Lausanne, September 27, 2018

Investor Day

Jacek Olczak Chief Operating Officer OPERATING AROUND THE ADULT CONSUMER

2 Operating Around the Adult Consumer

CC RRPs PMI

Combustible Reduced-Risk Upskilling Cigarette Product Our Performance Performance Organization

3 Our Eye is On the Ball: Robust Cigarette Fundamentals

Sustainable Market Share Leader(a) Pricing Variance 26.8% cigarettes only ~7% combustible pricing 28.3% including heated tobacco units forecast for 2018

Superior Brand Portfolio(a) Marlboro, L&M, Chesterfield, and Philip Morris in global top 10 International Industry Total Volume Trends(b) ~(2.5)% forecast decline for 2018 (a) YTD August, 2018. Excluding China and the U.S. Reflects cigarettes and heated tobacco units (b) Excluding China and the U.S. Reflects cigarettes and heated tobacco units Source: PMI Financials or estimates 4 Our Strong Cigarette Brand Portfolio

International Cigarette Market Share (YTD August, 2018)

9.7%

3.3% 2.3% 1.8% 1.6% 1.2% #1 #4 #7 #10 #12 #15 We Own Six of the World’s Top 15 International Cigarette Brands

Note: Excluding China and the U.S. Reflects sales volume of PMI cigarettes as a percentage of cigarette industry sales volume Source: PMI Financials or estimates 5 Solid Global Cigarette Brand Share of Market (%)

9.6 9.7 9.7 1.6 1.6 1.6

3.4 3.3 3.3 2.1 2.3 1.8

1.7 1.8 1.5 1.2 1.4 1.2

2016 2017 YTD August 2016 2017 YTD August 2018 2018 Note: Excluding China and the U.S. Reflects sales volume of PMI cigarettes as a percentage of cigarette industry sales volume Source: PMI Financials or estimates 6 Cigarette SoM Resilient Despite Investment Shift to RRPs

PMI SoM (12 mma) in Markets where IQOS is Available 33.2%

Total(a) 32.5% PMI (CC+ HTU) Industry (CC+ HTU) 31.7%

PMI CC (b) Industry CC Cigarettes 31.4% 31.2% 31.1%

January December August 2017 2017 2018

(a) Sales volume of PMI cigarettes and HTUs as a percentage of the total industry sales volume for cigarettes and HTUs in the markets where IQOS was available at the end of August 2018 (b) Sales volume of PMI cigarettes as percentage of the total industry sales volume for cigarettes in the markets where IQOS was available at the end of August 2018 Source: PMI Financials or estimates 7 Focused Product Launches Yielding Higher Success Rate

Strike Rate (%) & Number of Launches Number of SKUs (0.7% SoM in 12 months after launch) 229 4,497 4,488 4,419 163 Number of Launches 83

42% 24% 31%

2015 2016 2017(a) 2015 2016 2017

(a) Based on latest available share for 2017 launches Note: Strike rate is defined as % of innovations meeting a pre-defined threshold, 12 months after launch Source: PMI Financials or estimates 8 Region/MarketMARKET SNAPSHOT Snapshot

OPERATING RESILIENCE

RUSSIA

EU REGIONEU

TURKEY

SAUDI ARABIA PHILIPPINES

INDONESIA

9 Strong Total Market Share Performance % Var. vs. Total Industry Volume (billion units) YTD Aug, 2017 509 502 492 326 (1.7)%

Total PMI 38.3% 38.3% 38.3% 38.4% 0.3% 1.0% HEETS

Philip Morris 2.7% 3.2% 3.1% 3.0% Chesterfield 5.5% 5.9% 6.0% 5.9% EU REGION

L&M 6.9% 6.9% 6.9% 6.9%

Marlboro 18.8% 19.0% 18.8% 18.5%

2015 2016 2017 YTD August 2018 Note: Total industry volume reflects cigarettes and heated tobacco units Source: PMI Financials or estimates 10 Solid Business Fundamentals % Var. vs. Cigarette Industry Volume (billion units) YTD Aug, 2017 103 105 106 78(a) 13.7%

43.8% 44.3% 43.3% 43.1% TURKEY

• Amendment to cigarette excise tax structure on June 30, 2018: 9.5% 10.2% 10.2% 11.0% Marlboro ⎼ Increased specific component ⎼ Reduced ad valorem component

11.6% 11.7% 11.5% 11.2% Parliament

2015 2016 2017 YTD July 2018 (a) YTD August, 2018 Source: PMI Financials or estimates, and Nielsen 11 Improved Pricing

