Philip Morris International (PM) Q1 2026 earnings summary

Executive summary

• 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.

Financial highlights

• 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.

Outlook and guidance

• 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.