Philip Morris Companies Inc.
Excerpts from 2001 Annual Report
Philip Morris international
■ Philip Morris International Inc. (PMI) generated solid volume growth of 3.5%, with strong market share gains in most key markets. Underlying cigarette volume increased to 698.9 billion units, driven by gains in Western, Central and Eastern Europe, and Asia. Underlying operating companies income rose 2.6% to $5.4 billion. Excluding an unfavorable currency impact of $390 million, PMI's operating companies income would have grown by 10.0%.
■ PMI gained share in most of its top 25 income markets, reaching record shares, with share gains of one point or more in Belgium, France, Israel, Italy, Japan, Malaysia, Mexico, the Netherlands, Poland, Russia, Saudi Arabia, Singapore and Ukraine.
■ Marlboro, the global brand leader, benefited from line extensions of the medium, ultra lights and menthol varieties, which helped to achieve volume growth of 2.5%, excluding worldwide duty-free, and Argentina and Turkey, where severe economic downturns decreased premium sales. L&M, the third-best-selling international brand, continued to capitalize on growth opportunities in the mid-price category in over 60 markets. L&M volume increased 58.2% to 64.1 billion units.
■ In Western Europe, volume was up 1.2% as strong increases in Belgium, France, Italy, the Netherlands, Portugal, Spain, Sweden and the United Kingdom were partly offset by Germany, where volume was down 5,0%, due primarily to the continued growth of low-priced trade brands. Excluding Germany, volume in Western Europe was up 3.0%. Marlboro share was up in Belgium, France, Spain, Switzerland, the Netherlands, Portugal and the United Kingdom. Share increases were also achieved for L&M in Belgium, Diana in Italy, Chesterfield in Spam and Portugues in Portugal.
■ In Central Europe, the Middle East and Africa (CEMA), volume increased 2.7%, led by strong performances in Israel, Poland, Romania and Saudi Arabia. Volume was down in Turkey, as several price increases related to the Turkish lira devaluation led to a contraction of the premium segment and consumer down-trading. Excluding Turkey, volume in CEMA was up 4.6%. Strong share gains were registered by Marlboro in the Czech Republic, Israel and Saudi Arabia: Red & White in Romania; L&M in the Czech Republic, Poland, Turkey and Israel; Chesterfield in Poland and Turkey; and local brands Fajcant in Poland and Callatis in Romania.
■ in Eastern Europe, PMI volume grew 14.3%, due to very strong performances in Russia and Ukraine, the two largest markets in the region. PMI's international brands in Eastern Europe, including Marlboro, L&M, Virginia Slims, Parliament, Chesterfield and Bond Street, performed well Local brands, such as Optima in Russia, Vatra in Ukraine and Medeo in Kazakhstan, also were op significantly.
■ in Asia, PMI volume was up 6.1%, led by double-digit increases in Indonesia and Korea, as well as strong increases in Japan, Taiwan, Malaysia and Thailand. Volume in Japan was up 3.6%, driven by Marlboro growth of nearly 10% and the successful launch of Lark One. Total share in Japan reached 22.5%, up 1.1 points. In Indonesia, Marlboro volume doubled, and L&M was launched during the year. In Korea, Philip Morris Superlights, Virginia Slims and Marlboro each posted strong volume gains. In Thailand, solid volume growth continued on the sength of L&M.
■ In Latin America, volume rose 0.7%, driven by gains in Mexico and Brazil, largely offset by lower volume in Argentina, due to a recession driven market contraction. In Mexico, Marlboro fueled PMI's share to a record 58.3%, and in Argentina, mid-priced brand Philip Morris drove PMI's share to a record 64 3% by capturing consumer down-trading However the collapse of the Argentine peso will reduce PMI's income there in 2002
■ PMI continued to take a leading position in youth smoking prevention with more than 100 programs in nearly 90 countries. It is working with national governments and international institutions to establish reasonable regulation of tobacco
■ PMI is positioned for continued expansion in the American-blend, low-tar-and-nicotine and menthol segments with an outstanding portfolio of international brands, superb global infrastructure and talented employees.