Philip Morris International : PMI's 2024 Annual Report
PM
PHILIP MORRIS INTERNATIONAL
2024 ANNUAL REPORT
Leading & Transforming Through Innovation in Smoke-Free Products
Smoke-Free Product Portfolio4
VEEV
ZYN
(1) Smoke-free products (SFP) is the term PMI uses to refer to all of its products that provide nicotine without combusting tobacco, such as heat-not-burn, oral smokeless, and e-vapor.
(2) See page G-1 for definitions.
(3) In pouches or pouch equivalents.
(4) Select smoke-free products.
Dear Shareholder,
2024 was a remarkable year for PMI. With growth across all categories, our business delivered best-in-class organic top- and bottom-line growth, outperforming the industry and consumer packaged goods overall. This was fueled by the continued growth of IQOS and ZYN, in addition to the robust performance of our combustibles business.
We achieved several key milestones in our smoke-free journey over the past year, including the 10-year anniversaries of IQOS and ZYN and our total smoke-free net revenues reaching almost $15 billion. PMI's smoke-free business is large, profitable and growing fast.
The company's achievements would not have been possible without our 83,100 employees across the globe, who yet again rose to the occasion and spared no effort to deliver excellent business results. We thank them for their business acumen, dedication and hard work.
2024 vs. 2023 Results
Total international industry4 volume for cigarettes and heated tobacco units (HTUs) increased by 1.5%, with strong growth in smoke-free products and a resilient cigarette industry, especially in markets where smoke-free products are not permitted.
PMI achieved its fourth consecutive year of volume growth. Our total cigarette and HTU shipment volume increased by 2.5% to 756.6 billion units, with an 11.6% increase for HTUs and a 0.6% increase for cigarettes.
Our total cigarette and HTU market share reached 28.7% of the international market, up by 0.4 percentage points fueled by HTU performance (up by 0.5 percentage points).
Net revenues of $37.9 billion increased by 7.7%. Adjusted net revenues increased by 9.8% on an organic basis, mainly driven by smoke-free product shipment volume growth and a corresponding positive product mix impact, as well as favorable pricing.
Operating income (OI) increased by 16.0%, to $13.4 billion. Adjusted OI increased by 14.9% on an organic basis, driven by adjusted net revenue growth. This was partly offset by higher marketing, administration and research costs, mainly due to inflationary impacts, notably related to wages and higher commercial investments. Our adjusted OI performance also reflects higher manufacturing costs, notably related to tobacco leaf, largely mitigated by productivity and other cost improvements.
In 2024 PMI delivered diluted EPS of $4.52, or $6.01 before the Canada non-cash impairment of $1.49, compared to $5.02 in 2023. Adjusted diluted EPS of $6.57 increased by 15.6%, excluding currency.
Operating cash flow increased by 32.7% to $12.2 billion. On a currency-neutral basis, operating cash flow increased by 37.5% due to excellent profit delivery and favorable working capital.
Jacek Olczak,
Chief Executive Officer
André Calantzopoulos, Chairman of the Board
In September, the Board of Directors approved a 3.8% increase in the quarterly dividend, to an annualized rate of $5.40 per share. This represented the seventeenth consecutive year in which we increased our dividend since becoming a public company in 2008.
Delivering a Smoke-Free Future
In 2024, our smoke-free business accounted for approximately 39% of total net revenues. As of year-end, our smoke-free products had approximately 38.6 million users.5 The profitability of our smoke-free business accelerated, due to the operating leverage of IQOS' increasing scale, favorable unit economics, and pricing, as well as the accretion from ZYN's rapid growth in the U.S.
IQOS continues to drive strong growth of our smoke-free product portfolio. The estimated number of total IQOS users5 increased by 3.4 million in 2024 to reach 32.2 million as of year-end, with an estimated 72% having switched to IQOS and stopped smoking. This growth is broad based and consistent with recent years, despite limited new market openings. In Japan, at the end of 2024, 47% of the total industry was smoke-free on an offtake basis, driven by the heat-not-burn category where IQOS holds the #1 position. Moreover, the overall heat-not-burn category exceeded 50% of total nicotine offtake share in five prefectures and ten major cities across Japan. Our progress towards becoming substantially smoke-free is evidenced by 23 markets exceeding 50% of their net revenues, including six markets which are already above 75% smoke-free.
