8-K: Philip Morris Reaffirms Strong 2025 EPS Growth Forecast

Philip Morris International reaffirms its 2025 full-year adjusted diluted EPS forecast, projecting 13% to 15% growth.

Summary

• Philip Morris International (PMI) reaffirms its 2025 full-year reported diluted EPS forecast to be in a range of $7.24 to $7.37.
• The adjusted diluted EPS forecast is $7.43 to $7.56, representing a projected increase of 13% to 15% versus 2024.
• Excluding a favorable currency impact of $0.10, the adjusted diluted EPS growth is projected at 11.5% to 13.5% versus $6.57 in 2024.
• Strong volume momentum was observed over the summer months, including IQOS and ZYN offtake.
• Q3-to-date dynamics include combustible volume recovery in Turkey and better-than-expected volume dynamics in Egypt.
• Continued strong IQOS growth and very good international ZYN and VEEV growth are noted.
• U.S. ZYN offtake has accelerated further since the second quarter to approximately 32% growth in the first 8 weeks of Q3, as measured by Nielsen.
• PMI now assumes second-half year-on-year ZYN shipment volume growth broadly in line with second-half year-on-year offtake growth, intensifying commercial activities amid increasing competition.
• As of June 30, 2025, smoke-free products were available for sale in 97 markets and used by over 41 million legal-age consumers.
• Smoke-free products accounted for 41% of PMI's first-half 2025 total net revenues.

Sentiment

Score: 8

Explanation: The company reaffirmed strong full-year guidance, indicating confidence in its performance. Positive momentum in key smoke-free products like IQOS and ZYN, coupled with better-than-expected performance in some combustible markets, suggests robust operational execution despite increasing competition.

Positives

• Reaffirmed strong 2025 full-year adjusted diluted EPS growth forecast of 13% to 15% (11.5% to 13.5% excluding currency), which is the strongest since 2011 (excluding pandemic recovery).
• Strong volume momentum observed over the summer months for IQOS and ZYN products.
• Combustible volume recovery in Turkey and better-than-expected volume dynamics in Egypt.
• Continued strong IQOS growth globally.
• Very good international ZYN and VEEV growth.
• U.S. ZYN offtake accelerated to approximately 32% growth in the first 8 weeks of Q3, as measured by Nielsen.
• Smoke-free products represent a significant and growing portion of revenue, accounting for 41% of first-half 2025 total net revenues.
• Over 41 million legal-age consumers globally use PMI's smoke-free products, available in 97 markets.

Negatives

• Increasing competition in smoke-free products is noted.

Risks

• Excise tax increases and discriminatory tax structures.
• Increasing marketing and regulatory restrictions that could reduce competitiveness, eliminate the ability to communicate with adult consumers, or ban certain products.
• Health concerns relating to the use of tobacco and other nicotine-containing products and exposure to environmental tobacco smoke.
• Litigation related to tobacco and/or nicotine use and intellectual property.
• Intense competition.
• Effects of global and individual country economic, regulatory, and political developments, natural disasters, and conflicts.
• The impact and consequences of Russia's invasion of Ukraine.
• Changes in adult smoker behavior.
• The impact of natural disasters and pandemics on the business.
• Lost revenues as a result of counterfeiting, contraband, and cross-border purchases.
• Governmental investigations.
• Unfavorable currency exchange rates and currency devaluations, and limitations on the ability to repatriate funds.
• Adverse changes in applicable corporate tax laws.
• Recent and potential future tariffs imposed by the U.S. and other countries.
• Adverse changes in the cost, availability, and quality of tobacco and other agricultural products and raw materials, as well as components and materials for electronic devices.
• The integrity of information systems and effectiveness of data privacy policies.
• Unsuccessful attempts to introduce, commercialize, and grow smoke-free products, or if regulation or taxation do not differentiate between such products and cigarettes.
• Inability to successfully introduce new products, promote brand equity, enter new markets, or improve margins through increased prices and productivity gains.
• Inability to expand the brand portfolio internally or through acquisitions and the development of strategic business relationships.
• Inability to attract and retain the best global talent.
• Inability to successfully integrate and realize the expected benefits from recent transactions and acquisitions.
• Lower predictability of smoke-free products performance.

Future Outlook

PMI reaffirms its 2025 full-year reported diluted EPS forecast of $7.24 to $7.37 and adjusted diluted EPS of $7.43 to $7.56, representing 13% to 15% growth (11.5% to 13.5% excluding currency). The company anticipates continued strong IQOS and ZYN growth, with U.S. ZYN shipment volume growth broadly in line with offtake growth in the second half, despite increasing competition.

Management Comments

• "With strong volume momentum over the summer months, including IQOS and ZYN offtake, and despite increasing competition in smoke-free products, we are on track to deliver our full-year guidance of 13% to 15% adjusted diluted EPS growth in dollar terms, the strongest since 2011 excluding the pandemic recovery." Jacek Olczak, Chief Executive Officer.

Industry Context

The announcement highlights PMI's continued focus on its "smoke-free future" strategy, expanding its portfolio of heat-not-burn, nicotine pouch, and e-vapor products. The mention of increasing competition in smoke-free products suggests a dynamic and growing market segment within the broader consumer staples and tobacco industry, where companies are vying for market share in reduced-risk alternatives. PMI's strong ZYN and IQOS growth indicates its leading position in these categories, while also acknowledging competitive pressures.

Comparison to Industry Standards

• Specific comparable companies, projects, or results to assess against global benchmarks are not provided.
• Projected adjusted diluted EPS growth of 13% to 15% (11.5% to 13.5% excluding currency) is stated as 'the strongest since 2011 excluding the pandemic recovery,' indicating strong internal performance relative to the company's own historical trends.

Legal Proceedings

• Litigation related to tobacco and/or nicotine use and intellectual property is identified as a continuing risk.

Stakeholder Impact

• Shareholders: Positive impact due to reaffirmed strong EPS growth forecast and strong operational momentum, potentially leading to increased shareholder value.
• Customers (Adult Consumers): Continued availability and growth of smoke-free products like IQOS, ZYN, and VEEV in 97 markets, offering alternatives to traditional cigarettes.
• Employees: The risk of inability to attract and retain the best global talent is mentioned, implying ongoing focus on human capital.

Next Steps

• An archived copy of the webcast will be available for six months after the event at www.pmi.com/2025barclays and on the PMI Investor Relations Mobile Application.

Key Dates

Recommendation

The reaffirmation of robust full-year adjusted diluted EPS growth of 13-15% (11.5-13.5% excluding currency), described as the strongest since 2011 (excluding pandemic recovery), signals strong underlying business performance and management confidence. Key growth drivers like IQOS and ZYN are showing accelerated momentum, particularly in the U.S., and smoke-free products now constitute 41% of net revenues, indicating successful portfolio transformation. While competition is noted, the company's ability to maintain guidance amidst this suggests resilience. These factors, combined with better-than-expected combustible volume in certain markets, present a compelling case for continued strong performance, making it a strong buy for investors seeking growth in the consumer staples sector with a clear strategic direction towards reduced-risk products.

Keywords

Philip Morris International, PMI, PM, Tobacco, Nicotine, Smoke-free products, IQOS, ZYN, VEEV, Consumer Staples, EPS forecast, Financial guidance, Barclays Conference, Investor Relations, Regulation FD, 8-K