#1W WILL PM ANONAL PHILIP MORRIS ČR Annual General Meeting of Shareholders of Philip Morris ČR a.s. Kutná Hora April 27, 2012 András Tövisi Chairman of the Board of Directors#2In 2012 we celebrate two anniversaries... PHILIP MORRIS ČR 200 200 years of tobacco products manufacture in Kutná Hora PM PHILIP MORRIS ČR 20 years of Philip Morris International Inc. presence in the Czech Republic © 2012 Philip Morris ČR a.s. | 2#3Key Highlights of 20 Years with PMI Earnings per Share +252% CZK 926 CSK 263 1992 2011 GOLDEN TOBACCOS RED WHITE Start Kouření může zabíjet ážně lidem okoli W PHILIP MORRIS ČR PHILIP MORRIS i jet EM 3 1992 2011 55 Chesterfield Ministerstvo zdravotnictví varuje Kouření vážně škodí Vám i lidem ve Vašem okolí 555555555 SPARTA CLASSIC TRIPLE FILTER Ministerstvo zdravotnictvi vanue Kouřen škodí Vái ve Vaše HAL PETRA Ministerst Kou škodí ve Va O олодеи FILTER CIGARETTES Ministerstvo zdravotnictví varuje Kouření ůže zabíjet Source: Philip Morris ČR a.s. financials Marlboro Ministerstvo zdravotnictví varuje: Kouření může zabíjet © 2012 Philip Morris ČR a.s. | 3#4Cigarette Volume and Market Share Czech Republic Total Market (billion units) 21.7 21.1 21.1 10.1 2009 54.5% 2010 Market Share -2.9pp 51.6% 2011 2010 Shipments (billion units) -7.5% No. 1 INTERNATIONAL ORIGINAL 9.3 PHILIP MORRIS ČR 2011 RED WHITE 2010 2011 Shipments and market share impacted by: Losses of local heritage brands Partially offset by Red & White and Marlboro Source: ACNielsen Czech Republic s.r.o., Philip Morris ČR a.s. financials Ministerstvo zdravotnictví varuje: Kouření může zabíjet 2012 Philip Morris ČR a.s. 4#5• Tax & Price Increases Czech Republic Premium VAT increase January 1, 2010 Medium • Excise tax increase February 1, 2010 Note: Retail prices in CZK/pack of 20 cigarettes Source: Price Gazettes of the Ministry of Finance Low FILTER GIGARETTES Marlboro Mnisterstvo zdravotnictvi varje Kouření vážně škodi Vám i lidem ve Vašem okolí EM PETRA Kouření vážně škodí Vám i lidem ve Vašem okolí Kouření může zabíjet PHILIP MORRIS ČR Dec '09 Dec '10 Dec '11 82 82 84 66 69 72 RED WHITE 60 63 65 Kouření může zabíjet © 2012 Philip Morris ČR a.s. 5#6Cigarette Volume and Market Share Slovak Republic Total Market (billion units) 7.7 7.5 7.4 3.8 2009 2010 Market Share -0.6pp 2011 2010 Shipments (billion units) -2.8% PHILIP MORRIS ČR 3.7 2011 No. 1 RED LABEL EM 50.6% 2010 50.0% 2011 Market share impacted by: • • • Down-trading to competitive low-price brands Losses of local heritage brands AMERICAN BLEND Ministerstvo zdravotnictví varuje: Fajčenie môže zabíjať Partially offset by the strong performance of L&M EM 2012 Philip Morris ČR a.s. Source: ACNielsen Slovakia s.r.o, Philip Morris Slovakia s.r.o. financials Note: L&M No. 1 brand in August-December 2011 60#7Tax & Price Increases Slovak Republic • VAT increase Premium January 1, 2011 Medium • Excise tax increase February 1, 2011 Note: Retail prices in EUR/pack of 19 cigarettes Source: Philip Morris Slovakia s.r.o. price lists PELTER CONRETTER Marlboro Fajčenie vážne škodi vám a ostatným okolo vás PETRA Fajčenie vážne škodi vám a ostatným okolo vás PHILIP MORRIS ČR Dec '10 Dec '11 3.00 3.20 2.60 2.60 Super Low EM 2.30 2.50 Fajčenie môže zabíjať RED WHITE 2.25 2.40 Fajčenie môže zabíjať © 2012 Philip Morris ČR a.s. | 7#8Other Tobacco Products Czech Republic Fine Cut Tobacco Total Market - Czech Republic (billion cigarette equivalents) +22% 1.1 1.3 2010 2011 Note: Fine Cut Tobacco refers to tobacco products such as make-your-own cigarettes (0.75 g = 1 cigarette) Source: Philip Morris ČR a.s. internal estimates PHILIP MORRIS ČR © 2012 Philip Morris ČR a.s. 8#9Export Shipments • • 13.9 2010 Shipments (billion units) +12.8%. 