Philip Morris International Inc.
For the period ended Jun 30, 2026. Filed Jul 24, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 24, 2026
PM$197.88-1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-24.
0001628280-26-027019
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-24.
0001628280-26-049493
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 425 previous paragraphs and 482 current paragraphs.
285 unchanged; 123 reworded; 54 added; 14 removed; 3 previous and 20 current paragraphs rearranged.
Tables are not compared: 11 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (54)
Current report
Consolidated Operating Results for the Six Months Ended June 30, 2026
Current report
Note: Sum of product categories might not foot to total PMI due to rounding
Current report
Impairment of goodwill –During the second quarter of 2025, after the completion of our annual review of goodwill, it was determined that the estimated fair value of a business, which was a separate reporting unit in 2025, related to the consumer accessories products acquired as part of the Swedish Match acquisition in 2022 was lower than its carrying value. Consequently, PMI recorded a goodwill impairment charge of $41 million (representing a $0.03 per share decrease in diluted EPS). For further details, see Note 5. Goodwill and Other Intangible Assets, net.
Current report
Amortization of intangibles –During the six months ended June 30, 2025 and 2026, we recorded amortization of intangibles expense of $496 million (representing $385 million net of income tax or $0.24 per share decrease in diluted EPS) and $503 million (representing$392 million net of income tax or $0.25 per share decrease in diluted EPS), respectively.
Current report
Impairment related to RBH equity investment –In May 2026, pursuant to its obligation under its court-approved plan of compromise and arrangement (the "Plan"), RBH provided an annual business plan to its Plan Administrator containing updated five-year financial projections reflecting current industry dynamics. As a result, PMI determined that the estimated fair value of its investment in RBH was lower than its carrying value and recorded a non-cash impairment charge of $511 million (representing $0.33 per share decrease in diluted EPS) in the second quarter of 2026. For further details, see Note 13. Related Parties - Equity Investments and Other.
Current report
Egypt sales tax settlement adjustment –In the third quarter of 2024, following a ruling issued by the Higher Administrative Court in Egypt and subsequent evaluation of available remedies at that time, we concluded that an adverse outcome was probable and recorded a pre-tax charge in 2024 of $45 million (representing a diluted EPS charge of $0.03 per share) in relation to tax assessments for general sales tax deducted on imported cutfiller for the years 2014 to 2016. Pursuant to tax amnesty legislation enacted in Egypt in December 2024, PMI submitted review requests with the Dispute Resolution Committee, which issued settlement recommendations subject to court approval. In May 2026, court approval was obtained for the settlement covering the 2016 year, which then became effective. As a result, PMI recorded a favorable sales tax settlement adjustment during the second quarter of 2026 of $18 million net of income tax (representing an increase of $0.01 to diluted EPS).
Current report
The 2025 tax items that decreased our 2025 diluted EPS by $0.03 per share in the table above were due to the recognition of current tax expense related to the potential disallowance of deductions for certain intercompany transactions in Indonesia.
Current report
Interest – The favorable impact of $0.02 per share from interest in the table above was primarily due to higher interest income on investments
Current report
partly offset by
Current report
During the quarter, net revenues increased by 10.4%. Net revenues, excluding currency and acquisitions/divestitures, increased by 7.6%, mainly reflecting: a favorable pricing variance mainly driven by international combustibles; supported by favorable volume/mix, driven by international smoke-free volumes, notwithstanding adverse international combustibles mix.
Current report
Note: Sum of product categories might not foot to total PMI due to rounding
Current report
Impairment of goodwill –During the second quarter of 2025, after the completion of our annual review of goodwill, it was determined that the estimated fair value of a business, which was a separate reporting unit in 2025, related to the consumer accessories products acquired as part of the Swedish Match acquisition in 2022 was lower than its carrying value. Consequently, PMI recorded a goodwill impairment charge of $41 million (representing a $0.03 per share decrease in diluted EPS). For further details, see Note 5. Goodwill and Other Intangible Assets, net.
