Philip Morris International

Philip Morris International, the world’s largest publicly traded tobacco company, operates in approximately 180 countries and reported 18.31 billion USD in profits in 2017. Philip Morris International, a U.S.-based corporation, only sells its products outside the United States. Philip Morris International was separated from its parent company, the Altria Group, in March 2008, in part to protect the company from increased U.S.-based regulation and Litigation. Philip Morris International and Altria are now legally separate companies.

Company Overview

According to Philip Morris International's website, Philip Morris International is a leading international tobacco company engaged in the manufacture and sale of cigarettes and other nicotine-containing products in markets outside the United States of America. Philip Morris International Inc. is a Virginia holding company incorporated in 1987. The company's vision is for their products to "ultimately replace cigarettes to the benefit of adult smokers, society, our company and our shareholders."

Key Executives

Name	Position	Bio
André Calantzopoulos	Director and Chief Executive Officer (since 2013)	Calantzopoulos was named Chief Executive Officer and was elected to the Board of Directors on May 8, 2013. He served as Chief Operating Officer from Philip Morris’s spin-off on March 28, 2008 to May 8, 2013. Calantzopoulos was Philip Morris International’s President and Chief Executive Officer between 2002 and the date of the spin-off. After joining the company in 1985, he worked extensively across Central Europe, including as Managing Director of PM Poland and President of the Eastern European Region. Calantzopoulos holds a degree in electrical engineering from Swiss Federal Institute of Technology in Lausanne and an MBA from INSEAD in France.
Martin King	Chief Financial Officer (since January 2018)	King joined Philip Morris International in 2003 as Managing Director of Tabaqueira SA, Philip Morris International’s Portuguese subsidiary. He was then named Managing Director, Philip Morris Management Co. Ltd in Beijing. Following Philip Morris Indonesia’s acquisition of PT HM Sampoerna Tbk in May 2005, he served as President Director of PT HM Sampoerna Tbk until April 2009. King was appointed Senior Vice President, Operations in April 2009, and President, Latin America & Canada Region in February 2014. Between 2015 and 2017, he held the position of President, Asia Region. Prior to joining Philip Morris International, King served in various positions within Philip Morris USA between 1991 and 2003. A graduate of Harvard University with a bachelor’s degree in government, King also holds an MBA from the Darden School, University of Virginia.
Jacek Olczak	Chief Operating Officer (since January 2018)	Olczak joined Philip Morris Polska in 1993 as Manager, Finance and Administration. After serving as Manager, Internal Controls in 1995 in Lausanne, Switzerland, Mr. Olczak returned to Poland in 1996 where he held various positions in finance, sales, and operations. Between 2002 and 2006, Olczak worked extensively across Central Europe and the Baltic States, and in 2004 was appointed Managing Director, Poland & Baltic States. In October 2006, he became Managing Director, Germany & Austria, and from April 2009 until July 2012, he served as President of Philip Morris International’s European Union Region, responsible for managing our operations. From August 2012 until his current appointment, Olczak held the role of Chief Financial Officer. Prior to joining Philip Morris International, Olczak worked for BDO Binder Sp. z o.o. in London and Warsaw. Olczak holds a master’s degree in economics from the University of Lodz, Poland.
Paul Riley	President, East Asia & Australia Region (since January 2018)	Riley joined Philip Morris Australia in 1988. Over the following two decades, he held a number of positions in Australia, Hong Kong, and Japan, before being named Managing Director, Serbia & Montenegro in 2010. Riley returned to Asia in 2013, when he became President of Philip Morris Fortune Tobacco Corporation in the Philippines. He was appointed President of Philip Morris Japan in 2015. Riley holds a degree in technology innovation and services management from the Royal Melbourne Institute, and is a graduate of Harvard Business School.
Marco Mariotti	President, Eastern Europe Region (since January 2018)	Since joining Philip Morris International in 1997, Mariotti has held numerous leadership roles in Argentina and across Europe. He started in business development for the European Union Region and moved to Italy in 2001 as Director, Finance and then Director, Corporate Affairs. In 2005, Mariotti became Managing Director, Argentina, followed by his appointment as Managing Director, Italy in 2008. In 2010 Mariotti was named President, Russia & Belarus and became Senior Vice President, Corporate Affairs in 2015. Before joining Philip Morris International, Mariotti worked in the financial sector in Switzerland. Mariotti studied economics in Lausanne, Switzerland, and holds an MBA from INSEAD in Fontainebleau, France.
Frederic de Wilde	President, European Union Region (since July 2015)	De Wilde joined Philip Morris International in 1992 as Brand Manager L&M for Philip Morris Belgium. In 1996 he became Marketing Director for Philip Morris Spain S.L. and four years later Sales Director of Spain. He was then named Managing Director of Philip Morris Greece, where he led the acquisition and integration of the Papastratos Cigarette Manufacturing Company. In 2005 De Wilde became Managing Director of Philip Morris International’s affiliate in Italy, and from January 2008 until the end of June 2011, he held the position of President, Philip Morris Japan KK. In July 2011 de Wilde became Senior Vice President, Marketing & Sales. Prior to joining Philip Morris International, de Wilde worked at Colgate Palmolive, Belgium from 1991 to 1992 as Regional Sales Manager. De Wilde holds a degree in economics from the Université Libre de Bruxelles and a master degree in management from the Vrije Universiteit Brussel.
Jeanne Polles	President, Latin America & Canada Region (since 2015)	Pollès became Senior Vice President, Corporate Affairs in June 2013, a position she held until July 2015, when she was appointed President, Latin America & Canada Region. Pollès began her 26-year career with Philip Morris International as a sales representative in France and became Director, Sales in 1998. She served in various roles in France before being appointed Managing Director in 2005. She earned an undergraduate degree in business and a master’s degree in marketing from the ESIG and is a member of the Women’s Forum for the Economy & Society.
Stacey Kennedy	President, South & Southeast Asia Region (since January 2018)	Kennedy began her career with Philip Morris USA in 1995 as a Territory Sales Manager. She held a number of positions of increasing responsibility in the sales organization, until becoming Vice President Sales, Southeast Region in Atlanta in 2006. In 2010 Kennedy joined Philip Morris International’s Operations Center in Lausanne as Vice President, Sales Strategy, and in April 2013 Area Vice President, Southeast Europe. Kennedy served as Managing Director for Germany, Austria, Croatia, and Slovenia from 2015 until her current appointment. Kennedy received a bachelor degree in sociology and cultural anthropology from Randolph College in the United States, and an Executive MBA from IMD in Lausanne, Switzerland.
Drago Azinovic	President, Middle East, Africa & Philip Morris International Duty Free (since January 2018)	Azinovic joined Philip Morris Asia Limited in March 2009 as Vice President of Marketing and Sales for Philip Morris International’s Asia Region. He became President of Philip Morris Japan in July 2011, a position he held until July 31, 2012, when he was named President of the European Union Region. In July 2015 he became President, Eastern Europe, Middle East & Africa and Philip Morris International Duty Free. From 1997 until 2009 Azinovic held a variety of positions at Altadis and, after the acquisition of Altadis in 2008, at Imperial Tobacco. Previously, Azinovic had worked at Procter & Gamble. Azinovic received a law degree from the University of Alcalá in Spain and an MBA from Saint Louis University in Missouri (USA).
Marc S. Firestone	President, External Affairs and General Counsel (since January 2018)	Firestone held positions from 1988 to 2003 in the law departments of Philip Morris Companies Inc. and Philip Morris International Inc. Firestone is cofounder and chairman of the Institute for Inclusion in the Legal Profession; adjunct professor of law at New York Law School; a frequent speaker on international antitrust law, diversity, and in-house legal practice; and a recipient of the Director’s Roundtable Distinguished General Counsel award. From 2012 until his current appointment, Mr. Firestone served as Philip Morris International’s Senior Vice President and General Counsel. Firestone was previously Executive Vice President, Corporate and Legal Affairs and General Counsel of Kraft Foods Inc., where he served since 2003. Firestone began his legal career as an attorney at Arnold & Porter in Washington, D.C. He received a BA, magna cum laude, in romance languages and philosophy from Washington & Lee University and a JD, magna cum laude, from Tulane University School of Law.
Charles Bendotti	Senior Vice President, People & Culture (since January 2018)	Bendotti joined Philip Morris International in Lausanne in 1999 as Business Analyst. From 2000 until 2006, he served in various cross-functional roles in Marketing & Sales and Business Development in different markets of the Eastern Europe, Middle East & Africa, and Latin America & Canada Regions. Bendotti then became Managing Director, Ecuador & Bolivia, followed by his appointment as Vice President, Human Resources for the Latin America & Canada Region in 2008. In 2012 he was named Vice President, Human Resources Asia, a position he held until December 2016, and then Senior Vice President, Human Resources. Bendotti holds a master’s degree in international relations, economy, and law from the Graduate Institute of International & Development Studies in Geneva, Switzerland, and an Executive MBA from HEC Paris.

