Delivering a Smoke-Free Future
Delivering a Smoke-Free Future

Consumer Analyst Group of New York(CAGNY) Conference
February 19, 2020

André Calantzopoulos
Chief Executive Officer

Forward-Looking and Cautionary Statements• This presentation and related discussion contain 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 contained in such forward-looking statements. Pursuant to the "safe harbor" provisions of thePrivate Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results andoutcomes 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 and regulatory restrictions that could reduce
our competitiveness, eliminate our ability to communicate with adult consumers, or ban certain of our products; health concerns relating to the use of
tobacco products and exposure to environmental tobacco smoke; litigation related to tobacco use; intense competition; the effects of global andindividual country economic, regulatory and political developments, natural disasters and conflicts; changes in adult smoker behavior; lost revenues as aresult 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 qualityof tobacco and other agricultural products and raw materials; and the integrity 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 brandequity, 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 the development 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• PMI is further subject to other risks detailed from time to time in its publicly filed documents, including those described under Item 1A. "Risk Factors" in
PMI’s annual report on Form 10-K 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 statement that it may make from time to time,
except in the normal course of its public disclosure obligations• A glossary of key terms and definitions, including the definition for reduced-risk products, or "RRPs," as well as adjustments, other calculations andreconciliations to the most directly comparable U.S. GAAP measures and our business transformation metrics are at the end of today’s webcast slides,
which are posted on our website• Comparisons are presented on a "like-for-like" basis reflecting pro forma 2018 results, which have been adjusted for the deconsolidation of our Canadiansubsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 20192

A CHANGE INPERSPECTIVE IS
ALL IT TAKES.
WHEN YOU DISCOVER A BETTER WAY.
YOU CAN’T HELP BUT SMILE.

3

Agenda• 2019 performance and mid-term
outlook• The evolving industry landscape• PMI’s portfolio strategy andcompetitive strengths• Maintaining combustible tobacco
leadership• Creating a sustainable operating
environment• Closing remarks
4

Excellent Year in 2019
(Variance vs. PY)

PMI HTU Shipment Volume(billion units)

PMI Total Shipment Volume(like-for-like)

Net Revenues(ex-currency, like-for-like)

Combustible Tobacco Pricing(a)(like-for-like)

Adjusted OI Margin(ex-currency, like-for-like)

Adjusted Diluted EPS(ex-currency, like-for-like)(a) As a percentage of PY combustible tobacco net revenues
Source: PMI Financials or estimates

2019

60
(+44%)(1.4)%+6.4%+6.5%+170bps+9.9%
5

Robust 2020 Outlook(Variance vs. PY)

PMI HTU Shipment Volume(billion units)

PMI Total Shipment Volume(like-for-like)

Net Revenues(ex-currency, like-for-like)

Combustible Tobacco Pricing(a)(like-for-like)

Adjusted OI Margin(ex-currency, like-for-like)

Adjusted Diluted EPS(ex-currency, like-for-like)(a) As a percentage of PY combustible tobacco net revenues
Source: PMI Financials or estimates

2019

2020

60

90-100(+44%)

by 2021(1.4)%(2.5)-(3.5)%

+6.4%

~ 5%

+6.5%

~ 5%

+170bps≥150bps

+9.9%

≥8%
6

2019-2021 PMI Compound Annual Growth Targets

Net
Revenues

Adjusted
Diluted EPS

%
≥5

%
≥8

CAGR
ex-Currency

CAGR
ex-Currency

Source: PMI Financials or estimates (PMI Investor Day, September 27, 2018)7

2020: Reaffirming EPS Guidance• Reaffirming reported diluted EPS guidance of at least $5.50, at then-prevailingexchange rates (February 6, 2020), compared to $4.61 in 2019:⎼ Includes approximately four cents of unfavorable currency at then-prevailing exchange rates• On a currency-neutral like-for-like basis, our guidance represents a growth rate of atleast 8% compared to pro forma adjusted diluted EPS of $5.13 in 2019
• Strong Q1 with double-digit currency-neutral like-for-like adjusted EPS growth
expected, and a notably softer Q2• Coronavirus impact:⎼ As of now, no impact on IQOS device supply⎼ Modest impact on Duty-Free sales

Source: PMI Financials or estimates

8

Agenda• 2019 performance and mid-term
outlook• The evolving industry landscape• PMI’s portfolio strategy andcompetitive strengths• Maintaining combustible tobacco
leadership• Creating a sustainable operating
environment• Closing remarks
9

RRPs Enhance Industry Profile• Gaining credibility among adult consumers;
stakeholder consensus lagging• Better understanding of category dynamics:⎼ Key product categories are established⎼ Favorable unit margins in heated tobacco and closed
e-vapor categories⎼ Increasing number of adult smokers seeking better
alternatives to cigarettes• Sustainable and enhanced profit growth

Accelerating the growth of thesmoke-free category benefits
adult smokers, society and shareholders
Source: PMI Financials or estimates

10The RRP Opportunity Remains Vast …
Combined
total of

~ 20

~40

millionmillion adult smokers
have switched
to RRPs

1.1
billion~14

million(a) Source: World Health Organization (WHO)(b) Status at December 31, 2019. See glossary for definition
Source: PMI Financials or estimates, IQOS User Panels and PMI Market Researchof adult smokers

million~10
Adult Smokers(Global)(a)

~ 2%

Total
IQOS Users

Estimated users
who have stopped
smoking andswitched to
IQOS(b)~10
millionEstimated users
who have stopped
smoking andswitched to
e-vapor products

Total
E-vapor Users

11

… However RRPs Have Only Scratched the Surface of Their
Potential
PMI HTU share of …
2%

5%

~8%

2.7
trillion units

1.2
trillion units~700

billion units

International Market
Total Industry
Volume(a)(a) Excluding China and the U.S.
(b) Excluding the U.S.
(c) Weighted average
Note: Total volume reflects cigarettes and HTUs
Source: PMI Financials or estimates (2019)

