Good day, and welcome to the Philip Morris International fourth quarter 2021 year-end earnings conference call. Today's call is scheduled to last about one hour, including remarks by Philip Morris International management and the question-and-answer session. In order to ask a question, please press the star key followed by the number one on your touch-tone phone at any time. Media representatives on the call will be also invited to ask questions at the conclusion of questions from the investment community. I will now turn the call over to Mr. Nick Rolli, Vice President of Investor Relations and Financial Communications. Please go ahead, sir.
Welcome, and thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2021 fourth quarter and full year results. You may access the release on www.pmi.com. A glossary of terms, including the definition for reduced-risk products or RRPs, as well as adjustments, other calculations and reconciliations to the most directly comparable US GAAP measures and additional heated tobacco unit market share data are at the end of today's webcast slides, which are posted on our website. Unless otherwise stated, all references to IQOS are to our IQOS heat-not-burn products, and all references to smoke-free products are to our RRPs. Growth rates presented on an organic basis reflect currency-neutral underlying results. Following the acquisitions of Fertin Pharma, OtiTopic, and Vectura Group, PMI added the other category in the third quarter of 2021.
Business operations for the other category are evaluated separately from the geographical operating segments. Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements. Please also note the additional forward-looking and cautionary statements related to COVID-19. It's now my pleasure to introduce Jacek Olczak, our Chief Executive Officer, and Emmanuel Babeau, our Chief Financial Officer. Over to you, Jacek.
Thank you, Nick, and welcome everyone. I hope you're all safe and well. Our business delivered an excellent performance in 2021, reaching record net revenues, adjusted diluted EPS and cash flow with growth in overall volumes, high single-digit organic net revenue growth, and strong double-digit adjusted EPS growth. This illustrates the sustainable nature of our growth based on new products and innovation, as demonstrated by continued strength of IQOS, which delivered 31% full-year organic growth in RRP net revenues. Smoke-free products surpassed 30% of total net revenues in Q4 as we progress towards our ambition of becoming a predominantly smoke-free company by 2025. We are especially pleased by the re-acceleration of our business in Q4 to deliver a better than expected result.
This re-acceleration was visible in organic net revenues, IQOS user growth, heated tobacco unit market shares across developed and emerging markets, innovation in devices and consumables and commercial investments and combustible market share. IQOS user growth recovered in Q4 to reach an estimated 21.2 million total users despite ongoing tightness in device supplies in the second half of the year. Full-year heated tobacco unit shipment volumes grew 25% to reach 95 billion units, with broad-based growth for both our volumes and the category across key geographies, with an especially positive rebound in the EU. The growth outlook for IQOS remains very positive, with outstanding initial results from IQOS ILUMA in Japan and Switzerland, the only two launches so far, and growing traction for IQOS VEEV in early launch markets.
In combustibles, we essentially reached our goal of stable category share in the fourth quarter despite the impact of IQOS cannibalization. During the year, we laid the foundations for our long-term growth ambitions beyond nicotine in wellness and healthcare, including the milestone acquisition of Fertin and Vectura, which provide essential capabilities for future product development. Last, bolstered by strong operating cash flow, we continued to prioritize returns to shareholders through a 4.2% increase in the dividend and ongoing share repurchases. Turning to the headline numbers, our full-year adjusted net revenues grew organically by 7.6% or 10.3% in dollar terms, including positive currency.
This reflects the continued underlying strength of IQOS and the ongoing recovery of the combustible business in many markets compared to the pandemic-affected prior year. Our net revenue per unit grew 5.3% organically, driven by the increasing proportion of IQOS in our sales mix and pricing. Combustible pricing was in line with our expectations at 2.7%, or around 4% excluding Indonesia. Our adjusted operating income margin increased by 200 basis points on an organic basis, in line with our expectations, with continued positive effect from the increasing size and profitability of IQOS, pricing, and productivity savings. Through first half expansion, although strong half expansion was tempered in the second half by the expected initial higher unit cost of IQOS ILUMA, geographic and category expansion investment, and the Q4 resumption of consumer programs in a number of markets.
Our resulting adjusted diluted EPS of $6.08 represents 17.6% growth in dollar terms and 15.3% currency neutral growth, which is well above our prior guidance as IQOS user growth, the launch of ILUMA, and total industry volumes exceeded our expectations. Finally, we generated operating cash flow of $12 billion, reflecting excellent underlying cash conversion in addition to strong Q4 business results and certain timing factors. Looking at our Q4 performance, net revenues grew by 8.4% organically. This reflects the sequential improvement in IQOS user acquisition, the initial success of ILUMA in Japan, and strong overall volumes, including a further recovery in combustibles. We delivered a robust organic net revenue per unit growth of 4.1%, again reflecting our shifting business mix.
We achieved this despite softer pricing on combustibles of 1.4% due to the factors flagged previously of continued pandemic-related challenges in certain markets, as well as comparison effects in Germany and Australia. Our Q4 adjusted operating income margin declined by 10 basis points on an organic basis, primarily due to the same factors mentioned for the second half, as accelerating business performance opened more opportunities for investment in future growth. Despite that, our currency neutral adjusted diluted EPS again grew strongly by 11.9%, also reflecting a lower interest cost and effective tax rate. Turning now to 2022 guidance. After the temporary slowdown in IQOS user growth in the second half of 2021, the device supply situation is gradually improving.
While the situation remains fluid, we now expect a more limited impact, allowing us to gradually return to prior rates of user progression over the coming quarters. With the remarkable success of ILUMA in its first markets, a number of other innovations planned, and promising growth for IQOS in low- and middle-income markets, our 2022 growth fundamentals are strong, and we look forward to an exciting year. We note that the slower user growth in the second half of 2021, particularly in the third quarter, will have an estimated carryover effect on our growth this year of around 4 billion-5 billion heated tobacco units. This is reflected in our 2022 expectations of 113 billion-118 billion HTUs shipment volume. Given this continued growth, we expect our full year HTUs shipment to again be ahead of IMS volumes.
We expect to deliver between 4% and 6% organic net revenue growth, keeping us well on track to deliver our 2021-2023 compound annual growth rate target of more than 5%. This range prudently incorporates the continuing uncertainty on full device availability and the pace of the ongoing pandemic recovery. For duty-free, we assume no meaningful pickup in Asian travel, but a continued gradual recovery in other geographies. We expect our adjusted operating income margin to expand between 50 and 150 basis points as the positive effects of our product transformation continues, despite the expectation of a moderately lower gross margin.
