adverse changes in the cost and quality of tobacco and other agricultural products and raw materials; and theintegrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also
be adversely affected should it be unsuccessful in its attempts to produce and commercialize reduced-risk products
or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully
introduce new products, promote brand equity, enter new markets or improve its margins through increased prices
and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and thedevelopment of strategic business relationships; or if it is unable to attract and retain the best global talent. Future
results are also subject to the lower predictability of our reduced-risk product category's performance.
The COVID-19 pandemic has created significant societal and economic disruption, and resulted in closures ofstores, factories and offices, and restrictions on manufacturing, distribution and travel, all of which will adversely
impact our business, results of operations, cash flows and financial position during the continuation of the pandemic.
- 18 -

Although we have business continuity plans and other safeguards in place, there is no assurance that such plans
and safeguards will be effective. While much of the COVID-19 pandemic and its effect on our business is still
unknown, currently, significant risks include our diminished ability to convert adult smokers to our RRPs, significant
volume declines in our duty-free business and certain other key markets, disruptions or delays in our manufacturing
and supply chain, increased currency volatility, and delays in certain cost saving, transformation and restructuringinitiatives. Our business could also be adversely impacted if key personnel or a significant number of employees
or business partners become unavailable due to the COVID-19 outbreak. The significant adverse impact of
COVID-19 on the economic or political conditions in markets in which we operate could result in changes to thepreferences of our adult consumers, lower demand for our products, particularly for our mid-price or premium-pricebrands, and increased illicit trade. Continuation of the pandemic could disrupt our access to the credit markets orincrease our borrowing costs. Governments may temporarily be unable to focus on the development of sciencebased regulatory frameworks for the development and commercialization of RRPs or on the enforcement or
implementation of regulations that are significant to our business. In addition, messaging about the potential negative
impacts of the use of our products on COVID-19 risks may lead to increasingly restrictive regulatory measures on
the sale and use of our products, negatively impact demand for our products, the willingness of adult consumers
to switch to our RRPs and our efforts to advocate for the development of science-based regulatory frameworks forthe development and commercialization of RRPs.
Despite our efforts to manage these risks, their impact also depends on factors beyond our knowledge or control,
including the duration and severity of the outbreak and actions taken to contain its spread and to mitigate its publichealth effects, and the ultimate economic consequences thereof.
PMI is further subject to other risks detailed from time to time in its publicly filed documents, including the Form 10K for the year ended December 31, 2019. PMI cautions that the foregoing list of important factors is not a complete
discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statementthat it may make from time to time, except in the normal course of its public disclosure obligations.

- 19 -

Key Terms, Definitions and Explanatory Notes
General•"PMI" refers to Philip Morris International Inc. and its subsidiaries. Trademarks and service marks that are theregistered property of, or licensed by, the subsidiaries of PMI, are italicized.

•

Comparisons are made to the same prior-year period unless otherwise stated.

•

Unless otherwise stated, references to total industry, total market, PMI shipment volume and PMI market shareperformance reflect cigarettes and heated tobacco units.

•

References to total international market, defined as worldwide cigarette and heated tobacco unit volume
excluding the U.S., total industry, total market and market shares are PMI estimates for tax-paid products basedon the latest available data from a number of internal and external sources and may, in defined instances,
exclude the People's Republic of China and/or PMI's duty free business. In addition, to reflect the deconsolidationof PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019, PMI's total
market share has been restated for previous periods.

•"OTP" is defined as "other tobacco products," primarily roll-your-own and make-your-own cigarettes, pipe
tobacco, cigars and cigarillos, and does not include reduced-risk products.

•"Combustible products" is the term PMI uses to refer to cigarettes and OTP, combined.

•

In-market sales, or "IMS," is defined as sales to the retail channel, depending on the market and distribution
model.

•"Total shipment volume" is defined as the combined total of cigarette shipment volume and heated tobacco unit
shipment volume.

•"North Africa" is defined as Algeria, Egypt, Libya, Morocco and Tunisia.

•"The GCC" (Gulf Cooperation Council) is defined as Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United
Arab Emirates (UAE).

•

Following the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), PMI
will continue to report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark
owner. These include HEETS, Next, Philip Morris and Rooftop.

•

From time to time, PMI’s shipment volumes are subject to the impact of distributor inventory movements, andestimated total industry/market volumes are subject to the impact of inventory movements in various tradechannels that include estimated trade inventory movements of PMI’s competitors arising from market-specificfactors that significantly distort reported volume disclosures. Such factors may include changes to the
manufacturing supply chain, shipment methods, consumer demand, timing of excise tax increases or otherinfluences that may affect the timing of sales to customers. In such instances, in addition to reviewing PMI
shipment volumes and certain estimated total industry/market volumes on a reported basis, management
reviews these measures on an adjusted basis that excludes the impact of distributor and/or estimated tradeinventory movements. Management also believes that disclosing PMI shipment volumes and estimated totalindustry/market volumes in such circumstances on a basis that excludes the impact of distributor and/or
estimated trade inventory movements, such as on an IMS basis, improves the comparability of performanceand trends for these measures over different reporting periods.

