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Philip Morris International (PMI) has demonstrated robust financial performance in the first quarter of 2025, signaling a strong trajectory for the year ahead. According to the recent 8-K filing, PMI reported a 24.6% increase in reported diluted earnings per share (EPS) to \(1.72, while adjusted diluted EPS grew 12.7% to \)1.69, or 17.3% excluding currency effects (Fiscal Q1 2025).
PMI’s smoke-free business, accounting for 42% of total net revenues and 44% of gross profit, continues to be a major growth driver. Shipment volumes in this segment increased by 14.4%, net revenues rose by 15.0% (20.4% organically), and gross profit surged by 27.7% (33.1% organically). This segment includes heated tobacco units (HTUs), nicotine pouches, and e-vapor products, collectively deployed in 95 markets worldwide.
IQOS, PMI’s flagship heated tobacco product, grew its adjusted in-market sales volume by 9.4%, securing a 77% volume share in the global heat-not-burn category. For instance, in Japan, IQOS grew market share by 3.0 percentage points to a record 32.2%, with the heated tobacco category exceeding 50% nicotine offtake share in 13 major cities.
Oral smoke-free products like nicotine pouches witnessed a 27.2% volume increase, with the U.S.-based ZYN brand exceeding 200 million cans shipped, representing a remarkable 53% growth.
Although the combustible category showed flat net revenues, it reported 3.8% organic net revenue growth and a 5.3% organic gross profit increase. PMI’s cigarette portfolio, led by Marlboro, gained market share with a 0.4 percentage point increase to 24.8%.
PMI’s free cash flow for FY 2024 was \(10.77 billion, supporting continued investment in growth areas like smoke-free categories. The company projects full-year 2025 reported diluted EPS between \)7.01 and $7.14, representing a 55%-58% increase versus 2024, or 12.0%-14.0% adjusted EPS growth excluding currency effects. This translates to robust operating margin expansion, supported by organic operating income growth forecasted between 10.5% and 12.5%.
Europe saw an 8.6% organic net revenue increase mainly driven by smoke-free product growth, despite a 4.8% decline in the overall cigarette and heated tobacco market.
The SSEA, CIS & MEA region reported a 6.5% organic net revenue increase and a 13.9% organic adjusted operating income rise, despite some challenges in Indonesia’s commercial model.
Americas experienced a 32.0% organic net revenue increase fueled by strong U.S. nicotine pouch demand, with adjusted operating income growing 56.4% organically.
Philip Morris International remains confident in its ability to deliver double-digit adjusted diluted EPS growth for 2025 despite a volatile global economic environment. The company plans capital expenditures around $1.5 billion, including increased capacity investments in nicotine pouch production, targeting a net debt to adjusted EBITDA ratio near 2x by end-2026.
CEO Jacek Olczak emphasized, “Our smoke-free business goes from strength to strength,” highlighting the company’s leading position in the evolving nicotine market. PMI’s commitment to a smoke-free future is reinforced by over $14 billion invested since 2008 in developing and commercializing science-backed smoke-free products.
For additional details, please refer to the full 8-K filing: Philip Morris International Q1 2025 Earnings Release.
This analysis ties into previous PMI earnings calls where management consistently highlighted strategic growth in smoke-free products and expanded market share for IQOS globally, reinforcing the transformation from traditional combustible tobacco toward reduced-risk alternatives.
Tags: Philip Morris International, Smoke-Free Business Growth, IQOS, 2025 Earnings Forecast, Nicotine Pouches