This is essentially attributable to temporary ILUMA-related factors, such as the higher initial weight and cost of the TEREA consumables and the cost of devices, which we expect to decrease over the 18-24 months post-launch, as we have experienced with previous major innovations. We also account for higher logistic costs, where the tremendous uptake of ILUMA in Japan has led to increased use of air freight, investments to grow capacity across our smoke-free platforms, and inflation in certain supply chain elements. Operating income margin expansion and continued reinvestment in attractive smoke-free growth opportunities and in wellness and healthcare R&D will again be supported by our ongoing efficiency programs. We remain on track to deliver around $2 billion in gross savings by 2023. Accordingly, we forecast currency neutral adjusted diluted EPS growth of 8%-11%.
This translates into an adjusted diluted EPS range of $6.12-$6.30, including an estimated unfavorable currency impact of around $0.45 at prevailing rates. This is primarily due to translation effects, and this currency impact reflects notably the depreciation of the euro, Japanese yen, and Turkish lira versus the dollar. This guidance includes the impact of $785 million of share repurchases made in 2021, which were somewhat restricted by blackout periods. It does not reflect the impact of repurchases in 2022, as we continue to take an opportunistic approach within our target of between $5 billion-$7 billion over three years.
Our guidance also reflects the impact of acquired businesses, which we expect to generate underlying operating income in line with our business plan, but with an operating loss of around $150 million or approximately 1% of adjusted diluted EPS, which we'll come back to explain later. As outlined in today's release, there are a number of other assumptions underpinning our outlook. We expect the total industry volume of cigarettes and heated tobacco units, excluding the U.S. and China, to decline between -1% and -2%. Given our leadership in smoke-free products, the structural growth of the category, and its growing proportion in our business, we expect to gain share and target broadly stable total PMI shipment volumes within a range of -1% to +1%.
We assume full-year combustible pricing of 3%-4% with a softer first half and a stronger second half of the year, and this is clearly above 2021 levels. The pricing environment is improving, but still a challenge in certain markets with ongoing pandemic-related impacts. Our balance sheet is strong. We delivered excellent operating cash flow of $12 billion in 2021, reflecting robust underlying cash conversion, in addition to favorable timing and one-off impacts of around half a billion dollars. With further strong organic profit growth expected in 2022, we expect to generate around 11 billion of operating cash flow, subject to year-end working capital requirements and after accounting for the reversal of timing benefits and using prevailing exchange rates.
As a result, we raise our 2021 to 2023 operating cash flow target communicated at the February 2021 Investor Day at then prevailing rates from around $35 billion to the range of $36 billion-$37 billion. We also expect full-year capital expenditures of around $1 billion, reflecting increased capacity investment behind our smoke-free platforms, including Iluma, and enhancing our digital commercial engine, in addition to certain projects which were delayed due to the pandemic. Lastly, looking specifically to the first quarter of 2022, we expect adjusted diluted EPS of $1.50-$1.55, including $0.15 of unfavorable currency at prevailing rates.
We expect robust organic top-line growth and operating margins comparisons which reflect both the very strong prior-year quarter, which benefited from a high level of productivity savings and relatively low levels of investment, and the Q1 of 2022 dynamics of increased device sales, commercial investments, ILUMA-related costs, and increases in some inputs such as freight. Let me now hand over to Emmanuel, who will give you more details about our performance in 2021.
Thank you, Jacek. Turning back to our 2021 results, total shipment volumes increased by +4.2% in Q4 and by +2.2% for the year. This reflects continued strong broad-based growth from HTUs of +25% or 18.9 billion units for the full year, comfortably exceeding the decline of 3.6 billion cigarettes. The +2.4% increase in our Q4 cigarette volumes reflects the continued sequential recovery of the total industry and of our category share, in addition to a 2.7 billion stick favorable inventory movement, which mainly reflects inventory reduction in the prior year quarter.
Due to the remarkable performance of IQOS, heated tobacco units comprise almost 14% of our total shipment volume in the fourth quarter and 13.2% for the year. Compared to 11% in full year 2020, 8% in 2019, and 5% in 2018. Our sales mix is evolving rapidly, putting us on track to become a majority smoke-free company by 2025. Smoke-free net revenues made up over 30% of our adjusted total revenue in Q4, and 29% for the year compared to 24% in 2020. In 10 markets, we have already surpassed 50%. IQOS devices accounted for over 6% of the $9.1 billion of 2021 RRP net revenues. With a step up in H2 reflecting the IQOS ILUMA launch, outweighing the effect of supply constraints on other IQOS versions.
We delivered +7.6% organic growth in 2021 net revenues on shipment volume growth of +2.2%, reflecting the twin engines driving our top line. The first is pricing on combustible and in certain markets on HTUs. Second is the increasing mix of HTUs in our business at higher net revenue per unit, which continues to deliver substantial growth and increasingly powerful driver as our transformation accelerates. Let's now turn to the driver of our 2021 margin expansion. Our gross margin increased by 190 basis points on an organic basis due to product mix, pricing, and cost savings, while our adjusted marketing, administration, and research costs were 10 basis points better as a percentage of adjusted net revenues.
We generated over $800 million in gross cost saving in 2021, with around $550 million in manufacturing and supply chain productivities and more than $250 million in SG&A efficiency before inflation. This represents strong progress towards our target of around $2 billion for 2021 to 2023, and allows us to reinvest in top-line growth while continuing to deliver robust margin progression. While OI margin expansion was lower in H2, this reflects the positive dynamic of our business and the ability to return to normalized investment levels compared to the pandemic-affected prior year. ILUMA device and HTU shipments commenced with higher initial unit costs, and we re-accelerated investment in our commercial program, digital engine, and R&D, as well as a number of growth opportunities across category and geographies.
We intend to continue investing in such opportunities in 2022, but with the benefit of scale, operating leverage, and accelerated efficiencies, we continue to target organic SG&A increases below the rate of sales growth. Moving now to market share. Our share of the combustible category recovered and was essentially stable in Q4 on a year-over-year basis as our portfolio initiative Bear Fruit and pandemic-linked restriction recede in many markets. Our leadership in combustible helps to maximize switching to smoke-free product, and we continue to target a stable category share over time, despite the impact of IQOS cannibalization. As IQOS user growth re-accelerates, we target at worst a slight decline in 2022. For the combustible category overall, the improving total market volume backdrop includes notable Q4 recoveries in Indonesia, Mexico, and Turkey.