IQOS Markets
Total Industry
Volume(b)

IQOS’s 60%(c)Geographic Coverage
in IQOS Markets

60billion units
PMI HTU
Shipment Volume

12

RRPs, Already Around 1/5 of
Our Total Net Revenues in 2019~19%
Reduced-Risk Products($5.6 billion)
Source: PMI Financials or estimates

13

Still a Small Portion of Total Nicotine Retail Value
Nicotine Market International Retail Value (2019)

Combustible
Tobacco~95% ~$477 ~ 5%billion~4%

Growth vs. PY

Heated Tobacco &E-Vapor(a)~1% (b)Snus(a) Includes e-vapor, heated tobacco products (devices and consumables)(b) Includes nicotine pouches
Note: Excluding China and the U.S. Does not foot due to rounding
Source: PMI Financials or estimates

14

Principal RRP Categories Established~20%

International Retail Value (2019)

E-vapor~14%

Growth vs. PY

Growth vs. PY

Heated Tobacco

̴ 30% ~$23
̴ 70%
billion~23%

Growth vs. PY

Note: Excluding China and the U.S. Includes e-vapor and heated tobacco products (devices and consumables), and excludes nicotine pouches and snus
Source: PMI Financials or estimates

15

RRPs Have Attractive Unit Margins …
2019 Average(Index=PMI HTUs)100
PMI HTUs (a)80
E-Vapor Cartridge (b)(a) Based on average $ per pack of 20(b) Based on estimated industry average $ per closed system cartridge. Average for select key e-vapor markets (Russia and select EU markets)
Source: PMI Financials or estimates

16

… Providing Returnon Large Investments• Signiﬁcant upfront infrastructure
costs and capital expenditures forany serious long-term participant• Variable costs related to consumer
acquisition and retention

Scientific Substantiation

IQOS Stores• Signiﬁcant sales volumes needed
for accretion to the bottom line
• Entails signiﬁcant segment volume
share, which PMI has achieved in
HTUs• Infrastructure and IQOS brandequity to be leveraged for criticalmass in e-vapor
Source: PMI Financials or estimates

R&D Facility in Neuchâtel, Switzerland

17

… Upfront Investments, Subsequent Returns
PMI Adjusted OI Margin Variance vs. PY(ex-currency)

170bps(a) ≥150bps(a)2017(70)bps(a) Like-for-like
Source: PMI Financials or estimates

2018
2019

(130)bps

2020
Forecast

18

Share Gains Can Further Accelerate Growth
PMI International Share of Retail Value (2019)

~ 55%
~ 30%
Cigarettes(a) Includes e-vapor and heated tobacco products (devices and consumables), excludes nicotine pouches and snus
Note: Excluding China and the U.S.
Source: PMI Financials or estimates

RRPs (a)19Adult Consumer Insights Underpin RRP Outlook

80% of legal age smokers express mid-to-high interest in RRPs

Source: PMI Market Research

20Adult Consumer Insights Underpin RRP Outlook

80% of legal age smokers express mid-to-high interest in RRPs
32%

38%

10%

Familiarity
Seekers

Experimenters

Best of
Both Worlds• Tobacco taste• Familiar ritual• Convenience

Best served byheated tobacco
Source: PMI Market Research• High interest to switch• On-trend• Novelty and design• Cleanliness• Choice• RRP Polyusage

Best served byheated tobacco or
e-vapor / other novel RRPs

Best served byheated tobacco ande-vapor / other novel RRPs
21

Agenda• 2019 performance and mid-term
outlook• The evolving industry landscape• PMI’s portfolio strategy andcompetitive strengths• Maintaining combustible tobacco
leadership• Creating a sustainable operating
environment• Closing remarks
22

RRP Portfolio Strategy and Competitive Strengths• Growing the category to its full potential will
require different product formats, technologies
and taste experiences• HTUs have the highest conversion rates(approximately 70% for IQOS):⎼ Faster scale, establishing IQOS as most credible brand in
the category• We have the technology and capabilities toexpand to the e-vapor category

Source: PMI Financials or estimates, IQOS user panels and PMI Market Research

23

Key Pillars ofCompetitive Strength• Superior products backed byscience, technology and consumer
insights• A formidable commercial engine to
deploy portfolio rapidly at scale• Strong brand equity and awarenessthat we continue to build with IQOS
24

Product Superiority: Regular Device Innovation

IQOS 3Multi

IQOS 32015-2016•••

Aesthetics
Automatic blade cleaning
Easier holder insertion

2017
•
•
•
•
•
•
•

Aesthetics
Reinforced opening
Faster charging of holder
Bluetooth connectivity
Improved user interface
Utility accessories
Mobile App

IQOS 3
DUO

2018
•
•
•
•
•
•
•
•

New design language
ProtectPlusTM
Faster charging of holder
Sequential heating
More intuitive
Portfolio of accessories
Compact
Personalization

2019 onwards••

Faster charging of holder
Two consecutive uses
without recharging theholder25

Innovating Our
Heated Tobacco
Consumables Portfolio
26

Widening Options, Price Points in More Advanced Markets
Japan
15.3%

Total HTU SoM

16.9%

15.2%

Marlboro HeatSticks SoM

14.5%

0.1%

HEETS SoM

Oct 2018
Note: Excluding the impact of estimated trade inventory movements, and including the cigarillo category. HEETS launched in October 2018
Source: PMI Financials or estimates

2.4%
Dec 201927

28

Clear Leader in the Heated Tobacco Category(PMI 2019 share of heated tobacco segment)

100%

98%

73%

65%

97%

Germany

Italy

Japan(a)Korea(a)Russia(a) Excluding the impact of estimated trade inventory movements
Source: PMI Financials or estimates

