10-QPeriod: Q2 FY2026

Philip Morris International Inc. Quarterly Report for Q2 Ended Jun 30, 2026

Filed July 24, 2026For Securities:PM

Summary

Philip Morris International Inc. (PM) reported a strong first half of 2026, with net revenues increasing by 9.8% to $21.3 billion and diluted EPS at $3.36, a decrease of 8.4% from the prior year period. The decrease in EPS was largely driven by unfavorable fair value adjustments for equity security investments and a significant impairment charge related to the RBH equity investment, partially offset by higher operating income and lower interest expense. The company's strategic shift towards smoke-free products continues to gain traction, with smoke-free product shipments increasing by 8.3% driven by growth in heated tobacco units (HTUs) and e-vapor. For the second quarter of 2026, net revenues grew 10.4% to $11.2 billion, with diluted EPS of $1.80, down 7.7% year-over-year. The RBH equity investment impairment charge significantly impacted quarterly earnings. The International Smoke-Free segment showed robust revenue growth of 14.2% driven by higher HTU and e-vapor volumes and favorable pricing. The International Combustibles segment also saw revenue growth of 9.8%, primarily due to favorable pricing, though mix was less favorable. The U.S. segment experienced a slight revenue decline of 0.7%, impacted by lower cigar sales and an unfavorable phasing in the wellness business, though ZYN revenues remained stable.

Key Highlights

  • 1Net revenues for the first six months of 2026 increased by 9.8% to $21.3 billion, driven by favorable pricing and growth in smoke-free products.
  • 2Diluted EPS for the first six months of 2026 was $3.36, a decrease from $3.67 in the prior year, primarily due to a $511 million impairment charge related to the RBH equity investment and unfavorable equity security investment adjustments.
  • 3Smoke-free product shipment volume increased by 8.3% in the first six months of 2026, led by growth in heated tobacco units (HTUs) and e-vapor.
  • 4The International Smoke-Free segment demonstrated strong performance with a 19.2% increase in net revenues for the six-month period, driven by volume/mix and pricing.
  • 5The U.S. segment experienced a 16.1% decrease in net revenues for the six-month period, impacted by inventory dynamics for ZYN and declines in the cigar business.
  • 6The company maintained robust liquidity with cash and cash equivalents of $6.0 billion as of June 30, 2026.
  • 7PMI's credit ratings were positive, with Moody's and S&P having a 'Positive' outlook, reflecting the company's financial strength.

Frequently Asked Questions

The decrease in diluted EPS was primarily driven by a $511 million non-cash impairment charge related to the RBH equity investment and unfavorable fair value adjustments for equity security investments in India and Sri Lanka. These factors were partially offset by higher operating income and lower interest expense.

The smoke-free product segment showed strong growth. For the six months ended June 30, 2026, shipment volumes for smoke-free products increased by 8.3%, driven by significant growth in heated tobacco units (HTUs) and e-vapor. Net revenues for the International Smoke-Free segment specifically increased by 19.2%.

While the U.S. segment saw a decrease in net revenues for the six months ended June 30, 2026, ZYN revenues remained stable in the second quarter. The company plans to accelerate U.S. investments to maximize the long-term value of the ZYN brand and is preparing for the future launch of IQOS ILUMA.

Philip Morris International maintains a strong liquidity position with $6.0 billion in cash and cash equivalents as of June 30, 2026. The company has access to significant committed revolving credit facilities and a commercial paper program, which provide ample borrowing capacity. Credit ratings remain strong, with positive outlooks from major agencies.