Close to stable industry volume in the EU region and a modest recovery in duty-free, driven by sales outside Asia. Daily consumption remains below pre-COVID level in certain markets, such as the Philippines, where our share of market is influenced by mobility and social consumption. In Indonesia, our share was again broadly stable on a sequential basis, despite the continued growth of the below tier one segment and our volumes grew over 4% for the year. The reduction from ten to eight excise tax tier in 2022 represents a step in the right direction, and the industry weighted average excise increase of around +13% is slightly below the prior year. However, the playing field remains unequal between industry players and the pricing environment remains challenging.
In terms of our overall share, ongoing gains for our IQOS portfolio create positive momentum going into this year, and we expect to resume overall share growth as well as achieving broadly stable total shipment volume. PMI HTUs now have a 7.1% share in the markets where they are present, making them the third-largest tobacco brand. This includes the number one position in five markets and the number two in a further six markets. Moving now to IQOS performance. We estimate there were approximately 21.2 million IQOS users as of December 31st. The improved user growth of +0.8 million in Q4 reflects our agile commercial model, which allowed us to rapidly adjust our consumer program and assortment. As demonstrated by the performance of ILUMA in Japan and Switzerland, the underlying momentum of the IQOS brand remains strong.
While we don't yet have full visibility over the full year of 2022, as device shortages ease, we expect to gradually return to user growth at or above the prior run rate of around 1 million per quarter. We estimate that 72% of total users or 15.3 million adult smokers have switched to IQOS and stopped smoking with a balance in various stages of conversion. In the EU region, fourth quarter HTU share reached 6.4% of total cigarettes and HTU industry volume, 1.4 points higher than Q4 last year. Underlying IMS growth trends remain excellent. This very good performance includes strong growth across the region, with Italy reaching the milestone of 2 million users and positive contribution from Germany and Poland.
I also want to highlight Hungary, where our Q4 national HTU share exceeded 20% following Japan and Lithuania in reaching this important threshold. To give some further color on our progress in the EU region, this slide shows a selection of the latest key city offtake shares. While Vilnius continued to lead the way with 37.5% share, the 20% level was also reached in Budapest, Rome, and Athens. With strong progress across the region, we are especially pleased by Vienna almost doubling to 4%, the strong traction in London at almost 6% share, and an acceleration in Zurich with the introduction of IQOS ILUMA. We show further HTU share data in the appendix to this slide. Share growth continued in Russia with our Q4 HTU share up by +0.8 points to reach 8%.
For both Russia and the overall region, sequential growth in adjusted IMS slowed in the last two quarters, partly reflecting the more acute device shortage and limits on commercial program. In addition, the region was affected by the halting of sales in Belarus, which impacted sequential IMS growth in Q4. In this context, as mentioned in last quarter, we have seen some increased consumer trial in Russia of discounted competitor offerings and disposable e-vapor products. We continue to see high interest in the category, and with a pipeline of exciting innovations planned, including the launch of ILUMA, we aim to resume strong growth this year.
In Japan now, the adjusted total tobacco share for our HTU brand increased by +1.7 points to a record 21.8% in Q4, and an offtake exit share approaching 23%, with Q4 adjusted IMS sequential trends incorporating the pull forward of consumer offtake into Q3 before the price increase. This performance reflects the strength of our portfolio and the launch of IQOS ILUMA, which I will come back to shortly. The overall heated tobacco category continues to grow, making up over 31% of the adjusted total Japanese tobacco market in Q4, with IQOS maintaining a high share of segment and capturing the majority of the category's 2021 growth. In addition to strong progress in developed countries, we see very promising IQOS growth in low and middle-income markets.
A prime example of this is Egypt, where offtake share in Cairo is approaching 4% within six months of launch, with other notable successes including Lebanon, Jordan, the Dominican Republic, and the Philippines, despite pandemic restrictions in Manila. This low and middle-income market key city performance is especially encouraging as we achieved it despite the premium position of the current IQOS portfolio. We do intend to bring a new complementary range of heat-not-burn products tailored to emerging markets towards the end of this year, which I will come back to. With this potential in mind, we continue to drive the geographic expansion of our smoke-free products as we aim to be in 100 markets by 2025. During the quarter, we launched IQOS in both Morocco and Tunisia.
This takes the total number of markets where PMI smoke-free products are available for sale to 71, of which 30 are in low- and middle-income markets. We plan to add more markets this year as we also meaningfully broaden our product offer and price segmentation within existing geography. This includes the expansion of lil and Fiit, which are now available in over 20 markets across multiple regions, and our expansion of e-vapor and nicotine pouches. Following the implementation of the ITC's importation ban, IQOS is not currently available in the U.S. We continue to work on contingency plans, including domestic manufacturing, and hope to be able to resume U.S. supply in the first half of 2023. It is important to remember that the ITC decision on this patent is an outlier. We were encouraged by the U.S. Patent Office recent invalidation of one of the two patents included in the ITC ruling, and we expect a decision on the second patent by April 2nd, though the decisions are subject to an appeal process. BAT has been universally unsuccessful in asserting the same two patent family against IQOS in Europe. Separately, in December, a German court ruled that BAT's QA Quality Check
In Japan, the uptake of ILUMA devices and consumables among both existing IQOS users and legal age smokers has been rapid, with more than 20% of the large user base switching since the August launch and over 20% of sales to legal age smokers new to IQOS. Moreover, the enhanced and consistently high-quality user experience, better reliability, and no need for cleaning have led to significant observed increases in conversion rate, retention rate, and net promoter score. This bodes well for volume growth and indeed premium price TEREA consumables have been the fastest growing launch in the smoke-free category, reaching an offtake share in the three main convenience store chains of 8% within three months of national launch and driving the growth of the heat-not-burn category following the October tax-driven price increase.
Early results in Switzerland have been even more remarkable, with over 1/3 of sales to new users and TEREA making up over 1/3 of HTU sales after only two months of commercialization. Our HTU share growth has accelerated accordingly from 6% in September to 7.9% in December. These results are very encouraging for the wider rollout of ILUMA in the EU region and around the world, and we plan to roll out gradually to more markets this year, mostly in H2. While we continue to manage device supply constraints, the unprecedented growth in Japan also means we have had to accelerate both the supply of TEREA consumables using air freight and the conversion of our production line to support new market launches.