Financial•

Net revenues related to combustible products refer to the operating revenues generated from the sale of theseproducts, including shipping and handling charges billed to customers, net of sales and promotion incentives,and excise taxes. PMI recognizes revenue when control is transferred to the customer, typically either upon
shipment or delivery of goods.

•

Net revenues related to RRPs represent the sale of heated tobacco units, IQOS devices and related accessories,
and other nicotine-containing products, primarily e-vapor products, including shipping and handling charges
billed to customers, net of sales and promotion incentives, and excise taxes. PMI recognizes revenue whencontrol is transferred to the customer, typically either upon shipment or delivery of goods.

•"Cost of sales" consists principally of: tobacco leaf, non-tobacco raw materials, labor and manufacturing costs;
shipping and handling costs; and the cost of IQOS devices produced by third-party electronics manufacturingservice providers. Estimated costs associated with IQOS warranty programs are generally provided for in costof sales in the period the related revenues are recognized.

•"Marketing, administration and research costs" include the costs of marketing and selling our products, othercosts generally not related to the manufacture of our products (including general corporate expenses), and- 20 -

costs incurred to develop new products. The most significant components of our marketing, administration andresearch costs are marketing and sales expenses and general and administrative expenses.
•"Cost/Other" in the Consolidated Financial Summary table of total PMI and the six operating segments of thisrelease reflects the currency-neutral variances of: cost of sales (excluding the volume/mix cost component);
marketing, administration and research costs (including asset impairment and exit costs, the Canadian tobacco
litigation-related expense and the charge related to the deconsolidation of RBH in Canada); and amortizationof intangibles. “Cost/Other” also includes the currency-neutral net revenue variance, unrelated to volume/mix
and price components, attributable to fees for certain distribution rights billed to customers in certain markets
in the ME&A Region, as well as the impact of the deconsolidation in RBH.

•

"Adjusted Operating Income Margin" is calculated as adjusted operating income, divided by net revenues.

•"Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization and equity (income)/loss in unconsolidated subsidiaries, excluding asset impairment and exit costs, and unusual items.

•"Net debt" is defined as total debt, less cash and cash equivalents.

•

Management reviews net revenues, OI, OI margins, operating cash flow and earnings per share, or "EPS," onan adjusted basis, which may exclude the impact of currency and other items such as acquisitions, asset
impairment and exit costs, tax items and other special items. For example, PMI’s adjusted diluted EPS andother impacted results reflect the loss on deconsolidation of RBH and the Canadian tobacco litigation-related
expense, recorded in the first quarter of 2019, and the Russia excise & VAT charge, recorded in the third quarterof 2019. PMI believes that the adjusted measures, including pro forma measures, will provide useful insight
into underlying business trends and results, and will provide a more meaningful performance comparison forthe period during which RBH remains under CCAA protection. For PMI's 2018 pro forma adjusted diluted EPS
by quarter and year-to-date, see Schedule 3 in PMI's first-quarter 2019 earnings release.

•

Management reviews these measures because they exclude changes in currency exchange rates and otherfactors that may distort underlying business trends, thereby improving the comparability of PMI’s businessperformance between reporting periods. Furthermore, PMI uses several of these measures in its managementcompensation program to promote internal fairness and a disciplined assessment of performance againstcompany targets. PMI discloses these measures to enable investors to view the business through the eyes ofmanagement.

•

Non-GAAP measures used in this release should neither be considered in isolation nor as a substitute for thefinancial measures prepared in accordance with U.S. GAAP. For a reconciliation of non-GAAP measures tothe most directly comparable U.S. GAAP measures, see the relevant schedules provided with this press release.

•

U.S. GAAP Treatment of Argentina as a Highly Inflationary Economy. Following the categorization of Argentina
by the International Practices Task Force of the Center for Audit Quality as a country with a three-year cumulative
inflation rate greater than 100%, the country is considered highly inflationary in accordance with U.S. GAAP.
Consequently, PMI began to account for the operations of its Argentinian affiliates as highly inflationary, and totreat the U.S. dollar as the functional currency of the affiliates, effective July 1, 2018.

•"Fair value adjustment for equity security investments" reflects the adjustment resulting from share pricemovements in passive investments for publicly traded entities that are not controlled or influenced by PMI.
Under U.S. GAAP, such adjustments are required, since January 1, 2018, to be reflected directly in the income
statement.

•

The estimated impact from the COVID-19 pandemic primarily reflects management’s estimate for shipments
to distributors and trade partners that have been made solely for the purpose of increasing safety stocks. The
impact also includes the estimated reduction of shipments to duty free distributors and trade partners resulting
from the pandemic-related decline in international travel.

