Philip Morris International Inc. Presentation Slides

Philip Morris International

Forward-Looking Statements

This presentation and related discussion contain statements that, to the

extent they do not relate strictly to historical or current facts, are not

reported financial results or other historical information, are “forward-

looking statements”

within the meaning of the Private Securities Litigation

Reform Act of 1995. Such forward-looking statements are based on current

plans, estimates and expectations, and are not guarantees of future

performance. They are based on management’s expectations that involve a

number of business risks and uncertainties, any of which could cause

actual results to differ materially from those expressed in or implied by the

forward-looking statements. PMI undertakes no obligation to publicly

update or revise any forward-looking statements, except in the normal

course of its public disclosure obligations. The risks and uncertainties

relating to the forward-looking statements in this presentation include those

described under the caption “Cautionary Factors that May Affect Future

Results”

in PMI’s Registration Statement on Form 10 that was declared

effective by the Securities and Exchange Commission on March 7, 2008,

and in PMI’s quarterly reports on Form 10-Q for the quarters ended March

31, June 30, and September 30, 2008.

Philip Morris International

Summary

PMI had an excellent year in 2008

We face currency headwinds if current rates prevail

throughout 2009

We have not seen consumer downtrading in emerging

markets so far

We remain as committed as ever to generously

rewarding our shareholders

Our constant currency outlook is very strong

Philip Morris International

Share Trends

25.2

25.8

25.9

2007

12MM

3MM

Overall

PMI

Development

(a)

OECD/Non-OECD

Development

(a)(b)

OECD

Non-OECD

(%)

2008

(%)

(a) Excluding PRC and USA; (b) Also excluding Duty-Free

Source: PMI Estimates (from GIMS)

2008

33.5

34.6

34.8

2007

12MM

3MM

20.0

20.8

21.1

2007

12MM

3MM

Philip Morris International

Impact of Exchange Rates on 2009 EPS

$ / share

2008 EPS

3.32

Business Performance

0.33 –

0.48

Currency

(0.80)

(a)

2009 Guidance

2.85 –

3.00

(a)

Adverse

currency

based

exchange

rates

prevalent

February

2009

and

assuming

rates

remain

the

same

level

throughout

2009.

Source: PMI Financials

Philip Morris International

Exchange Rates vs. USD

Source: Bloomberg London Close 18:00 PM

Daily Average Indices

174

147

137

128

138

100

120

140

160

180

200

Sep 08

Oct 08

Nov 08

Dec 08

Jan 09

Feb 09

Ukrainian Hryvnia

Russian Ruble

Turkish Lira

Indo. Rupiah

Mexican Peso

Philip Morris International

2009 Guidance: Adverse Currency

(0.16)

Other developed market currencies

(0.11)

Other emerging market currencies

(0.58)

Key emerging market currencies

(a)

(0.80)

Total

0.03

Swiss Franc

0.15

Japanese Yen

(0.13)

Euro

EPS Impact ($ / share)

(a) Russian

Ruble,

Turkish

Lira,

Ukrainian

Hryvnia

and

Mexican

Peso

Source: PMI Financials

Philip Morris International

Impact of Currency

Revenues have straight line translation impact

Currency impact on profitability is neither linear,

simple nor consistent across our markets

Elements in the cost structure that are not in local

currency magnify the impact on OCI

Philip Morris International

Impact of Currency

800

900

1,200

OCI

(700)

(600)

(800)

Costs

(33)%

(25)%

% OCI Change

53%

60%

OCI Margin

($ mio)

1,500

2,000

Net Revenues

25% Depreciation

50% Local Costs

25% Depreciation

100% Local Costs

Philip Morris International

Hedging

PMI policy never to do net income hedges

(“translation hedges”) as we do not speculate on

currencies

Where appropriate, PMI carries out revenue and

purchasing hedges (“transaction hedges”)

Transaction hedges not feasible in most emerging

markets

Philip Morris International

PMI Cost Structure

2008 Total

16.2

TOTAL COSTS

(b)

6.9

Mkting, O/H and

Other Costs above

OCI

3.3

Other COGS

(a)

2.4

Direct Materials

3.6

Tobacco Leaf

($ bio)

(a) Other manufacturing related costs and shipping.

