Form 8-K Philip Morris Internatio For: Jul 18

July 18, 2019 9:03 AM

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 18, 2019

Philip Morris International Inc.

(Exact name of registrant as specified in its charter)




Virginia	1-33708	13-3435103
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)




120 Park Avenue, New York, New York		10017-5592
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (917) 663-2000

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	PM	New York Stock Exchange
1.875% Notes due 2019	PM19D	New York Stock Exchange
2.000% Notes due 2020	PM20B	New York Stock Exchange
Floating Notes due 2020	PM20C	New York Stock Exchange
1.750% Notes due 2020	PM20A	New York Stock Exchange
4.500% Notes due 2020	PM20	New York Stock Exchange
1.875% Notes due 2021	PM21B	New York Stock Exchange
1.875% Notes due 2021	PM21C	New York Stock Exchange
4.125% Notes due 2021	PM21	New York Stock Exchange
2.900% Notes due 2021	PM21A	New York Stock Exchange
2.625% Notes due 2022	PM22A	New York Stock Exchange
2.375% Notes due 2022	PM22B	New York Stock Exchange
2.500% Notes due 2022	PM22	New York Stock Exchange
2.500% Notes due 2022	PM22C	New York Stock Exchange
2.625% Notes due 2023	PM23	New York Stock Exchange
2.125% Notes due 2023	PM23B	New York Stock Exchange
3.600% Notes due 2023	PM23A	New York Stock Exchange



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
2.875% Notes due 2024	PM24	New York Stock Exchange
2.875% Notes due 2024	PM24C	New York Stock Exchange
0.625% Notes due 2024	PM24B	New York Stock Exchange
3.250% Notes due 2024	PM24A	New York Stock Exchange
2.750% Notes due 2025	PM25	New York Stock Exchange
3.375% Notes due 2025	PM25A	New York Stock Exchange
2.750% Notes due 2026	PM26A	New York Stock Exchange
2.875% Notes due 2026	PM26	New York Stock Exchange
3.125% Notes due 2027	PM27	New York Stock Exchange
3.125% Notes due 2028	PM28	New York Stock Exchange
2.875% Notes due 2029	PM29	New York Stock Exchange
3.375% Notes due 2029	PM29A	New York Stock Exchange
3.125% Notes due 2033	PM33	New York Stock Exchange
2.000% Notes due 2036	PM36	New York Stock Exchange
1.875% Notes due 2037	PM37A	New York Stock Exchange
6.375% Notes due 2038	PM38	New York Stock Exchange
4.375% Notes due 2041	PM41	New York Stock Exchange
4.500% Notes due 2042	PM42	New York Stock Exchange
3.875% Notes due 2042	PM42A	New York Stock Exchange
4.125% Notes due 2043	PM43	New York Stock Exchange
4.875% Notes due 2043	PM43A	New York Stock Exchange
4.250% Notes due 2044	PM44	New York Stock Exchange



Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).



Emerging growth company	o



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	o



Item 2.02.	Results of Operations and Financial Condition.

On July 18, 2019, Philip Morris International Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2019. The earnings release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference to this Item 2.02.

In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such filing or document.



Item 7.01.	Regulation FD Disclosure.

On July 18, 2019, the Company held a live audio webcast to discuss its financial results for the quarter ended June 30, 2019. In connection with the webcast, the Company is furnishing to the Securities and Exchange Commission the following documents attached as exhibits to this Current Report on Form 8-K and incorporated by reference to this Item 7.01: the conference call script attached as Exhibit 99.2 hereto and the webcast slides attached as Exhibit 99.3 hereto.

In accordance with General Instruction B.2 of Form 8-K, the information in Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.2 and 99.3, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 7.01 of this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such filing or document.



Item 9.01.	Financial Statements and Exhibits.

(d)	Exhibits

99.1	Philip Morris International Inc. Press Release dated July 18, 2019 (furnished pursuant to Item 2.02).

99.2	Conference Call Script dated July 18, 2019 (furnished pursuant to Item 7.01).

99.3	Webcast Slides dated July 18, 2019 (furnished pursuant to Item 7.01).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




PHILIP MORRIS INTERNATIONAL INC.

By:		/s/ JERRY WHITSON
Name:		Jerry Whitson
Title:		Deputy General Counsel and Corporate Secretary

DATE: July 18, 2019

Exhibit 99.1



PRESS RELEASE

Investor Relations:		Media:
New York: +1 (917) 663 2233		Lausanne: +41 (0)58 242 4500
Lausanne: +41 (0)58 242 4666		Email: [email protected]
Email: [email protected]

PHILIP MORRIS INTERNATIONAL INC. REPORTS 2019 SECOND-QUARTER REPORTED DILUTED EPS OF $1.49 VS. $ 1.41 IN 2018, REFLECTING CURRENCY-NEUTRAL LIKE-FOR-LIKE ADJUSTED DILUTED EPS GROWTH OF 15.0%;

INCREASES 2019 FULL-YEAR REPORTED DILUTED EPS FORECAST TO AT LEAST $4.94 (FROM AT LEAST $4.87) VS. $5.08 IN 2018; REFLECTING CURRENCY-NEUTRAL LIKE-FOR-LIKE ADJUSTED DILUTED EPS GROWTH OF AT LEAST 9%

NEW YORK, July 18, 2019 – Philip Morris International Inc. (NYSE: PM) today announced its 2019 second-quarter results and increases its 2019 full-year reported diluted earnings per share forecast. Comparisons presented in this press release on a "like-for-like" basis reflect pro forma 2018 results, which have been adjusted for the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019 (the date of deconsolidation). In addition, reflecting the deconsolidation, PMI's total market share has been restated for previous periods.

2019 SECOND-QUARTER & YEAR-TO-DATE HIGHLIGHTS

2019 Second-Quarter


•	Reported diluted EPS of $1.49, up by 5.7%; up by 10.6%, excluding currency


•	Adjusted diluted EPS of $1.46, up by 3.5%; up by 15.0% on a like-for-like basis, excluding currency


•	Cigarette and heated tobacco unit shipment volume down by 1.4% (down by 0.7% on a like-for-like basis), reflecting cigarette shipment volume down by 3.6% and heated tobacco unit shipment volume up by 37.0%


•	Net revenues down by 0.3%; up by 9.0% on a like-for-like basis, excluding currency


•	Operating income up by 3.0%; up by 8.4%, excluding currency


•	Adjusted operating income up by 15.7% on a like-for-like basis, excluding currency


•	Adjusted operating income margin, excluding currency, increased by 2.4 points to 41.4% on a like-for-like basis


•	PMI declared a regular quarterly dividend of $1.14, representing an annualized rate of $4.56 per common share


•	The U.S. Food and Drug Administration announced that the marketing of IQOS, PMI's electrically heated tobacco system, is appropriate for the protection of public health and authorized it for sale in the United States

2019 Six Months Year-to-Date


•	Reported diluted EPS of $2.36, down by 2.1%; up by 3.3%, excluding currency


•	Adjusted diluted EPS of $2.55, up by 5.8%; up by 15.0% on a like-for-like basis, excluding currency


•	Cigarette and heated tobacco unit shipment volume down by 0.2% (up by 0.1% on a like-for-like basis), reflecting cigarette shipment volume down by 1.9% and heated tobacco unit shipment volume up by 29.2%


•	Net revenues down by 1.2%; up by 6.2% on a like-for-like basis, excluding currency


•	Operating income down by 5.1%; up by 0.5%, excluding currency


•	Adjusted operating income up by 12.7% on a like-for-like basis, excluding currency


•	Adjusted operating income margin, excluding currency, increased by 2.2 points to 39.4% on a like-for-like basis

"Building on our encouraging start to the year, we delivered another strong quarter that continues to demonstrate the soundness of our strategies and the quality of our execution," said André Calantzopoulos, Chief Executive Officer.

"Of particular note is our combined cigarette and heated tobacco unit shipment volume, which -- for the first six months of the year -- was up by 0.1% on a like-for-like basis. This positive performance was led by robust in-market heated tobacco unit year-to-date sales growth of 34.0%, making HEETS/HeatSticks, combined, a top-ten international tobacco brand, despite only being present in approximately one quarter of our markets. In the markets where they are sold, our heated tobacco brands held a sizable combined share of 5.0% year-to-date, driving a total international share of 2.1%, up by 0.6 points."

"Our strong year-to-date results are the reason behind today's announcement to increase our full-year guidance and raise our currency-neutral, like-for-like 2019 full-year adjusted diluted EPS growth rate by one percentage point to at least 9% in a further demonstration of our overall confidence in PMI's short and long-term growth prospects. This projection includes additional investment behind our RRP portfolio to support geographic expansion and portfolio development that should help us enter 2020 in an even stronger position."

2019 FULL-YEAR FORECAST



	Full-Year
2019 EPS Forecast	2019 Forecast				2018			Adjusted Growth

Reported Diluted EPS	≥	$4.94		^(a)	$5.08
2018 Tax items		—			0.02
2019 Tax items		(0.04	)		—
2019 Asset impairment and exit costs		0.03			—
2019 Canadian tobacco litigation-related expense		0.09			—
2019 Loss on deconsolidation of RBH		0.12			—
Adjusted Diluted EPS		$5.14			$5.10
Net earnings attributable to RBH					(0.26	)	^(b)
Adjusted Diluted EPS		$5.14			$4.84		^(c)
Currency		(0.14	)
Adjusted Diluted EPS, excl. currency		$5.28			$4.84		^(c)	≥	9	%

^(a) Reflects the exclusion of previously anticipated net EPS of approximately $0.28 attributable to RBH from March 22, 2019 through December 31, 2019. The impact relating to the eight-day stub period was not material.
^(b) Net reported diluted EPS attributable to RBH from March 22, 2018 through December 31, 2018.
^(c) Pro forma.

PMI revises its full-year 2019 reported diluted EPS forecast to be at least $4.94 at prevailing exchange rates, compared to the previously communicated forecast of at least $4.87, versus $5.08 in 2018.

This revised full-year guidance reflects:


•	The net impact of the loss on deconsolidation of PMI's Canadian subsidiary Rothmans, Benson & Hedges Inc. (RBH) under U.S. GAAP of approximately $0.12 per share, recorded in the first quarter of 2019, which is a non-cash item, as well as the Canadian tobacco litigation-related expense of approximately $0.09 per share;

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•	The exclusion, announced on March 22, 2019, of RBH’s previously anticipated net earnings from PMI’s consolidated financial statements, from March 22, 2019 (the date of deconsolidation) to December 31, 2019, of approximately $0.28 per share;

•

Asset impairment and exit costs of approximately $0.03 per share resulting from plant closures as part of global manufacturing infrastructure optimization, reflecting: $0.01 per share related to Pakistan recorded in the first quarter of 2019; and $0.02 per share related to Colombia ($0.01 per share recorded in the second quarter of 2019 and $0.01 per share anticipated in the third quarter of 2019);


•	A favorable tax item of $0.04 per share related to a reduction in estimated U.S. federal income tax on dividend repatriation for the years 2015-2018;


•	An unfavorable currency impact, at prevailing exchange rates, of approximately $0.14;


•	A full-year effective tax rate of approximately 23%, excluding discrete tax items and Loss on Deconsolidation of RBH; and


•	A projected increase of at least 9%, excluding currency, versus pro forma adjusted diluted earnings per share of $4.84 in 2018, as detailed in the attached Schedule 3 and as shown in the 2019 EPS Forecast table above.

2019 Full-Year Forecast Overview & Assumptions

This forecast assumes:


•	A total cigarette and heated tobacco unit shipment volume decline for PMI of approximately 1.0%, on a like-for-like basis, compared to the previously disclosed range of approximately 1.5% to 2.0%;


•	An estimated total international industry volume decline, excluding China and the U.S., at the lower end of the previously disclosed range of approximately 2.5% to 3.0%; and


•	Currency-neutral net revenue growth of at least 6% on a like-for-like basis, compared to the previously disclosed assumption of at least 5%, which includes an adverse impact of approximately 0.7 points related to the move to highly inflationary accounting in Argentina resulting in the treatment of the U.S. dollar as the functional currency of the company’s Argentinian affiliates.

This forecast further assumes:


•	Net incremental investment behind RRPs of approximately $400 million for the full year 2019, compared to the previously disclosed estimate of approximately $300 million. Approximately half of the total net incremental investment of $400 million is expected in the third quarter;


•	An increase in full-year currency-neutral, like-for-like adjusted operating income margin of at least 100 basis points compared to 2018;


•	Operating cash flow of approximately $9.5 billion, subject to year-end working capital requirements;


•	Capital expenditures of approximately $1.1 billion; and


•	No share repurchases.

This forecast excludes the impact of any future acquisitions, unanticipated asset impairment and exit cost charges, future changes in currency exchange rates, further developments related to the Tax Cuts and Jobs Act, further developments pertaining to the judgment in the two Québec Class Action lawsuits and the Companies’ Creditors Arrangement Act (CCAA) protection granted to RBH and any unusual events. This forecast also excludes the contemplated proposal, previously communicated by PMI's local affiliate, to end cigarette production in Berlin,

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Germany, by January 2020. Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.

FDA Authorization for Sale of IQOS in the United States

On April 30, 2019, the U.S. Food and Drug Administration (FDA) announced that the marketing of IQOS, PMI's electrically heated tobacco system, is appropriate for the protection of public health and authorized it for sale in the United States. The FDA’s decision follows its comprehensive assessment of PMI’s premarket tobacco product applications (PMTAs) submitted to the Agency in 2017.

PMI will bring IQOS to the U.S. through an exclusive license with Altria Group, Inc., whose subsidiary, Philip Morris USA, will market the product and comply with the provisions set forth in the FDA's marketing order, and has the expertise and infrastructure to ensure a successful launch, beginning with the initial lead market of Atlanta, Georgia.

For additional information about the FDA's marketing order, see the FDA News Release of April 30, 2019, set out at the end of this release.

Conference Call

A conference call, hosted by Martin King, Chief Financial Officer, will be webcast at 9:00 a.m., Eastern Time, on July 18, 2019. Access is at www.pmi.com/2019Q2earnings. The audio webcast may also be accessed on iOS or Android devices by downloading PMI’s free Investor Relations Mobile Application at www.pmi.com/irapp.

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CONSOLIDATED SHIPMENT VOLUME & MARKET SHARE



PMI Shipment Volume by Region	Second-Quarter				Six Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes
European Union	46,367	47,984	(3.4	)%	85,855	87,655	(2.1	)%
Eastern Europe	27,080	28,454	(4.8	)%	47,400	50,493	(6.1	)%
Middle East & Africa	31,659	34,177	(7.4	)%	64,963	63,425	2.4	%
South & Southeast Asia	46,376	44,788	3.5	%	87,868	85,006	3.4	%
East Asia & Australia	13,845	15,114	(8.4	)%	25,958	29,205	(11.1	)%
Latin America & Canada	18,472	20,204	(8.6	)%	36,052	39,217	(8.1	)%
Total PMI	183,799	190,721	(3.6	)%	348,096	355,001	(1.9	)%

Heated Tobacco Units
European Union	3,043	1,195	+100%		5,336	2,123	+100%
Eastern Europe	2,807	951	+100%		4,355	1,515	+100%
Middle East & Africa	719	971	(26.0	)%	1,473	1,680	(12.3	)%
South & Southeast Asia	—	—	—	%	—	—	—	%
East Asia & Australia	8,428	7,838	7.5	%	15,277	15,180	0.6	%
Latin America & Canada	59	32	84.4	%	113	55	+100%
Total PMI	15,056	10,987	37.0	%	26,554	20,553	29.2	%

Cigarettes and Heated Tobacco Units
European Union	49,410	49,179	0.5	%	91,191	89,778	1.6	%
Eastern Europe	29,887	29,405	1.6	%	51,755	52,008	(0.5	)%
Middle East & Africa	32,378	35,148	(7.9	)%	66,436	65,105	2.0	%
South & Southeast Asia	46,376	44,788	3.5	%	87,868	85,006	3.4	%
East Asia & Australia	22,273	22,952	(3.0	)%	41,235	44,385	(7.1	)%
Latin America & Canada	18,531	20,236	(8.4	)%	36,165	39,272	(7.9	)%
Total PMI	198,855	201,708	(1.4	)%	374,650	375,554	(0.2	)%

Second-Quarter

PMI's total shipment volume decreased by 1.4%, or by 0.7% on a like-for-like basis, principally due to:


•	Middle East & Africa, reflecting lower cigarette shipment volume, notably Saudi Arabia and Turkey, partly offset by Egypt;


•	East Asia & Australia, reflecting lower cigarette shipment volume in Japan and lower cigarette and heated tobacco unit shipment volume in Korea, partly offset by higher heated tobacco unit shipment volume in Japan; and


•	Latin America & Canada, reflecting lower cigarette shipment volume, principally in Argentina, Canada (reflecting the impact of the deconsolidation of RBH), and Venezuela, partly offset by Mexico. On a like-for-like basis, PMI's total shipment volume in the Region decreased by 1.4%;

partly offset by


•	the EU, reflecting higher heated tobacco unit shipment volume across the Region, partly offset by lower cigarette shipment volume, notably France, Germany and Italy, partially offset by Poland;


•	Eastern Europe, reflecting higher heated tobacco unit shipment volume across the Region, notably Russia and Ukraine, partly offset by lower cigarette shipment volume, mainly Russia and Ukraine; and

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•	South & Southeast Asia, reflecting higher cigarette shipment volume, principally in Pakistan and Thailand.

Impact of Inventory Movements

On a like-for-like basis, excluding the net unfavorable impact of estimated distributor inventory movements of approximately 0.2 billion units, PMI’s total in-market sales declined by 0.6%, due to a 2.6% decline of cigarette in-market sales, partially offset by a 33.3% increase in heated tobacco unit in-market sales.

Six Months Year-to-Date

PMI's total shipment volume decreased by 0.2%, or increased by 0.1% on a like-for-like basis, due to:


•	Eastern Europe, reflecting lower cigarette shipment volume, principally in Russia and Ukraine, partly offset by higher heated tobacco unit shipment volume across the Region, notably Kazakhstan, Russia and Ukraine;


•	East Asia & Australia, reflecting lower cigarette shipment volume in Japan, lower cigarette and heated tobacco unit shipment volume in Korea, partly offset by higher heated tobacco unit shipment volume in Japan; and


•	Latin America & Canada, reflecting lower cigarette shipment volume, principally in Argentina, Canada (primarily reflecting the impact of the deconsolidation of RBH), and Venezuela, partly offset by Mexico. On a like-for-like basis, PMI's total shipment volume in the Region decreased by 4.4%;

partly offset by


•	the EU, reflecting higher heated tobacco unit shipment volume across the Region, and higher cigarette shipment volume in Poland and Spain, partly offset by lower cigarette shipment volume in France and Italy;


•	Middle East & Africa, primarily reflecting higher cigarette shipment volume, notably Egypt, Saudi Arabia and Turkey, partly offset by lower cigarette shipment volume in PMI Duty Free and Tunisia; and


•	South & Southeast Asia, reflecting higher cigarette shipment volume, principally in Pakistan, the Philippines and Thailand, partly offset by Indonesia.

Impact of Inventory Movements

On a like-for-like basis, excluding the net unfavorable impact of estimated distributor inventory movements of approximately 1.3 billion units, PMI’s total in-market sales growth was 0.5%, driven by a 34.0% increase in heated tobacco unit in-market sales, partly offset by a 1.4% decline of cigarette in-market sales.

