Consolidated Results

(in millions of dollars, except per share data) 2013 2012(1)
Net revenues $80,029 $77,393
Cost of sales 10,410 10,373
Excise taxes on products 48,812 46,016
Gross profit 20,807 21,004
Operating income 13,515 13,863
Net earnings attributable to PMI 8,576 8,800
Basic earnings per share 5.26 5.17
Diluted earnings per share 5.26 5.17
Cash dividends declared per share 3.58 3.24


Summary Results By Business Segment

European Union

Cigarette Shipment Volume (Billion Units)

2013 2012
185.1 198.0

Reported Net Revenues*($ Millions)

2013 2012
8,596 8,526

Reported Operating Companies Income(2)($ Millions)

2013 2012
4,238 4,187

Eastern Europe, Middle East & Africa

Cigarette Shipment Volume (Billion Units)

2013 2012
296.5 303.8

Reported Net Revenues*($ Millions)

2013 2012
8,766 8,332

Reported Operating Companies Income(2)($ Millions)

2013 2012
3,779 3,726


Cigarette Shipment Volume (Billion Units)

2013 2012
301.3 326.6

Reported Net Revenues*($ Millions)

2013 2012
10,501 11,198

Reported Operating Companies Income(2)($ Millions)

2013 2012
4,622 5,197

Latin America & Canada

Cigarette Shipment Volume (Billion Units)

2013 2012
97.3 98.6

Reported Net Revenues*($ Millions)

2013 2012
3,354 3,321

Reported Operating Companies Income(2)($ Millions)

2013 2012
1,134 1,043
  • * Excludes excise taxes on products.
  • (1) Certain amounts have been reclassified to conform with the current year’s presentation due to the separate disclosure of equity (income)/loss in unconsolidated subsidiaries, net.
  • (2) PMI’s management evaluates segment performance and allocates resources based on operating companies income, which PMI defines as operating income, excluding general corporate expenses and amortization of intangibles, plus equity (income)/loss in unconsolidated subsidiaries, net.

Dear Shareholder,

“We delivered solid results in 2013, despite an extremely challenging operating environment, while maintaining our uncompromising commitment to invest in the long-term growth of our business.”

Andre Calantzopoulos André Calantzopoulos
Chief Executive Officer
Louis Camilleri Louis C. Camilleri
Chairman of the Board

Last year was uniquely challenging for the industry and for PMI. The exceptionally weak global macroeconomic environment had a significant impact on industry volume in a number of key markets.

Within this context, we withstood the pressures well and delivered a solid financial performance. This is testament to the strength of our business fundamentals – which include our strong pricing power, driven by our industry-leading brand portfolio – and our ability to overcome challenges with discipline and determination.

2013 Results

Our overall performance last year was adversely impacted by specific challenges in Japan and the Philippines.

In Japan, we endured sustained competitive activities throughout the year that eroded our market share. We fully intend to address the situation through a planned pipeline of strong portfolio initiatives and increased marketing investment and expect that our share should stabilize during 2014.

In the Philippines, we faced truly exceptional circumstances following an excise tax increase of unprecedented magnitude in January 2013. We believe that, by the end of last year, our main local competitor was still producing approximately double the volume that it was declaring for excise tax purposes, thereby subsidizing an artificially low price for its portfolio that, in turn, caused significant down-trading from our key brands, Marlboro and Fortune. While recent developments are encouraging, the situation is likely to remain uncertain for much of 2014. Our focus going forward will be on recovering our volume base and re-establishing a platform for long-term growth.

Our market share performance elsewhere was strong in 2013, with 23 of our top 30 income markets registering stable or growing share, the highest number of markets to do so since we became a public company in 2008. Our share performance was also strong, on an aggregate basis, with gains in three of our four Regions, namely the EU, EEMA and LA&C, up by 0.5, 0.2 and 1.1 percentage points, respectively. Excluding China and the Philippines, our market share in the Asia Region was down by 0.4 points, and our total international share was essentially flat.