29

Significant Investment in Physical and Digital Infrastructure

199
IQOS Stores

23
Call Centers

Note: Status at December 31, 2019
Source: PMI Financials or estimates

3.3

11

thousandthousandExclusive
IQOS Retail
Touchpoints

Commercial
Salespeople(Sales experts and
IQOS coaches)

1.6

46

millionmillion

Adult Consumer
Feedbackin 2019

Unique Visits to
IQOS Digital Assets
in 201930

PMI’s Commercial Engine, A Sustainable Competitive Strength• Key pillars of commercial engine:⎼ An organization and approach aligned to the
IQOS consumer journey⎼ Omni-channel model giving consistent service
and experience to consumers⎼ Digitally-driven CRM approach for tailoredcommunications⎼ Systems and processes to generate consumer
feedback driving learnings and improvements• Simple in concept but complex andtime-consuming to implement:⎼ "Business-to-Consumer" approach⎼ Relentless focus on execution excellence and minimizing
unintended consequences
31

Commercial Approach
Aligned to IQOS
Consumer Journey

LEARN

PhasesStatesDiscover$Consider$Evaluate

$

TRY
Find

$

Try

$

BUY & LIVE
Buy

$

Use

$

Convert

$

Bond

$

Advocate$

Examples32

Coach providing
guided trial

Digital Coach33

Call Center

Email

Omni-channel
ApproachAcross Multiple
Touchpoints

FlagshipCallCenterRetailWeb/Mobil
Call Centere App

Call Center

Call Center

Call Center
Connected
devices

SocialSMS

Community
Call Center
Activator

Call Center
Call
Center34

34

From Reactive to Proactive Consumer Insight-Driven
Communication• Support e-mail to offer personalized
attention, schedule a call or an
appointment with our coach experts• HEETS education, showing the aroma, bodyand intensity of each flavour to help them takethe right decision in their conversion process

35

Execution Matters• Seizing the RRP opportunity requires bothproduct and deployment excellence• We are not just "selling RRPs," we are working
to change smoker behavior to switch to lessharmful alternatives• Hard-to-replicate competitive advantage• Superior IQOS growth in markets wherecommercial engine is more developed

36

Execution Learnings Drive Faster Results
PMI HTU SoM Performance Since Initial Commercial Launch(3-month moving average)

Japan (2015)(a)

10%

5%

0%

Italy (2015)(a)Germany (2016)
Russia (2015)06(a) Reflects date of initial geographic expansion beyond pilot launch city
Source: PMI Financials or estimates

12months18

24

37

Execution Learnings Drive Faster Results
PMI HTU SoM Performance Since Initial Commercial Launch
Lithuania (2017)
Japan (2015)(a)(3-month moving average)10%
Latvia (2018)

Czech Republic (2017)

5%

Hungary(2019)

Malaysia(2018)UAE (2019)0%

Italy (2015)(a)Germany (2016)
Russia (2015)06(a) Reflects date of initial geographic expansion beyond pilot launch city
Source: PMI Financials or estimates

12months18

24

38

Execution Learnings Drive Faster Results
PMI HTU SoM Performance Since Initial Commercial Launch(3-month moving average)
20%
Japan (2015)(a)15%
10%Italy (2015)(b)Russia (2015)

5%

Germany (2016)

0%
12

24

36
months48

60(a) Reflects date of initial geographic expansion beyond pilot launch city; excludes the impact of estimated trade inventory movements, and includes the cigarillo category(b) Reflects date of initial geographic expansion beyond pilot launch city
Source: PMI Financials or estimates

39

Leveraging Our Commercial Platform
for IQOS Platform 1

40

We Expect Accelerated User Growth in 2020
(in millions)

Total IQOS users(a)Estimated users who are in various stagesof conversion to IQOS(a)Estimated users who have stopped
smoking and switched to IQOS(a)

13.6

9.6

6.9

2.1
0.2

1.5

4.7

6.6

9.7

2015

2016

2017

2018

2019

(a) See Glossary for definition
Source: PMI Financials or estimates, IQOS user panels and PMI Market Research

41

Execution and Scale Improve Cost per User
(Index)

100

Italy
2015

Acquisition
34

20

14

11

2016

2017

2018

2019

25

11

2018

2019

31

27

2018

2019

100

Russia
2015

2016

100

Germany
2015
Source: PMI Financials or estimates

Retention

2016

65
2017

60
2017

48
2015

2015

2015

11

11

8

6

2016

2017

2018

2019

34

20

9

10

2016

2017

2018

2019

26

27

12

8

2016

2017

2018

2019
42

Commercial Engine Built in Key Cities Shows National Potential(Q4, 2019)
PMI HTU national IMS share
16.5%

13.6%

10.5%
National

6.7%
City

AthensPMI HTU city offtake share

6.4%

1.8%

2.5%

Bogotá

Bucharest

13.5%
7.7%

5.5%

3.5%

Kiev

Kuala Lumpur

7.2% 8.6%

Lisbon5.0%

1.6%

Moscow

4.4%

Munich

28.5%
20.6%
16.9%

13.7%
7.2%
National

10.7%
6.1%

6.3%

9.5%
4.6%

17.5%
10.5%

8.1%
3.8%

2.8% 3.3%

City

Prague

Rome

Seoul

Sofia

Tokyo (a)(a) Total market includes the cigarillo category. Excludes the impact of estimated trade inventory movements
Source: PMI Financials or estimates

VilniusWarsaw

Zürich43

Improving Performance in Slower Growth IQOS Markets(PMI HTU city offtake share)
Amsterdam