Current report
Impairment related to RBH equity investment –In May 2026, pursuant to its obligation under its court-approved plan of compromise and arrangement (the "Plan"), RBH provided an annual business plan to its Plan Administrator containing updated five-year financial projections reflecting current industry dynamics. As a result, PMI determined that the estimated fair value of its investment in RBH was lower than its carrying value and recorded a non-cash impairment charge of $511 million (representing $0.33 per share decrease in diluted EPS) in the second quarter of 2026. For further details, see Note 13. Related Parties - Equity Investments and Other.
Current report
Egypt sales tax settlement adjustment –In the third quarter of 2024, following a ruling issued by the Higher Administrative Court in Egypt and subsequent evaluation of available remedies at that time, we concluded that an adverse outcome was probable and recorded a pre-tax charge in 2024 of $45 million (representing a diluted EPS charge of $0.03 per share) in relation to tax assessments for general sales tax deducted on imported cutfiller for the years 2014 to 2016. Pursuant to tax amnesty legislation enacted in Egypt in December 2024, PMI submitted review requests with the Dispute Resolution Committee, which issued settlement recommendations subject to court approval. In May 2026, court approval was obtained for the settlement covering the 2016 year, which then became effective. As a result, PMI recorded a favorable sales tax settlement adjustment during the second quarter of 2026 of $18 million net of income tax (representing an increase of $0.01 to diluted EPS).
Current report
The 2025 tax items that decreased our 2025 diluted EPS by $0.03 per share in the table above were due to the recognition of current tax expense related to the potential disallowance of deductions for certain intercompany transactions in Indonesia.
Current report
Interest – The favorable impact of $0.02 per share from interest in the table above was primarily due to higher interest income on investments
Current report
partly offset by
Current report
•U.S. segment: Unfavorable volume/mix, mostly driven by cigars, and higher manufacturing costs; and
Current report
•Impairment of goodwill –See Note 5. Goodwill and Other Intangible Assets, net for details of the goodwill impairment charge recorded for the six months and three months ended June 30, 2025.
Current report
Consolidated Operating Results for the Six Months Ended June 30, 2026
Current report
The following discussion compares our consolidated operating results for the six months ended June 30, 2026, with the six months ended June 30, 2025.
Current report
Gross profit increased by 10.9%. Gross profit, excluding currency and acquisitions/divestitures, increased by 6.4%, mainly reflecting the same factors as for net revenues, partly offset by higher manufacturing costs.
Current report
Interest expense, net, of $480 million decreased by $38 million or 7.3%, primarily due to higher interest income on investments.
Current report
We recorded a non-cash impairment charge of $511 million related to our RBH equity investment in the condensed consolidated statement of earnings for the six months ended June 30, 2026. For further details, see Note 13. Related Parties - Equity Investments and Other.
Current report
Total Market
Current report
Total Shipment Volume
Current report
Note: Amounts may not foot due to rounding. Oral smoke-free products conversion: 1 pouch equals 1 unit. E-vapor products conversion: one milliliter of e-vapor liquid is equivalent to 10 units.
Current report
Our shipment volume, including cigarettes and smoke-free products (in equivalent units), increased by 2.5% driven by a 7.5% increase in smoke-free mainly due to IQOS and complemented by a resilient combustible segment, notably in markets where SFPs are banned or have a limited market presence.
Current report
During the quarter, net revenues increased by 10.4%. Net revenues, excluding currency and acquisitions/divestitures, increased by 7.6%, mainly reflecting: a favorable pricing variance mainly driven by international combustibles; supported by favorable volume/mix, driven by international smoke-free volumes, notwithstanding adverse international combustibles mix.
Current report
Gross profit increased by 11.5%. Gross profit, excluding currency and acquisitions/divestitures, increased by 8.7%, mainly reflecting a favorable pricing variance as mentioned in net revenues.
Current report
Operating income increased by 22.0%. Operating income, excluding currency and acquisitions/divestitures, increased by 20.0%, mainly reflecting: a favorable pricing variance and lower restructuring charges in 2026, partly offset by unfavorable volume/mix.
