Philip Morris International (PM) risk factors, FY2024 10-K

Other

1. 01Forward-Looking and Cautionary Statements
2. 02We may be unsuccessful in our attempts to introduce, commercialize, and grow smoke-free products in existing and new markets, and regulators may prohibit or significantly restrict the commercialization of these products or the communication of scientifically substantiated information and claims
3. 03Additionally, any claims, regardless of merit, challenging our research and clinical data available to date, may impact the development of science-based regulatory frameworks for the commercialization of the SFP category and the commercialization of the SFP category in general
4. 04The financial and business performance of our smoke-free products is less predictable than our cigarette business
5. 05We may be unsuccessful in our efforts to differentiate smoke-free products and cigarettes with respect to taxation
6. 06Consumption of tax-paid cigarettes continues to decline in many of our markets
7. 07Our business faces significant governmental action aimed at increasing regulatory requirements with the goal of reducing or preventing the use of tobacco or nicotine-containing products
8. 08Changes in the earnings mix and changes in tax laws may result in significant variability in our effective tax rates. Our ability to receive payments from foreign subsidiaries or to repatriate royalties and dividends could be restricted by local country currency exchange controls and other regulations
9. 09As a result of Russia’s invasion of Ukraine, certain taxing jurisdictions, including the U.S., have proposed punitive tax legislation applicable to companies doing business in Russia, which could also have a material adverse impact on our effective tax rate if enacted thereby reducing our net earnings
10. 10Disruptions in the credit markets or changes to our credit ratings may adversely affect our business
11. 11We could decide, or be required to, recall products, which could have a material adverse effect on our business, reputation, results of operations, cash flows or financial position
12. 12We may be required to write down assets due to impairment, which could have a material adverse effect on our results of operations or financial position

Risks Related to the Impact of the War in Ukraine on our Business

1. 13Our business, results of operations, cash flows and financial position may be adversely impacted by the continuation and consequences of the war in Ukraine

Risks Related to Sourcing and Distribution of Products, Services and Materials

1. 14Use of third-parties may negatively impact the distribution, quality, and availability of our products and services, and we may be required to replace third-party contract distributors, manufacturers or service providers
2. 15The effects of climate change, other environmental issues, and related legal or regulatory responses may have a negative impact on our business and results of operations
3. 16Government mandated prices, production control programs, and shifts in crops driven by economic conditions may increase the cost or reduce the quality of the tobacco and other agricultural products used to manufacture our products
4. 17A prolonged disruption of our production facilities could have a material adverse effect on our business, financial condition and results of operations

Risks Related to our International Operations

1. 18Because we have operations in numerous countries, our results may be adversely impacted by economic, regulatory and political developments, natural disasters, pandemics or conflicts
2. 19In certain markets, we are dependent on governmental approvals of various actions such as price changes, and failure to obtain such approvals could impair growth of our profitability
3. 20Our reported results could be adversely affected by unfavorable currency exchange rates and currency fluctuations could impair our competitiveness. Our results could also be adversely affected by capital controls or by foreign currency exchange constraints or devaluations
4. 21A sustained period of elevated inflation across the markets in which we operate could result in higher operating and financing costs and lead to reduced demand for our products

Risks Related to Legal Challenges and Investigations

1. 22Litigation related to tobacco products and nicotine products could substantially reduce our profitability and could severely impair our liquidity
2. 23From time to time, we are subject to governmental investigations on a range of matters
3. 24We may be unable to adequately protect our intellectual property rights, and disputes relating to intellectual property rights could harm our business
4. 25The research, development, and commercialization of non-recreational cannabinoid products subjects the Company to legal, regulatory, reputational and other risks

Risks Related to our Competitive Environment

1. 26We face intense competition, and our failure to compete effectively could have a material adverse effect on our profitability and results of operations
2. 27Our business is subject to changes in adult consumer preferences, which may be influenced by local economic conditions, accessibility to our products and availability of accurate information related to our products
3. 28Our ability to grow profitability may be limited by our inability to introduce new products, enter new markets, maintain sufficient production capacity, or improve our margins through higher pricing and improvements in our brand and geographic mix
4. 29We may be unable to expand our brand portfolio through acquisitions or the development of strategic business relationships, and the intended benefits from our investments may not materialize
5. 30Our ability to achieve our strategic goals may be impaired if we fail to attract, motivate and retain the best global talent and effectively align our organizational design with the goals of our transformation

Risks Related to Illicit Trade

1. 31Our revenues may be materially adversely affected as a result of counterfeiting, contraband, cross-border purchases, illicit products, non-tax-paid volume produced by local manufacturers and other non-compliant or illicit cigarettes or smoke-free products

Risks Related to Cybersecurity and Data Governance

1. 32We are significantly dependent on our and third-party information technology networks and systems, and a cybersecurity incident or attack against those networks or systems may adversely impact our business and operations
2. 33We continue to make investments in administrative, technical, and physical safeguards to maintain information security protections in line with industry standards and best practices. We evaluate the adequacy of preventative actions to reduce security incidents on an ongoing basis

Risks Related to Acquisitions and Divestitures

1. 34We may not successfully identify, complete, or realize the benefits from strategic acquisitions, divestitures, joint ventures, or investments
2. 35Accounting adjustments related to acquisitions could adversely affect our financial results