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PMI Shipment Volume by Brand



PMI Shipment Volume by Brand	Second-Quarter				Six Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes
Marlboro	68,060	68,893	(1.2	)%	128,024	126,866	0.9	%
L&M	23,522	23,196	1.4	%	45,337	42,422	6.9	%
Chesterfield	14,202	14,926	(4.8	)%	28,501	28,801	(1.0	)%
Philip Morris	12,950	12,523	3.4	%	23,673	23,182	2.1	%
Parliament	9,847	10,993	(10.4	)%	18,677	19,453	(4.0	)%
Sampoerna A	9,355	10,174	(8.0	)%	17,256	18,798	(8.2	)%
Dji Sam Soe	7,839	6,877	14.0	%	14,490	13,573	6.8	%
Bond Street	7,741	8,390	(7.7	)%	13,412	15,365	(12.7	)%
Lark	5,349	5,969	(10.4	)%	10,619	11,546	(8.0	)%
Fortune	3,441	4,155	(17.2	)%	6,487	7,739	(16.2	)%
Others	21,493	24,625	(12.7	)%	41,620	47,256	(11.9	)%
Total Cigarettes	183,799	190,721	(3.6	)%	348,096	355,001	(1.9	)%
Heated Tobacco Units	15,056	10,987	37.0	%	26,554	20,553	29.2	%
Total PMI	198,855	201,708	(1.4	)%	374,650	375,554	(0.2	)%
Note: Sampoerna A includes Sampoerna; Philip Morris includes Philip Morris/Dubliss; and Lark includes Lark Harmony.

Second-Quarter

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


•	Marlboro, mainly due to Italy and Japan, partly reflecting the impact of out-switching to heated tobacco units, as well as France and Saudi Arabia, partly offset by Indonesia, Mexico, the Philippines and Turkey;


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


•	Parliament, mainly due to Russia and Turkey;


•	Sampoerna A in Indonesia, mainly reflecting the impact of retail price increases resulting in widened price gaps with competitors' products and the impact of estimated trade inventory movements following the absence of an excise tax increase in January 2019;


•	Bond Street, mainly due to Russia and Ukraine;


•	Lark, mainly due to Turkey;


•	Fortune in the Philippines, mainly reflecting up-trading to Marlboro resulting from a narrowed price gap; and


•	"Others," notably due to: the impact of the deconsolidation of RBH in Canada; mid-price Sampoerna U in Indonesia, partly reflecting the impact of above-inflation retail price increases; and low-price brands, notably in Russia, partly offset by low-price brands in Pakistan.

The increase in PMI's heated tobacco unit shipment volume was mainly driven by the EU, notably Italy, Eastern Europe, notably Russia and Ukraine, as well as Japan, partly offset by Korea and PMI Duty Free.

PMI's cigarette shipment volume of the following brands increased:


•	L&M, mainly driven by Egypt and Thailand, partly offset by Russia, Saudi Arabia and Turkey;


•	Philip Morris, mainly driven by Indonesia and Russia, partly offset by Argentina; and


•	Dji Sam Soe in Indonesia, driven by the strong performance of the DSS Magnum Mild 16 variant and the introduction of 20s and 50s variants.

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International Share of Market

PMI's total international market share (excluding China and the United States), defined as PMI's cigarette and heated tobacco unit sales volume as a percentage of total industry cigarette and heated tobacco unit sales volume, increased by 0.1 point to 28.3%, reflecting:


•	Total international cigarette market share of 26.2%, down by 0.4 points; and


•	Total international heated tobacco unit market share of 2.1%, up by 0.5 points.

PMI's total international cigarette market share, defined as PMI's cigarette sales volume as a percentage of total industry cigarette sales volume, was 26.9%, down by 0.3 points.

Six Months Year-to-Date

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


•	Chesterfield, mainly due to Argentina, Italy, Russia and Venezuela, partly offset by Brazil, Mexico, Morocco and Poland;


•	Parliament, mainly due to Korea and Russia, partly offset by Turkey;


•	Sampoerna A in Indonesia, reflecting the same factors as in the quarter;


•	Bond Street, mainly due to Russia and Ukraine;


•	Lark, mainly due to Japan and Turkey;


•	Fortune in the Philippines, mainly reflecting up-trading to Marlboro resulting from a narrowed price gap; and


•	"Others," notably due to: the impact of the deconsolidation of RBH in Canada; mid-price Sampoerna U in Indonesia, partly reflecting the impact of above-inflation retail price increases; and low-price brands, notably in Mexico and Russia, partly offset by mid and low-price brands in Pakistan.

The increase in PMI's heated tobacco unit shipment volume was mainly driven by: the EU, notably Italy, Eastern Europe, notably Russia and Ukraine, and Japan; partly offset by Korea and PMI Duty Free.

PMI's cigarette shipment volume of the following brands increased:


•	Marlboro, mainly driven by Indonesia, Mexico, the Philippines, Saudi Arabia and Turkey, partially offset by Italy and Japan, partly reflecting the impact of out-switching to heated tobacco units, as well as France and PMI Duty Free;


•	L&M, mainly driven by Egypt, Saudi Arabia and Thailand, partly offset by Russia and Turkey;


•	Philip Morris, mainly driven by Indonesia and Russia, partly offset by Argentina; and


•	Dji Sam Soe in Indonesia, driven by the same factors as for the quarter.

International Share of Market


•	Total international cigarette market share of 26.1%, down by 0.1 point; and


•	Total international heated tobacco unit market share of 2.1%, up by 0.6 points.

PMI's total international cigarette market share, defined as PMI's cigarette sales volume as a percentage of total industry cigarette sales volume, was 26.8%, up by 0.1 point.

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CONSOLIDATED FINANCIAL SUMMARY

Second-Quarter



Financial Summary - Quarters Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Quarters Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other (1)
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other (1)
Net Revenues	$ 7,699		$ 7,726		(0.3	)%	5.4	%	(27	)	(447	)	459	209		(248	)
Cost of Sales	(2,665)		(2,744)		2.9	%	(2.0	)%	79		134		—	(84	)	29
Marketing, Administration and Research Costs	(1,831)		(1,868)		2.0	%	(5.9	)%	37		148		—	—		(111	)
Amortization of Intangibles	(16)		(21)		23.8	%	23.8	%	5		—		—	—		5
Operating Income	$ 3,187		$ 3,093		3.0	%	8.4	%	94		(165	)	459	125		(325	)
Asset Impairment & Exit Costs ⁽²⁾	(23	)	—		—	%	—	%	(23	)	—		—	—		(23	)
Adjusted Operating Income	$ 3,210		$ 3,093		3.8	%	9.1	%	117		(165	)	459	125		(302	)

Adjusted Operating Income Margin	41.7	%	40.0	%	1.7pp		1.4pp
⁽¹⁾ Cost/Other variance includes the impact of the RBH deconsolidation.
⁽²⁾ Included in Marketing, Administration and Research Costs above.

Net revenues, excluding unfavorable currency, increased by 5.4%, mainly reflecting: a favorable pricing variance, driven notably by Germany, Indonesia, Japan, the Philippines and Turkey, partly offset by Argentina; as well as a favorable volume/mix, mainly driven by favorable volume/mix of heated tobacco units, notably in the EU and Eastern Europe, partly offset by unfavorable volume/mix of cigarettes, mainly in the EU and East Asia & Australia. The currency-neutral growth in net revenues of 5.4% came despite the unfavorable impact of $248 million, shown in "Cost/Other," predominantly resulting from the deconsolidation of RBH. On a like-for-like basis, net revenues, excluding unfavorable currency, increased by 9.0%, as detailed in the attached Schedule 9.

Operating income, excluding unfavorable currency, increased by 8.4%. Excluding asset impairment and exit charges related to a plant closure in Colombia as part of global manufacturing infrastructure optimization, adjusted operating income, excluding unfavorable currency, increased by 9.1%, primarily reflecting: a favorable pricing variance; favorable volume/mix, notably in the EU; partly offset by higher manufacturing costs, higher marketing, administration and research costs and the net unfavorable impact resulting from the deconsolidation of RBH shown in "Cost/Other." On a like-for-like basis, adjusted operating income, excluding unfavorable currency, increased by 15.7%, as detailed in the attached Schedule 9.

Adjusted operating income margin, excluding currency, increased by 1.4 points to 41.4%, reflecting the factors mentioned above, as detailed in the attached Schedule 8, or by 2.4 points to 41.4% on a like-for-like basis, as detailed in the attached Schedule 9.

- -9 -

Six Months Year-to-Date



Financial Summary - Six Months Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Six Months Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other (1)
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other (1)
Net Revenues	$ 14,450		$ 14,622		(1.2	)%	4.4	%	(172	)	(816	)	687	194		(237	)
Cost of Sales	(5,130	)	(5,359	)	4.3	%	(0.3	)%	229		244		—	(74	)	59
Marketing, Administration and Research Costs ⁽²⁾	(4,048	)	(3,701	)	(9.4	)%	(16.5	)%	(347	)	262		—	—		(609	)
Amortization of Intangibles	(35	)	(43	)	18.6	%	16.3	%	8		1		—	—		7
Operating Income	$ 5,237		$ 5,519		(5.1	)%	0.5	%	(282	)	(309	)	687	120		(780	)
Asset Impairment & Exit Costs ⁽³⁾	(43	)	—		—	%	—	%	(43	)	—		—	—		(43	)
Canadian Tobacco Litigation-Related Expense⁽³⁾	(194	)	—		—	%	—	%	(194	)	—		—	—		(194	)
Loss on Deconsolidation of RBH ⁽³⁾	(239	)	—		—	%	—	%	(239	)	—		—	—		(239	)
Adjusted Operating Income	$ 5,713		$ 5,519		3.5	%	9.1	%	194		(309	)	687	120		(304	)

Adjusted Operating Income Margin	39.5	%	37.7	%	1.8pp		1.7pp
(1) Cost/Other variance includes the impact of the RBH deconsolidation.
(2) Unfavorable Cost/Other variance includes the 2019 Canadian tobacco litigation-related expense, the loss on deconsolidation of RBH, asset impairment and exit costs, and the impact of the RBH deconsolidation.
(3) Included in Marketing, Administration and Research Costs above.

Net revenues, excluding unfavorable currency, increased by 4.4%, mainly reflecting: a favorable pricing variance, notably in Canada, Germany, Indonesia, Japan, the Philippines and Turkey, partly offset by Argentina and Saudi Arabia; and favorable volume/mix, mainly driven by favorable volume/mix of heated tobacco units in the EU and Eastern Europe, partly offset by unfavorable volume/mix of cigarettes, mainly in the EU, Eastern Europe and East Asia & Australia, as well as unfavorable volume/mix of heated tobacco units in East Asia & Australia. The currency-neutral growth in net revenues of 4.4% came despite the unfavorable impact of $237 million, shown in "Cost/Other," predominantly resulting from the deconsolidation of RBH. On a like-for-like basis, net revenues, excluding unfavorable currency, increased by 6.2%, as detailed in the attached Schedule 9.

Operating income, excluding unfavorable currency, increased by 0.5%. Excluding the loss on deconsolidation of RBH, the Canadian tobacco litigation-related expense, and asset impairment and exit charges related to plant closures in Colombia and Pakistan as part of global manufacturing infrastructure optimization, adjusted operating income, excluding unfavorable currency, increased by 9.1%, primarily reflecting: a favorable pricing variance; favorable volume/mix, mainly in the EU, partly offset by East Asia & Australia; and lower manufacturing costs; partly offset by higher marketing, administration and research costs, the net unfavorable impact resulting from the deconsolidation of RBH, shown in "Cost/Other," as well as increased investment behind reduced-risk products mainly in the EU and Eastern Europe. On a like-for-like basis, adjusted operating income, excluding unfavorable currency, increased by 12.7%, as detailed in the attached Schedule 9.

Adjusted operating income margin, excluding currency, increased by 1.7 points to 39.4%, reflecting the factors mentioned above, as detailed in the attached Schedule 8, or by 2.2 points to 39.4% on a like-for-like basis, as detailed in the attached Schedule 9.

- -10 -

EUROPEAN UNION REGION

Second-Quarter



Financial Summary - Quarters Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Quarters Ended June 30,	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix	Cost/ Other
Net Revenues	$ 2,577		$ 2,503		3.0	%	11.6	%	74	(216	)	84	206	—

Operating Income	$ 1,195		$ 1,177		1.5	%	11.8	%	18	(121	)	84	168	(113	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—	—		—	—	—
Adjusted Operating Income	$ 1,195		$ 1,177		1.5	%	11.8	%	18	(121	)	84	168	(113	)

Adjusted Operating Income Margin	46.4	%	47.0	%	(0.6)pp		0.1pp

Net revenues, excluding unfavorable currency, increased by 11.6%, reflecting a favorable pricing variance, driven principally by France and Germany, and favorable volume/mix, driven by favorable heated tobacco unit volume, notably in the Czech Republic, Germany, Italy and Poland, partly offset by unfavorable cigarette volume, notably in France and Italy, and unfavorable cigarette volume/mix in Germany.

Operating income, excluding unfavorable currency, increased by 11.8%, mainly reflecting: a favorable pricing variance; favorable volume/mix, notably in the Czech Republic, Italy and Poland, driven by heated tobacco unit volume, partly offset by lower cigarette volume, notably in France and Italy, and unfavorable volume/mix in Germany; partially offset by higher manufacturing costs and higher marketing, administration and research costs primarily related to reduced-risk products.

Adjusted operating income margin, excluding currency, increased by 0.1 point to 47.1%, reflecting the factors mentioned above, as detailed on Schedule 8.

Six Months Year-to-Date



Financial Summary - Six Months Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Six Months Ended June 30,	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix	Cost/ Other
Net Revenues	$ 4,736		$ 4,491		5.5	%	13.4	%	245	(359	)	152	452	—

Operating Income	$ 2,091		$ 1,917		9.1	%	19.2	%	174	(195	)	152	365	(148	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—	—		—	—	—
Adjusted Operating Income	$ 2,091		$ 1,917		9.1	%	19.2	%	174	(195	)	152	365	(148	)

Adjusted Operating Income Margin	44.2	%	42.7	%	1.5pp		2.2pp

- -11 -

Net revenues, excluding unfavorable currency, increased by 13.4%, reflecting a favorable pricing variance, driven principally by Germany, and favorable volume/mix, primarily reflecting favorable heated tobacco unit volume/mix, notably in the Czech Republic, Germany, Italy and Poland, partly offset by lower cigarette volume, notably in France and Italy, and lower cigarette volume/mix in Germany.

Operating income, excluding unfavorable currency, increased by 19.2%, mainly reflecting: a favorable pricing variance; favorable volume/mix, notably in the Czech Republic, Italy and Poland, driven by heated tobacco unit volume, partially offset by lower cigarette volume/mix, notably in France, Germany and Italy; partially offset by higher manufacturing costs and higher marketing, administration and research costs primarily related to reduced-risk products.

Adjusted operating income margin, excluding currency, increased by 2.2 points to 44.9%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries



European Union Key Data	Second-Quarter						Six Months Year-to-Date
					Change						Change
	2019		2018		% / pp		2019		2018		% / pp
Total Market (billion units)	124.3		126.2		(1.5	)%	231.5		234.0		(1.1	)%

PMI Shipment Volume (million units)
Cigarettes	46,367		47,984		(3.4	)%	85,855		87,655		(2.1	)%
Heated Tobacco Units	3,043		1,195		+100.0%		5,336		2,123		+100.0%
Total EU	49,410		49,179		0.5	%	91,191		89,778		1.6	%

PMI Market Share
Marlboro	18.1	%	18.5	%	(0.4	)	18.1	%	18.4	%	(0.3	)
L&M	6.9	%	7.0	%	(0.1	)	6.8	%	6.9	%	(0.1	)
Chesterfield	5.8	%	5.9	%	(0.1	)	5.9	%	5.9	%	—
Philip Morris	2.7	%	2.9	%	(0.2	)	2.8	%	3.0	%	(0.2	)
HEETS	2.4	%	1.0	%	1.4		2.3	%	0.9	%	1.4
Others	3.0	%	3.1	%	(0.1	)	3.0	%	3.2	%	(0.2	)
Total EU	38.9	%	38.4	%	0.5		38.9	%	38.3	%	0.6

Second-Quarter

The estimated total market in the EU decreased by 1.5% to 124.3 billion units, mainly due to:


•	France, down by 6.6%, mainly due to the impact of significant excise-tax driven price increases, as well as an increase in the prevalence of illicit trade;


•	Germany, down by 3.4%, primarily reflecting the impact of price increases in the first quarter of 2019; and


•	Italy, down by 3.1%, primarily reflecting the impact of price increases in the first quarter of 2019;

partly offset by


•	Poland, up by 8.0%, primarily reflecting a lower prevalence of illicit trade.

PMI's total shipment volume increased by 0.5% to 49.4 billion units, notably driven by:

- -12 -


•	higher heated tobacco unit shipment volume across the Region, notably Italy, driven by higher market share; and


•	higher cigarette shipment volume, notably in Poland, driven by the higher total market;

partly offset by:


•	lower cigarette shipment volume, mainly in France and Germany due to the lower total market, and Italy, due to the lower total market and lower cigarette market share.

Six Months Year-to-Date

The estimated total market in the EU decreased by 1.1% to 231.5 billion units, notably due to:


•	France, down by 7.3%, primarily reflecting the impact of price increases in 2018 and the first quarter of 2019;


•	Germany, down by 3.7%, primarily reflecting the impact of price increases in 2018 and the first quarter of 2019; and


•	Italy, down by 3.0%, primarily reflecting the impact of price increases in 2018 and the first quarter of 2019;

partly offset by


•	Poland, up by 8.0%, reflecting the same factors as in the quarter; and


•	Spain, up by 0.9%, partly reflecting a lower prevalence of illicit trade.

PMI's total shipment volume increased by 1.6% to 91.2 billion units, notably driven by:


•	higher heated tobacco unit shipment volume across the Region, notably Italy, driven by higher market share; and


•	higher cigarette shipment volume, notably in Poland, mainly driven by the higher total market;

partly offset by


•	lower cigarette shipment volume, mainly in France due to the lower total market, and Italy, due to the lower total market and lower cigarette market share.

- -13 -

EASTERN EUROPE REGION

Second-Quarter



Financial Summary - Quarters Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Quarters Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix	Cost/ Other
Net Revenues	$ 822		$ 760		8.2	%	16.8	%	62		(66	)	36	92	—

Operating Income	$ 256		$ 261		(1.9	)%	4.2	%	(5	)	(16	)	36	27	(52	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—	—
Adjusted Operating Income	$ 256		$ 261		(1.9	)%	4.2	%	(5	)	(16	)	36	27	(52	)

Adjusted Operating Income Margin	31.1	%	34.3	%	(3.2)pp		(3.7)pp

Net revenues, excluding unfavorable currency, increased by 16.8%, reflecting a favorable pricing variance, driven notably by Russia and Ukraine, and favorable volume/mix, predominantly driven by heated tobacco unit volume in Russia, partly offset by lower cigarette volume/mix in Russia.

Operating income, excluding unfavorable currency, increased by 4.2%, reflecting: a favorable pricing variance; favorable volume/mix, predominantly driven by heated tobacco unit volume in Russia, partly offset by lower cigarette volume/mix in Russia; partly offset by higher marketing, administration and research costs, notably reflecting increased investments behind reduced-risk products, primarily in Russia in support of geographic expansion.

Adjusted operating income margin, excluding currency, decreased by 3.7 points to 30.6%, reflecting the factors mentioned above, as detailed on Schedule 8.