To complement IQOS, PMI continues to invest in a broad range of innovative and high-quality heat-not-burn alternatives across multiple price tiers. This includes licensed lil products, which were available in over 30 markets as of year-end, successfully competing in lower-price segments and delivering good shipment volume growth.
In the vaping category, VEEV is an increasingly trusted choice among IQOS legal-age poly-users and an important part of our smoke-free multi-category strategy, which we continue to deploy across our markets. VEEV is a top 3 pod brand in 13 European markets (holding the #1 position in five markets, including Italy, Romania and Czech Republic).
(1) On an organic basis. See page G-1 for definitions.
(2) On a currency-neutral basis.
(3) 2024 Annualized rate is based on a quarterly dividend of $1.35 per common share, declared September 12, 2024.
(4) References to "international industry" and the "international market" exclude China and the U.S.
(5) See page G-1 for definitions.
1
We continue to expand in the attractive oral smoke-free category, with our nicotine pouches now available in 37 markets across the globe. Total oral smoke-free shipment volume6 in pouches or pouch equivalents increased versus the prior year by nearly 25%, fueled by consumer demand for nicotine pouches, which grew by 53%.
Smoke-Free Product Regulation
The regulatory environment for smoke-free products is a work in progress, as many tobacco-control advocates, non-governmental organizations and the World Health Organization continue to confuse the discourse. Nevertheless, we remain at the forefront of the debate to increase category understanding and advocate tobacco harm reduction among consumers and regulators.
Science-based regulation of the smoke-free category is essential to accelerate progress on tobacco harm reduction. We are therefore encouraged by the recent U.S. Food and Drug Administration authorization for the marketing and sale of all ZYN nicotine pouches currently marketed in the U.S. by Swedish Match North America. This makes ZYN the first authorized nicotine pouch in the United States. Among several considerations were the substantially lower amounts of harmful constituents versus cigarettes and other smokeless tobacco products, as well as current low youth-usage levels. The FDA's authorization marks an important step in the protection of public health by recognizing the role that ZYN can play in providing better alternatives to cigarettes and other traditional tobacco products for legal-age adults.
We hope other countries follow the example of the U.S. and embrace effective tobacco harm reduction measures. This is especially important in places where smoke-free products are banned, resulting in the perpetuation of combustible cigarette consumption.
Combustible Tobacco Product Portfolio
Maintaining our competitive position in the combustible tobacco category as we transition to a smoke-free future is critical, as it best positions us to significantly accelerate our smoke-free journey.
PMI's combustible tobacco business delivered robust performance in 2024 with 5.9% organic growth in net revenue, driven by pricing of 8.7%. Marlboro, the world's best-selling cigarette in the international market, remains extremely resilient despite over-indexing to IQOS cannibalization. Our international cigarette category share reached 25.3%, up by 0.1 percentage points, reaching all-time highs for both Marlboro and our global brands overall.
Organization
We are making strong progress in building an engaged organization with distinctive capabilities and a winning team spirit through the shared ownership of our talent, culture, learning mindset, and operating model. The results are visible in our employee engagement metrics, which outperformed external benchmarks. A revamped approach to succession planning deepened the visibility of our talent pipeline and once again confirmed the depth and breadth of PMI's talent pool.
With regards to organizational developments, the Swedish Match integration focused on ensuring that we harness and retain the capabilities across both organizations. This involves the continued onboarding of the Swedish Match workforce in an aligned operating model and collaboratively building future ways of working to enhance our collective operational efficiency and effectiveness.
Adapting the PMI culture to serve our mission and the requirements of a modern and skillful workforce while strengthening our succession depth remains our key priority.
In 2024, we have also started to prepare our organization to harness opportunities emerging from artificial intelligence technology.