1.2%

1.1%

1.0%

1.2%

0.7%
Auckland

0.6%

0.7%

0.8%

0.8%

Cape Town
2.8%

3.3%

4.1%

Q4'18

1.7%

1.8%

2.1%

Q1'19

Q2'19

Q3'19

Source: PMI Financials or estimates

2.9%

0.7%

1.0%

1.2%

1.2%

1.4%

Q4'18

1.8%

0.8%
0.6%

0.6%

0.6%

Toronto
0.3%

Q4'19

0.8%

Paris
0.5%

Copenhagen
1.3%

4.4%

1.6%

Madrid
1.0%

0.3%

2.0%

London
1.0%

0.6%
0.4%

0.4%

0.4%

Q1'19

Q2'19

Q3'19

Q4'19
44

Building Our Platform: IQOS Available for Sale in …

52
Market Launches

Markets
Worldwide(a)2015 (7)2016 (13)2017 (18)2018 (6)2019 (8)(a) Status at December 31, 2019
Reflects markets where IQOS is available in key cities or nationwide. Reflects date of initial geographic expansion beyond pilot launch city. The number of markets includes Duty Free

45

IQOS: Now Available in the U.S.
• First IQOS retail stores openedin the initial launch markets ofAtlanta and Richmond

40

millionadult smokers
in the U.S.

• The only heat-not-burn productauthorized through FDA’s PMTA
pathway as "appropriate for theprotection of public health"• Plan to seek an additional
marketing order under the
PMTA pathway for the IQOS 3
device in the coming months
Source: PMI Financials or estimates46

Leveraging Our Commercial Platform
for IQOS VEEV47

IQOS VEEV: Leveraging
Our Commercial Engine• Leverage IQOS Platform 1 capabilities
to deploy IQOS VEEV at scale• IQOS brand embodies ourcommitment to responsible marketing• Differentiated technology for superior
adult consumer experience• Targeting legal age smokers andexisting RRP users

48

IQOS VEEV: The E-Vapor Landscape≤20mg/ml nicotine limit• Around 25 million international
users (approximately 70% in 10
markets)≤10mg/ml nicotine limit

U.K.

Germany
Poland• About 75% use open systems,
but faster growth from closed
systems

CanadaFranceRussiaUkraine

Spain

Korea

Italy

• Nicotine limits in most key
markets• We have infrastructure andcapabilities in all major e-vapor
markets

No nicotine limit(a)10 Largest International E-vapor Markets(b)(a) Includes markets where nicotine limit is not meaningful(b) Based on the number of legal age users in 2019. Excludes China and the U.S. Size of bubbles is for illustrative purposes only
Source: PMI Financials or estimates and PMI Market Research49

Global Collaboration Agreement with KT&G to
Accelerate the Achievement of a Smoke-Free Future• Our infrastructure and commercial engine
enables a broader offering of smoke-freealternatives to adult consumers• Complementing our portfolio with KT&G
products to reach more consumers• PMI has responsibility for all elements ofcommercialization(a) Excluding the impact of estimated trade inventory movements
Source: PMI Financials or estimates

Korea: 2019 HTU SoS(a)
KT&G

Other

28%

65%

PMI

50

KT&G’s lil Portfolio Includes …

lil Pluslil Hybrid

lil Mini
51

Agenda• 2019 performance and mid-term
outlook• The evolving industry landscape• PMI’s portfolio strategy andcompetitive strengths• Maintaining combustible tobacco
leadership• Creating a sustainable operating
environment• Closing remarks
52

RRP Growth Supported by Strong Combustible Portfolio
PMI Combustible Tobacco Pricing Variance(a)Maximum (2009)
7.7%

6.5%

6.5%(c)Average (2008-2018)(b)2019

Minimum (2008)
5.2%(a) Reﬂects combustible tobacco pricing as a % of PY combustible tobacco net revenues(b) Average combustible tobacco pricing variance (2008-2018) over average base combustible product net revenues (2007-2017)(c) On a like-for-like basis
Source: PMI Financials or estimates

53

Marlboro Cigarette Share at All-Time High in 2019
PMI International Cigarette Share
27.2%

26.9%

Others9.7%
2018

Marlboro

10.0%+0.3pp2019

Note: Excluding China and the U.S. Current view (reflecting the deconsolidation of RBH, PMI’s total market share has been restated for previous periods). Sales volume of PMI cigarettes as apercentage of the total industry sales volume for cigarettes
Source: PMI Financials or estimates
54

Recent Cigarette Share Decline Does Not Reflect Higher
Cannibalization from HTUs
PMI TotalInternational Share
28.3%+0.1pp

28.4%

PMI Share
in IQOS Markets+0.7pp
34.3%
33.6%

HTUs

1.6%

+0.6pp2.2%

3.6%+1.4pp5.0%

Cigarettes

26.7%(0.5)pp

26.2%

30.0%

(0.7)pp

29.3%

2019

2018

20%

2018

2019

Note: Excluding China and the U.S. Current view (reflecting the deconsolidation of RBH, PMI’s total market share has been restated for previous periods). Sales volume of PMI cigarettes and
HTUs as a percentage of the total industry sales volume for cigarettes and HTUs
Source: PMI Financials or estimates
55

Recent Cigarette Share Decline Does Not Reflect Higher
Cannibalization from HTUs
PMI Cigarette Sharein IQOS Markets

Cigarettes

31.4%

2018

(0.2)pp

31.2%

2019

PMI Cigarette Sharein Non-IQOS Markets

23.9%

2018

(0.2)pp

23.7%

2019

Note: Excluding China and the U.S. Current view (reflecting the deconsolidation of RBH, PMI’s total market share has been restated for previous periods). Sales volume of PMI cigarettes as apercentage of the total industry sales volume for cigarettes
Source: PMI Financials or estimates
56

Agenda• 2019 performance and mid-term
outlook• The evolving industry landscape• PMI’s portfolio strategy andcompetitive strengths• Maintaining combustible tobacco
leadership• Creating a sustainable operating
environment• Closing remarks
57

ESG Strategy: Product at the Core
Strategic Pillars

Source: PMI Sustainability

Priority Topics

58

ESG Targets
Strategic Pillars(a) See Glossary for deﬁnition
Source: PMI Sustainability