Board Members

Name	Position	Bio
Louis C. Camilleri	Chairman of the Board	Camilleri is our Chairman, having served as our Chairman and Chief Executive Officer from our spin-off in 2008 until the 2013 Annual Meeting of Shareholders. Mr. Camilleri remained Chairman and an employee of the company following the 2013 Annual Meeting. He retired effective December 31, 2014, and continues to serve as a non-employee Chairman. Before our spin-off, Mr. Camilleri was Chairman and Chief Executive Officer of Altria Group, Inc., positions he had held since 2002. From 1996 to 2002, he served as Senior Vice President and Chief Financial Officer of Altria Group, Inc. He had been employed continuously by Altria Group, Inc. and its subsidiaries (including Philip Morris International Inc.) in various capacities since 1978. Camilleri is a director of América Móvil, S.A.B. de C.V. and Ferrari N.V. He previously served on the Board of Telmex International SAB from 2009 to 2011. Camilleri was a director of Kraft Foods Inc. from 2001 to 2007 and was Kraft’s Chairman from 2002 to 2007.
Harold Brown	Director	Brown has been a Counselor at the Center for Strategic and International Studies since 1992. He was a partner of Warburg Pincus, a leading private equity firm, from 1990 until his retirement in 2007. Previously, he was Chairman of the Foreign Policy Institute at The Johns Hopkins University School of Advanced International Studies. Brown is President Emeritus and life trustee of the California Institute of Technology and served as Secretary of Defense for the United States from 1977 through 1981. Brown is a member of the board of directors of Chemical Engineering Partners, Inc., a member of the North American Group of the Trilateral Commission and a Trustee Emeritus of the RAND Corporation. Brown served as a Director of Altria Group, Inc. from 1983 to 2003, and again from 2004 to 2008. At Philip Morris International, Brown is Chair of the Product Innovation and Regulatory Affairs Committee and a member of the Compensation and Leadership Development and Finance Committees.
Massimo Ferragamo	Director	Ferragamo has served as Chairman of Ferragamo USA Inc. since 2000, having previously served as President of that company since 1985. He is also Vice President of the Lungarno Hotel Group and Executive Vice President of the Ferragamo Foundation. Ferragamo is a director of Ferragamo Finanziaria S.p.A. and served on the board of directors of Yum! Brands, Inc. from 1997 until 2016. Ferragamo is a member of the Finance and Product Innovation and Regulatory Affairs Committees.
Werner Geissler	Director	Geissler became an Operating Partner of Advent International in 2015. He previously served as Vice Chairman and Special Advisor to the Chairman and CEO of Procter and Gamble until his retirement in January 2015. He joined that company in 1979 and served in various capacities, including President, Northeast Asia, from 2001 to 2004, Group President, Central and Eastern Europe, Middle East and Africa, from 2004 to 2007, and Vice Chairman, Global Operations, from 2007 to 2014. Mr. Geissler is a director of The Goodyear Tire & Rubber Company. He is Chair of the Compensation and Leadership Development Committee and a member of the Audit, Finance, and Product Innovation and Regulatory Affairs Committees.
Jennifer Li	Director	Li currently serves as Chief Executive Officer and Managing Partner of Changcheng Investment Partners, Baidu's newly initiated growth fund. She previously served as Chief Executive Officer and General Managing Director of Baidu Capital, the investment arm of Baidu, Inc. Li joined Baidu, Inc., the largest internet search engine in China and the third-largest independent search engine in the world, in 2008, as Chief Financial Officer, responsible for a wide range of corporate functions, including Finance, Human Resources, International Operations, Marketing, Communications, and Purchasing. From 1994 to 2008, she held a number of senior finance positions at various General Motors companies in China, Singapore, the United States, and Canada, rising to Chief Financial Officer of GM’s business in China and Financial Controller of the North American Operations for GMAC. Li is a director of Flex Ltd. She is the Chair of the Audit Committee and a member of the Finance and Nominating and Corporate Governance Committees.
Lisa Hook	Director	Hook has served as Chief Executive Officer of Neustar, Inc. since October 2010, as a member of its board since November 2010, and as President since January 2008. She was President and Chief Executive Officer of Sunrocket, Inc. from 2006 to 2007, and held several executive-level posts at America Online, Inc. from 2001 to 2004. Previously, she was a partner at Brera Capital Partners, a global private equity investment firm, managing director of Alpine Capital Group, LLC., an investment banking firm, an executive at Time Warner, Inc., a legal advisor to the Chairman of the Federal Communications Commission, and a senior attorney at Viacom International, Inc. Hook serves on the board of Worldpay, Inc., a payment processing firm. Hook was as a senior independent director of RELX PLC and RELX NV, providers of information solutions, from 2006 to 2016. Previously, she served as a director of Covad Communications, Time Warner Telecom, Inc., and National Geographic Ventures. In 2012, she was appointed by President Obama to serve on the National Security Telecommunications Advisory Committee.
