By Timothy S. Donahue

Top Takeaways:

• Philip Morris International lowered its 2025 operating income growth forecast to 10–11.5%, citing increased U.S. spending for Zyn nicotine pouch expansion.
• Shares dropped up to 10% in New York despite a higher earnings-per-share forecast, which analysts described as a “low-quality raise.”
• Zyn shipments in the Americas jumped 38% year-over-year to 205.8 million cans in Q3, with PMI reaffirming its target for smoke-free products to account for two-thirds of revenue by 2030.

Philip Morris International Inc. shares fell sharply Tuesday after the company reduced its 2025 operating income growth forecast, warning that increased investment in its U.S. nicotine pouch business will pressure margins even as sales grow.

The maker of Marlboro cigarettes and Zyn pouches now expects organic operating income to grow by 10% to 11.5%, down from the 11% to 12.5% range forecast in July. The reduction came as PMI increases marketing and promotional spending to boost Zyn’s presence in the U.S. market following months of supply constraints.

The announcement caused PMI shares to drop as much as 10% in New York, their steepest decline since July, reducing year-to-date gains to approximately 19%. Analysts called the update a mixed signal — a solid earnings beat offset by rising costs.

“It’s a low-quality raise,” Bernstein’s Callum Elliott wrote in a client note, citing the lowered profit growth outlook “likely as a result of the impact of U.S. Zyn promotions.”

Zyn has become PMI’s leading growth driver. Its inclusion in the company’s smoke-free segment, now making up 41% of total revenue, highlights PMI’s shift away from cigarettes.

Earlier this year, the U.S. Food and Drug Administration granted PMI approval to market Zyn in the United States — a regulatory milestone that has sped up the brand’s rollout. The company said Tuesday that its expanded U.S. marketing campaign “is paying off” as distribution stabilizes and consumer demand stays strong.

“Zyn outperformed street volume expectations in the U.S., suggesting the brand continues to appeal to consumers,” Jefferies analysts Andrei Andon-Ionita and Edward Mundy said in a research note.

PMI reported that nicotine pouch shipments in the Americas increased 38% year-over-year to 205.8 million cans in Q3, while total cigarette shipments went up about 3% to 157.9 billion units.

Despite the short-term earnings pressure, the company reaffirmed its long-term goal to generate more than two-thirds of total net revenue from smoke-free products by 2030, including Zyn and its IQOS heated tobacco sticks.

For the full year, PMI now projects adjusted earnings per share of $7.46–$7.56, raising the lower end of its guidance by 3 cents — the third upward revision in 2025.

PMI stated that ongoing investments in the U.S. are crucial to maintaining Zyn’s leadership amid increasing competition and regulatory challenges. However, market response indicated that investors are wary of the short-term profitability trade-offs associated with PMI’s accelerated expansion into nicotine pouches.