Philip Morris International (PM) Conference presentation summary

Strategic transformation and growth

• Smoke-free products now generate nearly $15 billion in annual net revenues and are present in 100 markets, with IQOS surpassing Marlboro in net revenues within a decade.

• ZYN has become the #1 U.S. smoke-free brand, nearing $2 billion in U.S. net revenues, and smoke-free products now account for about 39% of total adjusted net revenues.

• The company targets over two-thirds of net revenues from smoke-free products by 2030, with significant expansion in both international and U.S. markets.

• Multicategory approach, including heat-not-burn, oral nicotine, and e-vapor, is driving volume growth and market share gains.

• Strong brand equity and consumer insights underpin sustainable growth and harm reduction strategies.

Financial performance and targets

• Organic net revenues grew 9.8% in FY'24, with shipment volumes up 2.9% and adjusted diluted EPS up 15.6% (currency neutral).

• 2024-26 CAGR targets include 6-8% organic net revenue growth, 8-10% operating income growth, and 9-11% adjusted diluted EPS growth (currency neutral).

• Strong cash conversion (104-117% over 2020-2024) and return on invested capital above 45% five-year average.

• Deleveraging continues, with net debt to adjusted EBITDA targeted at ~2.0x by end of 2026 and a long-term dividend payout target of ~75% of adjusted diluted EPS.

• Cost savings and pricing power, especially in smoke-free products, are key levers for margin expansion and investment in growth.

Market opportunities and consumer trends

• The U.S. is expected to become the largest market by net revenues, with a $25 billion profit pool and rapid migration to smoke-free products.

• Internationally, IQOS and ZYN are positioned for growth, with a multicategory strategy addressing evolving consumer preferences.

• Smoke-free product users skew toward ages 30-49 and higher income brackets, with poly-usage and dual-usage trends supporting higher consumption.

• Responsible marketing and regulatory compliance are emphasized, with low underage usage rates for IQOS and ZYN.

• FDA authorizations and pending applications for key products support regulatory leadership and market expansion.