Philip Morris International Earnings Call Nuggets: Conservative Outlook and Downtrend in the Philippines
David Adelman – Morgan Stanley: Louis, first a question on the guidance and fundamentally it’s whether are you being conservative in your initial outlook, because it’s early in the year or are there some things to be mindful of particularly this year? The reason I ask it is that in the year just concluded you did 11.7% underlying local currency EPS growth and that was despite the Japanese hurdle which you are not going up against this year.
Louis C. Camilleri – Chairman and CEO: That’s correct David. No I don’t see anything out there that is of concern to us. Clearly the Philippines we have mentioned for some time and that’s baked into our guidance. I have to say that Southern Europe as I mentioned in my remarks continues to be fragile. As opposed to what others may have said we have actually have not detected a deterioration in trends. In fact if you look at fourth quarter trends they look better in every single market in the European Union with the exception of Spain and Italy, whether you look at it from a total cigarette point of view or cigarette including OTP. France has been slightly weaker because of the price increase but we have detected a significant improvement in the trends from October, November, December and even January now. So the watch out is Southern Europe. Elsewhere we are in great shape I think David. I mean, Asia and EEMA are growing strongly and growing in a quality manner. If I look at EEMA alone and you look at their growth, 60% of their growth came from pricing and 40% from volume mix which is quite a phenomenal achievement. If you go to Asia, pricing was 70% but volume mix contributed 30%. So, I would say we are in very good shape. Our guidance is conservative. I think at this time of the year, we always have to express caution and we will see how the year unfolds. But we certainly have momentum going forward.
David Adelman – Morgan Stanley: Then if I could one other quick question. You have obviously a major competitor domiciled in Japan and with the weakness in the yen, there’s presumably some prospect that that competitor could elect to be a little more price aggressive than otherwise would be the case. Is there any evidence of that materializing to any extent at this point?
Louis C. Camilleri – Chairman and CEO: No evidence whatsoever, David. In fact, I was very encouraged that they increased their earnings guidance to reflect the weakness of the yen. So, that’s a positive sign and I would say that in terms of pricing, things are looking pretty good.
Downtrend in the Philippines
Judy Hong – Goldman Sachs: Louis, just on your volume (offer) for 2013, so if I understood you correctly, you said Philippines is down 20%, 25%. So that’s probably a negative 2, 2.5 points of an impact. If we assume that the underlying volume trend ex-Philippines kind of stay what we saw in 2012, up 2% ex-Japan, is the all-in volume outlook for 2013 close to flattish?
Louis C. Camilleri – Chairman and CEO: As I said in my remarks, we see organic volume growth of about 1% this year excluding the Philippines if you include the Philippines and your calculation was right as to the impact of the Philippines was down about 1.5%. We’ve had significant price increases in a number of markets, Russia has been a significant price increase, and it’s being implemented in the market as we speak so it’s hard to gauge at this point what will happen in terms of volume. We don’t anticipate a dramatic deterioration at all, but it remains a watch out. Southern Europe, as a I said we believe that the trends are likely to remain the same as last year that could be upside Judy, but it’s a bit early to call that. We’ll see as the year unfolds and certainly when the asset takes you through the April, April through the first quarter, we should have a much better read of Europe. So, that’s where we stand Judy.
Judy Hong – Goldman Sachs: Then Louis, if I just kind of take a step back and I look at your portfolio of geographic exposure perspective, you’ve got now about 55% of the profit coming from the non-OECDs and excluding Japan and Europe and those markets are growing profit double-digits. So, when I think about your long-term growth algorithm 6% to 8%, if you can maintain that 55% of your business growing at a double digit, you probably only need flattish kind of growth in Europe and in Japan from an operating perspective. So, I guess, my question is, is there upside to that Europe, Japan, profit growth number going forward or is there downside to kind of that double-digit growth from a profitability perspective on these non-OECD markets?
Louis C. Camilleri – Chairman and CEO: No, I think, your analysis is very accurate Judy. We’ve always said that we feel that European Union one day will come back, but we need to see some meaningful efforts to get the employment rate back up and economies remain fragile and there’s still quite a lot of restructuring to do, but we are somewhat optimistic that government seem to be now weary of the austerity push and are trying to focus a bit more on employment. So, yes, if the EU were to improve, that would obviously increase our growth capacity. I would say one of the highlights for me anyway of Japan in 2012 was that the market was relatively stable relative to the secular decline trend that we had witnessed previously. So, enter the year with a pretty strong market. Our share, as you noticed, increased sequentially from the third to the fourth quarter. So, we hit 27.7%, which admittedly was lower than our exit share in 2011. But if I look at our January share in Japan, it was 28.3%. So, Japan volume, I think, is potentially stronger than it has been in the past, but clearly, income will come from pricing; and in terms of pricing, we are a follower in Japan. We tried to lead once and clearly, we need to follow.
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