(b) Total costs above OCI and sales allowances.

Source: PMI Financials

Philip Morris International

Tobacco Leaf

Key Sources:

–

Virginia: USA, Brazil

–

Burley: USA, Malawi, Brazil, Argentina

–

Oriental: Turkey, Greece

US Dollar based agricultural crop

PMI converts a large part of its leaf purchases into

Euros for inventory and balance sheet valuation

purposes

Philip Morris International

PMI Costs by Currency

(a) Other manufacturing related costs and shipping.

(b) Total costs above OCI and sales allowances.

Source: PMI Financials

16.2

TOTAL COSTS

(b)

6.9

Mkting, O/H and

Other Costs above

OCI

3.3

Other COGS

(a)

Currency (%)

2008 Total

EUR

USD

2.4

Direct Materials

3.6

Tobacco Leaf

Other

CHF

($ bio)

Philip Morris International

Indonesia / Russia Costs by Currency

Total

–

Mkting, O/H and

Other Costs above

OCI

Total COGS

Russia

Currency (%)

EUR

Total

–

USD

Mkting, O/H and

Other Costs above

OCI

Total COGS

Indonesia

Local

Other

Source: PMI Financials

Philip Morris International

Emerging Markets: Premium

4.1

(b)

31.6

(b)

35.7

Argentina

2.6

62.8

65.4

Mexico

20.2

23.3

43.5

Romania

2.1

21.0

23.1

Indonesia

19.6

14.8

17.9 %

2008

2.9

16.7

Turkey

5.9

8.9

Ukraine

6.0 pp

11.9 %

Russia

Variance

2005

Premium Share of Market

(a)

(a) Including above premium

(b) 2006 data

Source: Business Analytica, A.C. Nielsen and PMI estimates

Philip Morris International

Source: Retail prices available in market on February 1, 2009. Exchange rates from Bloomberg, London Close 18:00 PM, February 2, 2009

Emerging

Markets: Price Gaps

Premium

Mid

Low

Mexico

Indonesia

Turkey

Russia

Montana

PS 17/18

($1.32/20)

PS 28

($1.95)

PS 22

($1.54)

RP 9,609/16

($1.06/20)

RP 6,887/16

($0.76/20)

PR 4,781/12

($0.70/20)

TRL 4.80

($2.92)

TRL 3.75

($2.28)

RBL 12

($0.34)

RBL 40

($1.12)

RBL 29

($0.81)

$0.63

48%

$0.78

2.3X

$1.25

75%

Sejati

TRL 2.75

($1.67)

$0.36

51%

Philip Morris International

Consumer Prices: Russia

0.50

Bread (500g)

0.56

Mineral Water (0.5 liters)

1.76

Big Mac

0.92

Baltica

Beer (local)

1.12

Marlboro

1.40

Milk (1 liter)

1.15

Coca-Cola

(0.5 liters)

1.96

Colgate

toothpaste

3.36

120

Budweiser

beer (imported)

6.99

250

Cinema Ticket

Price (USD)

Price (RBL)

Source: Russian market observations by PMI affiliate. Exchange rate from Bloomberg, London Close 18:00 PM, February 2, 2009

Philip Morris International

Emerging

Markets: Premium

4.6

5.1

6.3

6.8

Romania

0.9

2.5

2.7

2.5

Argentina

0.8

0.9

(0.2)

(0.3)

Indonesia

(0.5)

(0.1)

0.7

2.8

Mexico

1.4

2.7

+ 2.2 pp

2.1

0.8

Turkey

3.2

3.1

2.1

Ukraine

+ 1.3 pp

+ 2.1 pp

Russia

Premium Share Growth 2008 vs. 2007

(a)

(a) Including above premium

Source: Business Analytica, A.C. Nielsen and PMI estimates

Philip Morris International

PMI Pricing

Pricing contributed $1.2 billion to OCI in 2008

Higher prices already announced for 2009, notably in:

PMI expects to retain its pricing power during the

economic crisis

Argentina

Colombia

Mexico

Australia

Indonesia

Philippines

Egypt

Romania

Russia

Serbia

Ukraine

Belgium

Czech

Italy

Netherlands

Spain

Latin America

Asia

EEMA

Source: PMI Financials

Philip Morris International

Excise Tax Environment

Reasonable approach being taken by governments in

key markets

Greater emphasis on:

–

Specific vs. ad-valorem

–

Minimum excise taxes and minimum reference price

mechanisms

–

Reduction in loopholes

Philip Morris International

Top 15 International Brands (2007)

(bio)

Lark

Parliament

Chesterfield

Bond Street

Philip Morris

L&M

Marlboro

Source:

Competitive

data

for

BAT

and

International

Brands

derived

from

2007

company

reports

and

PMI

estimates.

PMI

data

from

Financials.

Note: PMI brands in red color

100

150

200

250

300

350

Dunhill

Viceroy

Camel

Pall Mall

Kent

Mild Seven

Winston

PMI

BAT

Philip Morris International

Marlboro Filter / Flavor Plus

Enhanced taste due to

tobacco plug in filter

Attractive sliding pack

6 / 3 / 1 mg tar

(%)

Marlboro

Filter Plus

2008

Source: A.C. Nielsen

Romania

Market Share

0.2

2.5

Jan

Dec

Philip Morris International

Marlboro Filter / Flavor Plus

Key City

Market Shares (Dec 2008)

Now available in 20 markets

Initial focus on key cities

JAP

KUW

RUS

BRA

UKR

Source: Business Analytica, A.C. Nielsen and PMI estimates

(%)

2.2

1.2

0.6

0.4

0.3

2.5

Kuwait

Moscow

(a)

Kiev

Tokyo

São

Paulo

(b)

(a) November 2008 data; (b) January 2009 data

Philip Morris International

Marlboro Intense / Compact / Pocket Pack

Marlboro

Intense

shorter,

flavorful variant in a red pack

Marlboro

Intense

launched

Belgium, Germany, the

Netherlands and Turkey

Marlboro

Compact

lighter flavored version in

Italy in a silver pack

Marlboro

Pocket

Pack

shorter version of Marlboro

Red

Market Shares (Dec 2008)

(%)

Source: A.C. Nielsen and PMI estimates

0.5

0.6

Italy

Spain

Philip Morris International

Menthol Segment

4.0

12.0

16.0

Poland

23.1

5.0

19.5

47.2

37.5

22.0 %

2008

21.2

4.3

18.5

(a)

45.6

37.2

(a)

18.4 %

2005

Menthol Share of Market

1.9

Finland

0.7

Mexico

1.6

Singapore

1.0

Colombia

0.3

Hong Kong

3.6 pp

Japan

Variance

(a) 2006 data

Source: A.C. Nielsen, Tobacco Institute of Japan and PMI estimates

Philip Morris International

Marlboro

Fresh

Marlboro

Crisp,

Fresh

and

Ice

Mint

variants

launched

in 2007 in various Asian

markets

Marlboro

Black

Menthol

Japan since July 2008

Marlboro

Menthol Segment in Japan

2008

(%)

Source: Tobacco Institute of Japan

24.7

25.1

27.1

27.2

Initiatives

Philip Morris International

Marlboro

Fresh

Initiatives

Menthol important

segment in Colombia

Growing off low base in

several other Latin

American markets

New Marlboro menthol

initiatives in second half

2008 (Brazil, Colombia,

Mexico)

0.3

4.5

4.9

H1 08

H2 08

Non-

menthol

Menthol

Source: A.C. Nielsen

and PMI estimates

Colombia

SoM

(%)

Marlboro

Philip Morris International

Marlboro

Geographic expansion of innovative line extensions

using our superior global infrastructure

Pipeline of new products and concepts

Increased vibrancy and “halo effect”

Marlboro

volume grew by 0.2% in 2008 following a

decline the previous year

Increased volume in EEMA, Asia and Latin America &

Canada Regions

Marlboro

clear leader in EU Region with an 18.7%

market share

Source: PMI Financials and PMI estimates

Philip Morris International

Parliament

Recessed filter,

sophisticated image and

above premium pricing

Volume +20.0% in 2008

Growth driven by Korea,

Russia, Turkey and Ukraine

Upscale image being

reinforced with Parliament

Reserve

Parliament

Market

(%)

Source: Business Analytica, A.C. Nielsen, PMI estimates and PMI Financials.