Six Months Year-to-Date



Financial Summary - Six Months Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Six Months Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix	Cost/ Other
Net Revenues	$ 1,401		$ 1,327		5.6	%	15.4	%	74		(130	)	53	151	—

Operating Income	$ 385		$ 412		(6.6	)%	1.9	%	(27	)	(35	)	53	41	(86	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—	—
Adjusted Operating Income	$ 385		$ 412		(6.6	)%	1.9	%	(27	)	(35	)	53	41	(86	)

Adjusted Operating Income Margin	27.5	%	31.0	%	(3.5)pp		(3.6)pp

Net revenues, excluding unfavorable currency, increased by 15.4%, reflecting a favorable pricing variance, driven notably by Ukraine, and favorable volume/mix, predominantly driven by heated tobacco unit volume in Russia, partly offset by lower cigarette volume/mix in Russia.

Operating income, excluding unfavorable currency, increased by 1.9%, reflecting: a favorable pricing variance; favorable volume/mix, predominantly driven by heated tobacco unit volume in Russia, partly offset by lower cigarette volume/mix in Russia; partly offset by higher manufacturing costs and higher marketing, administration and research

- -14 -

costs, notably reflecting increased investments behind reduced-risk products, primarily in Russia in support of geographic expansion.

Adjusted operating income margin, excluding currency, decreased by 3.6 points to 27.4%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries



PMI Shipment Volume	Second-Quarter				Six Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	27,080	28,454	(4.8	)%	47,400	50,493	(6.1	)%
Heated Tobacco Units	2,807	951	+100.0%		4,355	1,515	+100.0%
Total Eastern Europe	29,887	29,405	1.6	%	51,755	52,008	(0.5	)%

Second-Quarter

The estimated total market in Eastern Europe decreased, notably due to:


•	Russia, down by 3.8%, primarily reflecting the impact of price increases, as well as an increase in the prevalence of illicit trade; and


•	Ukraine, down by 14.5%, primarily reflecting the impact of excise tax-driven price increases, as well as an increase in the prevalence of illicit trade.

PMI's total shipment volume increased by 1.6% to 29.9 billion units, driven by:


•	Kazakhstan, up by 11.7%, reflecting a higher total market and a higher market share of heated tobacco units; and


•	Russia, up by 1.1%, reflecting a higher market share of heated tobacco units, partially offset by the lower total market;

partly offset by


•	Ukraine, down by 4.3%, reflecting a lower total market, partly offset by higher market share of cigarettes and heated tobacco units.

Six Months Year-to-Date

The estimated total market in Eastern Europe decreased, notably due to:


•	Russia, down by 4.9%, reflecting the same factors as in the quarter, as well as the unfavorable impact in the first quarter of 2019 of estimated trade inventory movements in certain key accounts; and


•	Ukraine, down by 12.8%, reflecting the same factors as in the quarter.

PMI's total shipment volume decreased by 0.5% to 51.8 billion units, primarily in:


•	Russia, down by 1.5%. Excluding the net unfavorable impact of estimated distributor inventory movements of 0.5 billion units, primarily of heated tobacco units, PMI's in-market sales growth was 0.3%, reflecting a higher market share of heated tobacco units, partially offset by the lower total market;

partly offset by


•	Kazakhstan, up by 11.9%, reflecting a higher total market and a higher market share of heated tobacco units.

- -15 -

MIDDLE EAST & AFRICA REGION

Second-Quarter



Financial Summary - Quarters Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Quarters Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
Net Revenues	$ 1,004		$ 1,022		(1.8	)%	7.0	%	(18	)	(90	)	115	(48	)	5

Operating Income	$ 441		$ 403		9.4	%	20.8	%	38		(46	)	115	(47	)	16
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—		—
Adjusted Operating Income	$ 441		$ 403		9.4	%	20.8	%	38		(46	)	115	(47	)	16

Adjusted Operating Income Margin	43.9	%	39.4	%	4.5pp		5.1pp

Net revenues, excluding unfavorable currency, increased by 7.0%, primarily reflecting a favorable pricing variance, driven predominantly by Turkey, partly offset by unfavorable volume/mix, notably due to unfavorable heated tobacco unit volume in PMI Duty Free, and unfavorable cigarette volume in the GCC, primarily Saudi Arabia, and Turkey, partly offset by Egypt.

Operating income, excluding unfavorable currency, increased by 20.8%, mainly reflecting a favorable pricing variance and lower manufacturing costs, partly offset by unfavorable volume/mix, notably due to unfavorable cigarette and heated tobacco unit volume in PMI Duty Free, and unfavorable cigarette volume in the GCC, primarily Saudi Arabia, and Turkey.

Adjusted operating income margin, excluding currency, increased by 5.1 points to 44.5%, reflecting the factors mentioned above, as detailed on Schedule 8.

- -16 -

Six Months Year-to-Date



Financial Summary - Six Months Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Six Months Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
Net Revenues	$ 1,931		$ 1,983		(2.6	)%	5.3	%	(52	)	(158	)	65	25		16

Operating Income	$ 785		$ 777		1.0	%	10.3	%	8		(72	)	65	(12	)	27
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—		—
Adjusted Operating Income	$ 785		$ 777		1.0	%	10.3	%	8		(72	)	65	(12	)	27

Adjusted Operating Income Margin	40.7	%	39.2	%	1.5pp		1.8pp

Net revenues, excluding unfavorable currency, increased by 5.3%, mainly reflecting: a favorable pricing variance, driven by Egypt, PMI Duty Free and Turkey, partly offset by Saudi Arabia; favorable volume/mix, driven by favorable cigarette volume/mix, notably in Saudi Arabia and Turkey, partly offset by unfavorable cigarette and heated tobacco unit volume in PMI Duty Free; and a favorable cost/other variance mainly driven by the timing of other revenues.

Operating income, excluding unfavorable currency, increased by 10.3%, mainly reflecting: a favorable pricing variance, lower manufacturing costs and a favorable cost/other variance, as noted above; partly offset by unfavorable volume/mix, notably due to unfavorable cigarette and heated tobacco unit volume in PMI Duty Free, partly offset by favorable cigarette volume/mix in Saudi Arabia and favorable cigarette volume in Turkey.

Adjusted operating income margin, excluding currency, increased by 1.8 points to 41.0%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries



PMI Shipment Volume	Second-Quarter				Six Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	31,659	34,177	(7.4	)%	64,963	63,425	2.4	%
Heated Tobacco Units	719	971	(26.0	)%	1,473	1,680	(12.3	)%
Total Middle East & Africa	32,378	35,148	(7.9	)%	66,436	65,105	2.0	%

Second-Quarter

The estimated total market in the Middle East & Africa increased, notably driven by:


•	Saudi Arabia, up by 6.7%, primarily reflecting a favorable comparison with the second quarter of 2018, which was down by 23.8% mainly due to the impact of retail price increases in 2017 and the first quarter of 2018 following the introduction of the new excise tax in June 2017 and VAT in January 2018, respectively; and


•	Turkey, up by 9.2%, mainly reflecting a lower prevalence of illicit trade;

partly offset by


•	Egypt, down by 4.7%, mainly due to the impact of price increases in 2018.

PMI's total shipment volume decreased by 7.9% to 32.4 billion units, notably in:

- -17 -


•	PMI Duty Free, down by 8.5%. Excluding the net unfavorable impact of estimated distributor inventory movements of 0.2 billion units, principally cigarettes, PMI's in-market sales decline was 5.9%;

•

Saudi Arabia, down by 50.2%. Net unfavorable estimated distributor inventory movements totaled 0.9 billion cigarettes, mainly attributable to the pay-back of adjustments in the first quarter of 2019 resulting from the delayed importation deadline before the implementation of plain packaging scheduled for January 1, 2020. Excluding the impact of these inventory movements, PMI's in-market sales grew by 3.5%, reflecting a favorable comparison with the second quarter of 2018, which was down by 40.1%, mainly due to the impact of the factors described for the total market above; and


•	Turkey, down by 7.6%, reflecting lower market share, mainly driven by the timing of retail price increases in April 2019 compared to competition, partly offset by a higher total market;

partly offset by


•	Egypt, up by 11.5%, primarily reflecting higher market share, driven by L&M, partly offset by a lower total market.

Six Months Year-to-Date

The estimated total market in the Middle East & Africa increased, notably driven by:


•	Algeria, up by 4.9%, or down by 4.1% excluding the net favorable impact of estimated trade inventory movements associated with expectations regarding excise tax announcements in 2019 compared to 2018;


•	Saudi Arabia, up by 7.5%, primarily reflecting a favorable comparison with the first six months of 2018, which was down by 33.2% mainly due to the impact of retail price increases in 2017 and the first quarter of 2018 following the introduction of the new excise tax in June 2017 and VAT in January 2018, respectively; and


•	Turkey, up by 11.5%, mainly reflecting the same factor as in the quarter;

partly offset by


•	Egypt, down by 2.2%, mainly reflecting the same factor as in the quarter.

PMI's total shipment volume increased by 2.0% to 66.4 billion units, notably in:


•	Egypt, up by 10.5%, primarily reflecting higher market share, driven by L&M, partly offset by a lower total market;

•

Saudi Arabia, up by 69.0%. Net favorable estimated distributor inventory movements totaled 1.7 billion cigarettes, mainly attributable to the timing of shipments compared to 2018. Excluding the impact of these inventory movements, PMI's in-market sales grew by 6.1%, reflecting a favorable comparison with the first six months of 2018, which were down by 48.3%, mainly due to the impact of the factors described for the quarter above; and


•	Turkey, up by 5.6%, driven by a higher total market, partly offset by a lower market share reflecting the same factor as in the quarter;

partly offset by


•	PMI Duty Free, down by 10.4%. Excluding the net unfavorable impact of estimated distributor inventory movements of 0.6 billion units, PMI's in-market sales decline was 4.3%.

- -18 -

SOUTH & SOUTHEAST ASIA REGION

Second-Quarter



Financial Summary - Quarters Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Quarters Ended June 30,	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix	Cost/ Other
Net Revenues	$ 1,248		$ 1,156		8.0	%	10.7	%	92	(32	)	114	10	—

Operating Income	$ 492		$ 440		11.8	%	15.0	%	52	(14	)	114	9	(57	)
Asset Impairment & Exit Costs	—		—		—	%	—	%	—	—		—	—	—
Adjusted Operating Income	$ 492		$ 440		11.8	%	15.0	%	52	(14	)	114	9	(57	)

Adjusted Operating Income Margin	39.4	%	38.1	%	1.3pp		1.4pp

Net revenues, excluding unfavorable currency, increased by 10.7%, predominantly reflecting a favorable pricing variance driven by Indonesia and the Philippines.

Operating income, excluding unfavorable currency, increased by 15.0%, predominantly reflecting a favorable pricing variance, partly offset by higher manufacturing costs, mainly due to Indonesia, and higher marketing, administration and research costs, notably due to the Philippines, partly offset by Indonesia.

Adjusted operating income margin, excluding currency, increased by 1.4 points to 39.5%, reflecting the factors mentioned above, as detailed on Schedule 8.

Six Months Year-to-Date



Financial Summary - Six Months Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Six Months Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix	Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix	Cost/ Other
Net Revenues	$ 2,361		$ 2,237		5.5	%	9.7	%	124		(93	)	190	27	—

Operating Income	$ 932		$ 869		7.2	%	12.3	%	63		(44	)	190	23	(106	)
Asset Impairment & Exit Costs ⁽¹⁾	(20	)	—		—	%	—	%	(20	)	—		—	—	(20	)
Adjusted Operating Income	$ 952		$ 869		9.6	%	14.6	%	83		(44	)	190	23	(86	)

Adjusted Operating Income Margin	40.3	%	38.8	%	1.5pp		1.8pp
⁽¹⁾ Included in marketing, administration and research costs at the consolidated operating income level.

Net revenues, excluding unfavorable currency, increased by 9.7%, reflecting: a favorable pricing variance, driven principally by Indonesia and the Philippines, as well as a favorable volume/mix, largely driven by favorable cigarette volume and mix in the Philippines, partly offset by lower cigarette volume and mix in Indonesia.

Operating income, excluding unfavorable currency, increased by 12.3%. Excluding asset impairment and exit costs related to a plant closure in Pakistan in the first quarter of 2019 as part of global manufacturing infrastructure optimization, adjusted operating income, excluding unfavorable currency, increased by 14.6%, mainly reflecting: a favorable pricing variance; favorable volume/mix, mainly driven by favorable cigarette volume and mix in the Philippines, partly offset by lower cigarette volume and mix in Indonesia; partly offset by higher manufacturing costs,

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mainly due to Indonesia and the Philippines, and higher marketing, administration and research costs, partly due to the Philippines.

Adjusted operating income margin, excluding currency, increased by 1.8 points to 40.6%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries



PMI Shipment Volume	Second-Quarter				Six Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	46,376	44,788	3.5	%	87,868	85,006	3.4	%
Heated Tobacco Units	—	—	—	%	—	—	—	%
Total South & Southeast Asia	46,376	44,788	3.5	%	87,868	85,006	3.4	%

Second-Quarter

The estimated total market in South & Southeast Asia increased, notably driven by:


•	Indonesia, up by 4.8%, mainly driven by the absence of an excise tax increase in January 2019;


•	Pakistan, up by 21.7%, mainly driven by the timing of estimated trade inventory movements related to anticipated excise tax-driven price increases in 2019 compared to the prior year. Excluding the impact of these inventory movements, the total market is estimated to have declined by 7.3%; and


•	Thailand, up by 10.0%, primarily reflecting on-going recovery from the September 2017 excise tax reform;

partly offset by


•	the Philippines, down by 1.5%, mainly due to the impact of price increases in the below premium segment in the fourth quarter of 2018; and


•	Vietnam, down by 2.9% reflecting the impact of the excise tax increase in January 2019.

PMI's total shipment volume increased by 3.5% to 46.4 billion units, notably driven by:


•	Pakistan, up by 33.6%, mainly reflecting a higher total market and higher market share resulting from the timing of estimated trade inventory movements described above; and


•	Thailand, up by 19.8%, mainly reflecting a higher market share driven by the continued strong performance of L&M 7.1 and the favorable impact of distribution expansion in 2018, as well as a higher total market.

Six Months Year-to-Date

The estimated total market in South & Southeast Asia increased, notably driven by:


•	Indonesia, up by 2.1%, reflecting the same factor as in the quarter;


•	Pakistan, up by 10.5%, reflecting the same factor as in the quarter. Excluding the impact of trade inventory movements, the total market is estimated to have declined by 4.0%;


•	the Philippines, up by 3.2%, mainly reflecting the impact of net favorable estimated trade inventory movements in the first quarter of 2019 associated with expectations regarding excise tax-driven price increases, partly offset by the impact of price increases in the below premium segment in the fourth quarter of 2018; and


•	Thailand, up by 17.8%, reflecting the same factor as in the quarter;

partly offset by

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•	Vietnam, down by 5.3% reflecting the same factor as in the quarter.

PMI's total shipment volume increased by 3.4% to 87.9 billion units, notably driven by:


•	Pakistan, up by 22.3%, mainly reflecting a higher market share resulting from the timing of estimated trade inventory movements described above, as well as a higher total market;


•	the Philippines, up by 3.7%, mainly reflecting the higher total market; and


•	Thailand, up by 26.6%, reflecting the same factors as in the quarter;

partly offset by


•	Indonesia, down by 1.8%, mainly reflecting a lower market share primarily due to the widened retail price gap of A Mild to competitive brands following its price increase in October 2018, partly offset by the higher total market.

EAST ASIA & AUSTRALIA REGION

Second-Quarter



Financial Summary - Quarters Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Quarters Ended June 30,	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix		Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total	Cur- rency		Price	Vol/ Mix		Cost/ Other
Net Revenues	$ 1,521		$ 1,478		2.9	%	4.6	%	43	(25	)	121	(53	)	—

Operating Income	$ 642		$ 498		28.9	%	23.7	%	144	26		121	(32	)	29
Asset Impairment & Exit Costs	—		—		—	%	—	%	—	—		—	—		—
Adjusted Operating Income	$ 642		$ 498		28.9	%	23.7	%	144	26		121	(32	)	29

Adjusted Operating Income Margin	42.2	%	33.7	%	8.5pp		6.1pp

During the quarter, net revenues, excluding currency, increased by 4.6%, reflecting a favorable pricing variance, driven predominantly by Japan, partly offset by unfavorable volume/mix, mainly due to unfavorable cigarette volume in Australia and Japan and unfavorable cigarette and heated tobacco unit volume in Korea.

Operating income, excluding favorable currency, increased by 23.7%, mainly reflecting a favorable pricing variance and lower manufacturing costs, mainly in Korea, as well as lower marketing, administration and research costs, partly offset by unfavorable volume/mix, mainly due to unfavorable cigarette volume in Australia and Japan and unfavorable cigarette and heated tobacco unit volume in Korea, partially offset by heated tobacco unit volume in Japan.

Adjusted operating income margin, excluding currency, increased by 6.1 points to 39.8%, reflecting the factors mentioned above, as detailed on Schedule 8.

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Six Months Year-to-Date



Financial Summary - Six Months Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Six Months Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other
Net Revenues	$ 2,842		$ 3,069		(7.4	)%	(6.6	)%	(227	)	(25	)	207	(409	)	—

Operating Income	$ 1,069		$ 1,013		5.5	%	3.5	%	56		21		207	(254	)	82
Asset Impairment & Exit Costs	—		—		—	%	—	%	—		—		—	—		—
Adjusted Operating Income	$ 1,069		$ 1,013		5.5	%	3.5	%	56		21		207	(254	)	82

Adjusted Operating Income Margin	37.6	%	33.0	%	4.6pp		3.6pp

Net revenues, excluding unfavorable currency, decreased by 6.6%, reflecting a challenging comparison with the first six months of 2018 in which net revenues, excluding currency, grew by 16.8%, partly fueled by higher IQOS device shipments. The decline of 6.6% primarily reflected unfavorable volume/mix, due to lower cigarette shipment volume in Australia, lower cigarette and IQOS device shipment volume in Japan, and lower cigarette, heated tobacco unit and IQOS device shipment volume in Korea, partly offset by a favorable pricing variance driven predominantly by Japan.

Operating income, excluding favorable currency, increased by 3.5%, mainly reflecting: a favorable pricing variance, lower manufacturing costs related to Japan and Korea, lower marketing, administration and research costs, notably in Australia and Korea, partly offset by Japan; partly offset by unfavorable volume/mix as described above.

Adjusted operating income margin, excluding currency, increased by 3.6 points to 36.6%, reflecting the factors mentioned above, as detailed on Schedule 8.

Total Market, PMI Shipment & Market Share Commentaries



PMI Shipment Volume	Second-Quarter				Six Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	13,845	15,114	(8.4	)%	25,958	29,205	(11.1	)%
Heated Tobacco Units	8,428	7,838	7.5	%	15,277	15,180	0.6	%
Total East Asia & Australia	22,273	22,952	(3.0	)%	41,235	44,385	(7.1	)%

Second-Quarter

The estimated total market in East Asia & Australia, excluding China, decreased, notably due to:


•	Australia, down by 10.8%, mainly reflecting the impact of excise tax-driven retail price increases;


•	Japan, down by 4.3%, mainly reflecting the impact of the October 1, 2018 excise tax-driven retail price increases; and


•	Taiwan, down by 16.3%, primarily reflecting the impact of excise tax-driven retail price increases.