Priority Topics

Select Targets

59

ESG Achievements
Strategic Pillars

Priority Topics

Select Targets

Achievements~10 million users have stopped smoking
and switched to IQOS(a)Best-in-class
Agricultural Labor
Practices (ALP)On track to reachzero deforestation(a) See Glossary for definition
Source: PMI Sustainability

60

Outlook: Delivering Superior& Sustainable Growth• Structural industry landscape is favorable• Sustainable competitive advantages• Commercial engine supports ongoingmargin expansion and strong cashflow• Strong combustible portfolio• Confident in our 2019-2021 targets• Generously rewarding our shareholders
Source: PMI Financials or estimates

61Delivering a Smoke-Free Future
Delivering a Smoke-Free Future

Consumer Analyst Group of
New York (CAGNY) Conference
Questions & Answers
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Glossary of Key Terms and Definitions,
Appendix, andReconciliation of Non-GAAP Measures

63

Glossary: General Terms• "PMI" refers to Philip Morris International Inc. and its subsidiaries• Until March 28, 2008, PMI was a wholly owned subsidiary of Altria Group, Inc. ("Altria"). Since that time the company has been
independent and is listed on the New York Stock Exchange (ticker symbol "PM")• "RBH" refers to PMI’s Canadian subsidiary, Rothmans, Benson & Hedges Inc.
• The Companies’ Creditors Arrangement Act (CCAA) is a Canadian federal law that permits a Canadian business to restructure its
affairs while carrying on its business in the ordinary course• Trademarks 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 share performancereflect cigarettes and heated tobacco units• References to total international market, defined as worldwide cigarette and heated tobacco unit volume excluding the U.S., totalindustry, total market and market shares are PMI estimates for tax-paid products based on the latest available data from a numberof internal and external sources and may, in defined instances, exclude the People's Republic of China and/or PMI's duty freebusiness. In addition, to reflect the deconsolidation of 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 andcigarillos, 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 volume64

Glossary: General Terms (cont.)• "EU" is defined as the European Union Region• "EE" is defined as the Eastern Europe Region• "ME&A" is defined as the Middle East & Africa Region and includes PMI's duty free business• "S&SA" is defined as the South & Southeast Asia Region• "EA&A" is defined as the East Asia & Australia Region• "LA&C" is defined as the Latin America & Canada Region• Following the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), PMI will continue toreport the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owner. These include HEETS, Next,
Philip Morris and Rooftop, which accounted for approximately 40% of RBH's total shipment volume in 2018
• From time to time, PMI’s shipment volumes are subject to the impact of distributor inventory movements, and estimated totalindustry/market volumes are subject to the impact of inventory movements in various trade channels that include estimatedtrade inventory movements of PMI’s competitors arising from market-specific factors that significantly distort reported volume
disclosures. Such factors may include changes to the manufacturing supply chain, shipment methods, consumer demand, timingof excise tax increases or other influences that may affect the timing of sales to customers. In such instances, in addition toreviewing 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 trade inventory
movements. Management also believes that disclosing PMI shipment volumes and estimated total industry/market volumes insuch 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 performance and trends for these measures over different reporting periods• "SoM" stands for share of market• "SoS" stands for share of segment
65

Glossary: Financial Terms• Net revenues related to combustible products refer to the operating revenues generated from the sale of these products,
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 othernicotine-containing products, primarily e-vapor products, including shipping and handling charges billed to customers, net ofsales and promotion incentives, and excise taxes. PMI recognizes revenue when control is transferred to the customer, typicallyeither upon shipment or delivery of goods.
• "Adjusted Operating Income (OI) Margin" is calculated as adjusted OI, divided by net revenues• Management reviews net revenues, OI, OI margins, operating cash flow and earnings per share, or "EPS," on an adjusted basis,
which may exclude the impact of currency and other items such as acquisitions, asset impairment and exit costs, tax items andother special items. For example, PMI’s adjusted diluted EPS and other 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 quarter of 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
for the period during which RBH remains under CCAA protection• "Fair value adjustment for equity security investments" reflects the adjustment resulting from share price movements inpassive investments for publicly traded entities that are not controlled or influenced by PMI. Under U.S. GAAP, suchadjustments are required, since January 1, 2018, to be reflected directly in the income statement

66

Glossary: Reduced-Risk Products• "Reduced-risk products," or "RRPs," is the term PMI uses to refer to products that present, are likely to present, or have thepotential to present less risk of harm to smokers who switch to these products versus continuing smoking. PMI has a range of
RRPs in various stages of development, scientific assessment and commercialization. PMI RRPs are smoke-free products that
produce an aerosol that contains far lower quantities of harmful and potentially harmful constituents than found in cigarettesmoke• "Aerosol" refers to a gaseous suspension of fine solid particles and/or liquid droplets• "Combustion" is the process of burning a substance in oxygen, producing heat and often light• "Smoke" is a visible suspension of solid particles, liquid droplets and gases in air, emitted when a material burns• "Heated tobacco units," or "HTUs," is the term PMI uses to refer to heated tobacco consumables, which for PMI include thecompany's HEETS, HEETS Marlboro and HEETS FROM MARLBORO, defined collectively as HEETS, as well as Marlboro HeatSticks
and Parliament HeatSticks• The IQOS heat-not-burn device is a precisely controlled heating device into which a specially designed and proprietary
tobacco unit is inserted and heated to generate an aerosol• HTU "offtake volume" represents the estimated retail offtake of HTUs based on a selection of sales channels that vary bymarket, but notably include retail points of sale and e-commerce platforms• HTU "offtake share" represents the estimated retail offtake volume of HTUs divided by the sum of estimated total offtake
volume for cigarettes and HTUs
• National market share for HTUs is defined as the total sales volume for HTUs as a percentage of the total estimated sales
volume for cigarettes and HTUs