Reduced-Risk Products•

Reduced Risk Products (“RRPs”) is the term PMI uses to refer to products that present, are likely to present,or have the potential to present less risk of harm to smokers who switch to these products versus continuingsmoking. PMI has a range of RRPs in various stages of development, scientific assessment andcommercialization. PMI's RRPs are smoke-free products that produce an aerosol that contains far lower
quantities of harmful and potentially harmful constituents than found in cigarette smoke.

•"Heated tobacco units," or "HTUs," is the term PMI uses to refer to heated tobacco consumables, which include
the company's HEETS, HEETS Creations, HEETS Marlboro and HEETS FROM MARLBORO, definedcollectively as HEETS, as well as Marlboro HeatSticks and Parliament HeatSticks.

•

Unless otherwise stated, all references to IQOS are to PMI's heat-not-burn products.
- 21 -

•The IQOS heat-not-burn device is a precisely controlled heating device into which a specially designed andproprietary tobacco unit is inserted and heated to generate an aerosol.

•“Total IQOS users” is defined as the estimated number of Legal Age (minimum 18 years) IQOS users that used
PMI HTUs for at least 5% of their daily tobacco consumption over the past seven days.

•

The estimated number of people who have "stopped smoking and switched to IQOS" is defined as: for markets
where IQOS is the only heat-not-burn product, daily individual consumption of PMI HTUs represents the totalityof their daily tobacco consumption in the past seven days; for markets where IQOS is one among other heatnot-burn products, daily individual consumption of HTUs represents the totality of their daily tobacco
consumption in the past seven days, of which at least 70% are PMI HTUs.

IQOS in the United States•

On April 30, 2019, the U.S. Food and Drug Administration (FDA) announced that the marketing of a version of
IQOS, PMI's heat-not-burn product, together with its heated tobacco units (the term PMI uses to refer to heated
tobacco consumables), is appropriate for the protection of public health and authorized it for sale in the U.S.
The FDA’s decision follows its comprehensive assessment of PMI’s premarket tobacco product applications(PMTAs) submitted to the Agency in 2017. In the third quarter of 2019, PMI brought a version of its IQOS
Platform 1 device and three variants of its heated tobacco units to the U.S. through its license with Altria Group,
Inc., whose subsidiary, Philip Morris USA Inc., is responsible for marketing the product and complying with theprovisions set forth in the FDA's marketing order. On March 30, 2020, PMI submitted a supplemental PMTA
for the IQOS 3 tobacco heating device with the FDA.

•

Shipment volume of heated tobacco units to the U.S. is included in the heated tobacco unit shipment volumeof the Latin America & Canada segment. Revenues from shipments of Platform 1 devices, heated tobacco units
and accessories to Altria Group, Inc. for sale under license in the U.S. are included in Net Revenues of theLatin America & Canada segment.

- 22 -

Appendix 1

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Key Market Data

MarketTotal
European Union
FranceGermany
Italy
PolandSpain

Total Market,
bio units

Quarters Ended March 31,
PMI Shipments, bio units
Cigarette
HTU

Total

2020

2019

%
Change2020%
2019 Change

2020%2019 Change

606.6

624.7

(2.9)

173.7

175.8

(1.2)

157.0

164.3

(4.4)

2020
16.7

PMI Market Share, % (1)
Total
HTU

%
2019 Change
11.5

2020

pp
2019 Change

2020

pp
2019 Change

45.5

27.9

28.1

(0.2)

2.9

2.0

0.9

8.3

9.1

(8.7)

4.0

4.2

(3.0)

4.0

4.1

(3.8)

—

—

—

44.5

45.0

(0.5)

0.4

0.2

0.2

16.0

15.4

3.7

6.7

6.1

10.8

6.4

5.9

7.3

0.4

0.2

+100

42.2

39.5

2.7

2.4

1.0

1.4

15.7

15.6

0.6

9.2

7.7

19.1

7.8

7.1

8.9

1.4

0.6

+100

51.9

51.0

0.9

7.4

3.7

3.7

10.8

10.6

2.0

4.3

4.2

2.4

3.9

4.0

(4.3)

0.5

0.2

+100

40.0

39.9

0.1

4.3

1.8

2.5

10.4

10.2

1.8

3.7

3.6

1.8

3.5

3.5

(0.4)

0.1

0.1

+100

31.0

31.7

(0.7)

0.9

0.6

0.3

46.6

46.7

(0.1)

15.0

12.1

24.0

12.4

11.3

9.8

2.6

0.8

+100

32.6

28.4

4.2

6.5

3.0

3.5

Middle East & Africa
4.3
Saudi Arabia
22.4
Turkey5.3(18.6)

1.1

3.8(72.6)