Within the context of our overall share performance, Marlboro was resilient, particularly given the sizable total industry declines in a large number of its strongholds and down-trading across a wide range of markets. Most encouragingly, the brand continued to gain share in the EU Region, where it grew by 0.4 percentage points versus 2012, while also achieving growth in both the EEMA and LA&C Regions, up by 0.1 point and 0.4 points, respectively. Furthermore, excluding China and the Philippines, Marlboro grew by 0.1 share point in the Asia Region as well. In addition to the deployment of several innovative line extensions last year, some of which are featured later in this Report, we are ready to introduce the Marlboro Architecture 2.0. This new initiative will allow the core brand variants to firmly occupy more modern and smoother-tasting territories with new packaging and cigarette construction as well as an array of digital marketing platforms. We plan to initiate the worldwide rollout of the Marlboro Architecture 2.0 as of the second half of 2014.

Other major brands also fared well last year. Of particular note was the excellent performance of above premium Parliament, which grew volume by 2.9% versus 2012, and below premium L&M, which grew volume by 1.4% over the same period. Both brands benefited from the deployment of packaging upgrades and the launch of several innovative products, including the industry’s first-ever Recessed Filter capsule product, Parliament Hybrid, in Korea.

To support our brand portfolio, we continued to deploy a wide range of innovative adult consumer and trade engagement tools adapted to modern mobile channels. Last year, 37 markets had active pilot commercial programs in place, many of which contributed to significant increases in market share and strong organizational engagement. By the end of 2014, more than 45 markets – representing close to 90% of our operating companies income (OCI) – are expected to have fully deployed similar programs, which we believe should further accelerate the growth momentum of our brand portfolio.

Cigarette volume of 880.2 billion units in 2013 declined by 5.1% versus the previous year, driven almost exclusively by total market declines, notably in the EU Region, the Philippines, Russia and Turkey, partly offset by market share gains in the EU, EEMA and LA&C Regions. Excluding the impact of the Philippines, cigarette volume declined by 2.7% versus 2012.

Reported net revenues, excluding excise taxes, of $31.2 billion, reflecting constant currency growth of 1.9% versus 2012, fell short of our mid- to long-term annual growth target of 4% to 6%. This shortfall was due to the most severe volume/ mix impact in our history resulting from total market declines, which eroded a large part of our currency-neutral $2.1 billion positive price variance for the year – the highest price variance we have ever achieved.

Adjusted OCI reached $14.1 billion, up by 3.4% on a constant currency basis versus 2012, but below our growth target of 6% to 8%. Pricing was the key contributor to our OCI growth versus the previous year, while the adverse volume/mix and higher manufacturing costs weighed on our performance.

We surpassed our cost savings target of $300 million in 2013. Manufacturing and procurement-related savings helped offset increases in tobacco leaf and clove costs. In February this year, we announced a new annual productivity target of a further $300 million.

Adjusted diluted earnings per share (EPS) reached $5.40, up by 3.4% versus 2012 and by 10.0% on a constant currency basis, within our mid- to long-term growth target of 10% to 12%. Currency negatively impacted adjusted diluted EPS growth by $0.34 per share, representing a significant headwind

Free cash flow of $8.9 billion was up by $570 million versus 2012, mainly driven by improvements in working capital. Excluding the impact of unfavorable currency, our free cash flow grew by $990 million or 11.8% versus 2012.

We successfully completed a number of capital market transactions in 2013. We issued an aggregate of $7.3 billion in bonds at favorable interest rates and, in so doing, prolonged the average time to maturity of our total long-term debt to 10.8 years while simultaneously reducing the weighted average coupon of our total bond portfolio to 3.8%.

Our total shareholder return (TSR) in 2013 in U.S. Dollar terms was 8.5%, trailing that of the S&P 500 (32.4%), our Compensation Survey Group (27.6%), the FTSE 100 (20.9%) and our Tobacco Peers (17.5%). Strong currency headwinds, recent volume declines and our moderate EPS outlook for 2014 weighed on our share price.

On a three-year basis beginning January 1, 2011, our TSR in U.S. Dollar terms of 67.7% was below that of our Tobacco Peers (71.6%), which includes the major American tobacco companies with U.S. Dollar earnings that were not comparably affected by currency exchange rates, but outperformed that of our Compensation Survey Group (63.6%), the S&P 500 (56.8%) and the FTSE 100 (35.0%).

