About Company

Philip Morris International Inc. (PMI) is an American multinational tobacco company, with
products sold in over 180 countries. The company is often referred to as one of the companies
comprising Big Tobacco.The most recognized and best selling product of the company is
Marlboro. PMI is transforming for good by building PMI’s future on smoke-free products
that while not risk free are a far better choice than cigarette smoking. PMI has announced its
ambition to become a more than two-thirds majority smoke-free company by 2030. PMI’s
Integrated Report 2022 highlights progress we’re making toward our smoke-free ambition1.
PMI’s CEO Jacek Olczak has called on governments to accelerate the end of smoking and
says historical tobacco control measures aren’t working quickly enough .

At February 10, 2023, our credit ratings and outlook by major credit rating agencies were as
follows:

Financial Risk

Regulatory Risks: Philip Morris, is subject to extensive regulations.( WHO FCTC, GGTC),
and changes in regulations can significantly impact their financial performance. Stricter rules
on advertising, labelling, and health warnings can affect sales and profitability.

Litigation Risks: The tobacco industry has been a target of numerous lawsuits related to
health issues and product liability. These lawsuits can result in substantial legal expenses and
settlement payments, affecting the company's financial health.

Market Demand: The demand for tobacco products is influenced by various factors,
including health consciousness and government anti-smoking campaigns (New Zealand
banned cigarettes for anyone born after 2008). A decline in demand for tobacco products can
impact revenue and profitability.

Currency Exchange Risk: As a global company, Philip Morris is exposed to currency

exchange rate fluctuations. This can affect its financial results when it translates earnings
from different currencies back into the U.S. dollar.( As company have operations more than
180 countries and these countries currencies treated as NDF which cant be traded easily
without intervention of regulatory body )

Interest Rate Risk: If the company carries significant debt, fluctuations in interest rates can
impact the cost of servicing that debt. Rising interest rates can lead to higher interest
expenses.

Commodity Price Risk: The cost of raw materials used in tobacco products, like tobacco
leaves, can fluctuate. Changes in commodity prices can affect the cost of production and,
consequently, profit margins.

Taxation and Excise Duties: Changes in tax rates and excise duties on tobacco products
(majorly in middle east countries )can affect the price of these products and, consequently,
sales and profitability.

Competition: The tobacco industry is highly competitive, and competitors' actions, pricing
strategies, and innovations can impact market share and financial performance.

Credit and Counterparty Risk: The company has significant exposure to financial
derivatives or financial instruments, there is a risk associated with the creditworthiness of the
counterparties. Defaults by these parties can lead to financial losses.

Health and Environmental Liability: There may be potential future liabilities related to
health and environmental issues associated with the tobacco industry. These can result in
unexpected financial burdens.

Business risk

Health Awareness and Declining Smoking Rates: There is a global trend toward increased
health consciousness, which has led to a decline in smoking rates in many parts of the world.
This trend can impact PMI's sales and profitability.

Competition: The tobacco industry is highly competitive, with several major

players(Reynolds American, Lorillard ). Rivalry in the industry, price competition.

Market Access and Trade Restrictions: Trade barriers and restrictions in certain countries
can hinder market access for tobacco products. This can be influenced by trade policies,
geopolitical tensions, and trade disputes.
Environmental and Social Responsibility: Increasing scrutiny of tobacco companies for
their environmental impact and social responsibility can result in reputational risks and
pressure for corporate social responsibility initiatives.

Environmental and Social Responsibility: Increasing scrutiny of tobacco companies for

their environmental impact and social responsibility can result in reputational risks and
pressure for corporate social responsibility initiatives.
 Financial Model

2020 2021 2022 2023 2024

Revenue $ 28,694.00 $ 31,405.00 $ 31,762.00 $ 32,556.05 $ 33,369.95
(-) COGS $ -9,569.00 $ -10,033.00 $ -11,402.00 $ -10,856.93 $ -11,128.36
Gross Profit $ 19,125.00 $ 21,372.00 $ 20,360.00 $ 21,699.12 $ 22,241.59
(-) operation
expenses $ 7,457.00 $ 8,400.00 $ 8,114.00 $ 8,460.67 $ 8,741.78
EBIDTA $ 11,668.00 $ 12,972.00 $ 12,246.00 $ 13,238.45 $ 13,499.81
(-) Cash Interest $ -728.00 $ -716.00 $ -717.00 $ 717.00 $ 664.06
(-) Cash Tax $ -2,751.00 $ -2,936.00 $ -2,785.00 $ -2,780.00 $ -2,834.00
(+/-) Change In
Working capital $ -300.00 $ -387.00 $ 1,237.00 $ 1,608.10 $ 2,090.53
(+/-) Non
operating
Expenses $ -521.00 $ -513.00 $ -564.00 $ -564.00 $ -564.00
Cah Flow From
Operations $ 7,368.00 $ 8,420.00 $ 9,417.00 $ 12,219.55 $ 12,856.40
(-) Capital
Expenditure $ -602.00 $ -748.00 $ -1,077.00 $ -976.68 $ -1,001.10
Free cash Flow $ 6,766.00 $ 7,672.00 $ 8,340.00 $ 11,242.87 $ 11,855.30
(-) dividend $ -7,364.00 $ -7,580.00 $ -7,812.00 $ -7,936.99 $ -8,063.98
(-) share buy back $ - $ -775.00 $ -209.00 $ - $ -
(+/-) Share buy/
Issue $ - $ - $ - $ - $ -
(-) M&A $ - $ - $ -13,976.00 $ - $ -
(-) Other Investing
Activity $ -112.00 $ -69.00 $ -46.00 $ - $ -
(-) Other
Financing
Activities $ - $ - $ - $ - $ -
Net change in
cash $ -710.00 $ -752.00 $ -13,703.00 $ 3,305.87 $ 3,791.32
(+) Bal. cash and
cash equivalent $ 7,280.00 $ 4,496.00 $ 3,207.00 $ 3,603.00 $ 4,295.87
New cash bal. $ 6,570.00 $ 3,744.00 $ -10,496.00 $ 6,908.87 $ 8,087.19