Regulatory News:
Philip Morris International Inc. (PMI) (NYSE: PM) today
published its business transformation-linked financing framework
(“Framework”), which integrates the company’s smoke-free
transformation into its financing strategy.
“To strengthen our commitment and further highlight to
stakeholders the seriousness of our smoke-free ambitions, we wish
to link our most material sustainability priorities to our
financing,” said Emmanuel Babeau, Chief Financial Officer. “We
believe that a business transformation-linked financing framework
not only helps reinforce our commitment to reinvent our company,
but will also allow investors and lenders to engage with and
support our industry-leading transformation as we work to
accelerate the end of smoking and use our strong capabilities to
develop products that go beyond nicotine and have a net positive
impact on society.”
The Framework outlines the guidelines that PMI will follow in
issuing business transformation-linked financing instruments in the
debt capital and loan markets, which may include public notes
offerings, private placements, loans, and other relevant financing
instruments.
The Key Performance Indicators (KPIs) selected for the Framework
directly measure and respond to the focus of PMI’s sustainability
and corporate strategy, and the company’s most material1
sustainability topic: addressing the health impact of its products.
The chosen KPIs are directly linked to two of PMI’s most ambitious
and strategic Business Transformation Metrics:
- PMI’s smoke-free/total net revenue percentage, measuring the
scale of the company’s business transformation in regularly
reported financial terms and reflecting the publicly announced
benchmark by which it aims to become a predominantly smoke-free
company.
- Number of markets where PMI smoke-free products are available
for sale, measuring the access provided to adult smokers around the
world, which serves as a key indicator of the company’s commitment
to drive the obsolescence of cigarettes as fast as possible in as
many markets as possible.
The selected KPIs are key elements for demonstrating PMI’s
progress towards a smoke-free future, as well as its leading
position versus the other global industry players, both in actual
performance as well as ambitions for 2025 and beyond. The two KPIs
serve as an integral part of PMI’s broader 2025 aspirations
included in its Integrated Report 2020, as well as verifiable and
regularly reported metrics that provide external stakeholders
visibility on how the company achieves its goals.
The Framework includes two Sustainability Performance Targets
(SPTs), with an observation date of December 31, 2025:
- Increase PMI’s full-year 2025 smoke-free/total net revenue
percentage to more than 50%, from the 2020 baseline of 23.8%.
- Increase the number of markets where PMI’s smoke-free products
are available for sale to 100 markets by the end of 2025, from the
baseline of 64 markets on December 31, 2020.
These ambitious SPTs reflect PMI’s determination to become a
predominantly smoke-free company within the next five years and
significantly increase the access of its smoke-free products to a
greater number of adult smokers across a broad range of markets.
The SPTs further demonstrate the company’s commitment to deliver on
its purpose and drive the end of cigarette smoking as fast as
possible, with the ultimate objective to significantly improve
public health.
The Framework was validated by S&P Global Ratings, which
provided a second party opinion (SPO). The SPO recognized the
chosen KPIs and related SPTs as material, measurable, ambitious,
regularly reported and externally verified—in line with the June
2020 Sustainability-Linked Bond Principles administered by the
International Capital Market Association (ICMA), and the May 2021
Sustainability-Linked Loan Principles administered by the Loan
Market Association (LMA). The SPO is also available on the PMI
website.
“The transformation of our company is intrinsically linked to
our sustainability and corporate strategy,” said Jennifer Motles,
Chief Sustainability Officer. “As our most material issue comes
from the impact created by the products we sell, only a radical
transformation can successfully contribute to a more sustainable
world. We are therefore very pleased to publish our business
transformation-linked financing framework, which serves as a
further step in achieving our purpose.”
“The Framework builds on our genuine commitment to transform,”
she continued, “reflecting: a Statement of Purpose issued by the
Board of Directors; concrete KPIs for reporting and compensating
executives on that purpose (Business Transformation Metrics);
business transformation-linked financing instruments tied to
targets for select KPIs; and transparent, periodic disclosures on
our progress through integrated reporting. I hope this can serve to
inspire something bigger within our industry and set an example for
other industries also undergoing transformations.”
PMI is differentiated from other global tobacco companies by its
purpose, by its unique value proposition, by the commitment to,
pace of and scale of its transformation, by the magnitude of its
resource allocations and by the quality of its disclosure. To date,
PMI is the only tobacco company within the traditional
international tobacco industry that is purposefully working to
phase out cigarettes completely and actively engaging with
stakeholders to do so. It is also the only company in the industry
that has publicly disclosed ambitious forward-looking targets for
relevant metrics, including the two selected KPIs. In May of this
year, S&P Global Ratings’ ESG Evaluation Report recognized
PMI’s business transformation as an industry differentiator.