Our strong free cash flow enabled us to continue to reward shareholders generously, as demonstrated by our dividend increase last year of 10.6%, to an annualized rate of $3.76 per share, and $6.0 billion in total share repurchases. Since the spin-off in March 2008, we have increased the dividend rate by 104.3% and have spent $33.9 billion through the end of 2013 to repurchase 556.2 million shares – representing 26.4% of our initial shares outstanding – at an average price of $60.86 per share.

Business Development

In 2013 we finalized certain important business development initiatives that we expect will enhance our long-term competitiveness and growth prospects.

These included: the purchase of the remaining 20% interest in our affiliate in Mexico; the purchase of a 49% interest in Arab Investors-TA, which will bring our economic interest in Société des Tabacs Algéro-Emiratie (STAEM) in Algeria to approximately 25%; the acquisition of a 20% interest in Megapolis, our distributor in Russia; and the restructuring of our business in Egypt. These transactions are accretive to our earnings and will yield attractive returns. In addition, we finalized a strategic framework with our former parent, Altria Group, Inc., related to the commercialization of certain reduced-risk products, subject to FDA authorization, and e-cigarettes.

2011-2013 Total Shareholder Return - US$
Six Consecutive Dividend Increases Since the Spin-Off

The Fiscal, Regulatory and Illicit Trade Environment

Our record-high pricing variance in 2013 reflects not only the strength of our brand portfolio but also the broadly rational excise tax environment that prevails internationally. Overall, we did not face any disruptive excise tax increase around the world – with the obvious exception of the Philippines. Importantly, an increasing number of governments have now implemented multi-year excise tax plans that increase predictability. We also continued to see improved and more effective tax structures through high specific-to-total tax ratios, as well as higher levels of minimum excise tax yields. Despite this good progress, certain key markets still maintain high ad-valorem regimes and thus remain a priority for change.

The European Union Tobacco Products Directive (TPD) was the subject of a highly politicized debate throughout 2013. While it was encouraging to eventually see the elimination or moderation of certain irrational TPD provisions, such as the ban on slimmer-diameter cigarettes, the Directive regretfully still contains oversized health warnings without any apparent concern for property rights that the EU Charter protects and several provisions that fail to meet the standards of sound evidence-based policy. Once the TPD comes into force – expected during the second quarter of 2014 – Member States will have up to 24 months to transpose its text into national legislation.

Beyond the TPD, 2013 was a year of intensifying regulatory pressure across the globe. Nevertheless, numerous legislative initiatives advocating plain packaging, display bans and/or ingredients restrictions were averted, rejected or made subject to an injunction, demonstrating our continued ability as a company and/or industry to prevail in the face of extreme measures that ignore scientific evidence or rely on dubious facts. We have demonstrated our readiness to resort to legal action when political dialogue fails.

Growth in the illicit trade of cigarettes continues unabated despite some progress in certain markets. Challenging economic conditions in the EU Region, coupled with the impact of large excise tax increases in markets, such as the Philippines, Russia and Turkey, are exacerbating this phenomenon. We remain committed to combating this threat through our well-staffed and centralized organizational structure, our agreement with Interpol and the industry’s recent progress in enhancing controls surrounding the supply of critical raw materials, especially acetate tow, which could have the most significant impact on reducing illicit production in the short-term.

Research & Development and Environment, Health & Safety

We made very substantial progress on the exciting reduced-risk product front (RRP) – the term we use to refer to products that have the potential to reduce individual risk and population harm. We announced, in January this year, our plans to construct our first reduced-risk products manufacturing facility in Italy and have selected the electronic device supplier for our Platform 1 “heat-not-burn” product. We initiated the eight planned clinical trials of our Platform 1 in 2013 which we expect to complete this year. In parallel, we greatly advanced our preparation for the commercialization of RRPs in terms of our marketing programs and business model, including our supply and after-sales chain. Consequently, we have announced our decision to accelerate the launch of our Platform 1 product with pilot city tests in 2014 and a national launch in 2015. Our Platform 2 product is in the pre-clinical testing phase and early stages of industrial scale-up, while our Platform 3 product is still in the product development phase and early stages of pre-clinical assessment. We intend to enter the e-cigarette category in the second half of 2014 with current generation technology, but with an improved taste. We are also developing other potential platforms and are working on developing the next generation of e-cigarette technology.