PMI's total shipment volume decreased by 3.0% to 22.3 billion units, notably in:


•	Japan, down by 0.4%. Excluding the net favorable impact of estimated distributor inventory movements of approximately 0.7 billion units, comprised of approximately 0.5 billion heated tobacco units and approximately

- -22 -

0.2 billion cigarettes, PMI's in-market sales decline was 5.5%, reflecting the lower total market and lower cigarette market share; and


•	Korea, down by 9.8%, principally due to lower cigarette market share.

Six Months Year-to-Date

The estimated total market in East Asia & Australia, excluding China, decreased, notably due to:


•	Japan, down by 4.4%, mainly reflecting the same factor as in the quarter; and


•	Taiwan, down by 3.8%, primarily reflecting the impact of excise tax-driven retail price increases in 2017.

PMI's total shipment volume decreased by 7.1% to 41.2 billion units, notably in:


•	Japan, down by 7.1%. Excluding the net unfavorable impact of estimated distributor inventory movements of approximately 0.5 billion units, comprised of approximately 0.1 billion heated tobacco units and approximately 0.4 billion cigarettes, PMI's in-market sales decline was 5.5%, reflecting the lower total market and lower cigarette market share; and


•	Korea, down by 9.7%, principally due to lower cigarette market share.

LATIN AMERICA & CANADA REGION

Second-Quarter



Financial Summary - Quarters Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Quarters Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price		Vol/ Mix	Cost/ Other (1)
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price		Vol/ Mix	Cost/ Other (1)
Net Revenues	$ 527		$ 807		(34.7	)%	(32.5	)%	(280	)	(18	)	(11	)	2	(253	)

Operating Income	$ 161		$ 314		(48.7	)%	(50.6	)%	(153	)	6		(11	)	—	(148	)
Asset Impairment & Exit Costs ⁽²⁾	(23	)	—		—	%	—	%	(23	)	—		—		—	(23	)
Adjusted Operating Income	$ 184		$ 314		(41.4	)%	(43.3	)%	(130	)	6		(11	)	—	(125	)

Adjusted Operating Income Margin	34.9	%	38.9	%	(4.0)pp		(6.2)pp
⁽¹⁾ Unfavorable Cost/Other variance includes the impact of the RBH deconsolidation.
⁽²⁾ Included in marketing, administration and research costs at the consolidated operating income level.

Net revenues, excluding unfavorable currency, decreased by 32.5%, almost entirely due to the unfavorable impact of $253 million, shown in "Cost/Other," resulting from the deconsolidation of RBH. On a like-for-like basis, net revenues, excluding unfavorable currency, decreased by 2.0%, as detailed in the attached Schedule 10, mainly due to an unfavorable pricing variance primarily resulting from the adoption of highly inflationary accounting in Argentina.

Operating income, excluding favorable currency, decreased by 50.6%, predominantly due to the unfavorable impact, shown in "Cost/Other," resulting from the deconsolidation of RBH. Excluding asset impairment and exit costs related to a plant closure in Colombia as part of global manufacturing infrastructure optimization, adjusted operating income, excluding favorable currency, decreased by 43.3%. On a like-for-like basis, excluding favorable currency, adjusted operating income increased by 29.0%, as detailed in the attached Schedule 10, mainly reflecting lower manufacturing costs, and lower marketing, administration and research costs, partly resulting from the adoption of highly inflationary accounting in Argentina.

- -23 -

Adjusted operating income margin, excluding currency, decreased by 6.2 points to 32.7%, reflecting the factors mentioned above, as detailed on Schedule 8, or increased by 7.9 points to 32.7% on a like-for-like basis, as detailed in the attached Schedule 10.

Six Months Year-to-Date



Financial Summary - Six Months Ended June 30,					Change Fav./(Unfav.)				Variance Fav./(Unfav.)
Financial Summary - Six Months Ended June 30,	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other (1)
(in millions)	2019		2018		Total		Excl. Curr.		Total		Cur- rency		Price	Vol/ Mix		Cost/ Other (1)
Net Revenues	$ 1,179		$ 1,515		(22.2	)%	(18.8	)%	(336	)	(51	)	20	(52	)	(253	)

Operating Income (Loss)	$ (25)		$ 531		-(100)%		-(100)%		(556	)	16		20	(43	)	(549	)
Asset Impairment & Exit Costs ⁽²⁾	(23	)	—		—	%	—	%	(23	)	—		—	—		(23	)
Canadian Tobacco Litigation-Related Expense ⁽²⁾	(194	)	—		—	%	—	%	(194	)	—		—	—		(194	)
Loss on Deconsolidation of RBH ⁽²⁾	(239	)	—		—	%	—	%	(239	)	—		—	—		(239	)
Adjusted Operating Income	$ 431		$ 531		(18.8	)%	(21.8	)%	(100	)	16		20	(43	)	(93	)

Adjusted Operating Income Margin	36.6	%	35.0	%	1.6pp		(1.3)pp
⁽¹⁾ Unfavorable Cost/Other variance includes the impact of the RBH deconsolidation.
⁽²⁾ Included in marketing, administration and research costs at the consolidated operating income level.

Net revenues, excluding unfavorable currency, decreased by 18.8%, predominantly due to: the unfavorable impact of $253 million, shown in "Cost/Other," resulting from the deconsolidation of RBH. On a like-for-like basis, net revenues, excluding unfavorable currency, decreased by 2.7%, as detailed in the attached Schedule 10, reflecting: unfavorable volume, mainly due to Argentina and Canada, partly offset by Mexico (largely due to the timing of retail price increases compared to 2018); partly offset by a favorable pricing variance, notably in Canada and Mexico, partially offset by Argentina mainly due to the adoption of highly inflationary accounting.

Operating income, excluding favorable currency, decreased by over 100%, predominantly due to the unfavorable impact, shown in "Cost/Other," resulting from the deconsolidation of RBH. Excluding asset impairment and exit costs related to a plant closure in Colombia as part of global manufacturing infrastructure optimization, the Canadian tobacco litigation-related expense and the loss on deconsolidation of RBH, adjusted operating income, excluding favorable currency, decreased by 21.8%. On a like-for-like basis, excluding favorable currency, adjusted operating income increased by 16.9%, as detailed in the attached Schedule 10. This increase reflected: a favorable pricing variance; lower manufacturing costs and lower marketing, administration and research costs, partly resulting from the adoption of highly inflationary accounting in Argentina; partly offset by an unfavorable volume/mix, mainly due to lower cigarette volume in Argentina and Canada, partly offset by higher cigarette volume in Mexico (largely due to the timing of retail price increases compared to 2018).

Adjusted operating income margin, excluding currency, decreased by 1.3 points to 33.7%, reflecting the factors mentioned above, as detailed on Schedule 8, or increased by 5.6 points to 33.7% on a like-for-like basis, as detailed in the attached Schedule 10.

- -24 -

Total Market, PMI Shipment & Market Share Commentaries



PMI Shipment Volume	Second-Quarter				Six Months Year-to-Date
(million units)	2019	2018	Change		2019	2018	Change
Cigarettes	18,472	20,204	(8.6	)%	36,052	39,217	(8.1	)%
Heated Tobacco Units	59	32	84.4	%	113	55	+100.0%
Total Latin America & Canada	18,531	20,236	(8.4	)%	36,165	39,272	(7.9	)%

Second-Quarter

The estimated total market in Latin America & Canada decreased, notably due to:


•	Argentina, down by 9.9%, primarily due to the impact of cumulative price increases and the impact of the economic downturn as of the second half of 2018. Excluding estimated net trade inventory movements related to the timing of these price increases, the total market decreased by 5.5%;


•	Canada, down by 10.7%, primarily due to the impact of cumulative price increases; and


•	Venezuela, down by 60.7%, mainly reflecting the deterioration of the socioeconomic environment and the impact of inflation-driven price increases;

partly offset by:


•	Mexico, up by 8.3%, or by 1.5% excluding estimated net trade inventory movements related to the timing of price increases.

PMI's total shipment volume decreased by 8.4% to 18.5 billion units, or by 1.4% on a like-for-like basis, in part due to:


•	Argentina, down by 10.0%, primarily reflecting the lower total market; and


•	Venezuela, down by 85.5%, reflecting the lower total market and lower market share;

partly offset by


•	Mexico, up by 13.4%, driven by the higher total market and higher market share, largely reflecting the timing of retail price increases compared to 2018.

Six Months Year-to-Date

The estimated total market in Latin America & Canada decreased, notably due to:


•	Argentina, down by 8.6%, reflecting the same factors as in the quarter. Excluding estimated net trade inventory movements, the total market decreased by 7.4%;


•	Canada, down by 9.5%, reflecting the same factor as in the quarter; and


•	Venezuela, down by 58.5%, reflecting the same factors as in the quarter;

partly offset by:


•	Mexico, up by 3.3%, or down by 0.4% excluding estimated net trade inventory movements related to the timing of price increases.

- -25 -

PMI's total shipment volume decreased by 7.9% to 36.2 billion units, or by 4.4% on a like-for-like basis mainly due to:


•	Argentina, down by 10.5%, primarily reflecting the lower total market, as well as lower market share; and


•	Venezuela, down by 80.9%, primarily reflecting the lower total market, as well as lower market share;

partly offset by


•	Mexico, up by 6.3%, reflecting the same factors as in the quarter.

- -26 -

FDA NEWS RELEASE (APRIL 30, 2019)

(https://www.fda.gov/news-events/press-announcements/fda-permits-sale-iqos-tobacco-heating-system-through-premarket-tobacco-product-application-pathway)

FDA permits sale of IQOS Tobacco Heating System through premarket tobacco product application pathway

Agency places stringent marketing restrictions on heated tobacco products aimed at preventing youth access and exposure to the new products

For Immediate Release: April 30, 2019

The U.S. Food and Drug Administration today announced it has authorized the marketing of new tobacco products manufactured by Philip Morris Products S.A. for the IQOS “Tobacco Heating System” – an electronic device that heats tobacco-filled sticks wrapped in paper to generate a nicotine-containing aerosol. The FDA has placed stringent marketing restrictions on the products in an effort to prevent youth access and exposure.

Following a rigorous science-based review through the premarket tobacco product application (PMTA) pathway, the agency determined that authorizing these products for the U.S. market is appropriate for the protection of the public health because, among several key considerations, the products produce fewer or lower levels of some toxins than combustible cigarettes. The products authorized for sale include the IQOS device, Marlboro Heatsticks, Marlboro Smooth Menthol Heatsticks and Marlboro Fresh Menthol Heatsticks. While today’s action permits the tobacco products to be sold in the U.S., it does not mean these products are safe or “FDA approved.” All tobacco products are potentially harmful and addictive and those who do not use tobacco products should continue not to. Additionally, today’s action is not a decision on the separate modified risk tobacco product (MRTP) applications that the company also submitted for these products to market them with claims of reduced exposure or reduced risk.

“Ensuring new tobacco products undergo a robust premarket evaluation by the FDA is a critical part of our mission to protect the public, particularly youth, and to reduce tobacco-related disease and death. While the authorization of new tobacco products doesn’t mean they are safe, the review process makes certain that the marketing of the products is appropriate for the protection of the public health, taking into account the risks and benefits to the population as a whole. This includes how the products may impact youth use of nicotine and tobacco, and the potential for the products to completely move adult smokers away from use of combustible cigarettes,” said Mitch Zeller, J.D., director of the FDA’s Center for Tobacco Products. “Importantly, the FDA is putting in place postmarket requirements aimed at, among other things, monitoring market dynamics such as potential youth uptake. We’ll be keeping a close watch on the marketplace, including how the company is marketing these products, and will take action as necessary to ensure the continued sale of these products in the U.S. remains appropriate and make certain that the company complies with the agency’s marketing restrictions to prevent youth access and exposure. As other manufacturers seek to market new tobacco products, the FDA remains committed to upholding the vital public health standards under the law and using all the tools at our disposal to ensure the efficient and appropriate oversight of tobacco products.”

Under the PMTA pathway, manufacturers must demonstrate to the agency, among other things, that marketing of the new tobacco product would be appropriate for the protection of the public health. That standard requires the FDA to consider the risks and benefits to the population as a whole, including users and non-users of tobacco products. Importantly this includes youth. The agency’s evaluation includes reviewing a tobacco product’s components, ingredients, additives and health risks, as well as how the product is manufactured, packaged and

- -27 -

labeled. The review for the IQOS products took into account the increased or decreased likelihood that existing tobacco product users will stop using tobacco products, and the increased or decreased likelihood that those who do not use tobacco products will start using them.

In particular, through the FDA’s scientific evaluation of the company’s applications, peer-reviewed published literature and other sources, the agency found that the aerosol produced by the IQOS Tobacco Heating System contains fewer toxic chemicals than cigarette smoke, and many of the toxins identified are present at lower levels than in cigarette smoke. For example, the carbon monoxide exposure from IQOS aerosol is comparable to environmental exposure, and levels of acrolein and formaldehyde are 89% to 95% and 66% to 91% lower than from combustible cigarettes, respectively.

Additionally, IQOS delivers nicotine in levels close to combustible cigarettes suggesting a likelihood that IQOS users may be able to completely transition away from combustible cigarettes and use IQOS exclusively. Available data, while limited, also indicate that few non-tobacco users would be likely to choose to start using IQOS, including youth.

While these non-combusted cigarettes may be referred to as “heat-not-burn” or “heated” tobacco products, they meet the definition of a cigarette in the Federal Food, Drug and Cosmetic Act. Therefore, these products must adhere to existing restrictions for cigarettes under FDA regulations, as well as other federal laws that, among other things, prohibit television and radio advertising. In addition, to further limit youth access to the products and exposure to their advertising and promotion, the FDA is placing stringent restrictions on how the products are marketed – particularly via websites and through social media platforms – by including requirements that advertising be targeted to adults. The company must also give notification to the FDA of, among other things, its labeling, advertising, marketing plans, including information about specific adult target audiences, and how it plans to restrict youth access and limit youth exposure to the products’ labeling, advertising, marketing and promotion. The agency has issued a document providing its rationale for these postmarket requirements, which highlight important considerations for reviewing the company’s applications as well any potential future PMTAs for other products.

The FDA also is requiring all package labels and advertisements for these products to include a warning about the addictiveness of nicotine, in addition to other warnings required for cigarettes, to prevent consumer misperceptions about the relative addiction risk of using IQOS compared to combusted cigarettes.

With the authorization of these products, the FDA will evaluate new available data regarding the products through postmarketing records and reports required in the marketing order. The company is required to report regularly to the FDA with information regarding the products on the market, including, but not limited to, ongoing and completed consumer research studies, advertising, marketing plans, sales data, information on current and new users, manufacturing changes and adverse experiences. The FDA may withdraw a marketing order if it, among other reasons, determines that the continued marketing of a product is no longer appropriate for the protection of the public health, such as if there is an uptake of the product by youth.

The FDA is continuing its substantive scientific review of the company’s MRTP applications. The company would need to receive an MRTP order from the FDA before they could market a tobacco product with any implicit or explicit claims that, among other things, a product reduces exposure to certain chemicals or that use of the product is less harmful than another tobacco product or would reduce the risk of disease. If a company markets a tobacco product as an MRTP without authorization, the company would be in violation of the law and may face FDA advisory or enforcement actions.

####

- -28 -

Philip Morris International: Delivering a Smoke-Free Future

Philip Morris International (PMI) is leading a transformation in the tobacco industry to create a smoke-free future and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue to smoke, society, the company and its shareholders. PMI is a leading international tobacco company engaged in the manufacture and sale of cigarettes, smoke-free products and associated electronic devices and accessories, and other nicotine-containing products in markets outside the U.S. PMI is building a future on a new category of smoke-free products that, while not risk-free, are a much better choice than continuing to smoke. Through multidisciplinary capabilities in product development, state-of-the-art facilities and scientific substantiation, PMI aims to ensure that its smoke-free products meet adult consumer preferences and rigorous regulatory requirements. PMI's smoke-free IQOS product portfolio includes heat-not-burn and nicotine-containing vapor products. As of June 30, 2019, PMI estimates that approximately 8.0 million adult smokers around the world have already stopped smoking and switched to PMI’s heat-not-burn product, available for sale in 48 markets in key cities or nationwide under the IQOS brand. For more information, please visit www.pmi.com and www.pmiscience.com.

Forward-Looking and Cautionary Statements

This press release contains projections of future results and other forward-looking statements. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI.

PMI's business risks include: excise tax increases and discriminatory tax structures; increasing marketing 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 and individual country economic, regulatory and political developments, natural disasters and conflicts; changes in adult smoker behavior; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost and quality of tobacco and other agricultural products and raw materials; and 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 brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and 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 the Form 10-Q for the quarter ended March 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.

- -29 -

Key Terms, Definitions and Explanatory Notes

General


•	"PMI" refers to Philip Morris International Inc. and its subsidiaries. Trademarks and service marks that are the registered property of, or licensed by, the subsidiaries of PMI, are italicized.


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


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

•

[REVISED] References to total international market, defined as worldwide cigarette and heated tobacco unit volume excluding the United States, total industry, total market and market shares are PMI estimates for tax-paid products based on the latest available data from a number of internal and external sources and may, in defined instances, exclude the People's Republic of China and/or PMI's duty free business. In addition, to reflect the 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 and cigarillos, and does not include reduced-risk products.


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


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


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


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


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


•	Following the deconsolidation of PMI's Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), PMI will continue to report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owner. These include HEETS, Next, Philip Morris and Rooftop, which accounted for approximately 40% of RBH's total shipment volume in 2018.

•

[REVISED] From time to time, PMI’s shipment volumes are subject to the impact of distributor inventory movements, and estimated total industry/market volumes are subject to the impact of inventory movements in various trade channels that include estimated trade 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, timing of excise tax increases or other influences that may affect the timing of sales to customers. In such instances, in addition to reviewing PMI shipment volumes and certain estimated total industry/market volumes on a reported basis, management reviews these measures on an adjusted basis that excludes the impact of distributor and/or estimated trade inventory movements. Management also believes that disclosing PMI shipment volumes and estimated total industry/market volumes in such circumstances on a basis that excludes the impact of distributor and/or estimated trade inventory movements, such as on an IMS basis, improves the comparability of performance and trends for these measures over different reporting periods.

Financial


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


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

- -30 -

•

"Marketing, administration and research costs" include the costs of marketing and selling our products, other costs generally not related to the manufacture of our products (including general corporate expenses), and costs incurred to develop new products. The most significant components of our marketing, administration and research costs are marketing and sales expenses and general and administrative expenses.

•

[REVISED] "Cost/Other" in the Consolidated Financial Summary table of total PMI and the six reporting segments of this release reflects the currency-neutral variances of: cost of sales (excluding the volume/mix cost component); marketing, administration and research costs (including asset impairment and exit costs, the Canadian tobacco litigation-related expense and the charge related to the deconsolidation of RBH in Canada); and amortization of intangibles. “Cost/Other” also includes the currency-neutral net revenue variance, unrelated to volume/mix and price components, attributable to fees for certain distribution rights billed to customers in certain markets in the ME&A Region, as well as the impact of the deconsolidation in RBH.


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


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


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

•

Management reviews net revenues, OI, OI margins, operating cash flow and earnings per share, or "EPS," on an adjusted basis, which may exclude the impact of currency and other items such as acquisitions, asset impairment and exit costs, tax items and other special items. For example, PMI’s adjusted diluted EPS 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. 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. For PMI's 2018 pro forma adjusted diluted EPS by quarter and year-to-date, see Schedule 3 in PMI's second-quarter 2019 earnings release.