Jun Makihara	Director	Makihara was employed at Goldman, Sachs & Co. from 1981 to 2000, during which time he was a General Partner for six years, working in New York, Los Angeles, and Tokyo. During his tenure in Tokyo, he was co-head of the investment banking group and the Japanese equities group and also served as co-branch manager. Subsequently, he was Chairman of Neoteny Co., Ltd., a Japanese venture incubator, until 2015. Makihara is a director of Monex Group, Inc. and Shinsei Bank, Ltd. He is a trustee of the Protestant Episcopal Cathedral Foundation in Washington, D.C., and a board member of the Japan Society in New York. He also served on the board of RHJ International S.A. from 2005 to 2014. Makihara is Chair of the Finance Committee and a member of the Audit and Product Innovation and Regulatory Affairs Committees.
Sergio Marchionne	Director	Marchionne is Chief Executive Officer of Fiat Chrysler Automobiles N.V., having become a member of the Board of Directors of a predecessor of that company, Fiat S.p.A., in May 2003. He is also Chairman of Ferrari N.V. and CNH Industrial N.V. Marchionne has been a member of the Board of SGS S.A. since May 2001, serving as the Chief Executive and Managing Director from 2002 to 2004 and Chairman since March 2006. He is a director of Exor S.p.A., an investment company that, directly or indirectly, holds significant equity investments in Fiat Chrysler, Ferrari and CNH. Marchionne is a chartered accountant and lawyer who, since beginning his career in 1983, has held executive positions at several firms prior to assuming his current positions. He was a member of the Board of Directors of UBS from 2007 to 2010. Marchionne serves on the Finance and Product Innovation and Regulatory Affairs Committees.
Kalpana Morparia	Director	Ms. Morparia assumed her current position as CEO South and South East Asia for J.P. Morgan Chase in April 2016, having previously served as CEO of J.P. Morgan India since 2008. She is a member of J.P. Morgan’s Asia Pacific Management Committee. Prior to joining J.P. Morgan India, Ms. Morparia served as Joint Managing Director of ICICI Bank, India’s second-largest bank, from 2001 to 2007 and the Vice Chair of ICICI’s insurance and asset management business from 2007 to 2008. Ms. Morparia is a director of Dr. Reddy’s Laboratories Ltd. and Hindustan Unilever Limited. She is Chair of the Nominating and Corporate Governance Committee and is a member of the Finance and Product Innovation and Regulatory Affairs Committees.
Lucio A. Noto	Director	Noto assumed his current position as Managing Partner of Midstream Partners, LLC in March 2001. He retired as Vice Chairman of ExxonMobil Corporation in January 2001, a position he had held since the merger of the Exxon and Mobil companies in November 1999. Before the merger, Noto was Chairman and Chief Executive Officer of Mobil Corporation. Noto had been employed by Mobil continuously since 1962. Mr. Noto is a director of Penske Automotive Group, Inc. He also served on the boards of IBM from 1995 to 2008, Altria Group, Inc. from 1998 to 2008, Shinsei Bank from 2005 to 2008, Commercial International Bank from 2006 to 2009, and RHJ International S.A. from 2011 to 2015. MNoto is the Presiding Director, and a member of the Audit, Compensation and Leadership Development, Finance, and Nominating and Corporate Governance Committees.
Frederik Paulsen	Director	Dr. Paulsen has been Chairman of the Ferring Group, a research-driven, specialty biopharmaceutical group since 1988, having joined that company in 1976. Dr. Paulsen is a member of the boards of MGIMO University in Moscow, Russia, and the Pro Universitate of the Christian Albrechts University in Kiel, Germany, and a trustee of the Salk Institute of Biological Research in La Jolla, California, USA. Dr. Paulsen is a member of the Finance and Product Innovation and Regulatory Affairs Committees.
Robert B. Polet	Director	Polet is currently serving as Chairman of Rituals Cosmetics Enterprise B.V. He was Chairman of Safilo Group S.p.A. from 2011 to 2017, and President, Chief Executive Officer and Chairman of the Management Board of the Gucci Group from 2004 to 2011. Previously, Polet spent 26 years in the Unilever Group in a variety of executive roles, including President of Unilever’s Worldwide Ice Cream and Frozen Foods division, Chairman of Unilever Malaysia, Chairman of Van den Bergh and Executive Vice President of Unilever’s European Home and Personal Care division. He is a director of Safilo Group S.p.A., William Grant & Sons Limited, and Arica Holding B.V. Polet serves on the Compensation and Leadership Development, Finance, Nominating and Corporate Governance, and Product Innovation and Regulatory Affairs Committees.
Stephen M. Wolf	Director	Wolf has been Managing Partner of Alpilles, LLC since 2003. Previously, he was Chairman of US Airways Group from 2001 to 2003, and Chief Executive Officer of US Airways, Inc. from 1996 to 1998. Prior to joining US Airways, he had served since 1994 as senior advisor in the investment banking firm of Lazard Frères & Co., LLC. From 1987 to 1994, he was Chairman and Chief Executive Officer of UAL Corporation and United Air Lines, Inc. Wolf is Chairman of the Advisory Board of Trilantic Capital Partners and served as Chairman of R.R. Donnelley & Sons Company from 2004 to 2014. Wolf served as a director of Altria Group, Inc. from 1993 to 2008 and as a director of Fiat Chrysler Automobiles N.V. from 2009 to 2017. He is a trustee emeritus of the Brookings Institute. Wolf is a member of the Audit, Compensation and Leadership Development, Finance, Nominating and Corporate Governance, and Product Innovation and Regulatory Affairs Committees.