On the RRP regulatory front, we have shared our approach and studies with the U.S. Food & Drug Administration’s Center for Tobacco Products. In parallel, we have begun to engage with regulators in several other markets. The TPD, although disappointing for its failure to provide a comprehensive regulatory framework for RRPs in the EU, does not raise any insurmountable hurdles to their commercialization.

Our Agricultural Labor Practices program rollout is on track. By the end of 2013, all of our more than 3,700 field technicians had received additional training, and 98% of our approximately 500,000 farmers had already been enrolled in the program in more than 30 countries. The U.S. Department of Labor acknowledged PMI’s continued efforts to address child labor and migrant workers’ issues and removed Kazakhstani tobacco from their List of Goods Produced by Child Labor or Forced Labor.

On the environmental front, the Carbon Disclosure Project awarded us a score of 97%, up by six points versus 2012, and recognized PMI as one of only five Global 500 Consumer Staples companies to be a carbon disclosure leader. We aim to continue our leading performance and have set clear targets to further improve our environmental sustainability.

Also of note was the significant improvement in lost-time injuries in our factories to a record-low rate that represented a 60% reduction over the previous year, reflecting our unfailing focus on workplace safety.

The Organization

Last year marked the third edition of our biennial employee opinion survey since the spin-off. Key findings from the survey included spectacular progress in overall employee engagement and managerial effectiveness, well above global norms; tangible evidence that the numerous organizational initiatives we have put in place over the past few years are bearing fruit; and a clear demonstration that short-term adversities forge our employees’ determination and unfailing belief in the company’s bright future. The survey also allowed us to identify certain areas for further improvement which we are addressing. Last year, we continued to strengthen the depth and breadth of our already impressive talent pool, and to improve our organizational effectiveness, collaborative spirit and long-term focus.

Importantly, diversity and, in particular, gender balance improvement at all levels, continue to be a key focus area for the organization.

As of 2014, we are adopting a modified salary grade structure that better addresses PMI’s current organizational needs. We have also reduced our target variable compensation levels, while increasing the relative mix of equity versus cash for senior management, to better reflect current market practices and to increase even further the focus of management on longer-term performance.

We are blessed with an exceptional Board of Directors and derive great benefit from its tremendous experience. The Chief Executive Officer (CEO) transition was planned and executed seamlessly, and the separation of the Chairman and CEO roles operates with utmost efficiency. The relationship between the Board and management continues to be governed by total transparency and a very positive atmosphere.

Last year ended on the profoundly sad note of Graham Mackay’s passing. Graham had served as a member of our Board of Directors since our transition to a public company in March 2008. As the Executive Chairman of one of the largest brewers in the world, he brought invaluable business, strategic, marketing and regulatory insights to PMI’s Board. He will be sorely missed.

Finally, Mathis Cabiallavetta and J. Dudley Fishburn will retire from the Board of Directors at the Annual Meeting in May this year. Mathis and Dudley also served on the Board since our spin-off, and we have benefited tremendously from their dedicated service and invaluable advice. They leave with our most heartfelt gratitude.

The Year Ahead

We delivered solid results in 2013, despite an extremely challenging operating environment, while maintaining our uncompromising commitment to invest in the long-term growth of our business. The challenges of last year will likely persist well into 2014, but we have sharpened our ability to confront adversity and are focused on what needs to be done. We are blessed with some of the best resources in the industry, from our world-class portfolio of leading brands to a depth and breadth of employee talent that is second-to-none. We will continue to meet our challenges head-on in 2014 and, through judicious additional investment into the business, reinvigorate our growth prospects for 2015 and beyond, all with the objective of maintaining our steadfast commitment to generously reward our shareholders.

