Philip Morris International Inc

Good day and thank you for standing by. Welcome to the Philip Morris International fourth quarter 2024 and full year results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead.

Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2024 fourth quarter and full year results. The press release is available on our website at pmi.com. A glossary of terms, including the definition for smoke-free products, as well as adjustments, other calculations, and reconciliations to the most directly comparable U.S. gap measures for non-gap financial measures cited in this presentation, are available in Exhibit 99.2 to the Companies Form 8K, dated February 6, 2025, and on our Investor Relations website. Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements. I'm joined today by Jacek Olczak, Chief Executive Officer, and Emmanuel Babot, Chief Financial Officer. Over to you, Jacek.

Thank you, James, and welcome everyone. We delivered an outstanding performance in 2024 with all key elements of the business, contributing strongly to deliver best-in-class organic top and bottom line growth. This resulted in significant acceleration in adjusted diluted earnings per share growth in both currency neutral and equally importantly dollar terms, as we mitigated substantial currency headwinds. Our business outperformed the industry and consumer packaged goods overall with growth across all categories to deliver our fourth consecutive year of positive volumes. ICOS continued its strong underlying momentum with continued excellent growth in Japan, robust progress in Europe despite the EU characterising flavour ban and further strong growth in other global markets. Importantly, the growth of ICOS is increasingly profitable as the benefits of scale and pricing more than offset continued substantial growth investments, including brand building activities and innovations on devices and consumables. ZIN once again delivers strong growth in the US as 2023 demand acceleration continued in 2024. This resulted in short-term supply challenges, which we have progressively addressed throughout the year, working towards our goal of matching existing user demand. As we unlock further capacity, we will be in a position to explore the full potential of this dynamic category. Outside the U.S., shipments grew by 75% as we increased our global presence in nicotine pouches to 37 markets. In EVAPOR, VIV is progressively contributing to growth with encouraging volume momentum in closed spots and strengthening market position with a premium offer. Our combustible business performed well on all metrics. We delivered double-digit gross profit growth in quarter four of last year and around 7% organically for the year, led by strong pricing, resilient volumes in certain markets, and the ongoing benefits of our cost actions. Overall, our strong performance across all categories and regions drove meaningful operating leverage, notably in our smoke-free business, alongside cost efficiency initiatives across the entire value chain. This enabled us to deliver operating cash flow and adjusted diluted EPS above our expectations at the start of the year, despite ongoing currency and input cost headwinds. Our transformation journey and growth drivers have excellent momentum, and we are confident in our ability to deliver sustainable growth and returns in 2025 and beyond. Over the past year, we achieved several key milestones in our smoke-free journey, including the 10-year anniversary of EICOS and ZIN. Our smoke-free business is large, profitable, and growing fast. Our total smoke-free net revenues reach almost $15 billion in 2024. Combined with a strong combustible performance, our company also surpassed $10 billion in adjusted net earnings for the first time. Our smoke-free business reached 40% of total PMI net revenues in the fourth quarter, and around 42% of adjusted gross profit as our transformation becomes increasingly profitable. In our top five markets by operating income, around 60% of net revenues were smoke-free. We have deployed our smoke-free multi-category strategy across almost half of the 95 markets with smoke-free products and we closed the year with over 38.5 million estimated adult users across heat-not-burn, oral, and evapour. Our smoke-free business surpassed 1 billion cans, including 644 million cans of nicotine pouches. The Zin brand continues to resonate with adult nicotine consumers across the U.S., where it is the number one smoke-free brand and the fourth biggest nicotine brand, and also grows internationally. We are also very pleased that the robust science and responsible marketing practices behind Zyn were recognized by FDA through the recent marketing authorization of all currently commercialized US Zyn variants, making Zyn the first and the only authorized nicotine pouch brand in the United States. We remain at the forefront of the effort to increase understanding of smoke-free products and advance tobacco harm reductions among consumers and regulators. We are encouraged by the increasing number of governments adopting tobacco harm reduction policies to incentivize switching to reduced nicotine products instead of continuing to smoke, which is a sound public health policy. A number of markets are also moving favorably with regards to robust regulation of nicotine pouches and evaporation. Now, regretfully, there is also resistance in many places, often driven by ideology, not fact and science, and therefore a considerable amount of work is still in front of us. While reaching important milestones is pleasing, after 10 years we are still in the early stages of industry transformation. With our strong brands and our innovative and commercial capabilities, we have many years of opportunities and growth ahead. I look forward to sharing more with you at the upcoming Cagney Conference on February 19th. I will now hand over to Emmanuel to discuss our results and outlook in more detail.