Investments in Unconsolidated Subsidiaries ("significant" > 20 percent management control):

An unconsolidated subsidiary is a company that is owned by a parent company, but whose individual financial statements are not included in the consolidated or combined financial statements of the parent company to which it belongs. Instead, this type of company appears in the combined financial statement as an investment.

Subsidiary Name	Country	Interest amount (percentage)	Interest Type	Notes
Emirati Investors-TA (FZC)	United Arab Emirates	49	Equity
Société des Tabacs Algéro-Émiratie ("STAEM")	Algiers	25	Economic	Algerian joint venture 51% owned by EITA and 49% owned by Algerian state-owned enterprise Société Nationale des Tabacs et Allumettes SpA.Manufactures and distributes under license some of Philip Morris International's brands.
Megapolis Distribution BV	Russia	23	Equity	Holding company of CJSC TK Megapolis, Philip Morris International's distributor in Russia

List of Significant Subsidiaries

Subsidiary Name	State or Country of Organization	Region
Philip Morris Japan Limited	Japan	East Asia & Australia
Philip Morris Korea Inc.	Korea, Republic of	East Asia & Australia
Philip Morris Kazakhstan LLP	Kazakhstan	Eastern Europe
Limited Liability Company "Philip Morris Sales and Marketing"	Russian Federation	Eastern Europe
ZAO "Philip Morris Izhora"	Russian Federation	Eastern Europe
Philip Morris Operations a.d. Nis	Serbia	Eastern Europe
Limited Liability Company "Philip Morris Sales & Distribution"	Ukraine	Eastern Europe
Philip Morris Benelux BVBA	Belgium	European Union
Philip Morris CR a.s.	Czechia	European Union
Philip Morris Finland Ltd	Finland	European Union
f6 Cigarettenfabrik GmbH & Co. KG	Germany	European Union
Philip Morris GmbH	Germany	European Union
Philip Morris Manufacturing GmbH	Germany	European Union
Papastratos Cigarettes Manufacturing Company S.A.	Greece	European Union
Philip Morris Italia S.r.l.	Italy	European Union
Philip Morris Manufacturing & Technology Bologna S.p.A.	Italy	European Union
UAB "Philip Morris Lietuva"	Lithuania	European Union
Philip Morris Holland B.V.	Netherlands	European Union
Philip Morris Holland Holdings B.V.	Netherlands	European Union
Philip Morris International Holdings B.V.	Netherlands	European Union
Philip Morris Investments B.V.	Netherlands	European Union
PM Tobakk Norge AS	Norway	European Union
Philip Morris Polska Spolka Akcyjna	Poland	European Union
Philip Morris Polska Distribution Sp. z.o.o.	Poland	European Union
Tabaqueira II, S.A.	Portugal	European Union
Tabaqueira - Empresa Industrial de Tabacos, S.A.	Portugal	European Union
Philip Morris Romania S.R.L.	Romania	European Union
Philip Morris Brands Sàrl	Switzerland	European Union
Philip Morris Exports Sàrl	Switzerland	European Union
Philip Morris Finance SA	Switzerland	European Union
Philip Morris International Management SA	Switzerland	European Union
Philip Morris Products S.A.	Switzerland	European Union
Philip Morris & Company (UK) Limited	United Kingdom of Great Britain and Northern Ireland	European Union
Massalin Particulares S.R.L.	Argentina	Latin America & Canada
Philip Morris Brasil Industria e Comercio Ltda.	Brazil	Latin America & Canada
Compania Colombiana de Tabaco S.A.S.	Colombia	Latin America & Canada
Philip Morris Mexico Productos Y Servicios, Sociedad de Responsabilidad Limitada de Capital Variable	Mexico	Latin America & Canada
Philip Morris Mexico, Sociedad Anónima de Capital Variable	Mexico	Latin America & Canada
Philip Morris Misr Limited Liability Company	Egypt	Middle East & Africa
Leonard Dingler (Proprietary) Limited	South Africa	Middle East & Africa
Philip Morris SA Philip Morris Sabanci Pazarlama ve Satis A.S.	Turkey	Middle East & Africa
PHILSA Philip Morris Sabanci Sigara ve Tutunculuk Sanayi ve Ticaret A.S.	Turkey	Middle East & Africa
PT Hanjaya Mandala Sampoerna Tbk.	Indonesia	South & Southeast Asia
PT Philip Morris Indonesia	Indonesia	South & Southeast Asia
Philip Morris (Pakistan) Limited	Pakistan	South & Southeast Asia
Philip Morris Philippines Manufacturing Inc.	Philippines	South & Southeast Asia
PMFTC Inc.	Philippines	South & Southeast Asia
Philip Morris Limited	Australia	#N/A
Rothmans, Benson & Hedges Inc.	Canada	#N/A
Philip Morris Global Brands Inc.	United States of America

2018 Forecast

In a 2017 interview with Bloomberg, CEO Andre Calantzopoulos said to interviever Kevin Cirilli that "our (Philip Morris International) traditional cigarete business will continue to contribute to the majority of our revenue for the mid-term. We only have 18.6 percent share of the world market and therefore plenty of opportunity to grow… we conservatively estimate that glo [non-combustible] products could be at least 15 percent of the market in five to ten years. Our ambition that RRP surpass the sales of combustible cigarettes as soon as possible."

