01—Abstract
Summary
Summary of the 10-Q filed July 24, 2026. Cited figures are marked; the original filing is the authoritative source.
Philip Morris International Inc. (PM) reported a strong first half of 2026, with net revenues increasing by 9.8% to $21.3 billiona 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 billionb, 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%c driven by higher HTU and e-vapor volumes and favorable pricing.
The International Combustibles segment also saw revenue growth of 9.8%d, 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.
02—Key points
Key Highlights
- Net 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.
- Diluted 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.
- Smoke-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.
- The 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.
- The 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.
- The company maintained robust liquidity with cash and cash equivalents of $6.0 billion as of June 30, 2026.
- PMI's credit ratings were positive, with Moody's and S&P having a 'Positive' outlook, reflecting the company's financial strength.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Philip Morris International Inc. kept $0.25.
- Revenue$11.19B100.0%
- Cost of revenue−$3.53B31.6%
- Gross profit$7.66B68.4%
- Operating costs−$3.13B28.0%
- Operating income$4.53B40.5%
- Interest, other & tax−$1.71B15.3%
- Net income$2.82B25.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed July 24, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $11.19B$10.14B | +10.4% |
| Cost of Revenue | $3.53B$3.27B | +7.9% |
| Gross Profit | $7.66B$6.87B | +11.5% |
| Operating Income | $4.53B$3.71B | +22.0% |
| Net Income | $2.82B$3.04B | −7.3% |
| EPS (Basic) | $1.80$1.95 | −7.7% |
| EPS (Diluted) | $1.80$1.95 | −7.7% |
| Shares Outstanding (Basic) | 1.56B1.56B | +0.1% |
| Shares Outstanding (Diluted) | 1.56B1.56B | +0.1% |
05—Questions
Frequently Asked Questions
What were the primary drivers for the decrease in diluted EPS for the six months ended June 30, 2026?
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.
How did the company's smoke-free product segment perform in the first half of 2026?
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%.
What is the company's outlook for its U.S. smoke-free business, particularly for ZYN?
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.
How is the company managing its debt and liquidity?
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.
06—Continue