Sustainable Business
PMI's transformation clearly demonstrates that there is an unprecedented opportunity for smoke-free products to sustainably accelerate our financial results and generously reward shareholders. To align interest with those of our shareholders, executive compensation is linked to sustainability performance.
In 2024, we completed the first performance share units cycle of our 2022-2024 Sustainability Index. We achieved an overall index score of 89%, with 76% on product sustainability ("what" we sell) and 115% on operational sustainability ("how" we operate).
On product sustainability, we surpassed our ambitions relating to the number of smoke-free product users, youth access prevention efforts, eco-design principles in our electronic devices, and anti-littering programs for cigarettes. We delivered a particularly strong performance in operational sustainability, where we exceeded the majority of our targets. These included eliminating systemic child labor in our tobacco supply chain, making progress on living income for contracted tobacco farmers, reducing GHG emissions, preventing deforestation, and developing our human capital.
We excelled in most areas within our control. Factors outside of our control such as regulatory barriers, including smoke-free products bans, and geopolitical disruptions, impacted our progress, particularly the growth of smoke-free business to total revenue ratio. Despite these delays our commitment to delivering a smoke-free future remains intact.
For further information on PMI's sustainability progress and ambitions, we invite you to read our 2024 Integrated Report, which we plan to publish in the coming weeks.
Board of Directors
In February 2025, Dr. Juan José Daboub informed the Board that he would not stand for re-election this year. On behalf of the entire organization, we sincerely thank Juan José, who joined the Board in 2021, for his valued contributions to the company as a Director and member of the Compensation and Leadership Development and Science and Technology Committees, and as a former member of the Product Innovation and Regulatory Affairs, Finance, and Nominating and Corporate Governance Committees.
Looking Ahead
The global economic environment remains challenging and volatile. Nevertheless, this is an exciting time for PMI. We continue to see significant opportunities in our business transformation away from combustible tobacco products through our leadership in smoke-free products.
Our business fundamentals are robust, supported by our leading brand portfolio and a broadly rational excise tax environment. The strategic initiatives that we have in place should serve to further extend our leadership position in the smoke-free category and continue to drive the strong performance of our combustible business. We remain confident that the dedication and enthusiasm of our people will prove, yet again, that nothing is impossible.
We believe continued progress towards becoming a substantially smoke-free company will allow us to play a pivotal role in improving public health by accelerating an end to cigarettes, while securing the long-term future of our company and the sustainability of our earnings and dividend growth for years to come.
Jacek Olczak,
Chief Executive Officer
March 14, 2025
André Calantzopoulos, Chairman of the Board
(6) Oral smoke-free products volume excludes snuff, snuff leaf and U.S. chew.
Board of Directors
André Calantzopoulos 4
Chairman of the Board Director since 2013
Bonin Bough 1,4
Founder & Chief Growth Officer, Diligence LLC dba Bonin Ventures Director since 2021
Michel Combes 1,3
Partner at Forgelight LLC Director since 2020
Dr. Juan José Daboub 2,4†
Chairman, President and CEO, Daboub Partnership of Arcis, LLC Director since 2021
Werner Geissler 1,2,3
Operating Partner, Advent International Director since 2015
Victoria Harker 1
Former CFO and Executive Vice President of TEGNA, Inc. Director since 2024
Lisa A. Hook 1,2,3,4
Managing Partner,
Two Island Partners LLC Director since 2018
Kalpana Morparia 2,3,4
Founder & Managing Partner, KalMor Advisors LLP Director since 2011
Jacek Olczak 4
Chief Executive Officer Director since 2021
Robert B. Polet 2,4
Chairman, Arica Holding B.V. Chairman, SFMS B.V. Director since 2011
Dessislava Temperley 1