67

Glossary: Reduced-Risk Products (cont.)• "Total IQOS users" is defined as the estimated number of Legal Age (minimum 18 years) IQOS users that used PMI HTUs for atleast 5% of their daily tobacco consumption over the past seven days• "Converted IQOS Users" is defined as the estimated number of Legal Age (minimum 18 years) IQOS users that used PMI HTUs forover 95% of their daily tobacco consumption over the past seven days
• "Predominant IQOS Users" is defined as the estimated number of Legal Age (minimum 18 years) IQOS users that used PMI HTUs
units for between 70% and 95% of their daily tobacco consumption over the past seven days
• "Situational IQOS Users" is defined as the estimated number of Legal Age (minimum 18 years) IQOS users that used PMI HTUs for
between 5% and less than 70% of their daily tobacco consumption over the past seven days• "Abandoned IQOS Users" is defined as the estimated number of Legal Age (minimum 18 years) IQOS users that used PMI HTUs forless than 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 totality of their daily tobacco consumption
in the past seven days; for markets where IQOS is one among other heat-not-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
• "FDA" stands for the U.S. Food & Drug Administration• "MRTP" stands for Modified Risk Tobacco Product, the term used by the U.S. FDA to refer to RRPs
• "MRTP application" stands for Modified Risk Tobacco Product application under section 911 of the FD&C Act• "PMTA" stands for Premarket Tobacco Application under section 910 of the FD&C Act

68

Glossary: 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), isappropriate 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 marketingthe product and complying with the provisions set forth in the FDA's marketing order• Shipment volume of heated tobacco units to the U.S. is included in the heated tobacco unit shipment volume of 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 the Latin America & Canada segment69

2020: EPS Guidance($/share)
Reported Diluted EPS

Full-Year
2020
Forecast

2019≥ $5.50$4.61- Tax items(0.04)- Asset impairment and exit costs

0.23- Canadian tobacco litigation-related expense

0.09- Loss on deconsolidation of RBH

0.12- Russia excise and VAT audit charge

0.20- Fair value adjustment for equity security investments(0.02)

Adjusted Diluted EPS$5.50- Net earnings attributable to RBH$5.50- Less: Currency(0.04)(a) Net reported diluted EPS attributable to RBH from January 1, 2019 through March 21, 2019(b) Pro forma
Source: PMI Financials or estimates$5.19 (a)(0.06)

Adjusted Diluted EPS

Adjusted Diluted EPS, excluding currency

Adjusted
Growth

≥ $5.54$5.13 (b)$5.13 (b)≥ 8%70Business Transformation Metrics(a)Shifting Company Resources to Deliver a Smoke-Free Future

Aspiration(b)by 2025

2015

2016

2017

2018

2019

70%

72%

74%

92%

98%

8%

15%

39%

60%

71%

Net revenues(c)(smoke-free/total)

0.2%

2.7%

12.7%

13.8%

18.7%

38-42%

Smoke-free product shipment ratio(d)(smoke-free/total)

0.1%

0.9%

4.4%

5.1%

7.6%

>30%

n/a

1.5

4.7

6.6

9.7

>40

R&D expenditure(smoke-free/total)
Commercial expenditure(smoke-free/total)

Estimated users who have stopped smoking
and switched to IQOS(e) (in millions)(a) As of December 31, 2019(b) Assuming constant PMI market share. We do not set aspirational targets for R&D and commercial expenditure but we expect both ratios to continue increasing to enable the statedoutcome in terms of shipment volume. Note: Aspirational targets do not constitute financial projections(c) Excluding excise taxes. For future periods, at today’s pricing and excise tax assumptions(d) The smoke-free product shipment ratio is computed based on millions of units. Smoke-free products include heated tobacco units and e-cigarettes. Total products include smoke-free
products, cigarettes and other combustible products(e) See slide 68 for definition
Source: PMI Financials or estimates, IQOS user panels and PMI Market Research

71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)Years Ended December 31,
2019

2018

% Change

Reported Diluted EPS$ 4.61$ 5.08(9.3)%

Less: Currency(0.13)

Reported Diluted EPS, excluding Currency$ 4.74$ 5.08(6.7)%

Years Ended December 31,
2019

2018

% Change$ 4.61$ 5.08(9.3)%

Asset impairment and exit costs

0.23

-

Canadian tobacco litigation-related expense

0.09

-

Loss on deconsolidation of RBH

0.12

-

Russia excise and VAT audit charge

0.20

-

Fair value adjustment for equity security investments(0.02)-

Reported Diluted EPS

Tax items(0.04)

0.02

Adjusted Diluted EPS$ 5.19$ 5.101.8%

Less: Currency(0.13)

Adjusted Diluted EPS, excluding Currency$ 5.32$ 5.104.3%

72

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency(Unaudited)Years Ended December 31,
Adjusted Diluted EPS (a)

2019

2018

% Change$ 5.19$ 5.101.8%(0.26)(b)

Net earnings attributable to RBH
Adjusted Diluted EPS$ 5.19Less: Currency(0.13)

Adjusted Diluted EPS, excluding Currency$ 5.32(a) For the calculation, see previous slide(b) Represents the impact attributable to RBH from March 22, 2018 through end of period date(c) Pro forma$ 4.84 (c)7.2%$ 4.84 (c)

9.9%

73

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

Net
Revenues
excludingCurrency

Currency

Acquisitions

Net
Revenues
excludingCurrency &Acquisitions

2019

Years Ended
December 31,

Net
Revenues

Reduced-Risk Products

2018

ExcludingCurrency &Acquisitions

ExcludingCurrency

Total% Change$ 1,724$ (98)$ 1,822$-$ 1,822

European Union

$ 865

99.2%

+100%

+100%

844

(19)

864

-

864

Eastern Europe

324

+100%

+100%

+100%

321

(1)

322

-

322

Middle East & Africa

382(15.8)%(15.7)%(15.7)%

-

-

-

-

-

South & Southeast Asia

-

-

-

-

2,671

13

2,658

-

2,658

East Asia & Australia

2,506

6.6%

6.0%

6.0%

27

(1)