With ILUMA, IQOS DUO, and lil, we now have three heat-not-burn technologies under the IQOS umbrella to serve different consumer needs and segment the market. We have an exciting pipeline of innovation on devices and consumables across our technology at different price tiers. As I mentioned, we also plan to enhance our portfolio for future growth with the introduction of a new complementary technology towards the end of this year. This will be targeted at smokers in low and middle-income markets, catering to the consumer need of simple, high-quality, affordable devices and consumables and specific local taste preferences. In terms of HTUs, after launching over 50 new non-ILUMA HTUs in Q4, we plan to continue expanding our portfolio across platforms, geography, and price points this year.
We continue to commercialize IQOS VEEV with very promising results in the first group of markets where we started in our own channel with a limited range of taste variants and nicotine levels. IQOS VEEV is a premium product providing a superior experience, and the commercial infrastructure of IQOS allows us to deploy efficiently and at scale through a bespoke route to market approach. As we start to expand distribution and the consumable offering, we observe signs of increased uptake and clear positive consumer feedback relative to competitive product. We see encouraging success in Italy and the Czech Republic, reaching double-digit offtake shares of closed system pods, with rapid progress also visible in Croatia within three months of launch. After launching in Canada and Ukraine in the fourth quarter, we plan to add more markets in 2022, with timing subject to device availability.
We also continue preparation to apply for a PMTA from the U.S. FDA and now prudently assume readiness for filing in early 2023, given further clarity on the required preparatory steps. An additional exciting midterm growth opportunity is in the nicotine pouch category, where we aim to become a leading player with the Shiro brand. Nicotine pouches provide a convenient smoke-free alternative for adult smokers. While still early in many markets, we see Shiro playing an important role in our smoke-free portfolio over the coming years. Following the acquisition of AG Snus and Fertin Pharma, we have established a base of product development and manufacturing expertise. Although we are still learning about the promising category, our high cost commercial infrastructure allows for a fast rollout, and we plan a number of launches over the coming quarters.
The first major activity is the full relaunch of the revitalized Shiro portfolio in the Nordics this month from its more limited prior presence, with full commercial activity and a broad portfolio of flavors and strengths variants. Separately, following feedback from the 2021 consumer test of our TEEPS, the design of our current technology has been discontinued. We are assessing alternative design for this consumer segment. Turning now to our nascent business beyond nicotine, the 2021 acquisition of Vectura and OtiTopic provide the base for building critical respiratory and overall product development capabilities in tandem with our existing expertise. This open up opportunity to deliver the positive effect of existing wellness and skin molecules in a fast and effective manner.
For the time being, our reported number in the other segment show the existing acquired business, which delivered $101 million in net revenue in the fourth quarter and a marginal operating loss of $1 million. The underlying performance is in line with our expectation, with reported operating expenses reflecting the amortization of intangible deal-related item and our planned investment. Around 39% of Q4 revenue were derived from 13 smoking cessation product and nicotine pouch operations. While we intend to continue the CDMO activities of the acquired company, the most significant value to PMI is in this ability to develop and commercialize new products in the wellness and the skin segment over time.
We plan important R&D investment over the course of the coming years to support the aim of delivering meaningful incremental revenue starting two to three years from now, as we pursue our ambition of at least $1 billion of net revenue from wellness and skin product by 2025. We expect an operating loss of around $150 million in 2022, with revenue of around $250 million, including smoking cessation product. We recognize investor interest in our future product plan in these new areas and plan to provide more color at our CAGNY conference presentation on February 23rd.
Moving to sustainability and our ESG priorities, I'm happy to share that we have recently completed a new sustainability materiality assessment to update and recalibrate our priorities in accordance with our biggest impact on society, double materiality and extensive stakeholder input. While addressing the health impact of our product remained by far the biggest focus, we also identified a number of topics which are emerging in importance or required an evolved approach. We will publish the results next week. It is increasingly important to align management incentives with sustainability, materiality, performance and impact. We will strengthen this link in 2022 with a new sustainability index and plan to provide more details in the near future.
Our progress on sustainability continued to be recognized by leading external stakeholders with repeated inclusion in both the Dow Jones Sustainability North America Index and the Bloomberg Gender-Equality Index, and receiving CDP's AAA score for the second year running. We also published an agricultural labor practices report, marking 10 years of the program. Since its introduction, we have successfully eradicated systemic issues related to child labor while improving living conditions of farmers and farm workers. It also outlines our ambitious targets, such as 100% of farmers supplying tobacco to PMI making a living income by 2025. On our most critical priority of product impact, the growing penetration of smoke-free products around the world is accelerating the end of cigarettes as legal-age smokers switch to better alternatives. I am also pleased to report further recent positive regulatory developments.
For example, as part of Europe's Beating Cancer Plan, the European Parliament's Special Committee on Beating Cancer recognized and featured harm reduction in its draft report, for which the plenary vote will take place next week. In New Zealand, the government published its smoke-free action plan, expressly excluding smoke-free products from the proposed measures. In addition, a number of countries, including Poland and Russia, have announced new multi-year excise tax plans, with taxation of smoke-free products clearly differentiated from cigarettes, making 15 markets globally with such plans. There is a growing body of scientific and real-world evidence of the substantial risk reduction potential of smoke-free products compared with smoking. While changes in some markets are to be expected, we continue to support regulatory and fiscal frameworks that recognize this critical harm reduction opportunity. I will now turn it back to Jacek for some concluding remarks.
Thank you, Emmanuel. Overall, we are very pleased to have delivered the excellent growth in last year in 2021. With a strong underlying momentum for IQOS, as well as a record adjusted EPS, net revenues, and a cash generation. The consistent quality and sustainability of our organic top and bottom-line delivery has been clearly demonstrated over the last two years, which I believe we all acknowledge were pretty turbulent years. With an improving outlook for device supply, although still with an element of fragility, the exceptional initial success of ILUMA and the number of innovations and growth initiatives, we look forward to 2022 with a tremendous excitement. At the same time, we will be building our development capabilities in wellness and health care through targeted investment in order to support the next driver of our long-term growth.
Our balance sheet is strong, and we have increased cash returns to shareholders through a higher dividend and our share repurchase program, in line with our objective to deliver sustainable value and returns to investors as we continue our smoke-free transformation. In short, we continue to see a bright future for our business. Following a very strong 2021, we remain confident in our 2021 to 2023 growth targets and in our ambition to be majority smoke-free by net revenues in 2025. Thank you all for your attention. Emmanuel and myself will be happy to answer your questions.
