By Timothy S. Donahue
Top Takeaways:
- Record Revenue: Third-quarter net revenues increased 5.5% to $11.4 billion.
- ZYN Growth: U.S. nicotine pouch shipments rose 4.2% to 3.2 billion.
- Smoke-Free Gains: VEEV shipments jumped 61.6%, while IQOS volumes grew 1.5%.
Philip Morris International is making more money from smoke-free products, but cigarettes still aren’t giving up their day job.
PMI reported record third-quarter net revenue of US$11.4 billion, up 5.5%, as higher cigarette prices, growing nicotine pouch sales, and continued expansion of its smoke-free portfolio helped lift operating income by 14.1% to US$4.9 billion.
Adjusted diluted earnings per share increased 5.4% to $2.36, while reported earnings declined 4.9% to $2.12, primarily due to a noncash investment valuation adjustment.
“We delivered another excellent quarter, with growing total volumes, double-digit organic operating income growth and robust margin expansion,” said CEO Jacek Olczak.
PMI’s smoke-free business generated more than 40% of quarterly net revenue, and its products are now available in 110 markets. IQOS heated-tobacco shipments increased 1.5% to 41.5 billion units, while adjusted in-market sales grew 7.1%.
The company’s VEEV vaping business recorded a 61.6% increase in shipments, supported by growth in Europe and expansion into additional international markets. Modern oral nicotine shipments outside the U.S. increased by 20.6%, with ZYN now available in 62 international markets.
In the United States, ZYN shipments rose 4.2% to 3.2 billion pouches, lifting segment revenues 22.7% to $845 million. PMI said its expanded product lineup, including ZYN ULTRA and additional nicotine strengths, helped the brand gain more than one percentage point in category share between June and September.
The company also plans to transition most of its flagship ZYN products from 15-pouch to 20-pouch cans, with additional marketing investments in the fourth quarter.
Cigarettes remained a significant contributor. PMI shipped 158 billion cigarettes, broadly unchanged from a year earlier. International combustible revenues increased 6.5% to $6.7 billion, supported by an 8.9% price increase.
“With continued strong offtake momentum for our smoke-free brands and the exceptional results of our combustible business, we are in a strong position to continue delivering best-in-class performance,” Olczak said.
PMI maintained its underlying full-year earnings outlook, adjusting only for currency movements. The company now expects adjusted diluted earnings of $8.29 to $8.44 per share, reflecting 9.9% to 11.9% growth over 2025.