Former Group CFO and Executive Board Member of Beiersdorf AG Director since 2021
Shlomo Yanai 3,4
Chairman, Lumenis Ltd. Director since 2021
Board and Committee Leadership
1 Member of Audit and Risk Committee,
Michel Combes, Chair
2 Member of Compensation and Leadership Development Committee,
Werner Geissler, Chair
3 Member of Nominating and Corporate Governance Committee,
Kalpana Morparia, Chair
4 Member of Science and Technology Committee, Shlomo Yanai, Chair
Company Management
Jacek Olczak††
Chief Executive Officer
Massimo Andolina††
President,
Europe Region
Emmanuel Babeau††
Chief Financial Officer
Werner Barth††
President, Combustibles Category & Global Combustibles Marketing
Michele Cattoni
Senior Vice President, Research & Development
Badrul Chowdhury
Chief Life Sciences Officer, Smoke-Free Products
Scott Coutts
Senior Vice President, Operations
Lars Dahlgren††
President, Smoke-Free Oral Products &
CEO Swedish Match
Frank de Rooij
Vice President,
Treasury & Corporate Finance
Frederic de Wilde††
President, SSEA, CIS & MEA Region
Reginaldo Dobrowolski††
Vice President & Controller
Moira Gilchrist
Chief Communications Officer
Vassilis Gkatzelis††
President, East Asia, Australia, and PMI Duty Free Region
Yann Guérin††
Senior Vice President and General Counsel
Christos Harpantidis
Senior Vice President, External Affairs
Stacey Kennedy††
President, Americas Region & CEO of PMI's U.S. Business
Michael Kunst
President, Aspeya
Mimi Kurniawan
Chief Diversity Officer
Bin Li
Chief Operations Services Officer
Marco Mariotti
President CIS & Central Asia
Frederic Patitucci
Chief People & Culture Officer
Marian Salzman
Senior Vice president & Advisor to the CEO of PMI's U.S. Business
Mindaugas Trumpaitis
President,
Latin America & Canada
Michael Voegele
Chief Digital & Information Officer
Stefano Volpetti††
President, Smoke-Free Inhalable Products & Chief Consumer Officer
Waynn Wu
Chief Strategy Officer
† Not standing for re-election at the Annual Meeting of Shareholders on May 7, 2025. †† Executive Officer
Note: SSEA, CIS & MEA are acronyms for South and South East Asia, Commonwealth of Independent States & Middle East and Africa.
Shareholder Information
Mailing Addresses
Headquarters
Philip Morris International Inc. 677 Washington Blvd.
Ste. 1100
Stamford, CT 06901 USAwww.pmi.com
Operations Center Philip Morris Products S.A. Avenue de Rhodanie 50 1007 Lausanne Switzerlandwww.pmi.com
Independent Auditors PricewaterhouseCoopers SA Avenue C.F. Ramuz 45
1001 Lausanne Switzerland
Transfer Agent and Registrar Computershare Trust Company, N.A. P.O. Box 43078
Providence, RI 02940-3078 USA
2025 Virtual Annual Meeting of Shareholders
The Philip Morris International Inc. Annual Meeting of Shareholders will be held solely online via a live webcast on Wednesday, May 7, 2025, at 9:00 a.m. Eastern Daylight Time. For further information, call toll-free: 1-866-713-8075
Shareholder Publications
Philip Morris International Inc. makes a variety of publications and reports publicly available. These include the Annual Report, news releases and other publications. For copies, please visit:www.pmi.com/investors
Philip Morris International Inc. makes available free of charge its filings (including proxy statements and reports on Forms 10-K, 10-Q and 8-K) with the U.S. Securities and Exchange Commission. For copies, please visit:www.pmi.com/SECfilings
If you do not have Internet access, you may call our Shareholder Publications Center toll-free: 1-866-713-8075
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: 1-877-745-9350
From outside the U.S. or Canada, shareholders may call: 1-781-575-4310 Postal address:
Computershare Trust Company, N.A. P.O. Box 43078
Providence, RI 02940-3078 USA
E-mail address:pmi@computershare.com 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.
Trademarks
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 (ticker symbol "PM") and 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 (e.g., Annual Report and proxy statement) via the Internet. Shareholders also can vote their proxies via the Internet. For complete instructions, please visit:www.pmi.com/investors
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).
Additional Information
Information on our website is not, and shall not be deemed to be, a part of this report or incorporated into any filings we make with the SEC.