1.0

3.8(72.8)

—

—

—

40.8

41.7

(0.9)

—

—

—

29.5

(24.1)

10.2

13.9(27.0)

10.2

13.9(27.0)

—

—

—

45.1

47.2

(2.1)

—

—

—

67.6

(0.6)

20.4

22.1

(7.6)

20.4

22.1

(7.6)

—

—

—

30.4

32.7

(2.3)

—

—

—

16.8

(8.9)

10.7

11.7

(8.8)

10.7

11.7

(8.8)

—

—

—

70.2

70.1

0.1

—

—

—

3.1

(19.1)

0.7

0.8

(7.2)

0.7

0.8

(7.2)

—

—

—

28.0

24.4

3.6

—

—

—

37.7

(5.7)

12.8

12.1

5.6

6.8

6.5

5.6

6.0

5.7

5.6

36.3

34.5

1.8

19.1

17.0

2.1

15.6

3.6

3.5

3.6

(2.8)

2.4

2.5

(1.2)

1.1

1.2

(6.2)

21.8

23.3

(1.5)

6.6

7.3

(0.7)

8.5

(5.7)

5.3

6.1

(13.2)

5.3

6.1(13.2)

—

—

—

66.1

72.3

(6.2)

—

—

—

7.4

(10.5)

4.1

4.7(14.0)

4.1

4.7(14.2)

—

—

—

61.1

63.6

(2.5)

0.2

—

0.2

Eastern Europe
RussiaSouth & Southeast Asia
67.2
Indonesia
15.3
Philippines
East Asia & Australia
2.5
Australia
35.5
Japan
16.2
Korea
Latin America & Canada
8.0
Argentina
6.7
Mexico(1) Market share estimates are calculated using IMS data
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned
brands.

Appendix 2

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Shipment Volume Adjusted for the Impact of RBH Deconsolidation and COVID-19(in million units) / (Unaudited)

Total PMI
Total Shipment Volume
Shipment Volume for RBH-owned brands (1)Total Shipment Volume
Estimated impact related to COVID-19
Total Shipment Volume

Quarters Ended March 31,
2020
2019
% Change
173,745
175,795(1.2)%(1,008) (2)173,745
174,787 (3)(0.6)%(3,000)170,745 (4)174,787 (3)(2.3)%

Total Cigarette Shipment Volume
Shipment Volume for RBH-owned brands (1)Total Cigarette Shipment Volume
Estimated impact related to COVID-19
Total Cigarette Shipment Volume

157,018

Total HTU Shipment Volume
Estimated impact related to COVID-19
Total HTU Shipment Volume

164,297(4.4)%(1,008) (2)157,018

163,289 (3)(3.8)%(2,600)154,418 (4)163,289 (3)(5.4)%

16,727

11,49845.5 %(400)
16,327 (4)11,49842.0 %

15,171

17,634(14.0)%

15,171(995) (2)16,639 (3)(8.8)%

Latin America & Canada
Total Shipment Volume
Shipment Volume for RBH-owned brands
Total Shipment Volume(1) Includes Duty Free sales in Canada(2) Represents volume for RBH-owned brands from January 1, 2019 through March 21, 2019(3) Pro forma(4) Pro forma, ex-COVID-19
Note: Shipment Volume includes Cigarettes and Heated Tobacco Units; following the deconsolidation of RBH, wereport the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owners

Schedule 1

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Diluted Earnings Per Share (EPS)($ in millions, except per share data) / (Unaudited)

Diluted EPS
2020 Diluted Earnings Per Share (1)2019 Diluted Earnings Per Share (1)Change% Change
Reconciliation:
2019 Diluted Earnings Per Share (1)2019 Asset impairment and exit costs
2019 Canadian tobacco litigation-related expense
2019 Loss on deconsolidation of RBH
2019 Tax items
2020 Asset impairment and exit costs
2020 Fair value adjustment for equity security investments
2020 Tax items
Currency
Interest
Change in tax rate
Operations (2)2020 Diluted Earnings Per Share (1)Quarters Ended
March 31,
$ 1.17$ 0.87$ 0.30
34.5%
$

0.87
0.01
0.09
0.12
—
—
(0.04)—(0.13)
0.01(0.01)
0.25$ 1.17(1) Basic and diluted EPS were calculated using the following (in millions):

Net Earnings attributable to PMI
Less: Distributed and undistributed earnings
attributable to share-based payment awards
Net Earnings for basic and diluted EPS
Weighted-average shares for basic EPS
Plus Contingently Issuable Performance Stock Units
Weighted-average shares for diluted EPS(2) Includes the impact of shares outstanding and share-based payments

Quarters Ended
March 31,20202019
$ 1,826$ 1,3545$ 1,8214$ 1,350

1,557
1
1,558

1,555
1
1,556

Schedule 2

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency,
and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency(Unaudited)