Profitability

Annual Trends

According to Philip Morris International's website, total cigarette and heated tobacco unit shipment volume of 798.2 billion units declined by 2.7%, primarily reflecting lower cigarette industry volume in the Asia and Eastern Europe, Middle East & Africa (EEMA) Regions, partly offset by higher heated tobacco unit volume, driven principally by Japan. The total international market share, excluding China and the U.S., declined by 0.1 percentage point to 28.0%, mainly due to mid- and low price segments cigarette brands in the Asia and EEMA Regions. Market share of the premium brands increased, driven by the strong performance of our heated tobacco portfolio. In 2017, Philip Morris International recorded growing or stable total market share in 16 of our top 30 operating companies income (OCI)(1) markets.

Fiscal year in billions USD	2017	2016	2015	2014	2013
Revenues or Net Sales	78.09	74.95	73.91	80.11	80.03
Gross Profit	18.31	17.29	17.43	19.33	20.81

Profits per Region (in Millions USD)

European Union

European Union in Millions USD	2017	2016	2015	2014	2013
Net Revenues	27,580	27,129	26,563	30,517	29,656
Excise taxes on products	19,262	18,967	18,495	21,370	20,770
Net Revenues, excluding excise taxes on products	8,318	8,162	8,068	9,147	(NA)
Operating companies income	3,775	3,994	3,576	3,815	4,309

Eastern Europe, Middle East and Africa

Eastern Europe, Middle East and Africa in Millions USD	2017	2016	2015	2014	2013
Net Revenues	18,045	18,286	18,328	20,469	19,342
Excise taxes on products	11,346	11,286	10,964	11,855	10,866
Net Revenues, excluding excise taxes on products	6,669	7,000	7,364	8,614	(NA)
Operating companies income	3,775	3,016	3,425	4,033	3,708

Asia

Asia in Millions USD	2017	2016	2015	2014	2013
Net Revenues	22,635	20,531	19,469	19,255	20,987
Excise taxes on products	11,845	11,850	11,266	10,527	10,486
Net Revenues, excluding excise taxes on products	10,790	8,681	8,203	8,728	(NA)
Operating companies income	4,149	3,196	2,886	3,187	4,622

Latin America & Canada

Latin America and Canada in Millions USD	2017	2016	2015	2014	2013
Net Revenues	9,838	9,007	9,548	9,865	10,044
Excise taxes on products	6,897	6,165	6,389	6,587	6,690
Net Revenues, excluding excise taxes on products	2,944	2,842	3,159	3,278	(NA)
Operating companies income	1,002	938	1,085	1,030	1,134

Acquisitions

Recent acquisitions	Acquired Organization Name	Acquiring Organization Name	Announced Date	Value (in USD)
Papastratos Cigarette Manufacturing Company acquired by Philip Morris International	Papastratos Cigarette Manufacturing Company	Philip Morris International	9/15/2003	0.00
DIN Fabrika Duvana AD acquired by Philip Morris International	DIN Fabrika Duvana AD	Philip Morris International	12/18/2003	0.00
Compania Colombiana de Tabaco S.A.S. acquired by Philip Morris International	Compania Colombiana de Tabaco S.A.S.	Philip Morris International	8/31/2004	310,000,000.00
Rocker Production AB acquired by Philip Morris International	Rocker Production AB	Philip Morris International	9/3/2006	0.00
Lakson Tobacco Company acquired by Philip Morris International	Lakson Tobacco Company	Philip Morris International	1/19/2007	0.00
Rothmans acquired by Philip Morris International	Rothmans	Philip Morris International	8/1/2008	0.00
Swedish Match (South Africa) acquired by Philip Morris International	Swedish Match (South Africa)	Philip Morris International	7/2/2009	222,000,000.00
Productora Tabacalera de Colombia acquired by Philip Morris International	Productora Tabacalera de Colombia	Philip Morris International	7/10/2009	452,000,000.00

Investments

Investments	Organizational Name	Funding Type	Amount Raised (in USD)	Date Announced
Funding Round	Syqe Medical	Funding Round	20,000,000.00	1/19/2016

Market Share

According to Philip Morris International 2017 Annual report, the total international market share, excluding China and the U.S., declined by 0.1 percentage point to 28.0 percent, mainly due to mid- and low price segments cigarette brands in the Asia and EEMA Regions. Market share of Philip Morris International's premium brands increased, driven by the strong performance of our heated tobacco portfolio. We recorded growing or stable total market share in 16 of top 30 operating companies income markets.

Emerging Markets

Research shows that tobacco companies specifically target and market to lower socio-economic groups, and those countries with a more favourable regulatory landscape. It’s clear that their marketing strategy focuses on two main demographics. Aggressively pursuing larger volumes of combustibles, mainly cigarettes, to lower socio-economic groups around the world, particularly EMMA and Asia Pacific. And convincing those in developed economies to switch from combustibles to heated-tobacco products at a much higher price-point, whilst touting ‘reduced risks’ to lure over more educated and health conscious consumers According to Euromonitor International, in 2008, Philip Morris International had a market share of over 50% in 13 markets and a market share of over 30% in 36 markets. 21 of the 35 markets are emerging markets. Philip Morris International also had a share of over 20% in 12 additional markets including Russia and Japan.

According to Euromonitor International, Philip Morris International has increased its cigarette market share in the Middle East and Africa region more than any of its competitors over the last five years, from about 10 percent to 13 percent by retail volume sales.