•

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


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

•

U.S. GAAP Treatment of Argentina as a Highly Inflationary Economy. Following the categorization of Argentina by the International Practices Task Force of the Center for Audit Quality as a country with a three-year cumulative inflation rate greater than 100%, the country is considered highly inflationary in accordance with U.S. GAAP. Consequently, PMI began to account for the operations of its Argentinian affiliates as highly inflationary, and to treat the U.S. dollar as the functional currency of the affiliates, effective July 1, 2018. The move to highly inflationary accounting in Argentina reduced PMI's currency-neutral net revenue growth by approximately 0.6 points in 2018.

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 the potential to present less risk of harm to smokers who switch to these products versus continued smoking. PMI has a range of RRPs in various stages of development, scientific assessment and commercialization. Because PMI's RRPs do not burn tobacco, they produce an aerosol that contains far lower quantities of harmful and potentially harmful constituents than found in cigarette smoke.


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


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


•	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.

- -31 -



																						Appendix 1
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Key Market Data

	Quarters Ended June 30,
Market	Total Market, bio units				PMI Shipments, bio units												PMI Market Share, % ⁽¹⁾
	Total Market, bio units				Total				Cigarette				HTU				Total				HTU
	2019	2018	% Change		2019	2018	% Change		2019	2018	% Change		2019	2018	% Change		2019	2018	pp Change		2019	2018	pp Change

Total PMI	696.0	702.5	(0.9	)	198.9	201.7	(1.4	)	183.8	190.7	(3.6	)	15.1	11.0	37.0		28.3	28.2	0.1		2.1	1.6	0.5

European Union
France	9.8	10.5	(6.6	)	4.5	5.0	(10.6	)	4.5	5.0	(10.8	)	—	—	—		44.7	45.2	(0.5	)	0.2	0.1	0.1
Germany	18.9	19.6	(3.4	)	7.3	7.4	(2.0	)	7.1	7.3	(3.8	)	0.2	0.1	+100		38.5	38.0	0.5		1.1	0.4	0.7
Italy	17.1	17.7	(3.1	)	9.3	9.3	0.1		8.5	9.0	(5.5	)	0.8	0.3	+100		51.8	51.3	0.5		4.6	1.9	2.7
Poland	12.3	11.4	8.0		5.0	4.7	6.7		4.8	4.6	2.9		0.3	0.1	+100		40.8	41.3	(0.5	)	2.0	0.6	1.4
Spain	11.6	11.6	(0.6	)	3.9	3.9	(0.9	)	3.8	3.8	(1.7	)	0.1	0.1	60.8		31.2	31.8	(0.6	)	0.7	0.4	0.3

Eastern Europe
Russia	59.8	62.1	(3.8	)	17.7	17.5	1.1		15.9	16.9	(6.1	)	1.8	0.6	+100		29.6	28.1	1.5		2.9	0.8	2.1

Middle East & Africa
Saudi Arabia	5.4	5.0	6.7		0.8	1.7	(50.2	)	0.8	1.7	(50.2	)	—	—	—		38.9	40.1	(1.2	)	—	—	—
Turkey	31.3	28.6	9.2		12.5	13.5	(7.6	)	12.5	13.5	(7.6	)	—	—	—		39.9	47.2	(7.3	)	—	—	—

South & Southeast Asia
Indonesia	78.8	75.2	4.8		24.9	25.0	(0.1	)	24.9	25.0	(0.1	)	—	—	—		31.7	33.2	(1.5	)	—	—	—
Philippines	18.6	18.9	(1.5	)	13.1	13.2	(0.4	)	13.1	13.2	(0.4	)	—	—	—		70.4	69.6	0.8		—	—	—

East Asia & Australia
Australia	2.9	3.3	(10.8	)	0.9	1.0	(7.6	)	0.9	1.0	(7.6	)	—	—	—		31.0	29.9	1.1		—	—	—
Japan	40.6	42.4	(4.3	)	15.1	15.1	(0.4	)	8.0	8.7	(8.5	)	7.1	6.4	10.6		33.9	34.4	(0.5	)	16.6	15.5	1.1
Korea	17.7	17.9	(1.2	)	4.1	4.5	(9.8	)	2.8	3.1	(9.9	)	1.3	1.4	(9.5	)	23.1	25.3	(2.2	)	7.3	8.0	(0.7	)

Latin America & Canada
Argentina	7.8	8.6	(9.9	)	5.6	6.2	(10.0	)	5.6	6.2	(10.0	)	—	—	—		72.1	72.2	(0.1	)	—	—	—
Mexico	10.0	9.2	8.3		7.0	6.1	13.4		7.0	6.1	13.4		—	—	—		69.5	66.4	3.1		—	—	—

(1) Market share estimates are calculated using IMS data
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands.



																						Appendix 2
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Key Market Data

	Six Months Ended June 30,
Market	Total Market, bio units				PMI Shipments, bio units												PMI Market Share, % ⁽¹⁾
	Total Market, bio units				Total				Cigarette				HTU				Total				HTU
	2019	2018	% Change		2019	2018	% Change		2019	2018	% Change		2019	2018	% Change		2019	2018	pp Change		2019	2018	pp Change

Total PMI	1,322.2	1,336.9	(1.1	)	374.7	375.6	(0.2	)	348.1	355.0	(1.9	)	26.6	20.6	29.2		28.2	27.7	0.5		2.1	1.5	0.6

European Union
France	18.9	20.4	(7.3	)	8.6	9.4	(8.4	)	8.6	9.4	(8.7	)	—	—	—		44.9	45.0	(0.1	)	0.2	0.1	0.1
Germany	34.3	35.6	(3.7	)	13.4	13.3	0.8		13.0	13.1	(0.9	)	0.4	0.1	+100		38.9	37.2	1.7		1.1	0.4	0.7
Italy	32.8	33.8	(3.0	)	17.0	17.3	(1.3	)	15.6	16.7	(6.3	)	1.4	0.6	+100		51.4	51.7	(0.3	)	4.2	1.7	2.5
Poland	22.9	21.2	8.0		9.2	8.6	7.5		8.8	8.5	3.8		0.4	0.1	+100		40.4	40.6	(0.2	)	1.9	0.5	1.4
Spain	21.8	21.6	0.9		7.5	7.1	4.6		7.3	7.1	3.4		0.1	0.1	+100		31.4	32.0	(0.6	)	0.6	0.3	0.3

Eastern Europe
Russia	106.4	111.9	(4.9	)	29.9	30.3	(1.5	)	27.2	29.4	(7.6	)	2.7	0.9	+100		29.0	27.5	1.5		3.0	0.6	2.4

Middle East & Africa
Saudi Arabia	10.6	9.9	7.5		4.7	2.8	69.0		4.7	2.8	69.0		—	—	—		40.3	40.8	(0.5	)	—	—	—
Turkey	60.8	54.5	11.5		26.4	25.0	5.6		26.4	25.0	5.6		—	—	—		43.4	45.9	(2.5	)	—	—	—

South & Southeast Asia
Indonesia	147.5	144.5	2.1		47.1	48.0	(1.8	)	47.1	48.0	(1.8	)	—	—	—		31.9	33.2	(1.3	)	—	—	—
Philippines	35.4	34.3	3.2		24.9	24.0	3.7		24.9	24.0	3.7		—	—	—		70.3	69.9	0.4		—	—	—

East Asia & Australia
Australia	6.0	6.2	(2.6	)	1.7	1.8	(8.4	)	1.7	1.8	(8.4	)	—	—	—		27.6	29.3	(1.7	)	—	—	—
Japan	78.4	82.0	(4.4	)	27.2	29.3	(7.1	)	14.4	16.7	(13.3	)	12.7	12.6	1.2		34.1	34.6	(0.5	)	16.8	15.7	1.1
Korea	33.3	33.7	(1.1	)	7.7	8.6	(9.7	)	5.3	6.0	(11.6	)	2.4	2.6	(5.4	)	23.2	25.4	(2.2	)	7.3	7.6	(0.3	)

Latin America & Canada
Argentina	16.2	17.8	(8.6	)	11.7	13.1	(10.5	)	11.7	13.1	(10.5	)	—	—	—		72.0	73.5	(1.5	)	—	—	—
Mexico	17.4	16.9	3.3		11.7	11.0	6.3		11.7	11.0	6.3		—	—	—		67.0	65.1	1.9		—	—	—

(1) Market share estimates are calculated using IMS data
Note: % change for Total Market and PMI shipments is computed based on millions of units; PMI Market Share estimates for previous periods are restated to reflect RBH deconsolidation and exclude RBH-owned brands.



												Appendix 3
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Shipment Volume Adjusted for the Impact of RBH Deconsolidation
(in million units) / (Unaudited)


	Total PMI	Quarters Ended June 30,						Six Months Ended June 30,
		2019	2018			% Change		2019	2018			% Change
	Total Shipment Volume	198,855	201,708			(1.4	)%	374,650	375,554			(0.2	)%
	Shipment Volume for RBH-owned brands ⁽¹⁾		(1,460	)					(1,460	)	(2)
	Total Shipment Volume	198,855	200,248		(3)	(0.7	)%	374,650	374,094		(3)	0.1	%


	Latin America & Canada

	Total Shipment Volume	18,531	20,236			(8.4	)%	36,165	39,272			(7.9	)%
	Shipment Volume for RBH-owned brands		(1,446	)					(1,446	)	(2)
	Total Shipment Volume	18,531	18,790		(3)	(1.4	)%	36,165	37,826		(3)	(4.4	)%


	(1) Includes Duty Free sales in Canada
	(2) Represents volume for RBH-owned brands from March 22, 2018 through end of period date
	(3) Pro forma
	Note: Shipment Volume includes Cigarettes and Heated Tobacco Units; following the deconsolidation of RBH, we report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owners



										Schedule 1
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Diluted Earnings Per Share (EPS)
($ in millions, except per share data) / (Unaudited)

	Quarters Ended					Diluted EPS	Six Months Ended
	June 30,					Diluted EPS	June 30,
		$	1.49			2019 Diluted Earnings Per Share (1)		$	2.36
		$	1.41			2018 Diluted Earnings Per Share (1)		$	2.41
		$	0.08			Change		$	(0.05		)
		5.7			%	% Change		(2.1			)%

						Reconciliation:
		$	1.41			2018 Diluted Earnings Per Share (1)		$	2.41
		—				2018 Asset impairment and exit costs		—
		—				2018 Tax items		—
		(0.01			)	2019 Asset impairment and exit costs		(0.02			)
		—				2019 Canadian tobacco litigation-related expense		(0.09			)
		—				2019 Loss on deconsolidation of RBH		(0.12			)
		0.04				2019 Tax items		0.04
		(0.07			)	Currency		(0.13			)
		0.01				Interest		0.04
		(0.01			)	Change in tax rate		0.03
		0.12				Operations (2)		0.20
		$	1.49			2019 Diluted Earnings Per Share (1)		$	2.36

(1) Basic and diluted EPS were calculated using the following (in millions):

	Quarters Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	$ 2,319			$ 2,198		Net Earnings attributable to PMI	$ 3,673			$ 3,754
	5			5		Less distributed and undistributed earnings attributable to share-based payment awards	8			8
	$ 2,314			$ 2,193		Net Earnings for basic and diluted EPS	$ 3,665			$ 3,746

	1,556			1,555		Weighted-average shares for basic EPS	1,556			1,554
	—			—		Plus Contingently Issuable Performance Stock Units	—			—
	1,556			1,555		Weighted-average shares for diluted EPS	1,556			1,554

(2) Includes the impact of shares outstanding and share-based payments



												Schedule 2
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency,
and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency
(Unaudited)

	Quarters Ended June 30,						Six Months Ended June 30,
	2019		2018	% Change			2019		2018	% Change
	$ 1.49		$ 1.41	5.7	%	Reported Diluted EPS	$ 2.36		$ 2.41	(2.1	)%
	(0.07	)				Currency	(0.13	)
	$ 1.56		$ 1.41	10.6	%	Reported Diluted EPS, excluding Currency	$ 2.49		$ 2.41	3.3	%


	Quarters Ended June 30,						Six Months Ended June 30,						Year Ended
	2019		2018	% Change			2019		2018	% Change			2018
	$ 1.49		$ 1.41	5.7	%	Reported Diluted EPS	$ 2.36		$ 2.41	(2.1	)%		$ 5.08
	0.01		—			Asset impairment and exit costs	0.02		—				—
	—		—			Canadian tobacco litigation-related expense	0.09		—				—
	—		—			Loss on deconsolidation of RBH	0.12		—				—
	(0.04	)	—			Tax items	(0.04	)	—				0.02
	$ 1.46		$ 1.41	3.5	%	Adjusted Diluted EPS	$ 2.55		$ 2.41	5.8	%		$ 5.10
	(0.07	)				Currency	(0.13	)
	$ 1.53		$ 1.41	8.5	%	Adjusted Diluted EPS, excluding Currency	$ 2.68		$ 2.41	11.2	%



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


		Quarter Ended		Quarter Ended		Six Months Ended			Quarter Ended		Nine Months Ended			Quarter Ended		Year Ended				Quarter Ended
		March 31,		June 30,		June 30,			September 30,		September 30,			December 31,		December 31,				March 31,
		2018		2018		2018			2018		2018			2018		2018				2019
	Reported Diluted EPS	$ 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				—
	Adjusted Diluted EPS	$ 1.00		$ 1.41		$ 2.41			$ 1.44		$ 3.85			$ 1.25		$ 5.10				$ 1.09	(3)
	Net earnings attributable to RBH	—	(1)	(0.08	)	(0.08	)	(1)	(0.09	)	(0.18	)	(1)	(0.08	)	(0.26		)	(1)	—	(2)
	Pro Forma Adjusted Diluted EPS	$ 1.00		$ 1.33		$ 2.33			$ 1.35		$ 3.67			$ 1.17		$ 4.84

	(1) Represents the impact of net earnings attributable to RBH from March 22, 2018 through end of period date
	(2) Represents the impact of net earnings attributable to RBH from March 22, 2019 through end of period date
	(3) 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.



										Schedule 4
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Net Revenues by Product Category and Adjustments of Net Revenues for the Impact of Currency and Acquisitions
($ in millions) / (Unaudited)

Net Revenues	Currency		Net Revenues excluding Currency	Acquisitions	Net Revenues excluding Currency & Acquisitions	Quarters Ended June 30,	Net Revenues	Total		Excluding Currency		Excluding Currency & Acquisitions

2019						Combustible Products	2018	% Change
$ 2,149	$ (180)		$ 2,329	—	$ 2,329	European Union	$ 2,321	(7.4	)%	0.3	%	0.3	%
640	(51	)	691	—	691	Eastern Europe	695	(7.9	)%	(0.6	)%	(0.6	)%
918	(87	)	1,005	—	1,005	Middle East & Africa	910	0.8	%	10.4	%	10.4	%
1,248	(32	)	1,280	—	1,280	South & Southeast Asia	1,156	8.0	%	10.7	%	10.7	%
756	(18	)	774	—	774	East Asia & Australia	822	(8.0	)%	(5.8	)%	(5.8	)%
522	(18	)	540	—	540	Latin America & Canada	802	(34.9	)%	(32.7	)%	(32.7	)%
$ 6,233	$ (385)		$ 6,618	—	$ 6,618	Total Combustible	$ 6,706	(7.1	)%	(1.3	)%	(1.3	)%

2019						Reduced-Risk Products	2018	% Change
$ 428	$ (36)		$ 464	—	$ 464	European Union	$ 182	+100%		+100%		+100%
182	(15	)	197	—	197	Eastern Europe	65	+100%		+100%		+100%
86	(3	)	89	—	89	Middle East & Africa	112	(22.8	)%	(20.3	)%	(20.3	)%
—	—		—	—	—	South & Southeast Asia	—	—	%	—	%	—	%
765	(7	)	772	—	772	East Asia & Australia	656	16.6	%	17.7	%	17.7	%
5	—		5	—	5	Latin America & Canada	5	(2.4	)%	6.1	%	6.1	%
$ 1,466	$ (62)		$ 1,528	—	$ 1,528	Total RRPs	$ 1,020	43.7	%	49.8	%	49.8	%

2019						PMI	2018	% Change
$ 2,577	$ (216)		$ 2,793	—	$ 2,793	European Union	$ 2,503	3.0	%	11.6	%	11.6	%
822	(66	)	888	—	888	Eastern Europe	760	8.2	%	16.8	%	16.8	%
1,004	(90	)	1,094	—	1,094	Middle East & Africa	1,022	(1.8	)%	7.0	%	7.0	%
1,248	(32	)	1,280	—	1,280	South & Southeast Asia	1,156	8.0	%	10.7	%	10.7	%
1,521	(25	)	1,546	—	1,546	East Asia & Australia	1,478	2.9	%	4.6	%	4.6	%
527	(18	)	545	—	545	Latin America & Canada	807	(34.7	)%	(32.5	)%	(32.5	)%
$ 7,699	$ (447)		$ 8,146	—	$ 8,146	Total PMI	$ 7,726	(0.3	)%	5.4	%	5.4	%

Note: Sum of product categories or Regions might not foot to Total PMI due to roundings. “-“ indicates amounts between -$0.5 million and +$0.5 million.



										Schedule 5
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Net Revenues by Product Category and Adjustments of Net Revenues for the Impact of Currency and Acquisitions
($ in millions) / (Unaudited)

Net Revenues	Currency		Net Revenues excluding Currency	Acquisitions	Net Revenues excluding Currency & Acquisitions	Six Months Ended June 30,	Net Revenues	Total		Excluding Currency		Excluding Currency & Acquisitions

2019						Combustible Products	2018	% Change
$ 3,961	$ (300)		$ 4,261	—	$ 4,261	European Union	$ 4,157	(4.7	)%	2.5	%	2.5	%
1,110	(102	)	1,213	—	1,213	Eastern Europe	1,222	(9.1	)%	(0.8	)%	(0.8	)%
1,746	(155	)	1,901	—	1,901	Middle East & Africa	1,794	(2.7	)%	6.0	%	6.0	%
2,361	(93	)	2,454	—	2,454	South & Southeast Asia	2,237	5.5	%	9.7	%	9.7	%
1,394	(25	)	1,419	—	1,419	East Asia & Australia	1,559	(10.6	)%	(9.0	)%	(9.0	)%
1,168	(50	)	1,218	—	1,218	Latin America & Canada	1,506	(22.4	)%	(19.1	)%	(19.1	)%
$ 11,741	$ (725)		$ 12,466	—	$ 12,466	Total Combustible	$ 12,475	(5.9	)%	(0.1	)%	(0.1	)%

2019						Reduced-Risk Products	2018	% Change
$ 775	$ (59)		$ 834	—	$ 834	European Union	$ 334	+100%		+100%		+100%
291	(28	)	318	—	318	Eastern Europe	105	+100%		+100%		+100%
185	(3	)	188	—	188	Middle East & Africa	189	(2.3	)%	(0.6	)%	(0.6	)%
—	—		—	—	—	South & Southeast Asia	—	—	%	—	%	—	%
1,448	—		1,448	—	1,448	East Asia & Australia	1,510	(4.1	)%	(4.1	)%	(4.1	)%
11	(1	)	12	—	12	Latin America & Canada	9	18.9	%	28.1	%	28.1	%
$ 2,709	$ (91)		$ 2,800	—	$ 2,800	Total RRPs	$ 2,147	26.2	%	30.4	%	30.4	%

2019						PMI	2018	% Change
$ 4,736	$ (359)		$ 5,095	—	$ 5,095	European Union	$ 4,491	5.5	%	13.4	%	13.4	%
1,401	(130	)	1,531	—	1,531	Eastern Europe	1,327	5.6	%	15.4	%	15.4	%
1,931	(158	)	2,089	—	2,089	Middle East & Africa	1,983	(2.6	)%	5.3	%	5.3	%
2,361	(93	)	2,454	—	2,454	South & Southeast Asia	2,237	5.5	%	9.7	%	9.7	%
2,842	(25	)	2,867	—	2,867	East Asia & Australia	3,069	(7.4	)%	(6.6	)%	(6.6	)%
1,179	(51	)	1,230	—	1,230	Latin America & Canada	1,515	(22.2	)%	(18.8	)%	(18.8	)%
$ 14,450	$ (816)		$ 15,266	—	$ 15,266	Total PMI	$ 14,622	(1.2	)%	4.4	%	4.4	%

Note: Sum of product categories or Regions might not foot to Total PMI due to roundings. “-“ indicates amounts between -$0.5 million and +$0.5 million.