André Calantzopoulos, Chief Executive Officer

Louis C. Camilleri, Chairman of the Board

March 7, 2014

click here to expand complete letter

Leading The WayTo profitableGrowth

Marlboro: The World's Favorite Cigarette Brand

With a shipment volume in 2013 of 291.1 billion units, Marlboro remains the preeminent premium cigarette and the only truly global brand in our industry. The Marlboro brand architecture is a portfolio framework that allows us to unlock the potential of the brand’s equity and address the preferences of adult smokers. The Marlboro Flavor family, representing quality and tobacco expertise, leads the way in bringing adult smokers the most enjoyable tobacco flavor satisfaction. The Marlboro Gold family delivers pleasurable smooth tastes and refined smoking experiences that are progressive and contemporary. The Marlboro Fresh family offers new experiences, innovations and differentiated refreshing tastes that go beyond the ordinary. Our new introductions generated a combined volume of 35.9 billion units in 2013, accounting for more than 12% of Marlboro’s total volume. Below are a few examples.

Marlboro Touch: An innovative line of slimmer Marlboro cigarettes with different product characteristics to address a range of adult consumer preferences.

Marlboro Touch
Launched in Spain: All the rich flavor of Marlboro, packaged in a box specially lacquered for a softer feel.

Marlboro Touch
Launched in Croatia: A smoother-tasting Marlboro cigarette in an elegant round-corner box using a brighter tobacco blend for a smoother taste and less odor.


Marlboro Advance
Launched in Malaysia: The first Marlboro cigarette with a Recessed Filter for a smooth and satisfying taste, packaged in a vibrant blue foil box.

Marlboro W-Burst
Launched in Japan: The first cigarette in the world with two capsules in the filter to offer more choice in high cooling taste sensations.


Marlboro Kretek Mint
Launched in Mexico: The first Marlboro tobacco blend combining the typical character of Indonesian clove with menthol to deliver a uniquely refreshing taste sensation.

Marlboro Premium Black
Launched in the Gulf Cooperation Council countries: An above premium price Marlboro cigarette with a convenient automatic seal to preserve product freshness.

Marlboro: Regional Share Growth*

European Union

Eastern Europe,
Middle East & Africa


Latin America & Canada

*Source: PMI estimates
**Excluding the People’s Republic of China and the Philippines


Profitable Business Development

We have historically expanded our business through a combination of organic growth and judicious business development initiatives that enhance long-term shareholder value. In 2013 we were very successful on this front as highlighted below.


On September 30, we acquired a 49% equity interest in United Arab Emirates-based Arab Investors-TA (FZC) (AITA) for $625 million. As a result of this transaction, PMI holds an approximate 25% economic interest in Société des Tabacs Algéro-Emiratie (STAEM), an Algerian joint venture 51% owned by AITA and 49% by the Algerian state-owned Société Nationale des Tabacs et Allumettes SpA. STAEM, with which PMI has had a successful partnership since 2005, manufactures and distributes under license PMI’s Marlboro and L&M brands, which together hold more than 40% of the total market. Over the last five years, Algeria has been a key driver of the growth of our premium brands in North Africa. With the fourth-largest total GDP in Africa and an estimated cigarette market of approximately 30 billion units, Algeria holds tremendous potential for future growth. This business transaction is part of our strategy to significantly reinforce our competitive position and enhance our participation in the local profit pool in North Africa and the Middle East. In keeping with this strategy we also recently announced plans to restructure our business in Egypt.


On December 4, we announced our agreement to acquire a 20% equity interest in Megapolis Distribution BV, the holding company of CJSC TK Megapolis (Megapolis), PMI’s distributor in Russia, for $750 million. Megapolis, one of Russia’s leading consumer goods distributors, focuses principally on tobacco and beverages. It employs almost 15,000 employees and commands a direct store delivery system that reaches more than 150,000 points of sale. Megapolis handles approximately 70% of all cigarettes sold in Russia.

In addition to enhanced earnings and cash flow for PMI, this investment lays the foundation for infrastructure expansion and improved operating efficiencies in the distribution of PMI’s portfolio of leading brands in Russia.