_________________ 1 The term “material” is defined in the
referenced sustainability standards and is not meant to correspond
to the concept of materiality under the U.S. securities laws and/or
disclosures required by the U.S. Securities and Exchange
Commission.
Forward-Looking & Cautionary Statements
This press release contains projections of future results and
other forward-looking statements. Achievement of future results is
subject to risks, uncertainties and inaccurate assumptions. In the
event that risks or uncertainties materialize, or underlying
assumptions prove inaccurate, actual results could vary materially
from those contained in such forward-looking statements. Pursuant
to the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995, PMI is identifying important factors
that, individually or in the aggregate, could cause actual results
and outcomes to differ materially from those contained in any
forward-looking statements made by PMI.
PMI's business risks include: excise tax increases and
discriminatory tax structures; increasing marketing and regulatory
restrictions that could reduce our competitiveness, eliminate our
ability to communicate with adult consumers, or ban certain of our
products in certain markets or countries; health concerns relating
to the use of tobacco and other nicotine-containing products and
exposure to environmental tobacco smoke; litigation related to
tobacco use and intellectual property; intense competition; the
effects of global and individual country economic, regulatory and
political developments, natural disasters and conflicts; changes in
adult smoker behavior; lost revenues as a result of counterfeiting,
contraband and cross-border purchases; governmental investigations;
unfavorable currency exchange rates and currency devaluations, and
limitations on the ability to repatriate funds; adverse changes in
applicable corporate tax laws; adverse changes in the cost,
availability, and quality of tobacco and other agricultural
products and raw materials, as well as components and materials for
our electronic devices; and the integrity of its information
systems and effectiveness of its data privacy policies. PMI's
future profitability may also be adversely affected should it be
unsuccessful in its attempts to produce and commercialize
reduced-risk products or if regulation or taxation do not
differentiate between such products and cigarettes; if it is unable
to successfully introduce new products, promote brand equity, enter
new markets or improve its margins through increased prices and
productivity gains; if it is unable to expand its brand portfolio
internally or through acquisitions and the development of strategic
business relationships; or if it is unable to attract and retain
the best global talent. Future results are also subject to the
lower predictability of our reduced-risk product category's
performance.
Philip Morris International: Delivering a Smoke-Free
Future
Philip Morris International (PMI) is leading a transformation in
the tobacco industry to create a smoke-free future and ultimately
replace cigarettes with smoke-free products to the benefit of
adults who would otherwise continue to smoke, society, the company,
its shareholders and its other stakeholders. PMI is a leading
international tobacco company engaged in the manufacture and sale
of cigarettes, as well as smoke-free products, associated
electronic devices and accessories, and other nicotine-containing
products in markets outside the U.S. In addition, PMI ships
versions of its IQOS Platform 1 device and consumables to Altria
Group, Inc. for sale under license in the U.S., where these
products have received marketing authorizations from the U.S. Food
and Drug Administration (FDA) under the premarket tobacco product
application (PMTA) pathway; the FDA has also authorized the
marketing of a version of IQOS and its consumables as a Modified
Risk Tobacco Product (MRTP), finding that an exposure modification
order for these products is appropriate to promote the public
health. PMI is building a future on a new category of smoke-free
products that, while not risk-free, are a much better choice than
continuing to smoke. Through multidisciplinary capabilities in
product development, state-of-the-art facilities and scientific
substantiation, PMI aims to ensure that its smoke-free products
meet adult consumer preferences and rigorous regulatory
requirements. PMI's smoke-free product portfolio includes
heat-not-burn and nicotine-containing vapor products. As of June
30, 2021, PMI's smoke-free products are available for sale in 67
markets in key cities or nationwide, and PMI estimates that
approximately 14.7 million adults around the world have already
switched to IQOS and stopped smoking. For more information, please
visit www.pmi.com and www.pmiscience.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210827005192/en/
Philip Morris International
Investor Relations: New York: +1 (917) 663 2233 Lausanne: +41
(0)58 242 4666 Email: InvestorRelations@pmi.com
Media: Lausanne: +41 (0)58 242 4500 Email:
Iro.Antoniadou@pmi.com
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