PMI Investor Relations Mobile App
Our Investor Relations mobile application provides users with easy, dynamic and comprehensive access to the company's Investor Relations information, such as stock quotes, press releases, SEC filings, investor materials, and live and archived webcast playback of earnings calls and investor presentations. The free mobile application is available to download from the Apple App Store for iOS devices and Google Play for Android devices.
Philip Morris International: Delivering a Smoke-Free Future
iOS
Philip Morris International is a leading international tobacco company, actively delivering a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector. The company's current product portfolio primarily consists of cigarettes and smoke-free products. Since 2008, PMI has invested over $14 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. In 2022, PMI acquired Swedish Match - a leader in oral nicotine delivery - creating a global smoke-free champion led by the companies' IQOS and ZYN brands. Following a robust science-based review, the U.S. Food and Drug Administration has authorized the marketing of Swedish Match's General snus and ZYN nicotine pouches and versions of PMI's IQOS devices and consumables - the first-ever such authorizations in their respective categories. Versions of IQOS devices and consumables and General snus also obtained the first-ever Modified Risk Tobacco Product authorizations from the FDA. As of December 31, 2024, PMI's smoke-free products were available for sale in 95 markets, and PMI estimates that 38.6 million adults around the world use PMI's smoke-free products. The smoke-free business accounted for approximately 39% of PMI's total full-year 2024 net revenues. With a strong foundation and significant expertise in life sciences, PMI has a long-term ambition to expand into wellness and healthcare areas and aims to enhance life through the delivery of seamless health experiences. References to "PMI", "we", "our" and "us" mean Philip Morris International Inc., and its subsidiaries. For more information, please visitwww.pmi.comand www.pmiscience.com.
Android
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-33708
PHILIP MORRIS INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Virginia
13-3435103
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
677 Washington Blvd, Suite 1100
Stamford
Connecticut
06901
(Address of principal executive offices)
(Zip Code)
203-905-2410
(Registrant's telephone number, including area code)
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
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
0.125% Notes due 2026
PM26B
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
3.750% Notes due 2031
PM31B
New York Stock Exchange
0.800% Notes due 2031
PM31
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
1.450% Notes due 2039
PM39
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
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑ Non-accelerated filer ☐
Accelerated filer
Smaller reporting company Emerging growth company
☐ ☐ ☐
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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
As of June 30, 2024, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was approximately $158 billion based on the closing sale price of the common stock as reported on the New York Stock Exchange.
Class
Common Stock, no par value
Outstanding at January 31, 2025 1,554,857,221 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for use in connection with its annual meeting of shareholders to be held on May 7, 2025, to be filed with the Securities and Exchange Commission on or about March 27, 2025.
Parts Into Which Incorporated
Part III
TABLE OF CONTENTS
Page
PART I
Item 1.
Business
1
Item 1A.
Risk Factors
7
Item 1B.
Unresolved Staff Comments
19
Item 1C.
Cybersecurity
19
Item 2.
Properties
21
Item 3.
Legal Proceedings
21
Item 4.
Mine Safety Disclosures
21
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Item 5.
Purchases of Equity Securities
22
Item 6.
[Reserved]
25
Management's Discussion and Analysis of Financial Condition and Results of
Item 7.
Operations
25
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
75
Item 8.
Financial Statements and Supplementary Data
76
Changes in and Disagreements with Accountants on Accounting and Financial
Item 9.
Disclosure
147
Item 9A.
Controls and Procedures
147
Item 9B.
Other Information
147
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
147
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
147
Item 11.
Executive Compensation
150
Security Ownership of Certain Beneficial Owners and Management and Related
Item 12.
Stockholder Matters
150
Item 13.
Certain Relationships and Related Transactions, and Director Independence
150
Item 14.
Principal Accounting Fees and Services
150
PART IV
Item 15.
Exhibits and Financial Statement Schedules
151
Signatures
158
In this report, "PMI," "we," "us" and "our" refers to Philip Morris International Inc. and its subsidiaries.
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.
PART I
Item 1.
Business.