At an estimated industry size of 342.0 billion units in 2013, Russia is the largest cigarette market outside of the People’s Republic of China. Our market share in Russia, as measured by Nielsen, was 26.1%, driven by our portfolio of international trademarks, including Marlboro, Parliament, L&M, Chesterfield and Bond Street, and local trademarks, such as Optima and Apollo-Soyuz. Most of our cigarettes sold in Russia are produced at our state-of-the-art facilities in Krasnodar and near St. Petersburg, which is the second-largest PMI production facility in the world. Today we employ approximately 4,400 people in Russia.


On May 21, PMI announced that Grupo Carso, S.A.B. de C.V. would sell to PMI its remaining 20% interest in the Mexican tobacco business. The sale was completed on September 30 for $703 million. As a result, PMI now owns 100% of its Mexican tobacco business.

Mexico: PMI Market
Share 2013*

(2013 Industry Volume*
34.6 billion units)

*Source: PMI estimates


Reduced-Risk Products

We believe that our greatest growth opportunity lies in the commercialization of a world-class portfolio of innovative reduced-risk products that provide adult smokers with the taste, sensory experience, nicotine delivery profile and ritual characteristics that match as closely as possible those of cigarettes. We are developing rigorous scientific evidence to substantiate our products’ potential to reduce the risk of smoking-related diseases to the individual adult smoker in comparison to cigarettes and to reduce the harm to the population as a whole. Scientific substantiation is a core component of our long-term investment. We have also been advocating for the development of strong science-based regulatory frameworks for the review of reduced-risk products, including the approval of reduced exposure and risk claims.

Here are four of the product platforms that we plan to commercialize in the coming years. In the case of Platform 1, our objective is to start pilot city tests during the second half of 2014 and carry out a national launch in 2015.


Platform 1

features an electronic holder that heats tobacco rather than burning it, thereby creating a nicotine-containing aerosol with significantly fewer harmful constituents compared to cigarette smoke.(1)

Platform 2

uses a pressed carbon heat source that, once ignited, heats the tobacco without burning it, to generate a nicotine-containing aerosol. It reduces harmful constituents similar to Platform 1. (1)

Platform 3

is based on technology that PMI acquired in 2011. It uses a chemical process to create a nicotine-containing aerosol. The product is still under development.

Platform 4

is an e-cigarette – a battery powered device that produces an aerosol by vaporizing a nicotine solution.


(1) Our scientific assessment program includes additional studies to assess the potential of Platforms 1 and 2 to reduce the risk of developing tobacco-related diseases compared to cigarettes.

The Path to Commercialization

In November 2013, PMI announced plans to accelerate the commercialization of one of its potentially reduced-risk products in the second half of 2014 in selected cities prior to a full market launch in 2015.

In December 2013, PMI established a strategic framework with Altria Group, Inc. (Altria) under which Altria will make available its e-cigarette products exclusively to PMI for commercialization outside the United States. Likewise, PMI will make available two of its reduced-risk products exclusively to Altria for commercialization in the United States, subject to FDA authorization. PMI plans to enter the e-cigarette market in the second half of 2014.

In January 2014, PMI announced an investment of up to €500 million to build its first manufacturing facility and an associated pilot plant near Bologna, Italy, to produce its potentially reduced-risk tobacco products. Once fully operational, the combined annual production capacity of the factory and pilot plant is expected to reach up to 30 billion units by 2016.



At PMI, we are committed to vigorously address the variety of issues faced by the communities where we operate and source tobacco. The integrated efforts of our contributions, sustainable tobacco production programs and labor initiatives serve to improve the livelihoods of communities around the world. In 2013, our contributions amounted to approximately $39 million provided to some 245 organizations in over 60 markets.

On November 8, 2013, in the wake of Typhoon Haiyan in the Philippines, PMI and its local affiliate, PMFTC, quickly responded with a financial commitment of approximately $2.4 million to support immediate and longer-term recovery efforts. With two manufacturing facilities and more than 4,000 employees in the Philippines, ensuring the safety and well-being of our workforce and their families was the priority of PMFTC’s efforts in the immediate aftermath of the storm. Our employees helped colleagues and their families access medical care, food, clothing and shelter and raised funds, collected in-kind donations and volunteered to assist thousands of people recovering from this devastating natural disaster. We continue to work with the American Chamber Foundation Philippines Inc. and local non-governmental organizations such as the Philippine Red Cross to help restore livelihoods and rebuild the affected areas.