6.0

1.9

2.5

1.3

7.4

3.3

2.7

2.0

Turkey

Korea

Russia

Ukraine

2007

2008

Philip Morris International

Slimmer Diameter

Source: Business Analytica, A.C. Nielsen, Tobacco Institute of Japan and PMI estimates

37.4

6.3

13.8

9.0

12.1 %

2008

35.5

6.0

6.5

3.0

3.8 %

2005

Slims Share of Market

0.3

Japan

1.9

Korea

7.3

Poland

6.0

Ukraine

8.3 pp

Russia

Variance

Philip Morris International

Virginia Slims

Volume +8.2% in 2008

Uno

concept and

geographic expansion

driving

Virginia

Slims

growth

2.0

1.4

1.3

0.3

91%

80%

91%

100%

20%

2.5

Japan

Rom.

Russia

Greece

Source: Business Analytica, A.C. Nielsen, Tobacco Institute of Japan and PMI Financials.

Other

Uno

Virginia Slims

Market Shares (2008)

(%)

Philip Morris International

Chesterfield

Market

2007

2008

Volume +13.7% in 2008

Strong gains in Italy,

Portugal, Russia and

Ukraine

Growth more than offsetting

decline

L&M

volume

Source: Business Analytica, A.C. Nielsen, PMI estimates and PMI Financials.

(%)

9.8

6.4

3.2

2.0

2.4

9.9

8.5

3.6

3.3

2.9

Spain

Ukr.

Italy

Port.

Russia

Philip Morris International

L&M

Overall volume decline of

4.6% in 2008

EU shipment volume

increased by 2.0% in the

same period

L&M

Market

Gains

(2008)

Source: A.C. Nielsen, PMI estimates and PMI Financials

(pp)

1.9

1.8

0.5

0.3

0.2

Ger.

Neth.

Pol.

Fra.

Bel.

Philip Morris International

Low -

Price International Brands

Bond Street

Red &

White

collectively gained

3.8% in volume in 2008

Bond Street

and Next

achieved double digit

growth in EEMA

Market Shares (2008)

Source: A.C. Nielsen, Business Analytica and PMI Financials.

(%)

12.6

3.6

7.8

7.4

2.1

2.0

Kaz.

Russia

Ukraine

Bond Street

and

Philip Morris International

Geographic Expansion

Recent entry into Algerian

and Bulgarian markets

Marlboro

and

L&M

are

key

brands

Market Shares

(%)

Source: A.C. Nielsen and PMI estimates

10.9

4.9

10.3

14.9

Algeria

Bulgaria

2007

2008

Philip Morris International

China

Market size of 2.2 trillion in

2008, up 3.1%

PMI agreements with CNTC.

Aim to be preferred partner

Production of Marlboro under

license in two factories started

in August

International joint venture has

successfully launched three

Chinese heritage brands in six

international markets

Marlboro

in China

Joint-Venture Brands

Source: CNTC and PMI Financials

Philip Morris International

Other Tobacco Products

PMI achieved an 18% organic volume growth in OTP in 2008

Recent acquisitions have included leading fine cut brands in

France and Norway

Smokeless tobacco joint venture with Swedish Match

Source: PMI Financials

Philip Morris International

Izhora, Russia

Jakarta, Indonesia

Rationalization of production

within customs areas and

trade zones

Investments in key factories

Western European factories

absorbed 57 billion units in

2008, previously

manufactured by PM USA

Rationalization of blends and

product specifications

Supply chain optimization

and clustering

Manufacturing

Productivity

Source: PMI Financials

Philip Morris International

Free Cash Flow

(a)

4.5

6.8

2007

2008

+ 52.7%

($ bio)

(a)

Operating cash flow less capital expenditures. In 2008, operating cash flow was $7,935 million and capital expenditures $1,099 million. In

2007, operating cash flow was $5,550 million and capital expenditures $1,072 million.

