Philip Morris International Inc.'s Net Income Soars 26.6% on Strong Quarter

Philip Morris International Inc. reported robust financial performance for Q2 2025, with net revenues reaching $10.1 billion, marking a 7.1% increase from Q2 2024. Net income, presented as reported diluted EPS, significantly grew by 26.6% to $1.95 per share. The company's adjusted diluted EPS also rose by 20.1% to $1.91. This quarter's performance aligns favorably with analyst estimates, surpassing revenue expectations of $10.33 billion and EPS estimates of $1.85, indicating a strong beat on both fronts.

Smoke-Free Business Growth

The smoke-free business (SFB) was a primary driver of growth, contributing 41% to total net revenues and over 42% to total gross profit. SFB shipment volumes increased by 11.8%, with net revenues growing 15.2% (14.5% organically) and gross profit by 23.3% (21.5% organically). The company’s flagship IQOS brand exceeded $3 billion in quarterly net revenues, with HTU adjusted in-market sales volume reaccelerating to 11.4% growth. Notably, IQOS reached over 10 million legal-age consumers in Japan, where its HTU adjusted market share increased by 2.3pp to 31.7%.

In Europe, adjusted IMS growth for IQOS reaccelerated to an estimated 9.1%, fueled by the continued rollout of ILUMA i and the expansion of consumables. The e-vapor category, with VEEV, also saw significant growth, with shipment volumes more than doubling, primarily driven by Europe. Oral smoke-free products saw a 23.8% increase in shipment volume, primarily from nicotine pouches. ZYN in the U.S. reaccelerated its offtake growth to approximately 36% in June and 26% overall in Q2, as improved in-store availability and restocking contributed to its strength.

Combustibles Performance and Management Outlook

Despite an expected return to volume declines, the combustibles segment experienced net revenue growth of 2.1% (2.0% organically), driven by strong pricing. This segment delivered a robust gross profit growth of 5.0% (4.8% organically), and the Marlboro brand achieved its highest quarterly market share since the 2008 spin-off. Overall cigarette category share remained broadly stable.

For the full year 2025, Philip Morris International Inc. has raised its guidance, forecasting reported diluted EPS in the range of $7.24 to $7.37. Excluding adjustments, this represents a projected increase of 13% to 15% over 2024 adjusted diluted EPS. The company anticipates total cigarette and smoke-free product shipment volume growth of around 1%, with smoke-free product volume growth projected at 12% to 14%, partly offset by an estimated 2% decline in cigarette volumes. Organic net revenue growth is expected to be around 6% to 8%, and organic operating income growth is projected at 11% to 12.5%. Capital expenditures are estimated at approximately $1.6 billion, almost entirely allocated to investments supporting the smoke-free business.