Environmental Sustainability

At PMI, we focus our environmental sustainability efforts in three key areas, as shown below, and have set measurable goals for each that will help us reduce our impact on the world around us. Tackling climate change is an important part of our sustainability strategy. To understand more about our carbon footprint, we undertook an assessment of our entire value chain in 2010. We found that more than 70% of our carbon footprint comes from our supply chain, with around 40% coming from tobacco agriculture alone. This information has helped us develop a targeted strategy to reduce our carbon emissions by 30% by 2020.

We continue to benchmark our carbon reduction results against our external peer group through the Carbon Disclosure Project (CDP), and in 2013 we again achieved a leadership position in the CDP Global 500 Climate Change Report with a score of 97% for our carbon disclosure.

In addition to managing our operations in strict compliance with the laws and regulations of wherever we do business, we have developed global programs to reduce our water and energy consumption and waste production while increasing our rates of reuse and recycling. We have certified all of our main manufacturing facilities to ISO14001, the international standard for environmental management, and have increased our total certified manufacturing facilities to over 85%.



Value Chain Target:

CO2 Emissions 30%*

Environmental Performance

Reducing environmental impact in our factories: Energy, CO2, Water & Waste

We recycle over 80% of our factory waste

Good Agricultural Practices

Protecting the environment where our tobacco is grown and supporting the communities through our Good Agricultural Practices program


*Against a 2010 baseline, per million units of product equivalent. CO2 emissions refer to greenhouse gas emissions converted to CO2 equivalents.


Board of Directors

H. Brown
M. Cabiallavetta
A. Calantzopoulos
L.C. Camilleri
J.D. Fishburn
J. Li
S. Marchionne
K. Morparia
L.A. Noto
R.B. Polet
C. Slim Helú
S.M. Wolf

Harold Brown 2,3,5
Counselor, Center for Strategic
and International Studies
Director since 2008

Mathis Cabiallavetta* 1,3,4,5
Vice Chairman, Swiss Re Ltd.
Director since 2008

André Calantzopoulos
Chief Executive Officer
Director since 2013

Louis C. Camilleri
Chairman of the Board
Director since 2008

J. Dudley Fishburn* 1,2,3,4,5
Chairman, Bluecube
Technology Solutions Ltd.
Director since 2008

Jennifer Li 1,3,4
Chief Financial Officer, Baidu Inc.
Director since 2010

Sergio Marchionne 1,2,3,4
Chief Executive Officer, Fiat S.p.A.
Chairman, CNH Industrial N.V.
Director since 2008

Kalpana Morparia 3,4,5
Chief Executive Officer
J.P. Morgan India Private Ltd.
Director since 2011

Lucio A. Noto 1,3,4
Managing Partner,
Midstream Partners, LLC
Director since 2008

Robert B. Polet 2,3,4,5
Chairman, Safilo Group S.p.A.
Director since 2011

Carlos Slim Helú 3,5
Chairman, Carso Infraestructura y
Construcción, S.A.B. de C.V.
Director since 2008

Stephen M. Wolf 1,2,3,4,5
R.R. Donnelley & Sons Company
Managing Partner, Alpilles, LLC
Director since 2008

   Presiding Director, Lucio A. Noto
1 Member of Audit Committee,
   J. Dudley Fishburn, Chair
2 Member of Compensation and
   Leadership Development Committee,
   Stephen M. Wolf, Chair
3 Member of Finance Committee,
   Mathis Cabiallavetta, Chair
4 Member of Nominating and
   Corporate Governance Committee,
   Kalpana Morparia, Chair
5 Member of Product Innovation and
   Regulatory Affairs Committee,
   Harold Brown, Chair

* Not standing for re-election in 2014

Company Management

A. Calantzopoulos
D. Azinovic
B. Bonvin
P. Brunel
F. de Wilde
M. Firestone
M. King
P. Luongo
A. Marques
J. Mortensen
J. Olczak
M. Pellegrini
J. Pollès
J. Psotta
J. Whitson
M. Zielinski