28

-

28

19

41.9%

49.9%

49.9%

$ 5,587$ (106)$ 5,693$-$ 5,693

Total RRPs

$ 4,096

36.4%

39.0%

39.0%

$ 9,817$ (563)$ 10,380$-$ 10,380

European Union$ 9,298

3,282

(108)

3,390

-

3,390

Eastern Europe

4,042

(162)

4,204

-

4,204

Middle East & Africa

5,094

(10)

5,104

-

5,104

South & Southeast Asia

2019

Latin America & Canada(a)

PMI

2018

% Change
5.6%

11.6%

11.6%

2,921

12.4%

16.1%

16.1%

4,114

(1.8)%

2.2%

2.2%

4,656

9.4%

9.6%

9.6%

5,364

(26)

5,390

-

5,390

East Asia & Australia

5,580(3.9)%(3.4)%(3.4)%

2,206

(68)

2,274

-

2,274

Latin America & Canada

3,056(27.8)%(25.6)%(25.6)%$ 29,805$ (937)$ 30,742$-$ 30,742

Total PMI

$ 29,625

0.6%

3.8%

3.8%

(a) 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 underlicense in the United States
Note: Sum of Regions might not foot to Total PMI due to roundings. "-" indicates amounts between -$0.5 million and +$0.5 million
74

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency($ in millions) / (Unaudited)Years Ended December 31,
Net Revenues

2019

2018

% Change$ 29,805$ 29,6250.6%(742)(a)Net Revenues attributable to RBH
Net Revenues
Less: Currency
Net Revenues, excluding Currency(a) Represents the impact attributable to RBH from March 22, 2018 through end of period date(b) Pro forma$ 29,805$ 28,883 (b)3.2%$ 28,883 (b)

6.4%

(937)
$ 30,742

75

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 Other

Adjusted
Operating
IncomeCurrency

Adjusted
Operating
IncomeexcludingCurrency

Adjusted
Operating
IncomeexcludingCurrency& Acquisitions

Acquisitions

Years Ended
December 31,

2019$ 3,970547$ (342) (a) $ 4,312(374) (b)Operating
IncomeAsset
Impairment& Exit Costs

Adjusted
Operating
Income

Total

2018

ExcludingCurrency

ExcludingCurrency& Acquisitions% Change$ (330)$ 4,642$-$ 4,642European Union$ 4,105$-$ 4,105

5.0%

13.1%

13.1%

921

23

898

-

898

Eastern Europe

902

-

902

2.1%

(0.4)%(0.4)%

1,684

-

1,684

(53)

1,737

-

1,737

Middle East & Africa

1,627

-

1,627

3.5%

6.8%

6.8%

2,163

(20) (a)

2,183

17

2,166

-

2,166

South & Southeast Asia

1,747

-

1,747

25.0%

24.0%

24.0%

1,932

-

1,932

37

1,895

-

1,895

East Asia & Australia

1,851

-

1,851

4.4%

2.4%

2.4%

235

(493) (c)Latin America & Canada

1,145

-

1,145

(36.4)%(37.6)%(37.6)%

Total PMI

$ 11,377$-$ 11,377

3.4%

5.9%

5.9%

$ 10,531$ (1,229)

728

14

714

-

714

$ 11,760$ (292)$ 12,052$-$ 12,052(a) Represents asset impairment and exit costs(b) Represents the Russia excise and VAT audit charge(c) Includes asset impairment and exit costs ($60 million), the Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million)

76

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency($ in millions) / (Unaudited)Years Ended December 31,

Operating Income

2019

2018

% Change$ 10,531$ 11,377(7.4)%Less:
Asset impairment and exit costs

(422)

-

Canadian tobacco litigation-related expense

(194)

-

Loss on deconsolidation of RBH

(239)

-

Russia excise and VAT audit charge

(374)

-

Adjusted Operating Income$ 11,760

Adjusted Operating Income
Less: Currency
Adjusted Operating Income, excluding Currency(a) Represents the impact attributable to RBH from March 22, 2018 through end of period date(b) Pro forma$ 11,377

3.4%(542) (a)Operating Income attributable to RBH$ 11,760$ 10,835 (b)8.5%$ 10,835 (b)

11.2%

(293)
$ 12,053

77

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(a)MarginAdjusted
Adjusted
Net
OperatingOperating
Revenues
IncomeIncomeexcludingexcludingMarginCurrency
Currency
excluding(b)(a)
Currency

Adjusted
Operating
IncomeexcludingCurrency& Acquisitions (a)Adjusted
OperatingNet
Revenues Income
excluding Margin
Currency excluding& Acqui- Currency
sitions (b) & Acquisitions

Adjusted
Adjusted
Net
OperatingOperating
Income Revenues Income(a)MarginAdjusted
Adjusted Operating
Adjusted Operating Income
Operating Income
MarginMargin excluding
IncomeMargin excluding Currency
Currency & Acquisitions

2018% Points ChangeYears Ended
December 31,

2019$ 4,312$ 9,81743.9%$ 4,642$ 10,380

44.7%$ 4,642$ 10,38044.7%

European Union$ 4,105$ 9,298

44.1%

(0.2)

0.6

0.6

921

3,282

28.1%

898

3,390

26.5%

898

3,390

26.5%

Eastern Europe

902

2,921

30.9%

(2.8)

(4.4)

(4.4)

1,684

4,042

41.7%

1,737

4,204

41.3%

1,737

4,204

41.3%

Middle East & Africa

1,627

4,114

39.5%

2.2

1.8

1.8

2,183

5,094

42.9%

2,166

5,104

42.4%

2,166

5,104

42.4%

South & Southeast Asia

1,747

4,656

37.5%

5.4

4.9

4.9

1,932

5,364

36.0%

1,895

5,390

35.2%

1,895

5,390

35.2%

East Asia & Australia

1,851

5,580

33.2%

2.8

2.0

2.0

728

2,206

33.0%

714

2,274

31.4%

714

2,274

31.4%

Latin America & Canada

1,145

3,056

37.5%

(4.5)