Current report
Interest expense, net, of $243 million decreased by $34 million or 12.3%, primarily due to higher interest income on investments.
Current report
Our effective tax rate increased by 3.3 percentage points to 22.3%. For further details, see Note 10. Income Taxes.
Current report
We recorded an impairment charge of $511 million related to our RBH equity investment in the condensed consolidated statement of earnings for the three months ended June 30, 2026. For further details, see Note 13. Related Parties - Equity Investments and Other.
Current report
Net earnings attributable to PMI of $2.8 billion decreased by $0.2 billion or 7.3%. This decrease was primarily due to lower income from our equity security investments, the non-cash impairment charge related to our RBH equity investment and a higher effective tax rate, partly offset by higher operating income and lower interest expense, net. Basic and diluted EPS of $1.80 both decreased by 7.7%. Excluding a favorable currency impact of $0.03, diluted EPS decreased by 9.2%.
Current report
Gross profit increased by 17.1%. Gross profit, excluding currency and acquisitions/divestitures, increased by 14.6%, mainly due to the same factors as for net revenues.
Current report
For the six months ended June 30, 2026, net revenues increased by 19.2%. Net revenues, excluding currency and acquisitions/divestitures, increased by 13.7%, reflecting: a favorable volume/mix driven by higher HTU and e-vapor volumes and a favorable pricing variance due to higher HTU pricing.
Current report
Gross profit increased by 22.6%. Gross profit, excluding currency and acquisitions/divestitures, increased by 16.9%, mainly due to the same factors as for net revenues.
Current report
In the second quarter, our International Smoke-Free shipment volume increased by 8.0% to 44.7 billion equivalent units, with broad based growth across markets, notably Taiwan, Romania and Greece.
Current report
In the heat-not-burn category, IQOS grew shipment volumes by 7.6%. HTU adjusted in-market sales (IMS) volume grew by 5.1%, reflecting broad-based growth notwithstanding the expected pantry de-loading and initial consumer adjustment following the April 1 excise-driven price increase in Japan, and the impact of the characterizing flavor ban in Poland. Excluding Japan and Poland, adjusted IMS grew by 10%.
Showing the first 40 of 54 passages. Open the source sections for the rest.
Removed paragraphs (14)
Previous report
For the full year 2026, we currently expect an estimated industry volume decline of around 2% for cigarettes and HTUs, excluding China and the U.S.
Previous report
(1) Includes HTUs, e-vapor unit equivalents and oral SFP in pouch or pouch equivalents, excluding snuff, snuff leaf and U.S. chewing tobacco
Previous report
Oral smoke-free products conversion: (i) nicotine pouches: 15 pouches per can in the U.S. and approximately 20 pouches per can outside the U.S.; (ii) snus products: weighted average 21 pouches equivalent per can; (iii) moist snuff products: weighted average 17 pouches equivalent per can; (iv) tobacco bits products: weighted average 30 pouches equivalent per can; (v) chew bags products: weighted average 20 pouches per can.
Previous report
Gross profit increased by 10.1%. Gross profit, excluding currency, increased by 3.8%, mainly reflecting the same factors as for net revenues.
Previous report
Gross profit increased by 28.6%. Gross profit, excluding currency, increased by 19.4%, mainly due to the same factors as for net revenues.
Previous report
In the first quarter, our International Smoke-Free shipment volume increased by 11.9% to 44.1 billion in equivalent units, notably due to Italy, Global Travel Retail, Taiwan and Russia.
Previous report
In the heat-not-burn category, HTU adjusted in-market sales (IMS) volume, which excludes the net impact of estimated distributor and wholesaler inventory movements, grew by 10.9%, broadly in line with shipment volume growth of 11.3%. The growth in IQOS was broad-based across geographies with all key consumables product lines (TEREA, DELIA/SENTIA and LEVIA) contributing. Excluding the impact of consumer pantry-loading in Japan ahead of the excise-driven price increase on April 1, adjusted IMS grew by an estimated 9.4%.