Quarters Ended March 31,
2020

2019

% Change

Reported Diluted EPS$ 1.17$ 0.8734.5%

Less: Currency(0.13)

Reported Diluted EPS, excluding Currency$ 1.30$ 0.87

49.4%

Quarters Ended March 31,

Year Ended

2020

2019

$ 1.17$ 0.87

Asset impairment and exit costs

—

0.01

0.23

Canadian tobacco litigation-related expense

—

0.09

0.09

Loss on deconsolidation of RBH

—

0.12

0.12

Russia excise and VAT audit charge

—

—

0.20

0.04

—

(0.02)——(0.04)

Adjusted Diluted EPS$ 1.21$ 1.0911.0%

Less: Currency(0.13)

Adjusted Diluted EPS, excluding Currency$ 1.34$ 1.0922.9%

Reported Diluted EPS

Fair value adjustment for equity security investments
Tax items% Change
34.5%

2019
$ 4.61$ 5.19Schedule 3
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Pro Forma Adjusted Diluted EPS(Unaudited)

QuarterEnded
March 31,
2019

Quarter
Ended
June 30,
2019

Six Months
Ended
June 30,2019$ 0.87$ 1.49$ 2.36$ 1.22$ 3.57$ 1.04

Asset impairment and exit costs

0.01

0.01

0.02

0.01

0.03

0.20

0.23

Canadian tobacco litigation-related expense

0.09

—

0.09

—

0.09

—

0.09

Loss on deconsolidation of RBH

0.12

—

0.12

—

0.12

—

0.12

Russia excise and VAT audit charge

—

—

—

0.20

0.20

—

0.20

Fair value adjustment for equity security
investments

—

—

—

—

—

(0.02)(0.02)Tax items—(0.04)(0.04)—(0.04)—(0.04)$ 1.46$ 2.55$ 1.43$ 3.97$ 1.22$ 5.19

Reported Diluted EPS

Adjusted Diluted EPS$ 1.09Net earnings attributable to RBH(0.06)Pro Forma Adjusted Diluted EPS$ 1.03(1)—(0.06)$ 1.46$ 2.49(1)

QuarterNine Months
Quarter
Year
Ended
Ended
Ended
Ended
September 30, September 30, December 31, December 31,
2019
2019
2019
2019

—

(0.06)$ 1.43$ 3.91(1)—$ 1.22(1) Represents the impact of net earnings attributable to RBH from January 1, 2019 through March 21, 2019
Note: EPS is computed independently for each of the periods presented. Accordingly, the sum of the quarterly EPS amounts may not agree to the total for the year.

$

4.61

(0.06) (1)$ 5.13

Schedule 4

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Net Revenues by Product Category and Adjustments of Net Revenues for the Impact of Currency and Acquisitions($ in millions) / (Unaudited)Net
Revenues

Currency$ 1,911
523
832
1,251
642
440

$ (53)
(4)
(2)
19
(7)
(18)

$ 5,598$ (65)

$ 624
265
44
—
613
8
$ 1,555$ (17)
10
—
—
(2)
—
$ (9)

$ 2,535
788
876
1,251
1,255
448

$ (70)
6
(2)
19
(9)
(18)

$ 7,153$ (74)Net
Revenues
excludingCurrency2020$ 1,963
526
835
1,232
649
458
$ 5,663
2020
$ 642
256
43
—
615
8
$ 1,5642020$ 2,605
782
878
1,232
1,264
466
$ 7,227

Net
Revenues
Acquisitions excluding
Currency &Acquisitions
$—
—
—
—
—
—
$—
$—
—
—
—
—
—
$—
$—
—
—
—
—
—
$—

Quarters Ended
March 31,

Net
Revenues$ 1,963
526
835
1,232
649
458
$ 5,663

Combustible Products
European Union
Eastern Europe
Middle East & Africa
South & Southeast Asia
East Asia & Australia
Latin America & Canada
Total Combustible

2019$ 1,812
471
829

$ 642
256
43
—
615
8
$ 1,564

Reduced-Risk Products
European Union
Eastern Europe
Middle East & Africa
South & Southeast Asia
East Asia & Australia
Latin America & Canada(1)Total RRPs

2019
$ 347
108

$ 2,605
782
878
1,232
1,264
466
$ 7,227

PMI
European Union
Eastern Europe
Middle East & Africa
South & Southeast Asia
East Asia & Australia
Latin America & Canada
Total PMI2019
$ 2,159
579
927

1,113
638
646
$ 5,50898—683
6$ 1,243

1,113
1,321
652
$ 6,751

Total

ExcludingCurrency

5.4 %
11.1 %
0.5 %
12.4 %
0.6 %(31.9)%
1.6 %% Change
8.4 %11.8 %
0.7 %
10.7 %
1.8 %(29.2)%
2.8 %

