Philip Morris at Consumer Analyst Group Conference

Jacek Olczak – Chief Financial Officer

Strong market share everywhere

“Our leadership spans across all the major markets outside China and the U.S. In 2014, we achieved number one or number two positions in 29 out of the 40 largest markets by industry net revenue.’

Six of the top 15 cigarette brands

“Our international brands are in excellent shape. We own six of the top 15 international cigarette brands. Marlboro, L&M, Parliament, Bond Street, Chesterfield and Philip Morris all increased their share.”

Volume in the EU is forecast to be down 4% this year

“We are off to a positive start in 2015. The cigarette industry volume decline in the EU region moderated to 3.1% in 2014 and we are forecasting a decrease of about 4% this year.”

Volume fell by 9% in Russia

“In Russia, while cigarette industry volume decreased by 9.2% in 2014 and a similar rate of decline is expected this year, margins have been considerably boosted by large price increases that were primarily tax-driven.”

Investing in “reduced risk” products

“We continue to invest behind our combustible business and our Reduced-Risk Products. In November, we launched iQOS and Marlboro HeatSticks in the pilot cities of Nagoya, Japan, and Milan, Italy. The pilot marketing program for iQOS focuses on innovation and product convenience benefits, such as no ash and less smell. ”

Return 100% of FCF to shareholders

“We are also fully committed to returning around 100% of our free cash flow to our shareholders.”

Encourage local operations

“In terms of local content, about three-quarters of our cigarettes are manufactured locally or within the same trade zone in which they are sold. About one quarter of the tobacco leaf is sourced in the country of manufacture. Within the framework of our global sourcing of direct materials, we seek to encourage our suppliers to set up local operations.”

Nothing has changed in Australia from plain packaging laws

“Nothing has changed in Australia when it comes to smoking rates, and this is actually not industry data. I encourage you to look into the official Australian government statistics in the individual states and one could see that the smoking rates actually not only that they are flat, actually in some states went up.”

Claiming that iQOS is equivalent to quitting smoking

the recent days we talked a lot about the first heat-not-burn platform iQOS, which is in the commercialization stage. We about to finish the clinical studies, a battery of clinical studies which should allow us to present a very solid and robust evidence to the regulators. I have very much in mind the FDA in the U.S., which we hope to be able to prove that switching consumer from smoking combustible cigarette into iQOS essentially is at the same level of results in the same benefits or very close, the same benefits as one would quit smoking altogether.”