Source: PMI Financials

Philip Morris International

Liquidity

and Capital Structure

Major new factory projects completed and continued

focus on working capital management

Very strong balance sheet: net debt to EBITDA of 0.94 to

1 at year end 2008

Very favorable debt profile: $10.1 billion bonds issued

with

attractive

interest

rates

and

well-laddered

maturities

Unused bank credit facilities of over $6 billion

Continuous access to commercial paper market at very

attractive interest rates

Credit ratings: A2 / A / A+

(a)

the

end

2008,

net

debt

was

$10,430

million

with

total

debt

$11,961

million

and

cash

and

cash

equivalents

$1,531

million,

while

EBITDA

was

$11,090 million with pre-tax earnings of $9,937 million, net interest expense of $311 million and depreciation and amortization of $842 million.

Source: PMI Financials

Philip Morris International

Shareholder Returns

Dividend raised by 17.4% in August to an annualized

rate of $2.16 / share

Dividend to be maintained in 2009 even if 65% payout

target is exceeded

$13 billion two year share

repurchase program

initiated in May

$5.4 billion of share repurchases in 2008 ahead of

schedule and similar amount anticipated for 2009

In total, we forecast to return more than $9 billion in

cash to our shareholders in 2009

Source: PMI Financials

Philip Morris International

Conclusion

Superior brand portfolio

Strong pricing power

Ambitious productivity programs in place

Excellent liquidity and balance sheet

Dividends and share buy-back program are enhancing

shareholder value

10-14% EPS growth forecast for 2009 on a currency

neutral basis

Philip Morris International

Adjustments for the Impact of Currency

and Acquisitions

Full Year 2007

Acquisitions

Currency

Less

9.9 %

8,943

9,828

125

481

10,434

Total

–

17.5

514

424

100

(4)

520

LA & Canada

12.0 %

1,803

2,020

2,057

Asia

27.4 %

2,431

3,098

3,119

EEMA

2.2

4,195

4,286

432

4,738

Operating Companies Income

5.6 %

22,810

32,433

55,243

24,093

230

$1,382

25,705

37,935

63,640

Total

7.2 %

1,981

3,170

5,151

2,124

157

2,328

4,008

6,336

LA & Canada

6.2 %

5,648

5,449

11,097

5,999

140

6,185

6,037

12,222

Asia

13.6 %

6,346

5,820

12,166

7,208

296

7,504

7,313

14,817

EEMA

–

0.8 %

8,835

17,994

26,829

8,762

899

9,688

20,557

30,265

Change

Organic

Less

Excise

Taxes

Reported

Organic

Revenues

Excluding

Excise Taxes

Less

Excise

Taxes

Reported

Operating Revenues

Full Year 2008

($ Millions)

Source: PMI Finance

Philip

Morris

International

Source: PMI Financials

2007

2008

$ 8,894

$ 10,248

Operating Income

514

520

Latin America

Gain on sale of leasing business

(73)

(142)

General corporate expenses

$ 8,943

$10,434

Operating

Companies

Income

(28)

(44)

Amortization of intangibles

1,803

2,057

Asia

2,431

3,119

EEMA

$ 4,195

$ 4,738

Reconciliation of Operating Companies Income

to Operating Income

Philip

Morris

International

Reconciliation of Reported EPS to Adjusted EPS

and Adjusted EPS Ex-Currency

$ 13.2%

$2.80

$ 3.17

Adjusted EPS Ex Currency

(0.15)

Currency Impact

Less:

18.6%

$ 2.80

$ 3.32

Adjusted EPS

(0.06)

Interest expense on borrowings to fund

special dividends to Altria prior to spin-off

(0.03)

Incremental costs related to services

previously provided by Altria

(0.01)

Gain on sale of Business

0.06

Equity Loss from RBH Legal Settlement

(0.03)

(0.08)

Tax Items

0.07

0.02

Asset Impairment and Exit Costs

Adjustments:

16.1%

$ 2.86

$ 3.32

Reported EPS

% Change

2007

2008

Source: PMI Financials