8.4 %
11.8 %
0.7 %
10.7 %
1.8 %(29.2)%
2.8 %

79.9 %+100%(55.7)%—%(10.2)%
38.5 %
25.1 %% Change
84.9 %+100%(56.0)%—%(10.0)%
41.3 %
25.8 %

84.9 %+100%(56.0)%—%(10.0)%
41.3 %
25.8 %

17.4 %
36.1 %(5.5)%
12.4 %(5.0)%(31.3)%
6.0 %% Change
20.7 %
35.1 %(5.3)%
10.7 %(4.3)%(28.5)%
7.1 %

20.7 %
35.1 %(5.3)%
10.7 %(4.3)%(28.5)%
7.1 %(1) Net Revenues include revenues from shipments of Platform 1 devices, heated tobacco units and accessories to Altria Group, Inc., commencing in the third quarter of 2019, for sale under license in the United States.
Note: Sum of product categories or Regions might not foot to Total PMI due to roundings. “-“ indicates amounts between -$0.5 million and +$0.5 million.

ExcludingCurrency &Acquisitions

Schedule 5

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments of Operating Income for the Impact of Currency and Acquisitions($ in millions) / (Unaudited)

Operating
IncomeCurrency

Operating
IncomeexcludingCurrency

Operating
IncomeAcquisitions excluding
Currency &Acquisitions2020$ 1,158
99
321
599
486
126

$ (65)
(92)
(19)
19
(4)
(35)

$ 2,789$ (196)$ 1,223
191
340
580
490
161
$ 2,985

$—
—
—
—
—
—
$—

$ 1,223
191
340
580
490
161
$ 2,985

Operating
IncomeQuarters Ended
March 31,
European Union
Eastern Europe
Middle East & Africa
South & Southeast Asia
East Asia & Australia
Latin America & Canada
Total PMI

Total

2019
$ 896
129
344
440 (1)427(186) (2)$ 2,050(1) Includes asset impairment and exit costs ($20 million)(2) Includes the Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million)

ExcludingCurrency

ExcludingCurrency &Acquisitions% Change29.2 %(23.3)%(6.7)%
36.1 %
13.8 %+100%
36.0 %

36.5 %
48.1 %(1.2)%
31.8 %
14.8 %+100%
45.6 %

36.5 %
48.1 %(1.2)%
31.8 %
14.8 %+100%
45.6 %

Schedule 6

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Operating Income to Adjusted Operating Income, excluding Currency and Acquisitions($ in millions) / (Unaudited)

Operating
IncomeAsset
Impairment& Exit Costs
and Others

Adjusted
Adjusted
OperatingOperating Currency Income
IncomeexcludingCurrency

Acquisitions

Adjusted
Operating
IncomeexcludingCurrency& Acquisitions

Asset
Adjusted
Operating Impairment Operating
Income& Exit Costs
Incomeand Others

Quarters Ended
March 31,

2020

Total

2019

ExcludingExcluding Currency
Currency & Acquisitions% Change$ 1,158$—$ 1,158$ (65)$ 1,223$—$ 1,223

European Union

$ 896

$—

$ 896

29.2 %

36.5 %

36.5 %

99

—

99

(92)

191

—

191

Eastern Europe

129

—

129

(23.3)%

48.1 %

48.1 %

321

—

321

(19)

340

—

340

Middle East & Africa

344

—

344

(6.7)%(1.2)%(1.2)%

440

(20)

460

30.2 %

26.1 %

26.1 %

427

13.8 %

14.8 %

14.8 %

247(49.0)%(34.8)%(34.8)%$ 2,50311.4 %

19.3 %

19.3 %

599

—

599

19

580

—

580

South & Southeast
Asia

486

—

486

(4)

490

—

490

East Asia & Australia

427

—

126

—

126

(35)

161

—

161

Latin America &Canada

(186)

(433)

$ 2,789$—$ 2,789$ (196)$ 2,985$—$ 2,985$ 2,050$ (453)

Total PMI

(1) Represents asset impairment and exit costs(2) Includes the Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million)

(1)

(2)

Schedule 7

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted Operating Income Margin, excluding Currency and Acquisitions($ in millions) / (Unaudited)

Adjusted
Adjusted
OperatingNet
Operating
Income Revenues Income(1)
MarginAdjusted
Adjusted
Net
Operating Revenues
Operating
IncomeIncomeexcluding excluding
MarginCurrency
Currency
excluding(2)(1)
Currency

Adjusted
Operating
IncomeexcludingCurrency& Acquisitions (1)Adjusted
Net
Operating
Revenues Income
excludingMarginCurrency excluding& Acqui- Currency
sitions (2) & Acquisitions

Adjusted
Adjusted
OperatingNet
Operating
Income Revenues Income(1)
MarginAdjusted
Adjusted Operating
Adjusted Operating Income
Operating Income
MarginIncomeMarginexcludingMarginexcluding Currency
Currency & Acquisitions

