Latin America & Canada - Key Market Commentaries

In Argentina, estimated industry size, our shipment volume and market share performance are shown in the table below.

Argentina Key Market Data Full-Year Change 2015 2014 % / p.p. Total Cigarette Market (billion units) 40.8 41.9 (2.5)%

PMI Shipments (million units) 31,910 32,323 (1.3)%

PMI Cigarette Market Share 24.3% 24.3% — 2.1% 2.2% (0.1) Philip Morris 44.7% 43.4% 1.3 Others 7.1% 7.3% (0.2) Total 78.2% 77.2% 1.0

The decline of the estimated total cigarette market was mainly due to the impact of price increases and a challenging economic environment. The decrease in our shipment volume was mainly due to a lower estimated total market, partly offset by market share growth, driven primarily by Philip Morris, reflecting the positive impact of the brand's capsule variants. Our share of the growing capsule segment, representing 16.4% of the total market, grew by 4.4 points to 73.5%.

In Canada, estimated industry size, our cigarette shipment volume and market share performance are shown in the table below.

Canada Key Market Data Full-Year Change 2015 2014 % / p.p. Total Cigarette Market (billion units) 26.7 27.3 (2.3)%

PMI Shipments (million units) 9,926 10,275 (3.4)%

PMI Cigarette Market Share 3.3% 3.0% 0.3 Canadian Classics 10.3% 10.4% (0.1) 10.6% 10.6% — Others 13.1% 13.6% (0.5) Total 37.3% 37.6% (0.3)

The estimated total cigarette market decreased by 2.3%. Excluding the favorable impact of estimated competitors' trade inventory movements, the total market declined by 4.6%, mainly due to the impact of tax-driven price increases. The decrease in our cigarette shipment volume was principally due to a lower estimated total market. Our market share was also negatively impacted by the above- mentioned estimated competitors' trade inventory movements.

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