Philip Morris International Reports 2026 Second-Quarter & First Six-Months Results and Updates 2026 Full-Year Adjusted Diluted EPS Forecast for Currency Only;

Second-Quarter Reported Diluted EPS declined by 7.7% to $1.80; Adjusted Diluted EPS grew by 15.2% to $2.20; and by 13.6% excluding currency;

STAMFORD, CT--(BUSINESS WIRE)--Regulatory News:

Philip Morris International Inc. (PMI) (NYSE: PM) today announces its 2026 second quarter results.¹

"We delivered outstanding results in the second quarter, driving net revenues to over $11 billion for the first time with excellent growth across all headline metrics," said Jacek Olczak, Group CEO PMI.

"With a robust first half under our belt, including continued momentum and strong results in our smoke-free business, we are well positioned to deliver on our full-year targets while investing for future growth."

Shipments increased by 2.5% in the quarter, driven by a 7.5% increase in smoke-free mainly due to IQOS and complemented by a resilient combustible segment, notably in markets where SFPs are banned or have a limited market presence.

Net revenues increased by 10.4% (7.6% organically) to $11.2 billion, with both the smoke-free (up by 11.7%, 9.7% organically) and combustibles (up by 9.5%, 6.1% organically) businesses contributing positively. Our smoke-free business accounted for approximately 42% of total net revenues (up by 0.5pp vs. Q2 last year) with PMI smoke-free products (SFP) now available in 109 markets.

Gross profit increased by 11.5% (8.7% organically), expanding gross margins through strong pricing, scale and SFP mix benefits. Operating income increased by 22.0% (10.7% organically).

Reported diluted EPS of $1.80 was unfavorably impacted by the non-cash impairment of the RBH equity investment. Adjusted diluted EPS of $2.20 grew by 15.2%, or by 13.6% excluding a 3 cent favorable currency impact, which was above prior expectations primarily due to transactional effects.

International Smoke-Free Segment

Group performance continued to be driven by the international smoke-free business, with net revenue growth of 14.2% (11.8% organically) fueled by 8.0% volume growth. Gross profit growth of 17.1% (14.6% organically) reflects the increasing profitability of our portfolio. IQOS remains the primary growth engine, notwithstanding expected transient headwinds in Japan and Poland.

Heat-not-burn SFP: IQOS continued to lead the growth of the global category, in which PMI holds around three-quarters volume share. IQOS gained 0.2pp to reach 9.2% of combined cigarette and HTU industry volumes in markets where present, and grew shipment volumes by 7.6%. HTU adjusted in-market sales (IMS) volume grew by 5.1%, reflecting broad-based growth notwithstanding the expected pantry de-loading and initial consumer adjustment following the April 1 excise-driven price increase in Japan, and the impact of the characterizing flavor ban in Poland. Excluding Japan and Poland, adjusted IMS grew by 10%.

• In Japan, while PMI HTU adjusted IMS declined by an estimated 3.4%, it grew by 1.0% excluding the estimated pantry de-loading impact, broadly in-line with our expectations as consumers adjusted following our excise-driven price increase, which was the largest in the industry. IQOS maintained a strong category share, exiting the quarter with 68% in June, with SENTIA playing a key role in capturing price sensitive TEREA consumers.
• In Europe, IQOS HTU adjusted IMS grew by an estimated 5.1% and IQOS HTU adjusted market share increased by 1.0pp to 11.8%, notwithstanding ongoing disruptions in Ukraine and the impact of the characterizing flavor ban in Poland. This growth was led by strong performance in many markets, notably Germany, Romania, Greece and Spain. Adjusted IMS in Italy continued its strong trajectory (up by 10.8%), underscoring the category's significant potential across the region. Excluding markets where the characterizing flavor ban became effective in the last year, adjusted IMS volumes grew by around 8%.
• Outside Europe and Japan, adjusted IMS grew by 14.4% and offtake share increased in key cities across the globe, including Mexico City, Jakarta, Riyadh, Kuala Lumpur and Taipei. We continue to make progress in unlocking new markets, including Argentina which introduced legislation regulating the commercialization and sale of the heat-not-burn category in May.