														Schedule 6
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments of Operating Income for the Impact of Currency and Acquisitions
($ in millions) / (Unaudited)

Operating Income			Currency		Operating Income excluding Currency		Acquisitions	Operating Income excluding Currency & Acquisitions			Operating Income	Total		Excluding Currency		Excluding Currency & Acquisitions

2019										Quarters Ended June 30,	2018	% Change
$ 1,195			$ (121)		$ 1,316		—	$ 1,316		European Union	$ 1,177	1.5	%	11.8	%	11.8	%
256			(16	)	272		—	272		Eastern Europe	261	(1.9	)%	4.2	%	4.2	%
441			(46	)	487		—	487		Middle East & Africa	403	9.4	%	20.8	%	20.8	%
492			(14	)	506		—	506		South & Southeast Asia	440	11.8	%	15.0	%	15.0	%
642			26		616		—	616		East Asia & Australia	498	28.9	%	23.7	%	23.7	%
161		(1)	6		155		—	155		Latin America & Canada	314	(48.7	)%	(50.6	)%	(50.6	)%
$ 3,187			$ (165)		$ 3,352		—	$ 3,352		Total PMI	$ 3,093	3.0	%	8.4	%	8.4	%

2019										Six Months Ended June 30,	2018	% Change
$ 2,091			$ (195)		$ 2,286		—	$ 2,286		European Union	$ 1,917	9.1	%	19.2	%	19.2	%
385			(35	)	420		—	420		Eastern Europe	412	(6.6	)%	1.9	%	1.9	%
785			(72	)	857		—	857		Middle East & Africa	777	1.0	%	10.3	%	10.3	%
932		(2)	(44	)	976		—	976		South & Southeast Asia	869	7.2	%	12.3	%	12.3	%
1,069			21		1,048		—	1,048		East Asia & Australia	1,013	5.5	%	3.5	%	3.5	%
(25	)	(3)	16		(41	)	—	(41	)	Latin America & Canada	531	-(100)%		-(100)%		-(100)%
$ 5,237			$ (309)		$ 5,546		—	$ 5,546		Total PMI	$ 5,519	(5.1	)%	0.5	%	0.5	%

(1) Includes asset impairment and exit costs ($23 million)
(2) Includes asset impairment and exit costs ($20 million)
(3) Includes asset impairment and exit costs ($23 million), Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million)



																		Schedule 7
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 Income		Asset Impairment & Exit Costs and Others			Adjusted Operating Income	Currency		Adjusted Operating Income excluding Currency	Acqui-sitions	Adjusted Operating Income excluding Currency & Acqui-sitions			Operating Income	Asset Impairment & Exit Costs	Adjusted Operating Income	Total		Excluding Currency		Excluding Currency & Acqui-sitions

2019											Quarters Ended June 30,		2018			% Change
$ 1,195		—			$ 1,195	$ (121)		$ 1,316	—	$ 1,316		European Union	$ 1,177	—	$ 1,177	1.5	%	11.8	%	11.8	%
256		—			256	(16	)	272	—	272		Eastern Europe	261	—	261	(1.9	)%	4.2	%	4.2	%
441		—			441	(46	)	487	—	487		Middle East & Africa	403	—	403	9.4	%	20.8	%	20.8	%
492		—			492	(14	)	506	—	506		South & Southeast Asia	440	—	440	11.8	%	15.0	%	15.0	%
642		—			642	26		616	—	616		East Asia & Australia	498	—	498	28.9	%	23.7	%	23.7	%
161		(23	)	(1)	184	6		178	—	178		Latin America & Canada	314	—	314	(41.4	)%	(43.3	)%	(43.3	)%
$ 3,187		$ (23)			$ 3,210	$ (165)		$ 3,375	—	$ 3,375		Total PMI	$ 3,093	—	$ 3,093	3.8	%	9.1	%	9.1	%

2019											Six Months Ended June 30,		2018			% Change
$ 2,091		—			$ 2,091	$ (195)		$ 2,286	—	$ 2,286		European Union	$ 1,917	—	$ 1,917	9.1	%	19.2	%	19.2	%
385		—			385	(35	)	420	—	420		Eastern Europe	412	—	412	(6.6	)%	1.9	%	1.9	%
785		—			785	(72	)	857	—	857		Middle East & Africa	777	—	777	1.0	%	10.3	%	10.3	%
932		(20	)	(1)	952	(44	)	996	—	996		South & Southeast Asia	869	—	869	9.6	%	14.6	%	14.6	%
1,069		—			1,069	21		1,048	—	1,048		East Asia & Australia	1,013	—	1,013	5.5	%	3.5	%	3.5	%
(25	)	(456	)	(2)	431	16		415	—	415		Latin America & Canada	531	—	531	(18.8	)%	(21.8	)%	(21.8	)%
$ 5,237		$ (476)			$ 5,713	$ (309)		$ 6,022	—	$ 6,022		Total PMI	$ 5,519	—	$ 5,519	3.5	%	9.1	%	9.1	%

(1) Represents asset impairment and exit costs
(2) Includes asset impairment and exit costs ($23 million), Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million)



																				Schedule 8
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 Operating Income (1)	Net Revenues	Adjusted Operating Income Margin		Adjusted Operating Income excluding Currency (1)	Net Revenues excluding Currency (2)	Adjusted Operating Income Margin excluding Currency		Adjusted Operating Income excluding Currency & Acqui-sitions (1)	Net Revenues excluding Currency & Acqui-sitions (2)	Adjusted Operating Income Margin excluding Currency & Acqui-sitions				Adjusted Operating Income (1)	Net Revenues	Adjusted Operating Income Margin		Adjusted Operating Income Margin		Adjusted Operating Income Margin excluding Currency		Adjusted Operating Income Margin excluding Currency & Acqui-sitions

2019												Quarters Ended June 30,		2018				% Points Change
$ 1,195	$ 2,577	46.4	%	$ 1,316	$ 2,793	47.1	%	$ 1,316	$ 2,793	47.1	%		European Union	$ 1,177	$ 2,503	47.0	%	(0.6	)	0.1		0.1
256	822	31.1	%	272	888	30.6	%	272	888	30.6	%		Eastern Europe	261	760	34.3	%	(3.2	)	(3.7	)	(3.7	)
441	1,004	43.9	%	487	1,094	44.5	%	487	1,094	44.5	%		Middle East & Africa	403	1,022	39.4	%	4.5		5.1		5.1
492	1,248	39.4	%	506	1,280	39.5	%	506	1,280	39.5	%		South & Southeast Asia	440	1,156	38.1	%	1.3		1.4		1.4
642	1,521	42.2	%	616	1,546	39.8	%	616	1,546	39.8	%		East Asia & Australia	498	1,478	33.7	%	8.5		6.1		6.1
184	527	34.9	%	178	545	32.7	%	178	545	32.7	%		Latin America & Canada	314	807	38.9	%	(4.0	)	(6.2	)	(6.2	)
$ 3,210	$ 7,699	41.7	%	$ 3,375	$ 8,146	41.4	%	$ 3,375	$ 8,146	41.4	%		Total PMI	$ 3,093	$ 7,726	40.0	%	1.7		1.4		1.4

2019												Six Months Ended June 30,		2018				% Points Change
$ 2,091	$ 4,736	44.2	%	$ 2,286	$ 5,095	44.9	%	$ 2,286	$ 5,095	44.9	%		European Union	$ 1,917	$ 4,491	42.7	%	1.5		2.2		2.2
385	1,401	27.5	%	420	1,531	27.4	%	420	1,531	27.4	%		Eastern Europe	412	1,327	31.0	%	(3.5	)	(3.6	)	(3.6	)
785	1,931	40.7	%	857	2,089	41.0	%	857	2,089	41.0	%		Middle East & Africa	777	1,983	39.2	%	1.5		1.8		1.8
952	2,361	40.3	%	996	2,454	40.6	%	996	2,454	40.6	%		South & Southeast Asia	869	2,237	38.8	%	1.5		1.8		1.8
1,069	2,842	37.6	%	1,048	2,867	36.6	%	1,048	2,867	36.6	%		East Asia & Australia	1,013	3,069	33.0	%	4.6		3.6		3.6
431	1,179	36.6	%	415	1,230	33.7	%	415	1,230	33.7	%		Latin America & Canada	531	1,515	35.0	%	1.6		(1.3	)	(1.3	)
$ 5,713	$ 14,450	39.5	%	$ 6,022	$ 15,266	39.4	%	$ 6,022	$ 15,266	39.4	%		Total PMI	$ 5,519	$ 14,622	37.7	%	1.8		1.7		1.7

(1) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to Schedule 7
(2) For the calculation of Net Revenues excluding currency and acquisitions refer to Schedules 4 and 5



														Schedule 9
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency
($ in millions, except per share data) / (Unaudited)

		Quarters Ended June 30,							Six Months Ended June 30,
		2019		2018			% Change		2019		2018			% Change
	Net Revenues	$ 7,699		$ 7,726			(0.3	)%	$ 14,450		$ 14,622			(1.2	)%
	Net Revenues attributable to RBH			(253	)						(253	)	(1)
	Net Revenues	$ 7,699		$ 7,473		(2)	3.0	%	$ 14,450		$ 14,369		(2)	0.6	%
	Currency	(447	)						(816	)
	Net Revenues, ex. currency	$ 8,146		$ 7,473		(2)	9.0	%	$ 15,266		$ 14,369		(2)	6.2	%

	Operating Income	$ 3,187		$ 3,093			3.0	%	$ 5,237		$ 5,519			(5.1	)%
	Asset impairment and exit costs	(23	)	—					(43	)	—
	Canadian tobacco litigation-related expense	—		—					(194	)	—
	Loss on deconsolidation of RBH	—		—					(239	)	—
	Adjusted Operating Income	$ 3,210		$ 3,093			3.8	%	$ 5,713		$ 5,519			3.5	%
	Operating Income attributable to RBH			(177	)						(177	)	(1)
	Adjusted Operating Income	$ 3,210		$ 2,916		(2)	10.1	%	$ 5,713		$ 5,342		(2)	6.9	%
	Currency	(165	)						(309	)
	Adjusted Operating Income, ex. currency	$ 3,375		$ 2,916		(2)	15.7	%	$ 6,022		$ 5,342		(2)	12.7	%

	Adjusted OI Margin	41.7	%	40.0	%		1.7		39.5	%	37.7	%		1.8
	Adjusted OI Margin attributable to RBH			(1.0	)						(0.5	)	(1)
	Adjusted OI Margin	41.7	%	39.0	%	(2)	2.7		39.5	%	37.2	%	(2)	2.3
	Currency	0.3							0.1
	Adjusted OI Margin, ex. currency	41.4	%	39.0	%	(2)	2.4		39.4	%	37.2	%	(2)	2.2

	Adjusted Diluted EPS(3)	$ 1.46		$ 1.41			3.5	%	$ 2.55		$ 2.41			5.8	%
	Net earnings attributable to RBH			(0.08	)						(0.08	)	(1)
	Adjusted Diluted EPS	$ 1.46		$ 1.33		(2)	9.8	%	$ 2.55		$ 2.33		(2)	9.4	%
	Currency	(0.07	)						(0.13	)
	Adjusted Diluted EPS, ex. currency	$ 1.53		$ 1.33		(2)	15.0	%	$ 2.68		$ 2.33		(2)	15.0	%

	(1) Represents the impact attributable to RBH from March 22, 2018 through end of period date
	(2) Pro forma
	(3) For the calculation, see Schedule 2
	Note: Financials attributable to RBH include Duty Free sales in Canada



														Schedule 10
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Adjustments for the Impact of RBH, excluding Currency
($ in millions) / (Unaudited)

	Latin America & Canada	Quarters Ended June 30,							Six Months Ended June 30,
		2019		2018			% Change		2019		2018			% Change
	Net Revenues	$ 527		$ 807			(34.7	)%	$ 1,179		$ 1,515			(22.2	)%
	Net Revenues attributable to RBH			(251	)						(251	)	(1)
	Net Revenues	$ 527		$ 556		(2)	(5.2	)%	$ 1,179		$ 1,264		(2)	(6.7	)%
	Currency	(18	)						(51	)
	Net Revenues, ex. currency	$ 545		$ 556		(2)	(2.0	)%	$ 1,230		$ 1,264		(2)	(2.7	)%

	Operating Income	$ 161		$ 314			(48.7	)%	$ (25)		$ 531			-(100)%
	Asset impairment and exit costs	(23	)	—					(23	)	—
	Canadian tobacco litigation-related expense	—		—					(194	)	—
	Loss on deconsolidation of RBH	—		—					(239	)	—
	Adjusted Operating Income	$ 184		$ 314			(41.4	)%	$ 431		$ 531			(18.8	)%
	Operating Income attributable to RBH			(176	)						(176	)	(1)
	Adjusted Operating Income	$ 184		$ 138		(2)	33.3	%	$ 431		$ 355		(2)	21.4	%
	Currency	6							16
	Adjusted Operating Income, ex. currency	$ 178		$ 138		(2)	29.0	%	$ 415		$ 355		(2)	16.9	%

	Adjusted OI Margin	34.9	%	38.9	%		(4.0	)	36.6	%	35.0	%		1.6
	Adjusted OI Margin attributable to RBH			(14.1	)						(6.9	)	(1)
	Adjusted OI Margin	34.9	%	24.8	%	(2)	10.1		36.6	%	28.1	%	(2)	8.5
	Currency	2.2							2.9
	Adjusted OI Margin, ex. currency	32.7	%	24.8	%	(2)	7.9		33.7	%	28.1	%	(2)	5.6

	(1) Represents the impact attributable to RBH from March 22, 2018 through end of period date
	(2) Pro forma



										Schedule 11
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Condensed Statements of Earnings
($ in millions, except per share data) / (Unaudited)

	Quarters Ended June 30,							Six Months Ended June 30,
	2019		2018		Change Fav./(Unfav.)			2019		2018		Change Fav./(Unfav.)
	$ 19,987		$ 21,100		(5.3	)%	Revenues including Excise Taxes	$ 37,692		$ 39,526		(4.6	)%
	12,288		13,374		8.1	%	Excise Taxes on products	23,242		24,904		6.7	%
	7,699		7,726		(0.3	)%	Net Revenues	14,450		14,622		(1.2	)%
	2,665		2,744		2.9	%	Cost of sales	5,130		5,359		4.3	%
	5,034		4,982		1.0	%	Gross profit	9,320		9,263		0.6	%
	1,831		1,868		2.0	%	Marketing, administration and research costs (1)	4,048		3,701		(9.4	)%
	16		21				Amortization of intangibles	35		43
	3,187		3,093		3.0	%	Operating Income	5,237		5,519		(5.1	)%
	150		168		10.7	%	Interest expense, net	302		395		23.5	%
	20		6		-(100)%		Pension and other employee benefit costs	41		12		-(100)%
	3,017		2,919		3.4	%	Earnings before income taxes	4,894		5,112		(4.3	)%
	611		644		5.1	%	Provision for income taxes	1,035		1,203		14.0	%
	(30	)	(20	)			Equity investments and securities (income)/loss, net	(41	)	(33	)
	2,436		2,295		6.1	%	Net Earnings	3,900		3,942		(1.1	)%
	117		97				Net Earnings attributable to noncontrolling interests	227		188
	$ 2,319		$ 2,198		5.5	%	Net Earnings attributable to PMI	$ 3,673		$ 3,754		(2.2	)%

							Per share data (2):
	$ 1.49		$ 1.41		5.7	%	Basic Earnings Per Share	$ 2.36		$ 2.41		(2.1	)%
	$ 1.49		$ 1.41		5.7	%	Diluted Earnings Per Share	$ 2.36		$ 2.41		(2.1	)%

(1) Six months ended June 30, 2019 includes asset impairment and exit costs ($43 million), Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million). Quarter ended June 30, 2019 includes asset impairment and exit costs ($23 million).
(2) Net Earnings and weighted-average shares used in the basic and diluted Earnings Per Share computations for the quarters and for the six months ended June 30, 2019 and 2018 are shown on Schedule 1, Footnote 1.



					Schedule 12
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Condensed Balance Sheets
($ in millions, except ratios) / (Unaudited)

	June 30,				December 31,
	2019				2018
Assets
Cash and cash equivalents		$	4,008			$	6,593
All other current assets		13,155				12,849
Property, plant and equipment, net		6,917				7,201
Goodwill		5,828				7,189
Other intangible assets, net		2,130				2,278
Investments in unconsolidated subsidiaries and equity securities		4,665				1,269
Other assets		3,220				2,422
Total assets		$	39,923			$	39,801

Liabilities and Stockholders' (Deficit) Equity
Short-term borrowings		$	269			$	730
Current portion of long-term debt		4,762				4,054
All other current liabilities		13,015				12,407
Long-term debt		24,858				26,975
Deferred income taxes		786				898
Other long-term liabilities		5,642				5,476
Total liabilities		49,332				50,540

Total PMI stockholders' deficit		(11,199		)		(12,459		)
Noncontrolling interests		1,790				1,720
Total stockholders' (deficit) equity		(9,409		)		(10,739		)
Total liabilities and stockholders' (deficit) equity		$	39,923			$	39,801



													Schedule 13
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Calculation of Total Debt to Adjusted EBITDA and Net Debt to Adjusted EBITDA Ratios
($ in millions, except ratios) / (Unaudited)

	Year Ended June 30, 2019												Year Ended December 31, 2018
	July ~ December				January ~ June				12 months
	2018				2019				rolling
Net Earnings		$	4,344			$	3,900			$	8,244			$	8,286
Equity (income)/loss in unconsolidated subsidiaries, net		(37		)		(41		)		(78		)		(65		)
Provision for income taxes		1,242				1,035				2,277				2,445
Interest expense, net		270				302				572				665
Depreciation and amortization		501				472				973				989
Asset impairment and exit costs and Others (1)		—				476				476				—
Adjusted EBITDA		$	6,320			$	6,144			$	12,464			$	12,320

									June 30,				December 31,
									2019				2018
Short-term borrowings										$	269			$	730
Current portion of long-term debt										4,762				4,054
Long-term debt										24,858				26,975
Total Debt										$	29,889			$	31,759
Cash and cash equivalents										4,008				6,593
Net Debt										$	25,881			$	25,166

Ratios:
Total Debt to Adjusted EBITDA										2.40				2.58
Net Debt to Adjusted EBITDA										2.08				2.04

(1) Others include Canadian tobacco litigation-related expense ($194 million) and the loss on deconsolidation of RBH ($239 million)



										Schedule 14
PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries
Reconciliation of Non-GAAP Measures
Reconciliation of Operating Cash Flow to Operating Cash Flow, excluding Currency
($ in millions) / (Unaudited)

	Quarters Ended June 30,						Six Months Ended June 30,
	2019		2018	% Change			2019		2018	% Change
	$ 3,442		$ 3,993	(13.8	)%	Net cash provided by operating activities (1)	$ 4,683		$ 5,373	(12.8	)%
	(614	)				Currency	(777	)
	$ 4,056		$ 3,993	1.6	%	Net cash provided by operating activities, excluding currency	$ 5,460		$ 5,373	1.6	%

(1) Operating cash flow

Exhibit 99.2

Philip Morris International Inc.

