KNOWLEDGE BUILDER INVESTOR RELATIONS AN OVERVIEW OF INVESTOR RELATIONS AT PMI

Transcription

1 KNOWLEDGE BUILDER INVESTOR RELATIONS AN OVERVIEW OF INVESTOR RELATIONS AT PMI

2 2 Module Knowledge Titlebuilder Welcome PMI Investor Relations is a small, focused team managed from the Operations Center in Lausanne, Switzerland. This Knowledge Builder will help you: Describe the role of Investor Relations at PMI Identify Investor Relations primary stakeholders Describe PMI s shareholder ownership profile Understand why, how and what PMI communicates to the financial community Explain some key disclosure and compliance guidelines Understand how you can help Investor Relations What is Investor Relations? Investor Relations is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company s securities achieving fair valuation. (1) (1) National Investor Relations Institute About the team In order to establish credibility with and provide in-depth analyses to investors, analysts and other stakeholders, Investor Relations team members have: A long tenure at PMI A varied background and broad functional experience International experience from affiliates and regional headquarters around the world They work closely with the CEO, CFO and Corporate Secretary s Office. Did you know? Together, the seven employees in PMI s Investor Relations team have almost 150 years of combined experience at the company. Who is this for? Would you like to find out more about the Investor Relations team at PMI? You are in the right place. This Knowledge Builder will help you understand their role, who they work with and how you can contribute to the team s success. Work through this Knowledge Builder at your own pace. When you re ready, you can explore the other aspects of the Investor Relations Learning Journey.

3 3 Knowledge builder Meet our key stakeholders The Investor Relations team has a number of key stakeholders. Sell-side Analysts Sell-side Analysts work for investment banks and typically cover specific companies within a given industry. They issue research reports with recommendations (e.g., Buy, Sell, Hold ) for their firms clients, such as portfolio managers at mutual funds. As of December 2015, PMI was covered by over 15 analysts, based primarily in New York and London. Buy-side Analysts Buy-side Analysts are employed by investment firms such as mutual funds, pension funds and insurance companies. They provide research and recommendations exclusively for their firms portfolio managers, and do not publish their analyses externally. Portfolio Managers Portfolio managers invest client assets based on a given investment strategy. They rely on a broad range of information such as research and recommendations from both Sell-side and Buy-side Analysts to support their investment decisions. Other Stakeholders The Investor Relations team s other key stakeholders include: Financial media Individual ( retail ) investors PMI employees John King Sell-side Analyst Rowena May Buy-side Analyst Doug Lovett Portfolio Manager I work for a global investment bank, specializing in the Food, Beverage and Tobacco industries. My clients rely on me to be up-to-speed on the latest developments in the tobacco industry and to provide timely research on PMI and its competitors. I work for one of the world s largest investment firms, with over $500 billion in client assets under management. I m currently recommending PMI to one of my firm s portfolio managers because he s interested in investing in global consumer companies with leadership positions in developing countries such as Argentina, Indonesia, the Philippines and Russia. I manage a fund that invests primarily in large capitalization consumer products companies. PMI has been a core shareholding in my fund since the spin-off in I particularly like the company s broad geographic exposure, leading brand portfolio and history of annual dividend increases.

4 4 Knowledge builder PMI s shareholder ownership profile Approximately 75% of PMI s shares outstanding are held by institutions, the majority of which are based in the U.S. Nearly half of PMI s non-u.s. institutional shareholders are based in the United Kingdom. Figure 1: Investor Type 25% Individuals 75% Institutions (U.S. 61% + Non-U.S. 14%) PMI s institutional shareholders represent a range of investment styles, including Value, Growth and Index funds. Other Switzerland Germany 7% 7% 8% 15% 49% U.K. Figure 2: Non-U.S. Institutional Shareholders Japan 14% Canada 8% Other Figure 3: Institutional Shareholder Investment Style (1) 27% Index 38% Value 27% Growth Did you know? From the time of the spin-off in March 2008 to year-end 2015, the proportion of PMI s outstanding shares held by non-u.s. institutional shareholders doubled to approximately 14%. (1) Value (Below Market P/E, Low Price-to-Book Value), Growth (Above Market Earnings Growth), Index (Benchmark to an Index) Note: Reflects PMI s shareholder ownership profile as of December 31, All figures based on total shares held. Source: Bloom Partners, Inc., SPL Network and PMI estimates