Oral SFP: Robust modern oral volume growth of 14.7% (26.3% excluding the Nordics) to 0.6 billion pouches was more than offset by continued declines in the legacy snus business in the Nordics, resulting in a total oral SFP volume decrease of 7.0%. We continue to expand into new geographies, with ZYN now available in 60 markets and strongly growing volumes in key opportunity markets such as Pakistan, Poland and the UK. Our focus remains on introducing the segment to legal-age smokers with a relevant product portfolio, including a range of nicotine strengths and adult-appropriate flavors that meet consumer expectations.

E-vapor SFP: We are delivering increasingly profitable growth in VEEV, with quarterly shipments up by 55.1%. VEEV now holds the clear #1 closed pod position in Europe, with continued strong growth across a range of markets, notably Germany, Romania and Greece. PMI remains committed to building and commercializing the brand in a focused, responsible and profitable manner, leveraging its key role as part of our multicategory portfolio.

International Combustibles Segment

Cigarette volume increased by 1.1%, with growth in markets such as Turkey, Indonesia and Egypt outweighing declines in other markets. Net revenues grew by 9.8% (6.4% organically) driven by an exceptional quarter of 10.0% pricing, partly offset by geographic mix. Gross profit grew by 11.5% (8.0% organically). Our cigarette category volume share stood at 25.3% (flat vs. prior year) despite adverse market mix. Marlboro continued to gain share (up by 0.3pp) matching its record category share of 11.0%.

U.S. Segment

In the U.S., we delivered a significant sequential improvement in both net revenues and adjusted gross profit compared to a challenging first quarter, with a 0.7% year-on-year net revenue decline (down 0.9% organically) composed of a broadly stable top-line for ZYN, declines in cigars, and an unfavorable phasing dynamic in Wellness. ZYN offtake volumes were flat to slightly growing versus the prior year in a growing category, largely as a result of the uneven competitive landscape. ZYN shipments increased by 1.8% to 2.9 billion pouches, despite an inventory tailwind in Q2 2025. In June, we expanded the ZYN portfolio with the first shipments of ZYN ULTRA (9mg and 11mg moist variants at a lower price-per-pouch), as well as additional flavors within the ZYN dry flagship lineup. These launches are an important step in enhancing the portfolio and optimizing ZYN's price premium, ensuring ZYN can effectively play in the most dynamic growing segments of the category. We plan to continue expanding the ZYN lineup with the launch of 1.5mg and 8mg dry variants in the third quarter. To support the newly expanded ZYN portfolio, we intend to accelerate U.S. investments in the second half to maximize the long-term value of the brand and also prepare for the future launch of IQOS ILUMA. On June 30, the FDA granted MRTP authorization to 20 variants in the flagship ZYN range, the first and only for a nicotine pouch product. This serves as another example of the robust science behind our products and their potential to reduce the harm caused by smoking.

The Middle East conflict has had a minor impact on our business so far, mainly impacting transport, energy and other input costs, as was expected. While we have observed increased energy prices and some disruption in energy supply in a number of markets, it has not yet resulted in a discernible shift in consumer behavior. The situation remains volatile, and it is difficult to assess the broader long term implications for the consumer or the global cost environment. In our full-year forecast we do not assume a prolonged impact, however we have factored in some increases in transport, energy and other input costs. We will continue to closely monitor developments to assess the mid-to-long term consequences.

In May 2026, pursuant to its obligation under its court-approved plan of compromise and arrangement ("Plan"), PMI's deconsolidated Canadian affiliate, RBH, provided an annual business plan to its Plan Administrator containing updated five-year financial projections reflecting current industry dynamics. As a result, PMI determined that the estimated fair value of its investment in RBH was lower than its carrying value and recorded a non-cash impairment charge of $511 million in the second quarter of 2026, representing 33 cents of diluted EPS. RBH remains deconsolidated from the PMI group, with a remaining carrying value of $51 million as of June 30.