2019 Second-Quarter Results Conference Call

July 18, 2019

NICK ROLLI


(SLIDE 1.)

Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2019 second-quarter results. You may access the release on www.pmi.com or the PMI Investor Relations App.


(SLIDE 2.)

A glossary of terms, including the definition for reduced-risk products, or "RRPs," as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures, are at the end of today’s webcast slides, which are posted on our website. Unless otherwise stated, all references to IQOS are to our IQOS heat-not-burn products.

Comparisons presented on a "like-for-like" basis reflect pro forma 2018 results, which have been adjusted for the deconsolidation of our Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019.


(SLIDE 3.)

Today’s remarks contain forward-looking statements and projections of future results. I direct your attention to the Forward-Looking and Cautionary Statements disclosure in today’s presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements.

It’s now my pleasure to introduce Martin King, our Chief Financial Officer.

Martin.

MARTIN KING


(SLIDE 4.)

Thank you, Nick, and welcome, ladies and gentlemen.

Building on our encouraging start to the year, we delivered very solid performance in the second quarter, notably reflecting:


•	Positive momentum for both our combustible tobacco and smoke-free product portfolios; and


•	Strong currency-neutral adjusted financial results.


(SLIDE 5.)

Key among our strengths in the second quarter was our volume performance. On a like-for-like basis, total shipment volume declined by 0.7% in the quarter, and increased by 0.1% June year-to-date. This performance was better than we had anticipated, notably driven by the EU Region.

Heated tobacco unit shipment volume increased by 37.0% to 15.1 billion units in the quarter, driven by the EU Region, the Eastern Europe Region and Japan.


(SLIDE 6.)

Second-quarter net revenues increased by 9.0%, excluding currency, on a like-for-like basis, driven by higher HTU shipment volume and favorable pricing for our combustible tobacco portfolio. Our performance was flattered by the timing of pricing in certain markets compared to the prior year, which contributed an estimated two percentage points to net revenue growth.

RRP net revenues reached nearly $1.5 billion in the quarter, or nearly 20% of PMI's total net revenues. IQOS devices accounted for approximately 14% of RRP net revenues, compared to approximately 19% in the second quarter of 2018.


(SLIDE 7.)

We recorded a strong like-for-like combustible pricing variance of over 6% in the quarter, driven notably by Germany, Indonesia, Japan, the Philippines, Russia and Turkey.

We have recently increased our cigarette prices in markets such as Mexico and Ukraine, which should further contribute to a positive pricing variance over the balance of 2019.


(SLIDE 8.)

On a currency-neutral, like-for-like basis, adjusted operating income increased by 15.7% in the second quarter, while adjusted operating income margin increased by 240 basis points.

The strong margin expansion was driven primarily by favorable geographic mix related to HTUs, reflecting the increased contribution of volume from IQOS geographies with relatively high unit margins, notably markets in the EU Region.


(SLIDE 9.)

Like-for-like adjusted diluted EPS increased by 15.0%, excluding currency, driven by our strong business performance.


(SLIDE 10.)

Our total international market share, excluding China and the U.S., increased by 0.1 percentage point to reach 28.3% in the second quarter.

This growth was driven by heated tobacco units, which increased by 0.5 points to reach 2.1%, reflecting broad-based share gains across the EU Region and in Japan and Russia. In the markets where IQOS has been commercialized, our HTU brands recorded a total combined share of nearly 5% in the quarter, despite not yet being fully distributed in many of them.

Our share performance for cigarettes in the quarter reflected continued adult smoker out-switching to IQOS, as well as an estimated adverse impact of approximately 0.2 points related to Turkey, due to the timing of price increases vis-a-vis the competition. We expect our share performance in Turkey to improve over the balance of the year.


(SLIDE 11.)

Turning now to RRPs, we surpassed 11 million IQOS users as of quarter-end. Approximately 70% of the total -- or some eight million IQOS users -- have stopped smoking and switched to IQOS, with the balance in various stages of conversion.


(SLIDE 12.)

In the EU Region, HEETS continued its sequential quarterly share growth, increasing by 0.3 percentage points to reach 2.4%. This growth reflects success across a broad range of markets with varying regulatory frameworks and adult smoker preferences.


(SLIDE 13.)

We have achieved significant progress with IQOS across the Region over the past year, as evidenced by the HEETS market shares shown on this slide.

This includes strong growth in some of our larger markets, such as Italy, Poland and Germany, as well as even faster growth in other markets, such as the Czech Republic, Greece, Latvia, Lithuania and the Slovak Republic.


(SLIDE 14.)

HEETS continued its strong performance in Russia in the quarter, with sequential in-market sales growth of over 23% and national share of 2.9%.

As a reminder, our first-quarter HEETS share was flattered by the impact on the total market of seasonally lower cigarette industry volume. The in-market sales volume progression therefore remains a more realistic indicator of the brand's trajectory. For reference, we estimate a first-quarter adjusted share of 2.3%, implying sequential share growth of 0.6 points in the second quarter.

We continued our geographic expansion during the quarter and are now commercializing IQOS in cities representing an estimated 40% of the market by total industry volume, compared to approximately 32% at the end of the first quarter.


(SLIDE 15.)

In Japan, our total share for HeatSticks and HEETS increased by 1.1 points versus the second quarter of 2018 to reach 16.6%, further demonstrating that the initiatives we introduced during the second half of last year are paying off and driving a step-up in our share performance.

After adjusting for the impact of estimated trade inventory movements -- which benefited our first-quarter share this year -- our share was stable on a sequential basis.

We continue to anticipate greater competitive activity in the category as the year progresses. While this may increase competitive churn among adult consumers over the short term as they try new products, we ultimately view this as a positive development for the category overall and for IQOS in particular. As I will cover later in my remarks, we are investing behind further enhancements to the IQOS 3 device in 2019 to reinforce the brand's leadership position.


(SLIDE 16.)

Importantly, share for both the heated tobacco category and our heated tobacco brands continued to grow sequentially in the quarter, based on the latest consumer offtake share data.


(SLIDE 17.)

In Korea, the heated tobacco category continues to be highly competitive, particularly in the area of non-menthol flavors and related new taste dimensions.

Share for HEETS declined by 0.7 points and was stable on a sequential basis at 7.3%. This performance was flattered by the impact of inventory movements, as seen from the adjusted market share progression. We attribute the current share dynamics mainly to competitive churn, as new devices and consumables from the competition have entered the market and experienced initial trial.

We plan to broaden our portfolio of HEETS to better address the unique taste preferences of adult tobacco consumers in Korea, and have related launches scheduled for the second half of 2019. In addition, like Japan, Korea will be an initial focus geography for the upgraded IQOS 3 device.


(SLIDE 18.)

It is important to remember that, aside from Japan and Korea, our focus for IQOS across most launch markets remains targeted to key cities. These city-level shares compare very favorably to the corresponding national shares and provide an encouraging indicator of the greater opportunity that can come with broader focus and support in IQOS markets.


(SLIDE 19.)

Before closing on IQOS, I would also like to reiterate our excitement over the prospects for IQOS in the U.S.

As a reminder, on April 30th, the U.S. Food and Drug Administration confirmed that the marketing of IQOS is appropriate for the protection of public health and authorized it for sale in the U.S.

We are excited to bring IQOS to the U.S. market through an exclusive license with Altria Group, Inc., whose subsidiary Philip Morris USA has the market expertise and infrastructure to ensure a successful launch, beginning with the initial lead market of Atlanta, Georgia.


(SLIDE 20.)

Turning to our full-year outlook, we are raising our 2019 reported diluted EPS guidance, at prevailing exchange rates, to be at least $4.94.

The seven cent increase, compared to our prior guidance on May 1st of at least $4.87, was driven by:


•	Stronger business performance, primarily reflecting better shipment volume; and


•	A tax benefit of four cents related to a reduction in estimated U.S. federal income tax on dividend repatriation for the years 2015 to 2018; partly offset by


•	Asset impairment and exit costs of approximately two cents per share related to a plant closure in Colombia, as part of our global manufacturing infrastructure optimization.

Our guidance continues to include an unfavorable currency impact, at prevailing exchange rates, of approximately $0.14 per share, with just one cent in the second half of the year.


(SLIDE 21.)

After excluding the $0.20 per share of reporting adjustments and tax items outlined on this slide, our forecast represents a projected currency-neutral like-for-like increase of at least 9% versus our pro forma adjusted diluted EPS of $4.84 in 2018.


(SLIDE 22.)

Our increased guidance now assumes a total shipment volume decline of approximately 1% on a like-for-like basis, versus a decline of 1.5% to 2% assumed previously.

We continue to anticipate full-year HTU shipment volume broadly in line with our in-market sales volume, with any net inventory movements in individual markets essentially offsetting on an aggregate basis.

For the industry, we now estimate a total volume decline in 2019 of approximately 2.5%, excluding China and the U.S., which is at the low end of the previously communicated decline range of 2.5% to 3%.


(SLIDE 23.)

Our increased guidance further assumes like-for-like net revenue growth, excluding currency, of at least 6%, compared to the assumption of at least 5% in our prior guidance.

We also now expect IQOS device net revenues to account for less than 20% of our total RRP net revenues in 2019. The change from the previously communicated range of 20% to 25% primarily reflects the favorable geographic mix impact related to HTU shipment volume that I noted earlier.

We continue to anticipate a full-year like-for-like combustible pricing variance above 5%, supported by our June year-to-date variance of 5.2%.


(SLIDE 24.)

This positive top-line momentum provides us the opportunity to further increase or advance investments behind IQOS in order to:


•	Accelerate product and commercial development;


•	Expand distribution in both existing and new geographies during the second half of 2019;


•	Further enhance the IQOS 3 device in 2019 to reinforce the brand; and


•	Strengthen our category leadership as competition intensifies.

Consequently, we now anticipate net incremental investments behind RRPs this year of approximately $400 million, compared to our previously disclosed estimate of approximately $300 million, with the majority of the $100 million step-up in investment expected to occur in the third quarter. We believe this increased investment will reinforce the positive momentum behind IQOS heading into 2020.

Despite the increased investment, we are maintaining our assumption of currency-neutral adjusted operating income margin expansion of at least 100 basis points on a like-for-like basis.


(SLIDE 25.)

While we don't give quarterly guidance, I believe it is appropriate to provide some additional visibility on the third-quarter, in which we expect currency-neutral adjusted diluted EPS to be essentially flat compared to our pro forma adjusted diluted EPS of $1.35 in the third quarter of 2018.

This estimate assumes a like-for-like currency-neutral net revenue growth rate in the quarter slightly below our full-year assumption. As I noted earlier, compared to last year our second-quarter net revenue growth benefited from the timing of price increases in certain markets, and some of this benefit will be offset in the third quarter. We also face a challenging combustible pricing comparison versus the third quarter of 2018, our strongest quarter for pricing last year.

Coupled with our top-line assumption, our third-quarter EPS estimate also reflects higher expected costs on a like-for-like basis. This is primarily due to our net incremental investments behind RRPs, with around half of the full-year total of approximately $400 million expected to come in the quarter.


(SLIDE 26.)

Turning to cash flow, we continue to anticipate full-year operating cash flow of approximately $9.5 billion, subject to year-end working capital requirements, as well as capital expenditures of approximately $1.1 billion.


(SLIDE 27.)

In conclusion, we are building upon our promising start to the year, and delivered a very solid performance in the second quarter.

The fundamentals supporting our strong combustible tobacco portfolio are intact.

The favorable momentum for IQOS continues across geographies, further supporting our confidence in our HTU shipment volume target of 90 to 100 billion units by 2021.

Finally, on a currency-neutral like-for-like basis, we have increased our full-year 2019 growth assumption for net revenues to at least 6% and our anticipated full-year 2019 growth rate for adjusted diluted EPS to at least 9%, further demonstrating our overall confidence in PMI's short and long-term growth prospects.


(SLIDE 28.)

Thank you. I am now happy to take your questions.

NICK ROLLI

That concludes our call today. Thank you for joining us. If you have any follow-up questions, please contact the Investor Relations team. Thank you again and have a nice day.

Exhibit 99.3 Delivering a Smoke-Free Future 2019 Second-Quarter Results July 18, 2019

Introduction • A glossary of key terms and definitions, including the definition for reduced-risk products, or "RRPs," as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures, are at the end of today’s webcast slides, which are posted on our website • Unless otherwise stated, all references to IQOS are to our IQOS heat-not-burn products • Comparisons presented on a "like-for-like" basis reflect pro forma 2018 results, which have been adjusted for the deconsolidation of our Canadian subsidiary, Rothmans, Benson & Hedges, Inc. (RBH), effective March 22, 2019 2

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 the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward- looking statements made by PMI • PMI's business risks include: excise tax increases and discriminatory tax structures; increasing marketing 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 and individual country economic, regulatory and political developments, natural disasters and conflicts; changes in adult smoker behavior; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; adverse changes in the cost and quality of tobacco and other agricultural products and raw materials; and 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 brand equity, enter new markets or improve its margins through increased prices and productivity gains; if it is unable to expand its brand portfolio internally or through acquisitions and 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 the Form 10-Q for the quarter ended March 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 3

Delivered Very Solid Performance in Q2, 2019 • Positive momentum for combustible tobacco and smoke-free product portfolios • Strong currency-neutral adjusted financial results Source: PMI Financials or estimates 4

Q2, 2019: Better-than-Anticipated Total PMI Volume Shipments Like-for-Like Change vs. PY (billion units) Q2, 2019 H1, 2019 201.7 198.9 Total (0.7)% 0.1% 11.0 15.1 HTUs 37.0% 29.2% 190.7 183.8 Cigarettes (2.9)% (1.5)% Q2, 2018 Q2, 2019 Source: PMI Financials or estimates 5

Q2, 2019: Strong Adjusted Financial Results Growth vs. PY • Currency-neutral like-for-like net revenue (ex-currency, like-for-like basis) growth driven by: ⎼ Higher HTU shipment volume ⎼ Favorable pricing for combustible tobacco portfolio • Nearly $1.5 billion in RRP net revenues (or nearly 20% of PMI's total net revenues): ⎼ IQOS devices accounted for approximately 14% 9.0% Net Adjusted Adjusted Revenues OI Diluted EPS Source: PMI Financials or estimates 6

Q2, 2019: Strong Combustible Tobacco Pricing • Pricing variance of over 6%(a), on a like- for-like basis, driven notably by Germany, Indonesia, Japan, the Philippines, Russia and Turkey • Recently increased our cigarette prices in markets such as Mexico and Ukraine (a) Reflects combustible tobacco pricing as a % of PY combustible tobacco net revenues, on a like-for-like basis Source: PMI Financials or estimates 7

Q2, 2019: Strong Adjusted Financial Results Growth vs. PY • Currency-neutral like-for-like net revenue (ex-currency, like-for-like basis) growth driven by: ⎼ Higher HTU shipment volume ⎼ Favorable pricing for combustible tobacco portfolio • Nearly $1.5 billion in RRP net revenues (or nearly 20% of PMI's total net revenues): ⎼ IQOS devices accounted for approximately 14% • 240 bps currency-neutral like-for-like adjusted % % OI margin increase, driven primarily by a 9.0 15.7 favorable geographic mix related to HTUs Net Adjusted Adjusted Revenues OI Diluted EPS Source: PMI Financials or estimates 8

Q2, 2019: Strong Adjusted Financial Results Growth vs. PY • Currency-neutral like-for-like net revenue (ex-currency, like-for-like basis) growth driven by: ⎼ Higher HTU shipment volume ⎼ Favorable pricing for combustible tobacco portfolio • Nearly $1.5 billion in RRP net revenues (or nearly 20% of PMI's total net revenues): ⎼ IQOS devices accounted for approximately 14% • 240 bps currency-neutral like-for-like adjusted % % % OI margin increase, driven primarily by a 9.0 15.7 15.0 favorable geographic mix related to HTUs Net Adjusted Adjusted Revenues OI Diluted EPS Source: PMI Financials or estimates 9

Q2, 2019: Continued Total Share Growth, Driven by HTUs PMI Total International SoM(a) +0.1pp 28.2% 28.3% 1.6% HTUs 2.1% 26.6% Cigarettes 26.2% 20% Q2, 2018 Q2, 2019 (a) Sales volume of PMI cigarettes and HTUs as a percentage of the total industry sales volume for cigarettes and HTUs Note: Current view (reflecting the deconsolidation, PMI’s total market share has been restated for previous periods). Excluding China and the U.S. Source: PMI Financials or estimates 10

Over 11 Million IQOS Users in Q2, 2019 (in millions) Total IQOS users(a) 11.3 10.4 Estimated users who 9.6 % have stopped smoking 8.8 and switched to IQOS(a) 8.3 7.6 6.9 5.2 4.1 2.9 70% 71% 71% 68% 67% 67% 67% 69% 70% 70% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 (a) See Glossary for definition Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 11

EU Region: HEETS Sequential Share Growth Continues 2.4% 2.1% 1.7% 1.2% 1.0% 0.8% Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Source: PMI Financials or estimates 12

EU Region: HEETS Share Growth Across Markets Growth Growth Growth Q2, 2019 vs. PY Q2, 2019 vs. PY Q2, 2019 vs. PY Bulgaria 4.5% +2.5pp Hungary 1.0% +1.0pp Portugal 5.9% +3.4pp Croatia 3.6 +3.1 Italy 4.6 +2.7 Romania 2.2 +0.4 Czech Slovak 5.7 +3.9 Latvia 4.6 +4.3 7.2 +4.5 Republic Republic Germany 1.1 +0.7 Lithuania 12.1 +8.7 Slovenia 3.1 +1.9 Greece 8.1 +4.0 Poland 2.0 +1.4 Switz. 2.6 +1.1 Note: Select markets where HEETS share is ≥ 1%. Switz. is Switzerland Source: PMI Financials or estimates 13

Russia: Continued Strong HEETS Performance 1.7 1.4 1.1 0.7 0.5 0.2 3.0% HEETS IMS Volume 2.9% • Q1, 2019 share flattered by (billion units) the impact on the total market of seasonally lower cigarette industry volume 1.7% 1.1% 0.8% 0.5% Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Note: Includes Parliament HeatSticks through Q3, 2018 Source: PMI Financials or estimates 14

Japan: H2, 2018 Initiatives Paying Off PMI HTU Adjusted SoM(a): 15.5% 16.6% 16.6% 16.9% 16.6% 15.8% 15.5% 15.5% 15.2% Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 (a) Excluding the estimated impact of trade inventory movements Source: PMI Financials or estimates 15

Japan: HTU Category and PMI Offtake Share Growth HTU Category PMI HTUs +0.2pp +0.1pp 24.5% 24.3% 17.4% 17.5% Mar’19 Jun’19 Mar’19 Jun’19 Note: 3mma is three-month moving average. HTU category and PMI HTU offtake shares represent select C-Store sales volume 3mma 3mma 3mma 3mma for industry HTUs and PMI HTUs, respectively, as a percentage of the total retail sales volume for cigarettes and HTUs in these C-Stores Source: PMI Financials or estimates 16