15.7 2011 PHILIP MORRIS ČR Cigarettes up 1.3 billion (+9.7%) Other Tobacco Products up 0.5 billion (+96.1%) 2011 operations investments in Kutná Hora: CZK 0.4 billion Note: Shipments include other tobacco products such as cigarillos and make-your-own cigarettes (0.75 g = 1 cigarette) Source: Philip Morris ČR a.s. financials © 2012 Philip Morris ČR a.s. 9#10Business Overview Consolidated Financial Results PHILIP MORRIS ČR Revenues Net of Excise Tax & VAT (CZK billion) +6.6% Profit from Operations (CZK billion) +6.8% 7 11.4 12.2 2.9 3.1 2010 2011 2010 2011 Source: Philip Morris ČR a.s. financials © 2012 Philip Morris ČR a.s. 10#11Revenues, Net of Excise Tax and VAT Consolidated Financial Results (CZK billion) PHILIP MORRIS ČR 0.9 (0.1) 12.2 0.5 (0.4) 11.4 (0.2) (0.0) 2010 Currency Price Volume / Mix Slovakia Exports Income from Services 2011 Czech Republic Excluding the impact of currency: increase of CZK 0.9 billion (+8.2%) driven primarily by higher exports to other PMI affiliates and by favourable pricing in the Czech Republic and Slovakia, partially offset by unfavourable volume/mix Source: Philip Morris ČR a.s. financials 2012 Philip Morris ČR a.s. 11#12Profit from Operations Consolidated Financial Results (CZK billion) PHILIP MORRIS ČR 0.5 (0.5) 3.1 0.2 (0.0) 2.9 (0.0) (0.0) 2010 Currency Price Volume / Mix Slovakia Czech Republic Exports Costs/ 2011 Services Excluding the impact of currency: increase of CZK 0.2 billion (+7.4%) driven by higher exports to other PMI affiliates Source: Philip Morris ČR a.s. financials © 2012 Philip Morris ČR a.s. 12#13Cash and Cash Equivalents Consolidated Financial Results (CZK billion) 7.1 PHILIP MORRIS ČR 3.2 (0.6) (3.5) (1.1) Prior years accumulated retained earnings payout (2.4) 2010 net income payout (0.4) 0.1 0.1 5.9 2010 Profit before Taxes Dividends tax Change in Working Capital (CR) Change in Working Capital (SR) Other 2011 Decrease of CZK 1.2 billion mainly driven by the one-off payment of prior years' retained earnings Source: Philip Morris ČR a.s. financials © 2012 Philip Morris ČR a.s. 13#14Slovak Republic (EUR / 000's) 81.3 81.3 Fiscal Environment Minimum Excise Tax Development Czech Republic (CZK / 000's) 1,920 2009 2010 85.0 2009 2010 2011 2012 2013 Source: Act no. 95/2011 Coll., Council Directive 2011/64/EU on the structure and rates of excise duty applied to manufactured tobacco (codification) 2,010 2,010 2,100 2011 2012 2013 88.5 2014 90.0 © 2012 Philip Morris ČR a.s. 14 90.0 2,100 2014 PHILIP MORRIS ČR Min. eq. €90/'000 cig. (EU minimum)#152012 Update Czech Republic Premium Medium Low FILTER CIGARETTED Marlboro Kouření vážně škodí Vám i lidem ve Vašem okolí EM PETRA Kouření vážně škodí Vám i lidem ve Vašem okolí Kouření může zabíjet RED WHITE Kouření může zabíjet Dec '11 2012 Registered RSP's 84 86 Premium 72 12 65 55 Slovak Republic PHILIP MORRIS ČR Marlboro Fajčenie vážne škodi vám a ostatným okolo vás Dec '11 2012 3.20 3.30 PETRA 74 Medium 2.60 2.70 Fajčenie vážne škodi vám a ostatným okolo vás 68 Super Low EM 2.50 2.60 Note: Retail prices in CZK/pack of 20 cigarettes for Czech Republic and in EUR/pack of 19 cigarettes for Slovak Republic Source: Price Gazettes of the Ministry of Finance (Czech Republic) and Philip Morris Slovakia s.r.o. price lists Fajčenie môže zabíjať RED WHITE 2.40 2.50 Fajčenie môže zabíjať 2012 Philip Morris ČR a.s. 15#16Dividend Proposal PHILIP MORRIS ČR (CZK/share) 2009 2010 2011 Accumulated Retained 0 376 0 Earnings Net Income 780 884 920 Dividend Paid / Proposed 780 1,260 920 Source: Philip Morris ČR a.s. financials © 2012 Philip Morris ČR a.s. 16