Philip Morris has also targeted India and its 1.3 billion people as a major growth opportunity, stating in a 2014 internal company document that “India remains a high potential market with huge upside with cigarette market still in infancy,” according to a July 2017 Reuters report.

Factory Openings and Closures

In May 2018, the factory of Philip Morris International's Greek affiliate (Papastratos) in Aspropyrgos ceased cigarette production and is now exclusively producing HEETS, the tobacco units used with IQOS, the company’s most advanced smoke-free product.

The most recent annual report (2017) states that at on 31st December 2017 Philip Morris International owned and operated 46 manufacturing facilities.

The 2016 annual report states that on 31st December 2016 Philip Morris International owned and operated 48 manufacturing facilities.

On October 10, 2014, Philip Morris opened it's first pilot plant in the EU for producing RRPs near Bologna. Italy, after an announced investment of up to €500 million.

Later the company announced a doubling of the Bologna facility backed by another €500 million.

Dividends

During 2017, Philip Morris International increased its regular quarterly dividend by 2.9%, from USD 1.04 to 1.07, representing an annualized rate of USD 4.28per common share. Since its spin-off in March 2008, Philip Morris International has increased its regular quarterly dividend by 132.6% from the initial annualized rate of USD 1.84 per common share, or a compound annual growth rate of 9.8%.

Products

Philip Morris International cigarettes are sold in more than 180 markets, and in many of these markets they hold the number one or number two market share position. Philip Morris International have a wide range of premium, mid-price and low-price brands. Philip Morris International portfolio comprises both international and local brands and is led by Marlboro, the world’s best-selling international cigarette, which accounted for approximately 35% of the company's total 2017 cigarette shipment volume. Marlboro is complemented in the premium-price category by Parliament. Other leading international cigarette brands are Bond Street, Chesterfield, L&M, Lark and Philip Morris International. These seven international cigarette brands contributed approximately 75% of cigarette shipment volume in 2017.

Key Brands

Marlboro

In 2017, Marlboro’s international cigarette share increased slightly to 9.7%. The brand’s cigarette share increased in the Asia and EEMA Regions, reflecting robust growth in the Philippines and across markets in North Africa.

L&M

Philip Morris International's cigarette shipment volume of the following brands decreased: L&M, mainly due to Russia, Saudi Arabia and Turkey, partly offset by Algeria, Argentina, Colombia and Kazakhstan; Parliament, mainly due to Japan, Russia and Saudi Arabia, partly offset by Kazakhstan; Bond Street, mainly due to Kazakhstan, Russia and Ukraine; Lark, principally due to Japan; and "Others," mainly due to low-price brands in Indonesia, Pakistan, the Philippines, Russia and Ukraine.

Chesterfield

Philip Morris International's cigarette shipment volume of the following brands increased: Chesterfield, notably driven by Argentina, Brazil, Colombia, Saudi Arabia, Turkey and Venezuela, partly offset by Italy and Russia; and Philip Morris, mainly driven by Russia and Ukraine, notably reflecting successful portfolio consolidation of local, low-price brands in "Others," partly offset by Argentina and Italy.

Heated Tobacco Products

According to Philip Morris International's website, the company is engaged in the development and commercialization of smoke-free alternatives to cigarettes. Reduced-risk products ("RRPs") is the term Philip Morris International use 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 continued smoking.

Philip Morris International market heated tobacco units under the brand names HEETS, HEETS Marlboro and HEETS FROM MARLBORO, defined collectively as HEETS, as well as Marlboro HeatSticks and Parliament HeatSticks. IQOS was first introduced in Nagoya, Japan in 2014. To date, IQOS is available for sale in key cities in 37 markets and nationwide in Japan. Japan is the most developed IQOS launch market in terms of geographic coverage.

At the 2018 CAGNY Conference, Philip Morris International CAGNY Conference, CEO André Calantzopoulos read out a statement which said “Nearly five million adult consumers around the world have already stopped smoking and switched to IQOS…” REF Calantzopoulos also said: “Regulators must differentiate supply and demand measures – for example, product, communication and fiscal policies – based on product attributes and risk profiles. This is of critical importance for the people who smoke and who deserve policy choices that respect them, and their ability to decide. And policies should be sensible, and based on principled pragmatism rather than influenced by ideology. 1.1 billion men and women who smoke cannot be held hostage to, and misled by, absolutism that foments nihilistic rhetoric. Otherwise the vision of a smoke-free world will be harder and take longer to materialize, to their detriment.” REF

In the 2015 annual report, CEO André Calantzopoulos and Chairman of the Board, Louis C. Camilleri outline their goals to “ lead a full-scale effort to ensure that RRPs ultimately replace cigarettes to the benefit of adult smokers, society, our company and our shareholders.” The same message was also presented across the 2016 annual report. Philip Morris International keeps on using bold and broad statements such as “2016 was a pivotal year for Philip Morris International, reflecting exciting progress in our transformation from a cigarette company to one that is focused on RRPs. While our cigarette portfolio continued to drive our income growth, we began to see clear signs of the enormous potential for our RRP portfolio”. Co-opting and pushing the “quit” message in the media in recent marketing shows how they are strategically aligning their new product segment to work with the more difficult market conditions (regulation/education/social stigma) of more advanced economies. The use passive language to point out statistics suggesting the number of tobacco consumers will remain stagnant is both non-committal to the traditional message of quitting and subtly absolving themselves of responsibility. Philip Morris International also points out that in cases where a smoker doesn't quit tobacco, RRPs offer “a viable alternative” for them to continue consuming tobacco as a ‘mid-way point’ or ‘third option’ to quitting.

At the Philip Morris International 2017 Full-Year Results and launch webcast overview, CEO Calantzopoulos stated the company expects the price of IQOS to be reduced in upcoming years. Calantzopoulos also explained Philip Morris International's ongoing efforts to have IQOS classified as not a tobacco product. According to Calantzopoulos, a recently released report by the U.K. government had endorsed IQOS as “healthier” option REF and suggested that other governments are joining “a movement” at a faster than expected rate. REF

QUOTE: “We’re not greedy, trying to benefit from better taxes [...] These products are not cigarettes”).