Korea: Stable Sequential HEETS Share Adjusted SoM(a): 7.8% 7.8% 7.0% 8.0% 8.5% 7.3% 7.4% 7.3% 7.3% Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 (a) Excluding the estimated impact of trade inventory movements Source: PMI Financials or estimates 17

Encouraging Q2, 2019 HTU Offtake Shares in Key Cities PMI HTU Offtake Shares Change vs. PY +6.3pp +7.4pp +0.7pp +8.8pp +4.1pp +3.4pp +9.4pp +1.6pp 12.7% 13.2% 12.6% 12.7% 7.6% 5.9% 3.2% 3.3% Athens Bratislava Geneva Kiev Lisbon Milan Moscow Munich +5.9pp +4.6pp (1.1)pp +4.1pp +1.9pp +13.1pp +4.2pp +1.2pp 20.4% 19.7% 12.2% 10.1% 9.3% 8.2% 6.4% 2.7% Prague Rome Seoul Sofia Tokyo Vilnius Warsaw Zurich Source: PMI Financials or estimates 18

U.S.: FDA Authorization of IQOS • On April 30th, the FDA confirmed that the marketing of IQOS is appropriate for the protection of public health and authorized it for sale in the U.S. • Exclusive license with Altria Group, Inc.: ⎼ Philip Morris USA has the market expertise and infrastructure to ensure a successful launch, beginning with the initial lead market of Atlanta, Georgia 19

2019: Raising Our EPS Guidance • Raising our 2019 reported diluted EPS guidance, at prevailing exchange rates, to be at least $4.94, compared to $5.08 in 2018 • $0.07 increase (vs. May 1st guidance), driven by: ⎼ Stronger business performance, primarily reflecting better shipment volume ⎼ A tax benefit of four cents related to a reduction in estimated U.S. federal income tax on dividend repatriation for the years 2015 to 2018 ⎼ Partly offset by asset impairment and exit costs of approximately two cents per share related to a plant closure in Colombia, as part of our global manufacturing infrastructure optimization • Guidance continues to include an unfavorable currency impact, at prevailing exchange rates, of approximately $0.14 per share (one cent in H2, 2019) Source: PMI Financials or estimates 20

2019: EPS Guidance Full-Year ($/share) 2019 Adjusted Forecast 2018 Growth Reported Diluted EPS ≥ $4.94 (a) $5.08 - Tax items (0.04) 0.02 - Asset impairment and exit costs 0.03 ̶ 0.20 - Canadian tobacco litigation-related expense 0.09 ̶ - Loss on deconsolidation of RBH 0.12 ̶ Adjusted Diluted EPS $5.14 $5.10 - Net earnings attributable to RBH (0.26) (b) Adjusted Diluted EPS $5.14 $4.84 (c) - Currency (0.14) Adjusted Diluted EPS, excluding currency $5.28 $4.84 (c) ≥ 9% (a) Reflects the exclusion of previously anticipated net EPS of approximately $0.28 attributable to RBH from March 22, 2019 through December 31, 2019. The impact relating to the eight-day stub period was not material (b) Net reported diluted EPS attributable to RBH from March 22, 2018 through December 31, 2018 (c) Pro forma Source: PMI Financials or estimates 21

2019: Improved Total Volume Forecasts (% change vs. PY) Previous New Previous New ̴ (1.0)% (1.5)% (2.0)% (2.5)% ̴ (2.5)% (3.0)% PMI(a) Industry(b) (a) Shipment volume, on a like-for-like basis (b) Excluding China and the U.S. Note: Reflects cigarettes and HTUs Source: PMI Financials or estimates 22

2019: Net Revenues and Pricing Assumptions • Currency-neutral like-for-like net revenue growth of at least 6% (vs. at least 5%, previously) • Now expect IQOS device net revenues to account for less than 20% of our total RRP net revenues (vs. 20% to 25% range communicated previously), primarily reflecting a favorable geographic mix impact related to HTU shipment volume • Continue to anticipate a full-year like-for-like combustible tobacco pricing variance above 5%, supported by H1, 2019 variance of 5.2%(a) (a) Reflects combustible tobacco pricing as a % of PY combustible tobacco net revenues, on a like-for-like basis Source: PMI Financials or estimates 23

2019: Investing Further Behind IQOS • Positive top-line momentum provides opportunity to further increase or advance investments behind IQOS, in order to: ⎼ Accelerate product and commercial development ⎼ Expand distribution in existing and new geographies in H2 ⎼ Further enhance IQOS 3 device in 2019 to reinforce the brand ⎼ Strengthen our category leadership as competition intensifies • Now anticipate net incremental investments behind RRPs of approximately $400 million: ⎼ Majority of the $100 million step-up expected in Q3 • Assume ≥ 100 bps currency-neutral like-for-like adjusted OI margin increase Source: PMI Financials or estimates 24

Q3, 2019: EPS Outlook • Expect adjusted diluted EPS to be essentially flat, ex-currency, compared to our pro forma adjusted diluted EPS of $1.35 in Q3, 2018 • Assumes a currency-neutral like-for-like net revenue growth rate slightly below our full-year assumption of at least 6% • Reflects higher expected costs on a like-for-like basis: ⎼ Primarily due to our net incremental investments behind RRPs, with around half of the full-year total of approximately $400 million expected to come in Q3, 2019 Source: PMI Financials or estimates 25

2019: Cash Flow Operating ̴ $9.5(a) Cash Flow billion Total Capital Expenditures ̴ $1.1 billion (a) Subject to year-end working capital requirements Note: Operating cash flow is defined as net cash provided by operating activities Source: PMI Financials or estimates 26

Building on a Promising Start to 2019 • Very solid like-for-like Q2 performance • Fundamentals supporting our strong combustible tobacco portfolio are intact • Favorable momentum for IQOS continues across geographies: ⎼ Confidence in HTU shipment volume target of 90 to 100 billion units by 2021 • On a currency-neutral like-for-like basis, we increased: ⎼ 2019 growth assumption for net revenues to at least 6% ⎼ Anticipated 2019 growth rate for adjusted diluted EPS to at least 9% Source: PMI Financials or estimates 27

Delivering a Smoke-Free Future 2019 Second-Quarter Results Questions & Answers Have you downloaded the PMI Investor Relations App yet? iOS Download Android Download The free IR App is available to download at the Apple App Store for iOS devices and at Google Play for Android mobile devices Or go to: www.pmi.com/irapp

Delivering a Smoke-Free Future 2019 Second-Quarter Results July 18, 2019

Glossary of Key Terms and Definitions, and Reconciliation of Non-GAAP Measures 30

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 performance reflect cigarettes and heated tobacco units • References to total international market, defined as worldwide cigarette and heated tobacco unit volume excluding the United States, total industry, total market and market shares are PMI estimates for tax-paid products based on the latest available data from a number of internal and external sources and may, in defined instances, exclude the People's Republic of China and/or PMI's duty free business. In addition, to reflect the 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 and cigarillos, and does not include reduced-risk products • "Combustible products" is the term PMI uses to refer to cigarettes and OTP, combined • In-market sales, or "IMS," is defined as sales to the retail channel, depending on the market and distribution model • "Total shipment volume" is defined as the combined total of cigarette shipment volume and heated tobacco unit shipment volume 31

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 to report the volume of brands sold by RBH for which other PMI subsidiaries are the trademark owner. These include HEETS, Next, Philip Morris and Rooftop, 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 total industry/market volumes are subject to the impact of inventory movements in various trade channels that include estimated trade 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, timing of excise tax increases or other influences that may affect the timing of sales to customers. In such instances, in addition to reviewing PMI shipment volumes and certain estimated total industry/market volumes on a reported basis, management reviews these measures on an adjusted basis that excludes the impact of distributor and/or estimated trade inventory movements. Management also believes that disclosing PMI shipment volumes and estimated total industry/market volumes in such circumstances on a basis that excludes the impact of distributor and/or estimated trade inventory movements, such as on an IMS basis, improves the comparability of performance and trends for these measures over different reporting periods • "SoM" stands for share of market 32

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 other nicotine-containing products, primarily e-vapor products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes. PMI recognizes revenue when control is transferred to the customer, typically either 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 and other 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. 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. For PMI's 2018 pro forma adjusted diluted EPS by quarter and year-to-date, see Schedule 3 in PMI's second-quarter 2019 earnings release 33

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 the potential to present less risk of harm to smokers who switch to these products versus continued smoking. PMI has a range of RRPs in various stages of development, scientific assessment and commercialization. Because PMI's RRPs do not burn tobacco, they produce an aerosol that contains far lower quantities of harmful and potentially harmful constituents than found in cigarette smoke • "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 product," or "HTP," is a manufactured tobacco product that delivers a nicotine containing vapor (aerosol), without combustion of the tobacco mixture • "Heated tobacco units," or "HTUs," is the term PMI uses to refer to heated tobacco consumables, which for PMI include the company's HEETS, HEETS Marlboro and HEETS FROM MARLBORO, defined collectively as HEETS, as well as Marlboro HeatSticks and Parliament HeatSticks • Unless otherwise stated, all references to IQOS are to PMI's heat-not-burn products • 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 by market, 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 34

Glossary: Reduced-Risk Products (cont.) • 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 • "Total IQOS users" means the estimated number of Legal Age (minimum 18-year-old) IQOS users that used PMI HTUs for at least 5% of their daily tobacco consumption over the past seven days • "Converted IQOS Users" means the estimated number of Legal Age (minimum 18-year-old) IQOS users that used PMI HTUs for over 95% of their daily tobacco consumption over the past seven days • "Predominant IQOS Users" means the estimated number of Legal Age (minimum 18-year-old) 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" means the estimated number of Legal Age (minimum 18-year-old) 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" means the estimated number of Legal Age (minimum 18-year-old) IQOS users that used PMI HTUs for less than 5% of their daily tobacco consumption over the past seven days • New PMI methodology as of 2018 for estimating the number of people who have stopped smoking and made the change to IQOS: for markets where IQOS is the only heated tobacco 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 heated tobacco 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 35

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Reported Diluted EPS, excluding Currency, and Reconciliation of Reported Diluted EPS to Adjusted Diluted EPS, excluding Currency (Unaudited) Quarters Ended June 30, 2019 2018 % Change Reported Diluted EPS $ 1.49 $ 1.41 5.7% Currency (0.07) Reported Diluted EPS, excluding Currency $ 1.56 $ 1.41 10.6% Quarters Ended June 30, Year Ended 2019 2018 % Change 2018 Reported Diluted EPS $ 1.49 $ 1.41 5.7% $ 5.08 Asset impairment and exit costs 0.01 - - Tax items (0.04) - 0.02 Adjusted Diluted EPS $ 1.46 $ 1.41 3.5% $ 5.10 Currency (0.07) Adjusted Diluted EPS, excluding Currency $ 1.53 $ 1.41 8.5% 36

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of RBH, excluding Currency (Unaudited) Quarters Ended June 30, 2019 2018 % Change Adjusted Diluted EPS (a) $ 1.46 $ 1.41 3.5% Net earnings attributable to RBH (0.08) Adjusted Diluted EPS $ 1.46 $ 1.33 (b) 9.8% Currency (0.07) Adjusted Diluted EPS, excluding Currency $ 1.53 $ 1.33 (b) 15.0% (a) For the calculation, see previous slide (b) Pro forma 37

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 Net Revenues Excluding Net Revenues Quarters Ended Net Excluding Currency Acquisitions excluding Total Currency & Revenues excluding June 30, Revenues Currency Currency & Acquisitions Currency Acquisitions 2019 Reduced-Risk Products 2018 % Change $ 428 $ (36) $ 464 $ - $ 464 European Union $ 182 +100% +100% +100% 182 (15) 197 - 197 Eastern Europe 65 +100% +100% +100% 86 (3) 89 - 89 Middle East & Africa 112 (22.8)% (20.3)% (20.3)% - - - - - South & Southeast Asia - - - - 765 (7) 772 - 772 East Asia & Australia 656 16.6% 17.7% 17.7% 5 - 5 - 5 Latin America & Canada 5 (2.4)% 6.1% 6.1% $ 1,466 $ (62) $ 1,528 $ - $ 1,528 Total RRPs $ 1,020 43.7% 49.8% 49.8% 2019 PMI 2018 % Change $ 2,577 $ (216) $ 2,793 $ - $ 2,793 European Union $ 2,503 3.0% 11.6% 11.6% 822 (66) 888 - 888 Eastern Europe 760 8.2% 16.8% 16.8% 1,004 (90) 1,094 - 1,094 Middle East & Africa 1,022 (1.8)% 7.0% 7.0% 1,248 (32) 1,280 - 1,280 South & Southeast Asia 1,156 8.0% 10.7% 10.7% 1,521 (25) 1,546 - 1,546 East Asia & Australia 1,478 2.9% 4.6% 4.6% 527 (18) 545 - 545 Latin America & Canada 807 (34.7)% (32.5)% (32.5)% $ 7,699 $ (447) $ 8,146 $ - $ 8,146 Total PMI $ 7,726 (0.3)% 5.4% 5.4% Note: Sum of Regions might not foot to Total PMI due to roundings. "-" indicates amounts between -$0.5 million and +$0.5 million 38

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of RBH, excluding Currency ($ in millions) / (Unaudited) Quarters Ended June 30, 2019 2018 % Change Net Revenues $ 7,699 $ 7,726 (0.3)%(0.3) Net Revenues attributable to RBH (253) Net Revenues $ 7,699 $ 7,473 (a) 3.03.0% Currency (447) Net Revenues, excluding Currency $ 8,146 $ 7,473 (a) 9.09.0% (a) Pro forma 39

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) Adjusted Adjusted Operating Excluding Asset Adjusted Operating Income Asset Adjusted Operating Acqui- Operating Excluding Currency Impairment Operating Currency Income excluding Impairment Operating Total Income sitions Income Currency & Acqui- & Exit Costs Income excluding Currency & Exit Costs Income sitions Currency & Acqui- sitions Quarters Ended 2019 2018 % Change June 30, $ 1,195 $ - $ 1,195 $ (121) $ 1,316 $ - $ 1,316 European Union $ 1,177 $ - $ 1,177 1.5% 11.8% 11.8% 256 - 256 (16) 272 - 272 Eastern Europe 261 - 261 (1.9)% 4.2% 4.2% 441 - 441 (46) 487 - 487 Middle East & Africa 403 - 403 9.4% 20.8% 20.8% 492 - 492 (14) 506 - 506 South & Southeast Asia 440 - 440 11.8% 15.0% 15.0% 642 - 642 26 616 - 616 East Asia & Australia 498 - 498 28.9% 23.7% 23.7% 161 (23) 184 6 178 - 178 Latin America & Canada 314 - 314 (41.4)% (43.3)% (43.3)% $ 3,187 $ (23) $ 3,210 $ (165) $ 3,375 $ - $ 3,375 Total PMI $ 3,093 $ - $ 3,093 3.8% 9.1% 9.1% 40

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of RBH, excluding Currency ($ in millions) / (Unaudited) Quarters Ended June 30, 2019 2018 % Change Operating Income $ 3,187 $ 3,093 3.0% Asset impairment and exit costs (23) - Adjusted Operating Income $ 3,210 $ 3,093 3.8% Operating Income attributable to RBH (177) Adjusted Operating Income $ 3,210 $ 2,916 (a) 10.1% Currency (165) Adjusted Operating Income, excluding Currency $ 3,375 $ 2,916 (a) 15.7% (a) Pro forma 41

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 Adjusted Adjusted Adjusted Net Operating Adjusted Operating Net Operating Adjusted Adjusted Operating Operating Revenues Income Adjusted Adjusted Adjusted Operating Income Revenues Income Operating Net Operating Income Income excluding Margin Operating Net Operating Operating Income Margin excluding excluding Income Revenues Income excluding Margin Currency excluding Income Revenues Income Income Margin excluding Currency Currency (a) Margin Currency excluding & Acqui- Currency (a) Margin Margin excluding Currency (b) & Acqui- (a) Currency sitions (b) & Acqui- Currency & Acqui- sitions (a) sitions sitions Quarters Ended 2019 2018 % Points Change June 30, $ 1,195 $ 2,577 46.4% $ 1,316 $ 2,793 47.1% $ 1,316 $ 2,793 47.1% European Union $ 1,177 $ 2,503 47.0% (0.6) 0.1 0.1 256 822 31.1% 272 888 30.6% 272 888 30.6% Eastern Europe 261 760 34.3% (3.2) (3.7) (3.7) 441 1,004 43.9% 487 1,094 44.5% 487 1,094 44.5% Middle East & Africa 403 1,022 39.4% 4.5 5.1 5.1 492 1,248 39.4% 506 1,280 39.5% 506 1,280 39.5% South & Southeast Asia 440 1,156 38.1% 1.3 1.4 1.4 642 1,521 42.2% 616 1,546 39.8% 616 1,546 39.8% East Asia & Australia 498 1,478 33.7% 8.5 6.1 6.1 184 527 34.9% 178 545 32.7% 178 545 32.7% Latin America & Canada 314 807 38.9% (4.0) (6.2) (6.2) $ 3,210 $ 7,699 41.7% $ 3,375 $ 8,146 41.4% $ 3,375 $ 8,146 41.4% Total PMI $ 3,093 $ 7,726 40.0% 1.7 1.4 1.4 (a) For the calculation of Adjusted Operating Income and Adjusted Operating Income excluding currency and acquisitions refer to slide 40 (b) For the calculation of Net Revenues excluding currency and acquisitions refer to slide 38 42

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Adjustments for the Impact of RBH, excluding Currency ($ in millions) / (Unaudited) Quarters Ended June 30, 2019 2018 % Change Adjusted Operating Income (a) $ 3,210 $ 3,093 3.83.8% Net Revenues $ 7,699 $ 7,726 (0.3)(0.3)% Adjusted OI Margin 41.7% 40.0% 1.71.7 Adjusted OI Margin attributable to RBH (1.0) (1.0) Adjusted OI Margin 41.7% 39.0% (b) 2.72.7 Currency 0.3 0.3 Adjusted OI Margin, excluding Currency 41.4% 39.0% (b) 2.42.4 (a) For the calculation of Adjusted Operating Income refer to slide 40 (b) Pro forma 43

PHILIP MORRIS INTERNATIONAL INC. and Subsidiaries Reconciliation of Non-GAAP Measures Reconciliation of Reported Diluted EPS to Pro Forma Adjusted Diluted EPS (Unaudited) Quarter Quarter Six Months Quarter Nine Months Quarter Year Quarter Ended Ended Ended Ended Ended Ended Ended Ended Mar 31, Jun 30, Jun 30, Sept 30, Sept 30, Dec 31, Dec 31, Mar 31, 2018 2018 2018 2018 2018 2018 2018 2019 Reported Diluted EPS $ 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 - Adjusted Diluted EPS $ 1.00 $ 1.41 $ 2.41 $ 1.44 $ 3.85 $ 1.25 $ 5.10 $ 1.09 (c) Net earnings attributable to RBH - (a) (0.08) (0.08) (a) (0.09) (0.18) (a) (0.08) (0.26) (a) - (b) Pro Forma Adjusted Diluted EPS $ 1.00 $ 1.33 $ 2.33 $ 1.35 $ 3.67 $ 1.17 $ 4.84 (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 44

Delivering a Smoke-Free Future 2019 Second-Quarter Results July 18, 2019

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