2019% Points Change

Quarters Ended
March 31,2020
$ 1,158$ 2,53545.7%$ 1,223$ 2,605

46.9%$ 1,223$ 2,605

46.9%

European Union$ 896$ 2,159

41.5%

4.2

5.4

5.4

99

788

12.6%

191

782

24.4%

191

782

24.4%

Eastern Europe

129

579

22.3%

(9.7)

2.1

2.1

321

876

36.6%

340

878

38.7%

340

878

38.7%

Middle East & Africa

344

927

37.1%

(0.5)

1.6

1.6

599

1,251

47.9%

580

1,232

47.1%

580

1,232

47.1%

South & Southeast Asia

460

1,113

41.3%

6.6

5.8

5.8

486

1,255

38.7%

490

1,264

38.8%

490

1,264

38.8%

East Asia & Australia

427

1,321

32.3%

6.4

6.5

6.5

126

448

28.1%

161

466

34.5%

161

466

34.5%

Latin America & Canada

247

652

37.9%

(9.8)

(3.4)

(3.4)

$ 2,789$ 7,153

39.0%$ 2,985$ 7,227

41.3%$ 2,985$ 7,227

41.3%

Total PMI

$ 2,503$ 6,751

37.1%

1.9

4.2

4.2

(1) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to Schedule 6(2) For the calculation of Net Revenues excluding currency and acquisitions refer to Schedule 4

Schedule 8

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, COVID-19, excluding Currency($ in millions, except per share data) / (Unaudited)
Quarters Ended March 31,
Net Revenues

2020

2019

$ 7,153$ 6,751

Net Revenues attributable to RBH
Net Revenues
Less: Currency
Net Revenues, ex. currency
Estimated impact related to COVID-19$ 7,153

Adjusted Operating Income (4)$ 2,789(3)

Estimated impact related to COVID-19
Adjusted Operating Income, ex. currency
Adjusted OI Margin$ 2,789(2)

8.9%$ 6,570

(2)

10.0%

$ 6,570

(2)

8.0%
11.4%

(126)

(1)

$ 2,377

(2)

17.3%

$ 2,377

(2)

25.5%

$ 2,377

(2)

19.9%

(195)
$ 2,984(133)$ 2,851

(3)

39.0%

37.1%
(0.9)

Adjusted OI Margin attributable to RBH
Adjusted OI Margin$ 6,570$ 2,503

Operating Income attributable to RBH

Adjusted Operating Income, ex. currency

(1)

(130)
$ 7,098

Less: Currency

6.0%

(181)
(75)
$ 7,228

Net Revenues, ex. currency

Adjusted Operating Income% Change

39.0%

Less: Currency(2.3)

Adjusted OI Margin, ex. currency

41.3%

Estimated impact related to COVID-19(1.1)

Adjusted OI Margin, ex. currency

40.2% (3)Adjusted Diluted EPS (5)$ 1.21Net earnings attributable to RBH
Adjusted Diluted EPS$ 1.21

Less: Currency(0.13)

Adjusted Diluted EPS, ex. currency$ 1.34

Estimated impact related to COVID-19(0.07)

Adjusted Diluted EPS, ex. currency$ 1.27(3)(1) Represents the impact attributable to RBH from January 1, 2019 through March 21, 2019(2) Pro forma(3) Pro forma, ex-COVID-19(4) For the calculation of Adjusted Operating Income, see Schedule 6(5) For the calculation, see Schedule 2
Note: Financials attributable to RBH include Duty Free sales in Canada

1.9
(1)

36.2% (2)2.8

36.2% (2)5.1

36.2% (2)4.0

$ 1.0911.0%(0.06)(1)$ 1.03(2)

17.5%$ 1.03(2)

30.1%$ 1.03(2)

23.3%

Schedule 9

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency($ in millions) / (Unaudited)

Latin America & Canada
Net Revenues
Net Revenues attributable to RBH
Net Revenues
Less: Currency
Net Revenues, ex. currency

Quarters Ended March 31,
2020
2019
% Change
$ 448
$ 652
(31.3)%$ 448(179) (1)$ 473 (2)(5.3)%(19)$ 467$ 473 (2)(1.3)%

Operating Income
Less:
Asset impairment and exit costs
Canadian tobacco litigation-related expense
Loss on deconsolidation of RBH
Adjusted Operating Income
Operating Income attributable to RBH
Adjusted Operating Income
Less: Currency
Adjusted Operating Income, ex. currency$ 126$ (186)

+100%

—
—

—
(194)

—
$ 126

(239)
$ 247

$ 126

(125) (1)$ 122 (2)

3.3 %

(33)
$ 159

$ 122 (2)30.3 %

Adjusted OI Margin
Adjusted OI Margin attributable to RBH
Adjusted OI Margin
Less: Currency
Adjusted OI Margin, ex. currency