Previous report
In the E-vapor category, VEEV quarterly shipments exceeded one billion equivalent units for the first time. VEEVnow shares the #1 closed pod position in Europe, estimated based on Nielsen offtake data, with growth in Germany, France, Romania, Italy, Greece and Bulgaria.
Previous report
During the quarter, net revenues increased by 6.8%. Net revenues, excluding currency, increased by 1.0%, reflecting: a favorable pricing variance, partly offset by unfavorable volume/mix/other, including the favorable impact related to the restructuring of distribution terms in certain markets this quarter.
Previous report
Gross profit increased by 9.8%. Gross profit, excluding currency, increased by 3.9%, due to the same factors as for net revenues.
Previous report
In the first quarter, our cigarette shipment volume in the International Combustibles segment decreased by 5.1% to 137.3 billion units, with notable decreases in Indonesia, Russia, Germany and Mexico. Our overall cigarette category volume share was 24.8% (down by 0.6pp) due to unfavorable market mix as well as lower share in Indonesia, Russia and Turkey, partly offset by gains in Egypt. Marlboro continued to gain category share (up by 0.4pp) to 10.7%.
Previous report
Smoke-Free Products (SFPs)
Previous report
In April 2024, we submitted MRTPAs for ZYN products currently marketed in the United States and requested authorization of a modified risk claim. In February 2025, the FDA formally accepted our MRTPAs and in June 2025, issued a filing letter for 20 ZYN nicotine pouch products. This action initiated a scientific review of our MRTPAs which requested the following modified risk claim: “Using ZYN instead of cigarettes puts you at a lower risk of mouth cancer, heart disease, lung cancer, stroke, emphysema, and chronic bronchitis.” During the review, the FDA will determine whether our applications provide the necessary evidence for ZYN products to be marketed with the requested claim. The FDA referred our MRTPAs to TPSAC, which met on January 22, 2026.
Previous report
Term Loan Facility related to the Financing of the Swedish Match Acquisition –As of March 31, 2026, borrowings in the amount of €2.5 billion (approximately $2.9 billion) under the 5-year tranche of the term loan facility remained outstanding. For further details, see Note 11. Indebtedness.
Reworded paragraphs (123)
Previous wording
We are a leading international consumer goods company, actively delivering a smoke-free future. We are evolving our portfolio for the long term to include products outside of the tobacco and nicotine sector. Our current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, nicotine pouch and e-vapor products. Since 2008, we have invested over $16 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This investment includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. In November 2022, we acquired Swedish Match AB ("Swedish Match") – a leader in oral nicotine delivery – creating a global smoke-free combination led by the companies’IQOS and ZYN brands. As of April 30, 2024, we hold the full rights to commercialize IQOS in the U.S. after reaching an agreement to end our U.S. commercial relationship covering IQOS with Altria Group, Inc. in 2022. Following a robust science-based review, the U.S. Food and Drug Administration (the "FDA") has authorized the marketing of Swedish Match’s General snus and ZYNnicotine pouches and versions of PMI’s IQOS devices and consumables - the first-ever such authorizations in their respective categories. Versions of IQOS devices and consumables and General snus also obtained the first-ever Modified Risk Tobacco Product ("MRTP") authorizations from the FDA. We describe the MRTP orders in more detail in the "Business Environment" section of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A").
Current wording
We are a leading international consumer goods company, actively delivering a smoke-free future. We are evolving our portfolio for the long term to include products outside of the tobacco and nicotine sector. Our current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, nicotine pouch and e-vapor products. Since 2008, we have invested over $16 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke or use other nicotine-containing consumer products, with the goal of completely ending the sale of cigarettes. This investment includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. In November 2022, we acquired Swedish Match AB ("Swedish Match") – a leader in oral nicotine delivery – creating a global smoke-free combination led by the companies’IQOS and ZYN brands. As of April 30, 2024, we hold the full rights to commercialize IQOS in the U.S. after reaching an agreement to end our U.S. commercial relationship covering IQOS with Altria Group, Inc. in 2022. Following a robust science-based review, the U.S. Food and Drug Administration (the "FDA") has authorized the marketing of Swedish Match’s General snus and ZYNnicotine pouches and versions of PMI’s IQOS devices and consumables - the first-ever such authorizations in their respective categories. Versions of IQOS devices and consumables, General snus and 20 ZYN nicotine pouch variants also obtained the first-ever Modified Risk Tobacco Product ("MRTP") authorizations from the FDA. We describe the MRTP orders in more detail in the "Business Environment" section of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A").