RUSSIA • Strong pricing mainly driven by the annualization of pricing announced in H2, 2017, and further supported PMI Cigarette SoM (%) by price increases earlier this year % Var. vs. Total Industry Volume (billion units) YTD Aug, 2017 280 260 156(a) (8.6)% • July 1, 2018 excise tax increase with a pass-on of RUB 5/pack 27.2 27.1 26.5 5.2 5.1 5.1 Premium 5.4 4.6 4.0 Mid • PMI HTU national IMS share of 0.7% YTD July, 2018 16.6 17.4 17.4 Low

2016 2017 YTD July

(a) YTD August, 2018 2018 Note: Total industry volume reflects cigarettes and heated tobacco units. Cigarette share is based on cigarette industry only. Premium includes above premium. Low includes super-low Source: PMI Financials or estimates, and Nielsen 12 Solid SoM Performance Supported by Marlboro

• PMI cigarette share growth driven by strong INDONESIA performances of Marlboro Filter Black and Dji Sam Soe Magnum Mild PMI Cigarette SoM (%) % Var. vs. Cigarette Industry Volume (billion units) YTD Aug, 2017 Industry Segment Split (%) 316 307 200 1.2% 33.4 33.2 Hand-Rolled 33.0 Kreteks (SKT) 18.2 17.6 17.1 Hand-Rolled 6.8 6.6 6.4 Kreteks (SKT)

Machine-Made Machine-Made 21.7 21.2 21.0 (b) Kreteks (SKM)(a) 81.8 82.4 82.9 Kreteks (SKM)

4.9 5.2 5.8 Marlboro 2016 2017 YTD August 2016 2017 YTD August

(a) Includes non-kretek brands 2018 2018 (b) Excludes Marlboro SKM Source: PMI Financials or estimates 13 Gaining Share and Increasing Profitability PHILIPPINES • Further profit growth from excise tax- driven price increases PMI Cigarette SoM (%) % Var. vs. • Strong PMI share growth led by: Cigarette Industry Volume (billion units) YTD Aug, 2017 ⎼ Fortune: benefiting from narrowed price gaps vs. 75 47(a) (2.7)% lower-priced brands 67.6 69.7 ⎼ Marlboro: solid performance in spite of its price increase in December 2017 Others

18.0 22.4 Fortune • Excise tax increase of PHP 2.50/pack (+7.7%) effective July 2018 33.0 33.3 Marlboro

2017 YTD August 2018 (a) YTD August, 2018 Source: PMI Financials or estimates 14 SequentialMARKET SNAPSHOT Improvement

SAUDI ARABIA – SEQUENTIAL IMPROVEMENT IN VOLUME DECLINE SAUDI ARABIA Cigarette Volume (Variance vs. PY) Industry PMI IMS PMI Cigarette SoM (%) % Var. vs. Cigarette Industry Volume (billion units) H1 2017 15 11 10 (33.2)% 52.8 (23.8)% 1.9 40.8 35.4 18.2 Others 12.2 Chesterfield 9.8 (40.8)% (40.1)% 10.4 13.2 L&M 28.3 (54.5)% 13.1 14.0 Marlboro Q1 Q2 Q1 Q2 H1 H2 H1 2018 2018 2017 2018

Source: PMI Financials or estimates 15 Our Eye is On the Ball: Robust Cigarette Fundamentals

Sustainable Market Share Leader(a) Pricing Variance 26.8% cigarettes only ~7% combustible pricing 28.3% including heated tobacco units forecast for 2018

International Cigarette SoM(a) (YTD August, 2018)

9.7%

1.5%(b)

3.3% 2.3% 1.8% 1.6% 1.2% #1 #4 #7 #10 #12 #15

(a) Sales volume of cigarette brand as a percentage of the total industry sales volume for cigarettes (b) Sales volume of PMI HTUs as a percentage of the total industry sales volume for cigarettes and HTUs Note: Excluding China and the U.S. Source: PMI Financials or estimates 17 Operating Around the Adult Consumer

CC RRPs PMI

Combustible Reduced-Risk Upskilling Cigarette Product Our Performance Performance Organization

18 Every Consumer Matters

Approximately 5.8 million adult consumers around the world have already stopped smoking and switched to IQOS

Note: Status at the end of August 2018 Source: PMI Financials or estimates, IQOS user panels, and PMI Market Research 19 Continued IQOS User Growth (in millions) (a) 8.3 8.6 Total IQOS users 7.7 6.9