Thank you. We will now conduct the question-and-answer portion of the conference. Again, in order to ask a question or make a comment, please press star key on your phone, followed by the one on your touchtone phone. In the interest and fairness of time, we do ask that you please limit your questions to two questions each. If time allows, follow-up questions may be taken. You may rejoin the queue by again pressing the star and one on your touchtone phone. Our first question will come from Bonnie Herzog with Goldman Sachs. Please go ahead.
Right. Thank you. Hi, Jacek and Emmanuel. Hope you're both doing well. I have a question on your.
Hello, Bonnie.
Hi. I have a question on your EPS guidance this year. It's quite a wide range at 8%-11% on a currency-neutral basis. I was hoping you could highlight, you know, some of the key assumptions or drivers that put you maybe at the low end of that range versus what needs to happen for you to get to the 11% growth. You know, for instance, is, you know, 11% EPS growth possible, even if the chip shortage situation doesn't get resolved for the next few months?
I think Emmanuel.
I'm gonna take it. I'm gonna take that one, Bonnie. Obviously, we've been saying it in our preliminary remarks. We are still facing a number of uncertainties. COVID has not disappeared. Even if things seem to be improving, we don't have full visibility on the IT shortage and on the supply chain globally. That is obviously what is behind the cautiousness on the guidance that we are giving on the top line. Then from there, we, of course, are driving a business that is seeing good momentum. We have the traditional driver of price increase. We're gonna be very efficient on cost saving. You can see what we've been delivering in 2021, you know, already more than $800 million of efficiency on our cost.
We're gonna continue in 2022. All that is going to drive the difference between the revenue growth and the adjusted EPS organic growth. One of the headwind that we're gonna face this year, which I think we should see as very positive because it's coming from the growth, and we are managing a very nice potential of growth, is that we are investing for exciting outlook. It starts, of course, with ILUMA in Japan, but globally, the launch of ILUMA, but certainly with a big impact in Japan, where we know that when we launch a new product, this is having some impact on the cost of goods because we are not at the same level in terms of efficiency on the supply chain.
The productivity is not at its maximum, and we've been explaining that in our remarks. That is going to have some impact at the launch. We talk about air freight as well. That's going to have an impact. We said it would probably what we see today is a modest decrease, a moderate decrease of the growth margin rate. Without that, it would have been from what we see today, another year of growth of the growth margin rate. That's really what is driving the guidance. We have some uncertainty, but we are very excited by the potential of growth that we see with all this innovation that is coming up. We have the traditional driver of efficiency that are going to help.
We have some headwind, which was absolutely planned because we are coming with innovation, and we need to invest to launch this innovation. I should add, you know, in terms of innovation, Bonnie, certainly the fact that we are also expanding in terms of geography. What we see in Egypt bodes extremely well for the potential in emerging countries, but we need to invest, of course, to build the capacity. We need to develop our commercial tools. We need to invest in the new two platforms, vaping and nicotine pouches. What I think is great in this guidance and in our ambition for 2022 is that it's a year with a lot of investment for an exciting growth. We are still able to deliver a good dynamic top line.
We are able to deliver nice margin improvements, good organic growth at a good level. As you have seen, we are hugely cash generative, and we do that at the same time, again, while investing for the future.
Okay, that's super helpful and honestly makes a lot of sense. So clearly a lot of puts and takes, but you've got a lot of levers to pull. For my second question, I maybe wanted to switch gears a bit and just kind of ask a little bit about, you know, the situation in the U.S., and just maybe an update. You know, it sounds like you expect to get back in the market next year with IQOS, so maybe love to hear a little more color on this and, you know, will the build-out of the production in the U.S., will that be your financial responsibility? And then, you know, Altria mentioned some issues between you two in terms of the agreement you have in their fourth quarter press release. So just was hoping, you know, to better understand what that could mean.
You know, for instance, if, I guess, Altria fails to meet the terms of the agreement, would you then pursue distribution of IQOS in the U.S., yourselves and/or I guess, find another distribution partner? Can you kind of walk through that for us? I'm thinking about the context of a potential solution for VEEV in the U.S., assuming, you know, it gets PMTA approval. Thanks.
Yeah. Bonnie, yes, we're working on bringing the manufacturing capacity for IQOS on the U.S. territory, and that's our, you know, the main mitigation plan or reaction plan to where we are today post the ITC event. As we said, we think that the summer or the beginning of the next year, we should be in a position to resume the shipment in the U.S. As we and Altria as well here disclose, we have some disagreement with regards whether Altria has fulfilled the certain milestones in the current contract, and we're currently in negotiations or in discussions with Altria how to resolve it. I believe in good faith, we should be finding some solutions.
I wouldn't go now beyond speculating what, you know, other options and how we would approach the, you know, the IQOS going forward in the U.S. I mean, our partner is Altria, and I think we should seek some amicable solution between both partners. Now, I have said it on a number of occasions that U.S. market is, as are a few other markets in which we have a very negligible at all presence, is of a strategic importance. Obviously, you've heard us in the past believe that the pre-ITC ruling IQOS performance in U.S., and you know how we, you know, performing with Altria with IQOS across all essential geographies, and it's really well below what I would expect at this stage, or characterizes the potential of IQOS.
If I take into this, the fact that this is the only inhalable FDA authorized product, you know, you don't really have a competition and the size of the market, et cetera, I think it's fair to say that the expectations were, you know, much beyond where we are today. You know, I will stop here, and I believe we will find a good resolution which will, on the one hand, enable American smokers, cigarette smokers to have access to the technology and also something which, you know, will be accretive to us or the partners with results there.
Okay, thank you both. I'll pass it on.
Thank you, Bonnie.
We'll take our next question from Chris Growe with Stifel. Please go ahead. Your line is open.
Hi, good morning. Good afternoon to you, probably.
Hi, Chris. Yes.
Hi. I just wanted to ask, first of all, on IQOS. You had a nice acceleration in the number of IQOS users in the fourth quarter. I just wanna get. I know you talked about an acceleration of getting back to that roughly 1 million users sequentially. Can that not happen till the second half of 2022, or will supply be sufficient to where you could start to see that level of user growth in the first half of 2022? I'm just trying to get a sense of that availability of devices to understand the growth in 2022.