Previous wording
Smoke-Free Business ("SFB”) is the term PMI uses to refer to all of its smoke-free products. SFB also includes wellness products, as well as consumer accessories, such as lighters and matches.
Current wording
Smoke-Free Business ("SFB”) is the term PMI uses to refer to all of its smoke-free products. SFB also includes wellness products, as well as consumer accessories.
Previous wording
IQOS, ZYN and VEEV are the leading brands in our SFPs portfolio. As of March 31, 2026, our smoke-free products were available for sale in 108 markets.
Current wording
IQOS, ZYN and VEEV are the leading brands in our SFPs portfolio. As of June 30, 2026, our smoke-free products were available for sale in 109 markets.
Previous wording
During the quarter, net revenues increased by 9.1%. Net revenues, excluding currency, increased by 2.7%, mainly reflecting: a favorable pricing variance mainly driven by International Combustibles; partly offset by an unfavorable volume/mix/other, mainly driven by lower International Combustibles and U.S. volumes, notwithstanding higher International Smoke-Free volumes.
Current wording
For the six months ended June 30, 2026, net revenues increased by 9.8%. Net revenues, excluding currency and acquisitions/divestitures, increased by 5.3%, mainly reflecting: a favorable pricing variance mainly driven by international combustibles; partly offset by unfavorable volume/mix, mainly driven by lower international combustibles and U.S. volumes, notwithstanding higher international smoke-free volumes.
Previous wording
•Diluted Earnings Per Share - The changes in our diluted earnings per share (“diluted EPS”) for the three months ended March 31, 2026, from the comparable 2025 amounts, were as follows:
Current wording
•Diluted Earnings Per Share - The changes in our reported diluted earnings per share (“diluted EPS”) for the six months ended June 30, 2026, from the comparable 2025 amounts, were as follows:
Previous wording
Fair value adjustment for equity security investments –During the first quarter of 2025 and 2026, we recorded fair value adjustments for our equity security investments in India and Sri Lanka of $143 million gain after tax (or $0.09 per share increase in diluted EPS) and $338 million loss after tax (or $0.22 per share decrease in diluted EPS), respectively. For further details, see Note 13. Related Parties - Equity Investments and Other.
Current wording
Fair value adjustment for equity security investments –During the six months ended June 30, 2025 and 2026, we recorded fair value adjustments for our equity security investments in India and Sri Lanka of $410 million gain after tax (or $0.26 per share increase in diluted EPS) and $240 million loss after tax (or $0.16 per share decrease in diluted EPS), respectively. For further details, see Note 13. Related Parties - Equity Investments and Other.
Previous wording
Currency– The favorable impact of $0.18 per share from currency over the comparable 2025 period primarily results from the fluctuations of the U.S. dollar, especially against the Euro and Russian ruble, partly offset by the Japanese yen and Swiss franc. This favorable currency movement has impacted our profitability across our primary revenue markets and local currency cost bases.
Current wording
Currency– The favorable impact of $0.22 per share from currency over the comparable 2025 period primarily results from the fluctuations of the U.S. dollar, especially against the Euro and Russian ruble, partly offset by the Japanese yen and Swiss franc. This favorable currency movement has impacted our profitability across our primary revenue markets and local currency cost bases.