5.2

Users that have stopped smoking 5.2 5.6 5.8 4.7 and switched to IQOS 3.7

Q3 Q4 Q1 Q2 August 2017 2018 (a) Total IQOS users means the estimated number of Legal Age (minimum 18-year-old) who have used HeatSticks/HEETS for at least 5% of their daily tobacco consumption over the past seven days Source: PMI Financials or estimates, and IQOS user panels and PMI Market Research 20 Total IQOS Users by Region (in thousands) EE EU 665 1,298 469 863

LA&C 27,255

LA&C 40 EA&A 24 6,562 4,412

Total IQOS users Users that have stopped smoking and switched to IQOS ME&A 28 4

Note: Status at the end of August 2018 Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 21 IQOS in Italy Total IQOS Users (in thousands)

SoM Aug’18 Sep 2017 117 SoM Aug’18 2.5% 1.8% Aug 2018 318 Milan Torino IQOS Conversion Rate (>95%) Bologna SoM Aug’18 & 5.4% Sep 2017 63% Modena Aug 2018 D 67% Rome Awareness Level SoM Aug’18 Sep 2017 5% 19% 3.8% Jun 2018 8%8% 23% Tier 3 Tier 1 IMS SoM Sep 2017 0.8% Aug 2018 1.9% Notes: City share represents offtake share Tier 1 Awareness: I have heard or seen IQOS and or HEETS Tier 3 Awareness: I have heard of IQOS and HEETS, understand correctly what IQOS is or its benefits are and I find at least 1 benefit highly relevant Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 22 IQOS in Germany Total IQOS Users (in thousands) Sep 2017 36

Hamburg Aug 2018 111

Berlin SoM Aug’18 IQOS Conversion Rate (>95%) 1.1% Sep 2017 57% Dusseldorf Aug 2018 D 64%

Frankfurt Dresden Awareness Level (3 cities) SoM Aug’18 2.1% Sep 2017 28% 63% Aug 2018 38% 66%

Stuttgart Tier 3 Tier 1 SoM Aug’18 IMS SoM 2.1% Sep 2017 Munich 0.2% Aug 2018 0.5%

Notes: City share represents offtake share Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 23 IQOS in Greece Total IQOS Users (in thousands) Sep 2017 36 Aug 2018 113

IQOS Conversion Rate (>95%) Sep 2017 76%

SoM Aug’18 Aug 2018 D 82% 6.7%

Athens Awareness Level Oct 2017 6% 17% Jul 2018 13% 39% Tier 3 Tier 1 IMS SoM Sep 2017 1.8% Aug 2018 4.3%

Notes: City share represents offtake share Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 24 Growing IQOS User Base in the EU Region (in thousands)

Total IQOS users Users that have stopped smoking and switched to IQOS 1,298 1,124

873

611 863 749 353 602 250 418 233 157 Q2 Q3 Q4 Q1 Q2 August 2017 2018

Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 25 IQOS in Russia Total IQOS Users (in thousands) Sep 2017 85 Aug 2018 479

IQOS Conversion Rate (>95%) Sep 2017 62%

SoM Aug’18 Aug 2018 D 76% St. Petersburg 5.7% Moscow Novosibirsk Awareness Level (Moscow)

Yekaterinburg Sep 2017 12%12% 22% Rostov-on-Don Aug 2018 Krasnodar 20%20% 41% Vladivostok Tier 3 Tier 1 IMS SoM Sep 2017 0.1% Aug 2018 1.1%

Notes: City share represents offtake share. Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 26 IQOS in South Korea Total IQOS Users (in thousands) Sep 2017 353 Aug 2018 1,136

IQOS Conversion Rate (>95%) Sep 2017 66%

Aug 2018 D 59%

Awareness Level Sep 2017 13%13% 51% Aug 2018 35%35% 87% Tier 3 Tier 1 IMS SoM Sep 2017 2.9% Aug 2018 8.1%

Source: PMI Financials or estimates, Hankook Research, IQOS user panels and PMI Market Research 27 IQOS in Japan Total IQOS Users (in thousands) Sep 2017 4,358 Aug 2018 5,426

IQOS Conversion Rate (>95%) Sep 2017 Sep 2017 65% Aug 2018 58%

Awareness Level Sep 2017 34% 87% Aug 2018 35% 88% Tier 3 Tier 1 IMS SoM Sep 2017 12.8% Aug 2018 15.2%

Source: PMI Financials or estimates, Tobacco Institute of Japan, IQOS user panels and PMI Market Research 28 Japan: Market Opportunity for Smoke-Free Alternatives is Real