Volumes

According to Philip Morris International's 2017 Annual report, the total cigarette and heated tobacco unit shipment volume of 798.2 billion units declined by 2.7 percent, primarily reflecting lower cigarette industry volume in the Asia and Eastern Europe, Middle East & Africa regions, partly offset by higher heated tobacco unit volume, driven principally by Japan.

Volume of Cigarettes by Region

Region	2017	2016	2015	2014	2013
European Union	187,293	193,586	194,589	194,746	194,464
EMEA	256,157	271,393	279,411	278,374	287,094
Asia	234,253	260,029	281,350	288,128	301,324
Latin America & Canada	84,223	87,938	91,920	94,706	97,287
Total	761,926	812,946	847,270	855,954	880,169

Product Unit Volumes

Product Category	2017	2016	2015	2014	2013
Tobacco Units (in millions)	761,962	812,946	847,270	855.9	880.2
Heated tobacco (in billions)	36,226	7,394	396	0.0	0.0
Total	798,152	820,340	847,666	855.9	880.2
Percentage	(2.7)	(3.2)	(1.0)	(2.8)	(5.1)

Marketing and Lobbying

Global Campaigns

An investigative report published by Reuters in July 2017 revealed a large-scale secret campaign by Philip Morris International to undermine the World Health Organisation Framework Convention on Tobacco Control, depicting “a company that has focused its vast global resources on bringing to heel the world’s tobacco control treaty.”

In July 2017, The Guardian published a series of stories which detailed large tobacco companies, including Philip Morris International, have fought tobacco control efforts throughout Africa.

Corporate Social Responsibility

In 2016, Philip Morris International launched Philip Morris International IMPACT, a private fund aiming to support third-party projects dedicated to fighting illegal trade and related crimes such as corruption, organized criminal networks and money laundering which continues to be a major risk to their business. The organization has pledged to donate USD 100 million to fund individual projects.

In September 2017, Philip Morris International announced a pledge of USD 80 million dollars a year for 12 years beginning in 2018 for the creation of its latest “independent” research effort, the “Foundation for a Smoke-Free World”.

In 2018, Philip Morris International announced it will release the raw data from their non-clinical and clinical RRP studies later this year and make them available to the public.

Research and Development

In 2017, Philip Morris International published 46 peer-reviewed papers in leading scientific journals. In 2017, Philip Morris International filled over 170 new patent applications. Philip Morris International currently have more than 2,900 RRP-related patents granted worldwide and over 4,600 such patent applications pending.

Marketing to Kids

The company’s youth-oriented marketing efforts in recent years include:

• A new global campaign found to target youth: In 2011, Philip Morris launched a new global marketing campaign for its best-selling Marlboro cigarettes, called “Be Marlboro,” that used themes and images appealing to youth. With the slogan “Don’t be a Maybe. Be Marlboro,” the campaign’s ads featured young people partying, falling in love, playing music and engaging in risky behavior. The campaign expanded to more than 60 countries despite being banned by German authorities for targeting youth.

• Introducing and marketing new flavored cigarettes that attract kids: Philip Morris has introduced and promoted new flavored cigarettes in countries across the globe, products which have been banned in the United States precisely because they have been found to attract youth and other new smokers. Research conducted in five Latin American countries found that flavored cigarettes – including Marlboro and other Philip Morris brands – were observed at over two-thirds of retail locations visited. Examples of Philip Morris brands using menthol and other flavor descriptors include Marlboro Fusion Blast, Marlboro Double Fusion, Chesterfield Fresh Capsule, Marlboro Ice Blast and Marlboro Blue Ice. The introduction of new Marlboro brands that appeal to youth isn’t limited to Latin American. Philip Morris also touts the introduction of brands such as Marlboro Double Ice and Marlboro Touch Slim as “innovations delivering strong growth” in countries such as Turkey and the UAE.

• Marketing near schools: In its Code of Conduct, Philip Morris International promises not to market tobacco products to minors. However, research in more than 22 countries found cigarettes are being sold and promoted near schools, exposing children on a daily basis. Previous research has found that advertising and promotions for Marlboro and other Philip Morris brands were prominently visible around primary (elementary) and secondary schools. This research has been conducted in several African countries, Indonesia and other low and middle-income countries.

• Violating India’s tobacco marketing laws: According to a July 2017 report by Reuters, Philip Morris marketed Marlboro cigarettes by placing colorful ads at kiosks and handing out free cigarettes at parties frequented by young adults, in apparent violation of India’s tobacco control laws.

"Smoking a cigarette for the beginner is a symbolic act. . . . 'I am no longer my mother's child, I'm tough, I am an adventurer, I'm not square.' . . . As the force from the psychological symbolism subsides, thepharmacological effect takes over to sustain the habit."

—1969 draft report "Why One Smokes" to the PM board of directors prepared by Osdene's department. , Document Bates No. 1003287836

"Long after adolescent preoccupation with self-image has subsided, the cigarette will even preempt food in times of scarcity on the smoker's priority list."

—November 26, 1969 presentation to the PM Board of Directors, "Smoker Psychology Research." , Bates No. 1000273741

"We are not sure that anything can be done to halt a major exodus if one gets going among the young. This group follows the crowd, and we don't pretend to know what gets them going for one thing or another . . . Certainly Philip Morris should continue efforts for Marlboro in the youth market, but perhaps as strongly as possible aimed at the white market rather than attempting to encompass blacks as well."

—July 1974 Roper Organization report for Philip Morris, "A Study of Smoking Habits Among Young Smokers." , Bates No. 2024921279

"Marlboro's phenomenal growth rate in the past has been attributable in large part to our high market penetration among young smokers ... 15 to 19 years old . . . my own data, which includes younger teenagers, shows even higher Marlboro market penetration among 15-17-year-olds."