Previous wording
Operations – The increase in diluted EPS of $0.03 from our operations in the table above was due primarily to the following:
Current wording
Operations – The increase in diluted EPS of $0.21 from our operations in the table above was due primarily to the following:
Previous wording
•International Smoke-Free segment: Favorable volume/mix/other and favorable pricing;
Current wording
•International Smoke-Free segment: Favorable volume/mix and favorable pricing; and
Previous wording
•International Combustibles segment: Favorable pricing, partly offset by unfavorable volume/mix/other, including the favorable impact related to the restructuring of distribution terms in certain markets this quarter;
Current wording
•International Combustibles segment: Favorable pricing, partly offset by unfavorable volume/mix;
Previous wording
•U.S. segment: Unfavorable volume/mix/other, unfavorable pricing (mainly driven by increased consumer promotions) and higher manufacturing costs; and
Current wording
•U.S. segment: Unfavorable volume/mix, unfavorable pricing and higher manufacturing costs; and
Previous wording
•Net Revenues - Net revenues of $10.1 billion for the three months ended March 31, 2026, increased by $0.8 billion, or 9.1%, from the comparable 2025 amount. The change in our net revenues from the comparable 2025 amount was driven by the following (variances not to scale with quarterly results):
Current wording
•Net Revenues - Net revenues of $11.2 billion for the three months ended June 30, 2026, increased by $1.1 billion, or 10.4%, from the comparable 2025 amount. The change in our net revenues from the comparable 2025 amount was driven by the following (variances not to scale with quarterly results):
Previous wording
Restructuring charges –During the first quarter of 2026, we recorded pre-tax restructuring charges of $24 million(representing $19 millionnet of income tax and a diluted EPS charge of$0.01 per share), related to a series of footprint optimization initiatives in the U.S. For further details, see Note 15. Restructuring Activities.
Current wording
Restructuring charges – During the second quarter of 2025, we recorded pre-tax restructuring charges of $243 million (representing $200 million net of income tax and a diluted EPS charge of $0.13 per share), related to the end of combustible tobacco production in two of our factories in Germany. For further details, see Note 15. Restructuring Activities.
Previous wording
Amortization of intangibles –During the first quarter of 2025 and 2026, we recorded amortization of intangible expense of $246 million (representing $191 million net of income tax or $0.12 per share decrease in diluted EPS) and $251 million (representing $196 million net of income tax or $0.12 per share decrease in diluted EPS), respectively.
Current wording
Amortization of intangibles –During the second quarter of 2025 and 2026, we recorded amortization of intangibles expense of $250 million (representing $194 million net of income tax or $0.12 per share decrease in diluted EPS) and $252 million (representing $196 million net of income tax or $0.13 per share decrease in diluted EPS), respectively.
Previous wording
Income taxes – The income tax impact associated with the Swedish Match acquisition financing that increased our 2025 diluted EPS by $0.06 and decreased our 2026 diluted EPS by $0.05 in the table above was due to a deferred tax impact for unrealized foreign currency gains and losses on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings, while the underlying pre-tax foreign currency movements fully offset in the condensed consolidated statements of earnings and were reflected as currency translation adjustments in the condensed consolidated statements of stockholders' (deficit) equity.
Current wording
Income taxes – The income tax impact associated with the Swedish Match acquisition financing that increased our 2025 diluted EPS by $0.18 and decreased our 2026 diluted EPS by $0.01 in the table above was due to a deferred tax impact for unrealized foreign currency gains and losses on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings, while the underlying pre-tax foreign currency movements fully offset in the condensed consolidated statements of earnings and were reflected as currency translation adjustments in the condensed consolidated statements of stockholders' (deficit) equity.
Previous wording
The change in the tax rate that increased our diluted EPS by $0.06 per share in the table above was primarily driven by a reduction in tax costs associated with global intangible low-taxed income and discrete tax benefits recognized during the period.
Current wording
The change in the tax rate that increased our diluted EPS by $0.05 per share in the table above was primarily driven by a reduction in tax costs associated with global intangible low-taxed income and discrete tax benefits recognized during the period.