2015 2016 2017 2018 December August 41.6% 37.1% 31.3%

28.0% 22.2% 14.0% 18.5%

11.0% Device Ownership 4.3% 3.1% 6.2% Past 7-Day Usage 0.4% HnB Category Share

Note: All numbers reflect a three-month moving average Device ownership of any heated tobacco product (IQOS, glo, Ploom TECH) among all adult tobacco users in Japan Past 7-day usage of any heated tobacco product (IQOS, glo, Ploom TECH) among all adult tobacco users in Japan HnB category share represent selected C-Store sales volume for HTUs as a percentage of the total retail sales volume for cigarettes and HTUs in these C-Stores Source: PMI Financials or estimates, IQOS user panels and PMI Market Research 29 Initiatives in Japan

1 2 3

Increased Second Simplified Warranty 2.4 Plus Improved Holder Penetration Registration Process Device Improved Response Time

4 5 6

Campaign “5 Million” New IQOS Devices Stronger-Tasting HTU Variants

30 2018 IMS Evolution for IQOS Kit and Holder – Japan (in thousands)

874 817

304 IQOS Holder 616 622 302 543 124 189 200

515 570 IQOS Kit 492 433 343

April May June July August

Source: PMI Financials or estimates 31 IncreasingBUSINESS InteractionsMODEL EVOLUTION with Adult Consumers

Wholesale & Retail

From "Business-to-Business"

to "Business-to-Consumer"

LEARN EXPERIENCE LIVE ADVOCATE

Discover Consider Evaluate Find Try Buy Use Convert Bond

32 InvestingC for Revenue Growth

Revenue

LEARN EXPERIENCE LIVE ADVOCATE

Discover Consider Evaluate Find Try Buy Use Convert Bond

Acquisition Cost Retention Cost

33 RRP Commercial Investment at Market Level (2017 % split) Split between Acquisition and Retention Costs 20 depends on Market Maturity 40 Acquisition Retention 60 80

Variable Fixed Variable IQOS Coaches Brand Retail Customer Care Registration Incentive Trade & LAMPs E-commerce Referral Programs Overheads Loyalty Programs Marketing & Events

Source: PMI Financials or estimates 34 CostPROFITABILITY per IQOS User COMPA+RISON - Index

Acquisition Retention(a)

100 Japan 39 24 20 22 14

100 Italy 34 48 20 11 11

100 65 Russia 34 20

2015 2016 2017 2015 2016 2017

(a) Indexed to base year acquisition cost per IQOS user

SourceNote: Marginal: PMI Contribution Financials of new or user estimates assumed only for half a year. Annualized USD per User. Data based on 2018 RF6. 35 IQOSPROFITABILITYUser Economics COMPARISON - Index (2017 marginal contribution per user; Index = marginal contribution per Marlboro adult smoker) Situational & Situational & Converted Predominant Marlboro Converted Predominant Marlboro IQOS LAU IQOS LAU Adult Smoker IQOS LAU IQOS LAU Adult Smoker

121 254 82 100 168 Japan Germany 100

321 282 227 210 Italy 100 Romania 100

144 433 102 100 328 Russia Greece 100

Note: 2017 annualized marginal contribution per user. Marginal Contribution per user represents customer revenues before considering discounts and incentives to consumers, less the volume driven components of “Cost of sales”. It excludes fixed manufacturing costs and distribution costs

Source:Note: Marginal PMI Contribution Financials of new or user estimates assumed only for half a year. Annualized USD per User. Data based on 2018 RF6. 36 BusinessBUSINESS Model MODEL Evolution EVOLUTION Opens New Doors

Wholesale & Retail

From "Business-to-Business"

to "Business-to-Consumer"

LEARN EXPERIENCE LIVE ADVOCATE

Discover Consider Evaluate Find Try Buy Use Convert Bond

37 RRP Portfolio Drives New Revenue Opportunities

Cigarettes

Tobacco

IQOS + +

Consumables Device & Services

Accessories 38 Growing Revenue Stream: IQOS Accessories Today: Narrow Range Tomorrow: Wider Range

JAPAN 25% KOREA 29% RUSSIA 46% ITALY 66% 30% GERMANY 74% Adult Users

Source: PMI Financials or estimates, and PMI Market Research 39 Operating Around the Adult Consumer

CC RRPs PMI

Combustible Reduced-Risk Upskilling Cigarette Product Our Performance Performance Organization

40 Aligning Organization Along The RRP Consumer Journey

LEARN EXPERIENCE LIVE ADVOCATE

Discover Consider Evaluate Find Try Buy Use Convert Bond

ACQUISITION RETENTION • Understand consumer needs faster • Enhance & add new capabilities • Deploy new organization at speed & scale

41 Summary

Market Opportunity Robust CC Business for Smoke-Free Alternatives is Real

PMI Business Model Deploy New Evolution Capabilities at Speed & Scale

42 Investor Day

Lausanne, September 27, 2018