28.1%

37.9%
(12.1) (1)25.8% (2)(9.8)

25.8% (2)

8.2

28.1%
(5.9)
34.0%

(1) Represents the impact attributable to RBH from January 1, 2019 through March 21, 2019(2) Pro forma(49.0)%

2.3

Schedule 10

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Condensed Statements of Earnings($ in millions, except per share data) / (Unaudited)

Quarters Ended March 31,
2020

2019

ChangeFav./(Unfav.)$ 18,253$ 17,705

3.1 %Excise Taxes on products

11,10010,954(1.3)%Net Revenues

7,153

6,751

6.0 %

Cost of sales

2,402

2,465

2.6 %

Gross profit

4,751

4,286

10.8 %

Marketing, administration and research costs (1)

1,944

2,217

12.3 %

18

19

Operating Income

2,789

2,050

36.0 %

Interest expense, net

129

152

15.1 %

Pension and other employee benefit costs

2321(9.5)%

2,637

1,877

40.5 %

Provision for income taxes

596

424

(40.6)%

Equity investments and securities (income)/loss, net

54

(11)

1,987

1,464

161

110

$ 1,826$ 1,35434.9 %

Basic Earnings Per Share$ 1.17$ 0.8734.5 %

Diluted Earnings Per Share$ 1.17$ 0.8734.5 %

Revenues including Excise Taxes

Amortization of intangibles

Earnings before income taxes

Net Earnings
Net Earnings attributable to noncontrolling interests
Net Earnings attributable to PMI

35.7 %Per share data (2):(1) Includes in 2019 asset impairment and exit costs ($20 million), the Canadian tobacco litigation-related expense ($194 million) and theloss on deconsolidation of RBH ($239 million).
(2) Net Earnings and weighted-average shares used in the basic and diluted Earnings Per Share computations for the quarters ended
March 31, 2020 and 2019 are shown on Schedule 1, Footnote 1.

Schedule 11

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Condensed Balance Sheets($ in millions, except ratios) / (Unaudited)

AssetsCash and cash equivalents
All other current assets
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Investments in unconsolidated subsidiaries and equity securities
Other assets
Total assets
Liabilities and Stockholders' (Deficit) Equity
Short-term borrowings
Current portion of long-term debt
All other current liabilities
Long-term debt
Deferred income taxes
Other long-term liabilities
Total liabilities
Total PMI stockholders' deficit
Noncontrolling interests
Total stockholders' (deficit) equity
Total liabilities and stockholders' (deficit) equity

March 31,2020

December 31,
2019

$

3,746
13,115
6,107
5,284
1,850
4,390
3,002
$ 37,494

$

$

$

1,438
1,933
13,21324,999838
6,136
48,557(12,944)1,881(11,063)$ 37,494

6,861
13,653
6,631
5,858
2,113
4,635
3,124
$ 42,875

338
4,051
14,44426,656908
6,077
52,474(11,577)

1,978(9,599)$ 42,875

Schedule 12

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Calculation of Total Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA Ratios($ in millions, except ratios) / (Unaudited)Year Ended March 31, 2020

Net Earnings

April ~ December

January ~ March

12 months

2019

2020

rolling

Year Ended
December 31,
2019$ 6,264$ 1,987$ 8,251$ 7,728

Equity investments and securities (income)/loss, net

(138)

54

(84)

(149)

Provision for income taxes

1,869

596

2,465

2,293

Interest expense, net

418

129

547

570

Depreciation and amortization

724

241

965

964

Asset impairment and exit costs and Others (1)

776

—

776

1,229

$ 9,913$ 3,007$ 12,920$ 12,635

Adjusted EBITDA

Short-term borrowings

March 31,

December 31,

2020

2019

$ 1,438$

338

Current portion of long-term debt

1,933

4,051

Long-term debt

24,99926,656$ 28,370$ 31,045

3,746

6,861

$ 24,624$ 24,184

Total Debt to Adjusted EBITDA

2.20

2.46

Net Debt to Adjusted EBITDA

1.91

1.91

Total Debt
Cash and cash equivalents
Net Debt
Ratios:(1) For the period April to December 2019, Others include the Russia excise and VAT charge ($374 million). For the year ended December 31, 2019, Others include theCanadian tobacco litigation-related expense ($194 million), the loss on deconsolidation of RBH ($239 million) and the Russia excise and VAT audit charge ($374 million).

Schedule 13

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding Currency($ in millions) / (Unaudited)

Quarters Ended March 31,

Net cash provided by operating activities (1)Less: Currency
Net cash provided by operating activities, excluding currency(1) Operating cash flow

2020

2019

% Change$ 1,111$ 1,241(10.5)%$ 1,241(6.4)%(50)$ 1,161