André Calantzopoulos
Chief Executive Officer

Drago Azinovic
European Union Region

Bertrand Bonvin
Senior Vice President,
Research & Development

Patrick Brunel
Senior Vice President and
Chief Information Officer

Frederic de Wilde
Senior Vice President,
Marketing & Sales

Marc S. Firestone
Senior Vice President
and General Counsel

Martin King
President, Latin America
& Canada Region

Peter Luongo
Vice President,
Treasury & Planning

Antonio Marques
Senior Vice President,

James R. Mortensen
Senior Vice President,
Human Resources

Jacek Olczak
Chief Financial Officer

Matteo Pellegrini
Asia Region

Jeanne Pollès
Senior Vice President,
Corporate Affairs

Joachim Psotta
Vice President and

Jerry Whitson
Deputy General Counsel
and Corporate Secretary

Miroslaw Zielinski
President, Eastern Europe,
Middle East & Africa Region
and PMI Duty Free


Shareholder Information

Philip Morris International Inc. (PMI) is the leading international tobacco company, with seven of the world’s top 15 international brands, including Marlboro, the number one cigarette brand worldwide. PMI’s products are sold in more than 180 markets. In 2013, the company held an estimated 15.7% share of the total international cigarette market outside of the U.S., or 28.2% excluding the People’s Republic of China and the U.S. For more information, see

Mailing Addresses:

Philip Morris International Inc.
120 Park Avenue
New York, NY 10017-5579 USA

Operations Center:
Philip Morris International
Management SA
Avenue de Rhodanie 50
1007 Lausanne

Independent Auditors:
PricewaterhouseCoopers SA
Avenue C.F. Ramuz 45
1001 Lausanne

Transfer Agent and Registrar:
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078 USA

2014 Annual Meeting:
The Philip Morris International Inc. Annual Meeting of Shareholders will be held at 9:00 a.m. on Wednesday, May 7, 2014, in the Empire State Ballroom at the
Grand Hyatt New York 109 East 42nd Street
New York, NY 10017 USA
For further information, call
toll-free: 1-866-713-8075

Direct Stock Purchase and Dividend Reinvestment Plan:
Philip Morris International Inc. offers a Direct Stock Purchase and Dividend Reinvestment Plan, administered by Computershare. For more information, or to purchase shares directly through the Plan, please contact Computershare.

Shareholder Publications:
Philip Morris International Inc. makes a variety of publications and reports available. These include the Annual Report, news releases and other publications. For copies, please visit:

Philip Morris International Inc. makes available free of charge its filings (proxy statement and Reports on Forms 10-K, 10-Q and 8-K) with the U.S. Securities and Exchange Commission. For copies, please visit:

If you do not have Internet access, you may call our Shareholder Publications Center toll-free:

Shareholder Response Center:
Computershare Trust Company, N.A., our transfer agent, will answer questions about your accounts, certificates, dividends or the Direct Stock Purchase and Dividend Reinvestment Plan. U.S. and Canadian shareholders may call toll-free:
From outside the U.S. or Canada,
shareholders may call:
Postal address:
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078 USA
E-mail address:

To eliminate duplicate mailings, please contact Computershare (if you are a registered shareholder) or your broker (if you hold your stock through a
brokerage firm).

Trademarks and service marks in this report are the registered property of, or licensed by, the subsidiaries of Philip Morris International Inc., and are italicized or shown in their logo form.

Stock Exchange Listings:
Philip Morris International Inc. is listed on the New York Stock Exchange and NYSE Euronext/Paris (ticker symbol “PM”). The company is also listed on the SIX Swiss Exchange (ticker symbol “PMI”).

Internet Access Helps Reduce Costs:
As a convenience to shareholders and an important cost-reduction measure, you can register to receive future shareholder materials (i.e., Annual Report and proxy statement) via the Internet. Shareholders also can vote their proxies via the Internet. For complete instructions, please visit:

PMI Investor Relations Application:
Stay up-to-date with access to all PMI’s previously disclosed investor relations materials such as, press releases, SEC filings, investor materials and live and archived audio webcast playback of earnings calls and investor presentations. The free Investor Relations Mobile Application is available to download at the Apple App Store for iOS devices and at Google Play for Android mobile devices at:

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