5 5 Knowledge builder External reporting Investor knowledge about PMI is growing. Let s explore why, how and what PMI communicates to the financial community. Why does PMI have external reporting requirements? PMI became a publicly traded company on Friday, March 28, 2008, with its first official trading day on the New York Stock Exchange on Monday, March 31, Being a publicly-traded company gives rise to various external reporting requirements that have as an important objective the clear, consistent and transparent communication of the company s business and financial health and future prospects. The disclosures enable investors to make informed decisions on whether to buy, sell or hold the company s securities. How does Investor Relations communicate financial and business information? Press releases These cover topics such as: Quarterly earnings Dividend declarations M&A transactions Changes in senior management and the Board of Directors Separate one-on-one and group meetings are typically organized in conjunction with the presentations. Annual Report PMI s Annual Report is published in March each year, prior to the Annual Stockholders Meeting. It includes a joint letter to shareholders from the Chairman and Chief Executive Officer, as well as information about the company, our people and our products, and management s discussion and analysis of financial conditions and results of operations. Calls and meetings Throughout the year, the Investor Relations team speaks with key institutional stakeholders by phone or in person. These discussions typically cover the company s latest results and other publicly disclosed information. PMI Investor Day An Investor Day event is held in Lausanne every other year, during which senior management provide a detailed update on PMI s business performance and outlook. The event is attended by many of the company s key institutional stakeholders and is webcast in audio format. What are our investors and other key stakeholders interested in? It varies, of course, but here s a selection of the most popular topics: Cigarette industry volume trends Market share performance Marlboro innovation Pricing Reduced-Risk Products (1) Cash flow Dividends and share buybacks Regulatory and fiscal developments Illicit trade (1) Reduced-Risk Products ( RRPs ) is the term the company uses to refer to products with the potential to reduce individual risk and population harm in comparison to smoking cigarettes. Investor conferences Throughout the year, senior management present at select investor conferences, such as the annual CAGNY conference in the U.S. The conferences are attended by many of our key institutional stakeholders. Investors that are Highly Knowledgeable about PMI Source: Rivel Research Group 87% 76% Average Average

6 6 Knowledge builder A year in the life of Investor Relations Each year the Investor Relations team: Supports at least one event for each of the Sell-side Analysts who cover PMI Participates in multiple investor conferences Meets with at least 60 of our top 100 U.S. institutional shareholders Meets with around 75% of our identified non-u.s. institutional shareholders Holds over 100 one-to-one/group meetings with investors Reaches around 70% of our available global institutional shareholders (1) (1) Global institutional investor base excludes index and pension funds

7 7 Knowledge builder Disclosure rules PMI and its employees are responsible for fulfilling the requirements of external laws and regulations on disclosure. Disclosure Rulebook The disclosure of financial and business information is governed by: 1: Laws passed by U.S. Congress 2: Regulations and rules of the U.S. Securities and Exchange Commission (SEC) 3: Rules of stock exchanges (e.g., NYSE) 4: Best practice guidelines such as those of the National Investor Relations Institute (NIRI) Fair disclosure On August 15, 2000, the U.S. Securities and Exchange Commission adopted Regulation FD (Fair Disclosure) to address the selective disclosure of information by publicly traded companies and other issuers. It mandated that all publicly traded companies disclose material, nonpublic information to all investors at the same time. What is material information? There is a substantial likelihood that a reasonable investor would consider the information in making an investment decision. There must be a substantial likelihood that the information would have been viewed by the reasonable investor as having significantly altered the total mix of information made available. U.S. Supreme Court The SEC considers changes in stock price and trading volume in material assessments. You can help PMI comply with disclosure rules No employee of PMI and its subsidiaries should communicate any information about our businesses to any member of the investment community without securing approvals in accordance with PMI 33 ( Providing Financial Information to Third Parties ). Should you have any questions about what information you may or may not share publicly, please contact the Investor Relations team. Material information at PMI Company information that may be material includes, but is not limited to: Financial results Dividends and share repurchases Future pricing Mergers, acquisitions and divestitures New products or innovations Factory closures, lay-offs and significant developments regarding customers or suppliers Major events regarding the company s equity and debt securities Litigation PMI discloses material, non-public information in: Quarterly earnings releases Press releases Investor presentations SEC filings (e.g., Form 10-K and 10-Q) The information included on the PMI Investor Relations website, including webcasts, presentations and reports, helps us fulfil this requirement.

8 8 Knowledge builder How you can help Investor Relations The Investor Relations team relies on the global PMI community to help it stay informed on the latest company and industry developments worldwide. What s next? Want to stay connected with the Investor Relations team and remain up-to-date on PMI s public disclosures? How you can help Notify Investor Relations before (or as soon as) important developments in your Region or market become public. For example: Major regulatory changes (e.g., plain packaging) Excise tax structure proposals/changes PMI price changes and tax passon amounts, if applicable Significant competitive activities (e.g., pricing, brand repositioning, product launches) Reduced-Risk Product (1) launches and/or developments (1) Reduced-Risk Products ( RRPs ) is the term the company uses to refer to products with the potential to reduce individual risk and population harm in comparison to smoking cigarettes. Download the PMI IR Mobile App at: Visit our website: If you have questions for us, we re here to help. us at: InvestorRelations@pmi.com