Net revenues rose 9.1% year-over-year to $10.1 billion, with smoke-free products contributing 43% of total net revenues and strong international growth led by IQOS, ZYN, and VEEV, offsetting U.S. and combustibles volume declines.
Adjusted diluted EPS increased 16% to $1.96, or 5.3% excluding currency, while reported diluted EPS declined 9.3% to $1.56 due to non-cash fair value adjustments on equity investments.
International smoke-free business saw double-digit volume and revenue growth, with IQOS now the #1 nicotine brand in key markets and strong multicategory gains from ZYN and VEEV.
U.S. segment performance declined sharply due to inventory normalization and lower promotional activity, though ZYN offtake volumes grew 10%.
Net earnings attributable to shareholders declined 9.4% to $2.4 billion, impacted by equity investment losses.
Gross profit increased 10.1% to $6.9 billion (3.8% organically), with gross margin expansion from pricing, operating leverage, and product mix.
Adjusted operating income grew 10% to $4.2 billion (0.9% organically), with margin improving by 0.4pp to 41.1%.
Adjusted gross profit margin reached 68.1%, up 0.6pp year-over-year.
Operating cash flow was negative $399 million in Q1, but full-year projection is $13.5 billion.
Dividends paid totaled $2.3 billion; annualized dividend rate is $5.88 per share.
Full-year 2026 adjusted diluted EPS forecast raised to $8.36–$8.51, up 10.9%–12.9% year-over-year, with a $0.25 currency tailwind.
Organic net revenue growth expected at 5%–7%, operating income at 7%–9%, and adjusted diluted EPS (ex-currency) at 7.5%–9.5%.
Q2 2026 adjusted diluted EPS forecasted at $2.02–$2.07.
Net cash provided by operating activities projected at $13.5 billion for 2026.
Effective tax rate for 2026 estimated at 21.5%, excluding discrete tax events.
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