Yeah. Look, the Q4 re-acceleration or, you know, coming back to the previous user growth is highly encouraging. It just confirms that IQOS had that ability of a continued growth. Obviously, it very much hinges on the fact that do we have unrestricted access or availability of the devices. Remember, IQOS today is of a heat-not-burn propositions which we have today consists of the few versions of IQOS blade product. I should mention lil product, you know, coming through our partnership with KT&G and IQOS ILUMA. All of that all together creates certain portfolio proposition for the various targeting the various consumers group.
We regain a little bit of a flexibility of recomposing the full portfolio in Q4, you know, we all have seen the spectacular regain in user acquisition. You know, it is somehow reflected in our 4%-6% growth target and you know, the heated tobacco units target for this year that for how many months or for how many weeks in a year we think we can have unrestricted access to the full product portfolio of the devices very much. I believe that actually IQOS can fly higher if we're in the unrestricted mode. Somehow in the forecast for the next year, we should have you know, bigger scenario, which is maybe more on the moderate side, et cetera. If this was the
If we wouldn't have all these constraints coming from the devices, couple other things in the supply chain, I believe we would be looking at the different numbers. At this stage, it's difficult to start baking this into something which we think we can deliver. I think I am saying that IQOS has a higher potential than that growth rate, but we really have to be in the moment when we can go on unconstrained. Needless to say that, you know, part of our growth is coming from Asia region, and, you know, although European Union, western part of the world, if you like, seems like it's leaving COVID behind, we're still not at this stage in Japan and a few other locations, so we also have to start factoring this in.
Look, I'm very optimistic that we can deliver 2022. Frankly speaking, knowing how much headwinds we need to take on our chest in 2022, I start looking actually excited about the 2023. Okay?
Okay. Thank you for that.
Just.
Just to comment on your question on can we reach 1 million, I think we see rather a ramp-up today. It doesn't mean that we cannot reach 1 million, you know, in one of the quarters in H1, but it's true that we see a ramp-up and an acceleration as we go through the year.
Okay, thank you for that. I did just have a quick question on the U.S., to follow on Bonnie's question. Is there a scenario where you prevail on the patent office review that would allow you to start importing the product again before the first half of 2023? So you're getting your supply chain ready in the U.S., but is there a chance that you could win on the patents and then be able to import the product again?
Well, there is the whole process, you know. I think it deserves a separate conversation about the patent laws and the processes around this whole thing. Unfortunately, we have to cope with this. I mean, even if we prevail on the invalidation of some patents, obviously the other party, in this case, BAT, they have a right to appeal. The whole process is really extended in time. You know, you need another couple of years, frankly speaking, until you have one of the parties actually can claim the full victory. Then you have to go to the ITC and establish, you know, the restrictions, if you like, which are now imposed on us.
You know, I think the fastest, absent any other resolutions, right, the fastest route back to the U.S., is through activating our domestic capacity and resupplying the market from there. Then it might be that later on we are unconstrained, which means that the U.S. market could be supplied from both the international and the domestic. I think the near-term opportunity for us is to go the route which we discussed.
Okay. Thank you for your time today.
Thank you.
Please.
We'll take our next question from Pamela Kaufman with Morgan Stanley. Please go ahead. Your line is open.
Hi, good morning.
Good morning.
Good morning.
I have a question about your outlook for combustibles pricing in 2022. Pricing in 2021 was below your historical rate of growth given headwinds in Indonesia. Can you talk about your expectations for pricing, the pricing environment in 2022, and how you're prioritizing price realization versus market share in combustibles?
Yeah. We're looking for, as we said, we're looking at the 3%-5% pricing variance this year, which is better, stronger than the last year. I think some Asian geographies, you know, due to the variety of factors, are still presumably dragging us lower on what we think we could have normally realized, a bit comparing at least to the historical trends we had there. Indonesia, you're absolutely right to point it out, is on the negative. Although the tax increases which the industry has to pass on, I mean, it gives some hope that we can, you know, we can end up with that. Maybe Indonesia can return to pricing as the important component of the growth there.
We also have to take it from the considerations of, you know, impact of the COVID, the volumes. I'm presumably talking more about the Philippines. We'll see how much of this thing we can unwind in 2022, and having a, you know, reaping the benefits in 2022, and how much we can build as a good base for 2023. It's going in the right direction, but a bit of a more is needed. The rest of the pricing environment, okay, it's always difficult to predict, but as we characterize, it's improving. Okay? On, you know, all other geographies.
We have a pretty good visibility at this stage, obviously, about the taxes, at least in the major volume or profit market. Emmanuel, you know, in his part of the remarks was talking about this, you know, more and more countries are taking this multi-year approach, which always gives us a better visibility and a planning around. As you know, in some countries, you know, the tax increases cannot be passed into consumers in a one step. You need to have some preparatory, you know, take some pricing before, some pricing after. So it's always going into the right directions, especially if we take it in a context that, you know, every country, every market is having a huge pressure on the public finances due to, you know, to the COVID situation, et cetera.
I think we, I mean, so far navigated pretty well there.
Great. Thank you. My second question.
Thank you.
Is on ILUMA uptake and if you can provide some more color on how much of the new user growth in Japan has been driven by ILUMA for IQOS, and what observations you have around the user base and the interaction with prior versions of IQOS? Thank you.
Well, if I remember that from the very beginning of ILUMA, I was personally very excited about that innovation, and I am so happy that it delivers on my expectations. Actually, it's not even beating my expectations. I will continue, if you allow me, with this enthusiastic voice. ILUMA does generate, obviously, you know, if you're IQOS user, blade product users, you appreciate the benefits of ILUMA in the first moment you have it in your hands and you have your first experience. The response from the consumers in Japan is phenomenal. Obviously, the first ILUMA goes to the existing users, but we also already having the benefit of existing IQOS users switching to ILUMA because they have an uninterrupted consumption during every moment of the day when they wish or they're willing to use the product.
This also has an impact on the volumes, i.e., in another sense, if I give you the device which is much more intuitive to use, reliable, much more reliable, you will have a tendency to, you know, to increase the consumption versus what you had on a blade, which, you know, on the occasions failed to allow for having that experience. That's very good thing. Second thing is ILUMA, after all of this initial months, we observe a very solid higher level of conversions.
If you know, it is a very important component in the business model, i.e., you know, how many devices will fully convert smokers who, you know, were combustible smokers, how many of them will stay because it releases the pressure going forward also on the margins, et cetera. The third one is, at this stage, if I remember the number correctly, about 20% of the user of the ILUMA sales is coming from the people who were never in the category, not in IQOS. Also, what we start observing recently, ILUMA also starts taking back users who have temporarily migrated from IQOS to competitive products. In whatever aspects of performance of ILUMA look like, it really delivers on every axis.