General Development of Business
General
Philip Morris International Inc. is a Virginia holding company incorporated in 1987. In March 2008, we became a U.S. public company listed on the New York Stock Exchange and subject to the rules of the U.S. Securities and Exchange Commission (the "SEC"). We are a leading international tobacco company, actively delivering a smoke-free future and evolving our portfolio for the long term to include products outside of the tobacco and nicotine sector. Our current product portfolio primarily consists of cigarettes and smoke-free products. Since 2008, we have invested over $14 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This investment includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. In November 2022, we acquired Swedish Match AB ("Swedish Match") - a leader in oral nicotine delivery - creating a global smoke-free combination led by the companies' IQOS and ZYN brands. Following a robust science-based review, the U.S. Food and Drug Administration (the "FDA") has authorized the marketing of Swedish Match's General snus and ZYN nicotine pouches and versions of PMI's IQOS devices and consumables - the first-ever such authorizations in their respective categories. Versions of IQOS devices and consumables and General snus also obtained the first-ever Modified Risk Tobacco Product ("MRTP") authorizations from the FDA. We describe the MRTP orders in more detail in the "Business Environment" section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Through our acquisition of Swedish Match in 2022, with its leading nicotine pouch franchise in the U.S. under the ZYN brand name, we acquired a market leader in oral nicotine delivery with a significant presence in the United States market. The Swedish Match acquisition has been a key milestone in PMI's transformation to becoming a smoke-free company. The Swedish Match product portfolio is complementary to our existing portfolio, permitting us to bring together a leading oral nicotine product with the leading heat-not-burn product. By joining forces with Swedish Match, we expect to accelerate the achievement of our joint smoke-free ambitions, switching more adults who would otherwise continue to smoke cigarettes to better alternatives faster than either company could achieve separately.
In 2022, we reached an agreement with Altria Group, Inc. to end our commercial relationship in the U.S. covering IQOS as of April 30, 2024. PMI now holds the full rights to commercialize IQOS in the U.S. For further details, see Item 8, Note 3. Acquisitions and
Divestitures.
In 2021, we began our long-term growth ambitions beyond nicotine in wellness and healthcare given our strong foundation and significant expertise in life sciences. Our Wellness and Healthcare business strategy currently focuses on developing and commercializing oral and inhaled consumer health and wellness offerings and inhaled prescription products for therapy areas that include pain management and cardiovascular emergencies. This includes medical and pharmaceutical cannabinoids, and non-recreational cannabinoid products (including CBD), in line with applicable regulatory requirements, though any revenue related to cannabinoids is expected to be negligible in the near to medium term.
Smoke-Free Business ("SFB") is the term PMI uses to refer to all of its smoke-free products. SFB also includes wellness and healthcare products, as well as consumer accessories, such as lighters and matches.
Smoke-free products (also referred to herein as "SFPs") is the term PMI uses to refer to all of its products that provide nicotine without combusting tobacco, such as heat-not-burn, e-vapor, and oral smokeless, and that therefore generate far lower levels of harmful chemicals. As such, these products have the potential to present less risk of harm versus continued smoking.
We have a range of SFPs in various stages of development, scientific assessment and commercialization. Our smoke-free products are designed for, and directed toward, current adult smokers and adult users of nicotine-containing products. We put significant effort to restrict access of our products from non-smokers and youth. We believe regulation must include measures designed to prevent youth initiation; and we also support and engage with relevant authorities to seek sensible regulation of flavors, mandated health warnings and minimum age laws.
Our IQOS smoke-free product brand portfolio includes heated tobacco and nicotine-containing vapor products. It uses a precisely controlled heating device into which a specially designed and proprietary tobacco unit is inserted and heated to generate an aerosol. Heated tobacco units ("HTUs") is the term we use to refer to heated tobacco consumables, which include our BLENDS, DELIA,
HEETS, HEETS Creations (defined collectively as "HEETS"), SENTIA, TEREA, TEREA CRAFTED and TEREA Dimensions, as well
1
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Philip Morris International Inc. published this content on March 27, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 27, 2025 at 10:39:05.836.