(6.1)

(6.1)

$ 11,760$ 29,805

39.5%$ 12,052$ 30,742

39.2%$ 12,052$ 30,742

39.2%

Total PMI

$ 11,377$ 29,625

38.4%

1.1

0.8

0.8

(a) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to slide 76(b) For the calculation of Net Revenues excluding currency and acquisitions refer to slide 74

78

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency($ in millions) / (Unaudited)Years Ended December 31,
2019

2018

% Change

Adjusted Operating Income (a)$ 11,760$ 11,377

3.4%

Net Revenues$ 29,805$ 29,625

39.5%

38.4%

Adjusted OI Margin
Adjusted OI Margin
Less: Currency
Adjusted OI Margin, excluding Currency(a) For the calculation of Adjusted Operating Income refer to slide 76(b) Represents the impact attributable to RBH from March 22, 2018 through end of period date(c) Pro forma

1.1(0.9)(b)Adjusted OI Margin attributable to RBH
39.5%

37.5%(c)2.0

37.5%(c)

1.7

0.3
39.2%

79

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

Reported Diluted EPS

QuarterEnded
Mar 31,

QuarterEnded
Jun 30,Six Months
Ended
Jun 30,Quarter
Ended
Sept 30,

Nine Months
Ended
Sept 30,

QuarterEnded
Dec 31,Year
Ended
Dec 31,

QuarterEnded
Mar 31,

2018

2018

2018

2018

2018

2018

2018

2019

$ 1.00$ 1.41$ 2.41$ 1.44$ 3.85$ 1.23$ 5.08$ 0.87

Asset impairment and exit costs

-

-

-

-

-

-

-

0.01

Canadian tobacco litigation-related expense

-

-

-

-

-

-

-

0.09

Loss on deconsolidation of RBH

-

-

-

-

-

-

-

0.12

Tax items

-

-

-

-

-

0.02

0.02

-

$ 1.00$ 1.41$ 2.41$ 1.44$ 3.85$ 1.25$ 5.10(0.08)(0.08) (a)(0.09)(0.18) (a)(0.08)(0.26) (a)$ 1.33$ 2.33$ 1.35$ 3.67$ 1.17$ 4.84

Adjusted Diluted EPS
Net earnings attributable to RBH-

Pro Forma Adjusted Diluted EPS$ 1.00(a)(a) Represents the impact of net earnings attributable to RBH from March 22, 2018 through end of period date(b) Represents the impact of net earnings attributable to RBH from March 22, 2019 through end of period date(c) Includes approximately $0.06 per share 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

$ 1.09 (c)
-

(b)

80

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

Currency

Net
Revenues
excludingCurrency

Acquisitions

Net
Revenues
excludingCurrency &Acquisitions$-$ 29,185

Total PMI$-

$ 29,728

Total PMI

Years Ended
December 31,

2017$ 28,748$ (437)$ 29,185$ 29,625$ (103)$ 29,728

Net
Revenues

Net
Revenues

2016

2018

$ 26,685

Net
Revenues
excludingCurrency &Acquisitions% Change
7.7%

9.4%

9.4%

% Change2017$ 28,748

Net
Revenues
excludingCurrency

3.1%

3.4%

3.4%

81

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

Adjusted
Operating
Income$ 11,581$-$ 11,581$ 11,377$-$ 11,377

Currency

Acqui-sitions

Adjusted
Operating
IncomeexcludingCurrency& Acquisitions

Years Ended
December 31,

Operating
Income$ 11,738$-$ 11,738

Total PMI

$ 10,903$ 11,591$-$ 11,591

Total PMI

$ 11,581

Adjusted
Operating
IncomeexcludingCurrency2017$ (157)

Adjusted
Operating
IncomeAdjusted
Operating
Income20162018$ (214)Asset
Impairment& Exit Costs

Adjusted
Operating
IncomeexcludingCurrency

Adjusted
Operating
IncomeexcludingCurrency& Acquisitions% Change$-$ 10,903

6.2%$-$ 11,581(1.8)%

2017

7.7%

7.7%

% Change
0.1%

0.1%

82

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(a)MarginAdjusted
Adjusted
Net
OperatingOperating
Revenues
IncomeIncomeexcludingMarginexcludingCurrency
excludingCurrency(b)
Currency(a)$ 11,581$ 28,748

40.3%$ 11,738$ 29,185$ 11,377$ 29,625

38.4%$ 11,591$ 29,728

Adjusted
Adjusted
Net
OperatingOperating
Revenues
IncomeIncomeexcludingexcludingMarginCurrency
Currency
excluding& Acqui& AcquiCurrency
sitionssitions& Acqui(b)(a)
sitions

Years Ended
December 31,

Adjusted
Adjusted
OperatingNet
Operating
Income Revenues Income(a)Margin

2017

2016
40.2%

$ 11,738$ 29,185

40.2%

Total PMI

$ 10,903$ 26,685

39.0%$ 11,591$ 29,728

39.0%

Total PMI

$ 11,581$ 28,748

2018% Points Change
40.9%

(0.6)

40.3%

(1.9)

2017

(a) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to previous slide(b) For the calculation of Net Revenues excluding currency and acquisitions refer to slide 81

Adjusted
Adjusted Operating
Adjusted Operating Income
MarginOperating Income
Margin excluding
IncomeMargin excluding Currency
Currency & Acquisitions

(0.7)

(0.7)

% Points Change
(1.3)

(1.3)

83

Delivering a Smoke-Free Future
Delivering a Smoke-Free Future

Consumer Analyst Group of New York(CAGNY) Conference
February 19, 2020