Reported diluted EPS is forecast to be in a range of $7.19 to $7.34, at prevailing exchange rates. Excluding a total 2026 adjustment of $1.07 per share, this forecast represents a projected increase of 9.5% to 11.5% versus adjusted diluted EPS of $7.54 in 2025. This includes a favorable currency impact of $0.15, at prevailing exchange rates (previously $0.20), as versus our previous forecast the benefit of transactional gains in the second quarter are more than offset by translational effects of the strengthening U.S. dollar. Excluding currency, this forecast represents a projected increase of 7.5% to 9.5% versus adjusted diluted EPS of $7.54 in 2025, as outlined in the above table.

2026 Full-Year Forecast Assumptions

• Broadly stable to slightly growing (previously broadly stable) total PMI cigarette and SFP shipment volume, with high-single digit SFP shipment volume growth, and a cigarette shipment volume decline of 2% to 3% (previously around 3%);
• Net revenue growth of 5% to 7% on an organic basis;
• Organic operating income growth of 7% to 9%;
• Full-year amortization of acquired intangibles of $0.50 per share;
• Broadly stable net financing costs;
• An effective tax rate, excluding discrete tax events, of around 21.5%;
• Operating cash flow around $13.5 billion at prevailing exchange rates, subject to year-end working capital requirements;
• Capital expenditures of $1.4 to $1.6 billion, predominantly supporting the smoke-free business;
• Further net debt to adjusted EBITDA ratio improvement as we target a ratio of close to 2.0x by the end of 2026, at prevailing exchange rates;
• No share repurchases; and
• Third quarter adjusted diluted EPS of $2.20 to $2.25, including an estimated unfavorable currency impact of 8 cents at prevailing exchange rates.

Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections.

Total PMI

• Estimated industry volume (excluding China and the U.S.) for cigarettes and HTUs increased by 0.8%.
• Net revenues increased by 7.6% organically, mainly reflecting: a favorable pricing variance mainly driven by international combustibles; supported by favorable volume/mix, driven by international smoke-free volumes, notwithstanding adverse international combustibles mix.
• Operating income increased by 10.7% on an organic basis, largely reflecting the same factors as for net revenues.

International Smoke-Free Segment

• Shipment volume grew by 8.0%, with broad based growth across markets, notably Taiwan, Romania, and Greece.
• Net revenues increased by 11.8% on an organic basis, reflecting: a favorable volume/mix driven by higher HTU and e-vapor volumes and a favorable pricing variance due to HTUs.
• Gross profit increased by 14.6% organically mainly due to the same factors as for net revenues.

International Combustibles Segment

• Shipment volume grew by 1.1% with notable increases in Turkey, Indonesia, and Egypt.
• Net revenues increased by 6.4% on an organic basis, reflecting: a favorable pricing variance, partially offset by unfavorable mix as growth in developing economies more than offset declines in Europe.
• Gross profit increased by 8.0% organically due to the same factors as for net revenues.

U.S. Segment

• Net revenues slightly decreased by 0.9% organically, primarily reflecting: broadly stable ZYN revenues, declines in the cigar business, and unfavorable phasing dynamics in Wellness.
• Gross profit decreased by 8.9% on an organic basis reflecting the same factors as for net revenues and higher manufacturing costs linked to the expansion of our footprint.
• Adjusted OCI decreased by 19.1% organically, to $279 million, reflecting the same factors as for adjusted gross profit and phasing of investments in marketing, administration and research costs as part of the Aspeya Wellness business.

Total PMI

• Estimated industry volume (excluding China and the U.S.) for cigarettes and HTUs declined by 0.4%.
• Net revenues increased by 5.3% organically, mainly reflecting: a favorable pricing variance mainly driven by international combustibles; partly offset by unfavorable volume/mix, mainly driven by lower international combustibles and U.S. volumes, notwithstanding higher international smoke-free volumes.
• Operating income increased by 6.1% on an organic basis, reflecting the same factors as for net revenues, partially offset by higher marketing, administration and research costs.

Philip Morris International
Investor Relations:
InvestorRelations@pmi.com
Stamford, CT: +1 (203) 905 2413

Media:
Corey.Henry@pmi.com
Stamford, CT: +1 (203) 905 2410
Lausanne: +41 582 424 500