The question is, again, and I know that, you know, for some might be boring, do we have availability of the devices, and can we continuously, you know, continue supplying the market? The rest, I believe so far is really going in the right direction.
Thank you. That's helpful.
Thank you, Pam.
We'll take our next question from Vivien Azer with Cowen. Please go ahead. Your line is open.
Hi. Good morning.
Hello, Vivien.
Hi, Vivien.
My first question is on pricing, certainly encouraging to hear that your outlook for 2022 contemplates an improvement in pricing relative to last year. I was wondering, however, if you could just comment on how you're thinking about price gap management between your combustible cigarettes and your heated tobacco units, please. Thank you.
We essentially in most or in all markets maintain the same sort of a positioning of IQOS today versus the cost of combustible reference point. As you know, most of the tax systems actually have that conversion mechanism built in. If there is a tax increase on the combustibles, somehow proportionally this triggers the increase on the heated tobacco units, which translate the consumer price gaps essentially untouched. We obviously complement, depends on the market situation, our portfolio with, for example, KT&G the lil proposition, and I think it works very nicely, especially in the geographies when, you know, IQOS reaches the levels which are above, for example, premium equivalent of the premium price segment in the combustible market. We need to take affordability into equation as well.
Instead of doing something about the pricing of IQOS and the HEETS, we're actually extending the portfolio to the below but also to the above in some geographies when we think there is above premium versus IQOS versus HEETS, the opportunity. We did it very successfully in Russia and in a few European markets. I think the whole thing is that, you know, the broader we have a portfolio, both horizontally from a price perspective and vertically from a, you know, taste, flavor, et cetera, perspective, we increasingly creating a more attractiveness for the cigarette smokers to switch to heat-not-burn.
Perfect. Thank you so much. My follow-up question is on your decision to discontinue Platform 2 heat. Certainly that product has been under evaluation for a number of years. I was just curious to hear kind of the key takeaway from the consumer test. Is the problem that consumers are using a live heat source and that's just creating a lot of confusion in terms of the reduced risk proposition? Was it product performance? I just any other color would be helpful. Thanks.
No, no. Actually, I think, if you like, if you allow me the tech language, it was more on the user interface rather than anything else. I don't think the test, which was the number of the market test, the proposition, believability of the propositions in terms of, you know, is it a better alternative to smoking and everything was well. The issue actually pertains to the heat source. As you remember, the design, you know, at the very end of the cigarette-like looking product, you had a heat source, which, you know, requires lighting, okay? And this was, you need to first open this from the paper cup, light it, and then the question is how you extinguish this product, right? Because you need to pay attention how you extinguish the product.
This was actually, in our opinion, the consumer's opinion actually not leading to that adoption levels which we would wish to have, you know, especially comparing our experience from, you know, other platforms and mainly P1 platform. I think we reached a moment, the design of that product and this part of the technology around the heat source and, you know, operating, asking the consumers how to interact and operate around this whole thing led us to the conclusion that we think that design component will shut down. I think still the proposition makes sense, is understood by the consumer, has potential, but we cannot offer the product to the consumers which they will, you know, not find convenient to use.
You know, the convenience is the middle name of what the consumers wants these days, and I think we need to deliver on this one, especially that, you know, our ambition would be to also leverage the equity which we build around the IQOS. IQOS cannot afford going to the product which has this one. I think we will come back one day to the P2. From the very beginning, you may recall our early Investor Day when we start talking about the vision of going smoke-free and how many platforms will be needed to convert the billion smokers worldwide. This is a proposition which is more for the more conservative audience, the people who really don't want to completely walk away from the ritual and experience when the combustible cigarettes are delivering.
I think in terms of our growth prospect for the near term, I don't think it's that much of an issue. You know, we will be working on that by using a different approach to the design and the technology going forward. I hope it answered your question, Vivien.
Yeah, that's very helpful. Thank you so much.
Thank you. Thank you, Vivien.
We'll take our question from Gaurav Jain with Barclays. Please go ahead.
Thanks a lot. Good morning, Emmanuel and Jacek.
Good morning.
Is that set? I have a couple of questions. First one is on your guidance. Your volume growth is -1%- 1%. You are saying cigarette pricing will be 3%- 4%, and then category price mix in that slide that you have, it is +3%. Assuming it is +3%, it should come to +5% to + 8% on revenue growth for FY 2022. You are saying 4%- 6%, so that will imply that the category mix uplift will be less in FY 2022 than was the case in FY 2021. Can you just help us understand why that will be the case?
I'm happy to try to help you, Gaurav. Certainly, what we are expecting in 2022 is to have another very nice difference between the volume growth and the revenue growth. Indeed, for the volume, we've been guiding to from -1% to +1%. So then the question is how much are we going to generate in terms of extra growth. There is this price where we are seeing 2%-4%. Remember, we've done 2.7% in 2021. So, you know, the low end of the bracket is not massively above what we did in 2021, but it's true that it could be better and certainly something that we are factoring in the high end.
There is impact of the growth of the IQOS business and the heat-not-burn category, where we have this price/mix impact that is playing out. Earlier, the mix, and you know, with the launch in many new economies and new geographies, emerging country that is potentially having an impact on the differential. We do expect a very strong differential again, but not necessarily at the same level as the difference that we generated in 2021. Last but not least, we refer to the fact that we are at the beginning, and it's temporary, higher waste on the consumable for IQOS ILUMA on TEREA.
This is having an impact because the excise duty in the country where the excise duty are based on weight is higher, and therefore, because we are coming with the same price for the consumable than HEETS, that can generate, when you have a switch, a temporary, again, I insist on the fact that it's temporary, decrease, a slight decrease on the first stick, so that can have an impact as well. That is really what you're gonna have, plus potentially some impact on the price of the device, which will depend on the volume of the device that we sell, also on the mix of the device that we sell, and also on the commercial aggressiveness that we want to have on the price of the device.
You have to take a number of things into account. Now, at the end of the day, as you can see, between -1% to +1% and 4%-6%, we are definitely targeting to have another year with a very nice differential between volume and organic revenue growth. We will see exactly how we end up.