—May 21, 1975 report " The Decline in the Rate of Growth of Marlboro Red" from PM researcher Myron E. Johnston to Robert B. Seligman. , Bates No. 2022849875-9880

"It is important to know as much as possible about teenage smoking patterns and attitudes. Today's teenager is tomorrow's potential regular customer and the overwhelming majority of smokers first begin to smoke while in their teens. . . . The smoking patterns of teen-agers are particularly important to Philip Morris. . . the share index is highest in the youngest group for all Marlboro and Virginia Slims packings. At least a part of the success of Marlboro Red during its most rapid growth period was because it became the brand of choice among teenagers who then stuck with it as they grew older. "

—March 31, 1981 market research report on young smokers titled "Young Smokers Prevalence, Trends, Implications, and Related Demographic Trends," written by Philip Morris researcher Myron E. Johnston and approved by Carolyn Levy and Harry Daniel. , Bates No. 1000390803

"We will no longer be able to rely on a rapidly increasing pool of teenagers from which to replace smokers through lost normal attrition. . . Because of our high share of the market among the youngest smokers Philip Morris will suffer more than the other companies from the decline in the number of teenage smokers."

—March 31, 1981 market research report on young smokers titled "Young Smokers Prevalence, Trends, Implications, and Related Demographic Trends," written by Philip Morris researcher Myron E. Johnston and approved by Carolyn Levy and Harry Daniel. , Bates No. 1000390803

"I have just received data on the graduating class of 1982 and the results are much more encouraging and corroborate the Roper data [a survey that tracked track smoking trends] . . . These data show that smoking prevalence among these 18-year-old high school seniors has increased from 1981 to 1982."

—February 19, 1983 Philip Morris interoffice memo, "Still More on Trends in Cigarette Smoking Prevalence." , Bates No. 2022849870

“The ability to attract new smokers and develop them into a young adult franchise is key to brand development.”

—1999 Philip Morris report, "Five-Year Trends 1988-1992." , Bates No. 2044895379-484

“From the 1950s to the present, different defendants, at different times and using different methods, have intentionally marketed to young people under the age of twenty-one in order to recruit ‘replacement smokers’ to ensure the economic future of the tobacco industry.”

—U.S. District Court Judge Gladys Kessler , Final Opinion, United States v. Philip Morris

“Today’s teenager is tomorrow’s potential regular customer, and the overwhelming majority of smokers first begin to smoke while still in their teens… The smoking patterns of teenagers are particularly important to Philip Morris.”

—Philip Morris, Special Report, “Young Smokers: Prevalence, Trends, Implications, and Related Demographic Trends,” March 31, 1981

, Bates No. 1000390803.

Political Spending

For a list of political contributions look here.

Tobacco Litigation

Full list of tobacco industry litigation cases can be found here.

An investigative report published by Reuters in July 2017 revealed a massive, secret campaign by Philip Morris to undermine the WHO FCTC, depicting “a company that has focused its vast global resources on bringing to heel the world’s tobacco control treaty.”

In recent years, Philip Morris has also filed numerous legal challenges, both in national and international courts, to strong measures designed to reduce smoking adopted by Australia, Canada, France, Norway, Panama, Uruguay and the United Kingdom. One of the company’s favorite tactics has been to challenge tobacco control laws as violations of international trade and investment agreements. Examples of the company’s legal challenges include:

• Philip Morris International challenged Australia’s pioneering law requiring plain cigarette packaging both in Australia’s courts and in an international tribunal as a violation of a bilateral investment treaty between Australia and Hong Kong. The company lost both cases. According to media reports, Philip Morris has also helped finance an ongoing World Trade Organization challenge that several countries filed against Australia’s plan packaging law (Australia has reportedly won the case, but the WTO has not officially released its ruling).
• Philip Morris challenged Uruguay’s strong cigarette warning and labeling laws as violations of a bilateral investment treaty between Uruguay and Switzerland. In a landmark ruling, an arbitration panel of the World Bank ruled for Uruguay and ordered Philip Morris to pay Uruguay’s legal costs.
• In Thailand, Philip Morris’ ongoing legal challenge temporarily stopped the Ministry of Health from increasing the size of pictorial health warnings on cigarette packs.
• In Colombia, a Philip Morris subsidiary is suing a local government for protecting kids and vulnerable populations by banning sales of cigarette and other tobacco products around schools and health facilities, among other sales restrictions.

Partners and Allies

Audit and Accounting

PricewaterhouseCoopers are Philip Morris International's current auditors. Appointed at the 2017 annual shareholder meeting. The company was selected as a service provider to define the key requirements for a "track and trace" system for the tobacco industry. A question was raised in the UK Parliament if there would be a conflict of interest since PricewaterhouseCoopers offers it's own "track and trace" solution already.

Marketing, Communications and PR Companies

Name	Contract Status	Notes	Other Clients
Pagefield Communications (2017)	Active	2017 SABRE awards: Launching IQOS and Helping the Tobacco Giant Quit Smoking—Philip Morris International with Pagefield Communications http://www.pagefield.co.uk/insight/helping-distrusted-companies-gain-acceptance/"	21st Century Fox AirBnb Bupa Grant Thorton HP John Lewis Variety (the children's charity) World Economic Forum Full list: http://www.pagefield.co.uk/who/our-clients/
Feinstein Kean Healthcare (2017)	Active	Feinstein Kean Healthcare, wholly owned subsidiary of Ogilvy PR, provides an array of communications and consulting services to biotechnology, pharmaceutical and other healthcare companies. As of March 2018, Lynn Blenkhorn is listed as a media contact for the Philip Morris-funded Foundation for a Smoke-Free World.	National Brain Tumor Society National Institutes of Health, Intramural Research Program National Multiple Sclerosis Society Heartware Full list: https://fkhealth.com/clients/
Leo Burnett (2017)	Active	"Leo Burnett Worldwide believes in using creativity to drive dynamic business change for its clients. Through a HumanKind approach to marketing, the agency puts a brand's purpose at the center of communications to transform human behavior. Part of Publicis Communications, Leo Burnett Worldwide is one of the world's largest agency networks with 85 offices and more than 8,000 employees."	Coca-Cola Fiat Kellogg's KraftHeinz McDonald's MillerCoors Nintendo P&G Samsung Tata