Okay, that's very helpful. My second question is on the Beyond Nicotine segment, where you will have $150 million of operating losses this year, and you make also the comment that you will invest in it in future years so that you can hit the billion-dollar revenue target. Does it mean that the losses we should expect to be higher in FY 2023 than what they will be in FY 2022? Or when could we expect that segment to break even?
Well, I think there will be an investment for the next, you know, few years, not a couple, but a few years, which we are willing to do. I think if you would stay with us in a way until the CAGNY, when we, you know, we will give you a more insight of what we have, of what is our thinking about this Beyond Nicotine and Wellness and Healthcare business. Because then we will, you know, we'll be in a position to show which products, concrete products or programs we're willing to go after, what is the size of an opportunity, and what sort of investment it entails.
I think the number which we gave for this year, for 2022 in the guidance, was about the ballpark sort of the investment which we will be carrying for the couple of years.
It's not a one-off. It could go a bit higher, but don't expect an explosion here, you know? That I think you have a good calibration of the kind of amount that we're going to invest over a few years.
Okay, thanks a lot.
Thank you.
We'll take our next question from Jared Dinges with J.P. Morgan. Please go ahead.
Hi, guys. First I wanna touch.
Hi.
A bit more on the nicotine pouches. How should we be thinking about the scale of that initial launch in the Nordics? How should we think about, you know, the future market launches that you guys touched on a bit? Are you considering launching nicotine pouches in markets maybe that don't have a nicotine pouch presence today, like some of your emerging markets? You know, and also just looking at the potential in the U.S., would you consider a PMTA application there as well?
Yeah. I would leave the U.S. aside for a second. I think nicotine pouches can play a very important role in, if you like, smoking smokers, okay? They demonstrated the viability as that proposition in many markets. Initially, we are essentially taking a Shiro as we acquire this, and after remaking of the product and the packaging, et cetera, we'll go in the markets when there was some sales of Shiro, obviously not very high, but we start where we already were present, okay? We build on this. As always in our innovations, we will look at the, you know, consumers' feedback, see what else we have to improve.
We also have some product pipelines behind the initial offering of Shiro, which we now could accelerate to a large extent, thanks to the acquisition of Fertin. Now, Fertin gives us much broader opportunities than just the pouches, because Fertin sits on very interesting delivery systems for the oral delivery. We know that Fertin is the manufacturer of the nicotine replacement therapies like the nicotine gums, but they also have interesting other technologies. We will be thinking, we start with the pouches, but I think over a period of time, not 2022, I think the oral way of delivering the nicotine as a substitute to smoking is actually a very attractive opportunity which we are very excited to start working on.
We will go into the geographies, obviously, where the pouches are not present today. Then as you know, you know, we have a geographical footprint in addition to this that, you know, 70+ markets, we already have a quite a meaningful IQOS infrastructure. You're talking the shops, you're talking digital, you're having all the CRM, commerce, consumer engagement. I believe we can start adding to the to our portfolio of the propositions to smokers, the the oral category, broader oral category than just the pouches. We focus this year on the pouches. We'll be extending the presence, but I think there is more than just the than just the pouches. I'm therefore very pleased that, you know, we concluded the acquisition of Fertin because it gives us
It accelerates our development by a quite good few years, which otherwise we would have to, you know, take our organic.
Got it. Just to follow up on that, you would consider a U.S. PMTA application?
I think I answered that question to Bonnie. U.S., is a very attractive market, and I believe, you know, because of the strategic importance to us, and I do believe that on the market of the size of the U.S., you need to have all platforms, frankly speaking, because not the one platform which can guarantee the full success or full seizing of an opportunity. Ultimately, yes, but our focus today is somewhere else.
Got it. The second one, you know, going back towards cigarettes and IQOS. Are you guys worried at all about potential impacts of price elasticities with especially with lower income consumers, you know, given the inflationary environment and, you know, where you guys are positioned in most markets, you know, usually more at the premium end, so maybe you can give a comment on that.
Yeah. The price elasticity is always, you know, the concern, and as we know very well, you know, sometimes this price elasticity on the tobacco nicotine product is elevated due to the pressures or income pressures on the consumers. We now, you know, having those situations in a few markets that, you know, consumers have a pressure on the income. I mean, I believe some of these pressures will unwind as the COVID will be, you know, becoming a sort of the past. Because I don't think it's anything systemic.
It's very interesting you're asking this question because if you look in the markets where we were taking pricing on cigarettes and on the heat sticks and the market has a pretty robust set of data from the past increases. I think today products like IQOS or alternatives to smoking tends to have a better elasticity, price elasticity than the conventional cigarette. As you know, I guess very well, the price elasticity on cigarettes undisturbed by other factors was pretty attractive, and this was a part of the building as a business model. Actually, at this stage, it looks like alternatives even have a not high but better elasticity than you know than a combustible cigarette.
Currently, not from the elasticity perspective, but from the pure affordability perspective, we've, you know, we're already pretty successful with IQOS in the so-called low, middle income countries. We also know that in order to make the more significant inroads, we need to come with the proposition which directly addresses the, you know, need of below mid-price, low price segments. We will not leave the smokers behind or alone. Before the end of this year, we have plans to test another technology which would allow for the both devices and a consumable to be more accessible from affordability perspective while delivering on the harm reduction potential as IQOS as we know it today. We're taking these things into the very serious consideration. Thank you for your question.
Got it. Very clear. I appreciate the answers.
You're welcome.
There are no further questions at this time. I will turn the call back over to the management team for any closing remarks.
This was a call longer than expected, but we also delivered the results last year better than we expected, so I think somehow we match it. Thank you very much for your attention. We invite you to our CAGNY presentation, which will be in a position to give the, you know, more light, more details on the few aspects like what we discussed today, wellness, healthcare, but also how we look the, in a much broader terms, the development of these categories. I think you could feel in our, my voice and Emmanuel's voice how excited we are that 2021 we delivered in that shape and form. Despite the, you know, number of headwinds which I believe we articulate pretty well, we're still looking forward to a very successful and rewarding for both of us, 2022.
Thank you very much for your attention and hope to see most of you if not all during our CAGNY presentation. Thank you all. Thank you, Simon.
Thank you very much.
Thank you.
If you have any follow-up questions, please, contact the investor relations team, and just a reminder that the slides and script are available on the PMI website. Thank you very much. Have a great day.
Thank you, and this does conclude today's Philip Morris International fourth quarter 2021 year-end earnings conference call. At this time, you may disconnect and have a wonderful day.