Previous wording
See pages 70 -82 for a discussion of our "Cautionary Factors That May Affect Future Results." Net revenues, cost of sales and gross profit by segment, as well as total significant expenses and operating income were as follows:
Current wording
See pages 77 -88 for a discussion of our "Cautionary Factors That May Affect Future Results." Net revenues, cost of sales and gross profit by segment, as well as total significant expenses and operating income were as follows:
Previous wording
•Restructuring charges – See Note 15. Restructuring Activities for details of the $24 million pre-tax charges included in marketing, administration and research costs for the three months ended March 31, 2026.
Current wording
•Restructuring charges – See Note 15. Restructuring Activities for details of the pre-tax charges included in marketing, administration and research costs for the six months and three months ended June 30, 2026 and 2025.
Previous wording
Net revenues related to smoke-free, excluding wellness, refer to the operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes, if applicable. These net revenue amounts consist of the sale of our products that are not combustible tobacco products, such as heat-not-burn, e-vapor, and oral products, as well as consumer accessories. Net revenues related to wellness refer to the operating revenues generated from the sale of product, primarily associated with oral and intra-oral delivery systems.
Current wording
Net revenues related to smoke-free, excluding wellness, refer to the operating revenues generated from the sale of these products, including shipping and handling charges billed to customers, net of sales and promotion incentives, and excise taxes, if applicable. These net revenue amounts consist of the sale of our products that are not combustible tobacco products, such as heat-not-burn, e-vapor, and oral products, as well as consumer accessories. Net revenues related to wellness refer to the operating revenues generated from the sale of products, primarily associated with oral and intra-oral delivery systems.
Previous wording
Following the deconsolidation of our Canadian subsidiary, we continue to report the volume and corresponding royalty revenues of brands sold by RBH for which other PMI subsidiaries are the trademark owners. These include Next, TEREA and VEEV. The volume and corresponding royalty revenues of these brands sold by RBH were not material to PMI for all periods presented.
Current wording
Following the deconsolidation of our Canadian subsidiary, we continue to report the volume and corresponding royalty revenues of brands sold by RBH for which other PMI subsidiaries are the trademark owners. These include Next, Parliament, TEREA and VEEV. The volume and corresponding royalty revenues of these brands sold by RBH were not material to PMI for all periods presented.
Previous wording
Heated tobacco units ("HTUs") is the term we use to refer to heated tobacco consumables, which include our BLENDS, DELIA, HEETSand HEETS Creations(defined collectively as HEETS), SENTIA, TEREA, TEREA CRAFTEDand TEREA Dimensions, as well as the KT&G-licensed brands, Fiit and Miix (outside of South Korea). HTUs also include zero tobacco heat-not-burn consumables (LEVIA).
Current wording
Heated tobacco units ("HTUs") is the term we use to refer to heated tobacco consumables, which include our BLENDS, DELIA, HEETSand HEETS Creations(defined collectively as HEETS), SENTIA, TEREA, TEREA CRAFTEDand TEREA Dimensions, as well as the KT&G-licensed brands, Fiit and Miix (outside of South Korea). HTUs also include zero tobacco heat-not-burn consumables (BEYOND and LEVIA).
Previous wording
Oral smoke-free product volume excludes snuff, snuff leaf and U.S. chew and is measured in cans or, for the purposes of total shipment volumes, in pouches or pouch equivalents.
Current wording
Oral smoke-free product volume excludes snuff, snuff leaf and U.S. chew.
Previous wording
Total industry volume, PMI in-market sales volume and PMI market share for the the total international market, and Japanese domestic market include the cigarillo category in Japan.
Current wording
Total industry volume, PMI in-market sales volume and PMI market share for the total international market, and Japanese domestic market include the cigarillo category in Japan.
Previous wording
E-vapor products conversion: one milliliter of e-vapor liquid equivalent to 10 units.
Current wording
Note: Amounts may not foot due to rounding. Oral smoke-free products conversion: 1 pouch equals 1 unit. E-vapor products conversion: one milliliter of e-vapor liquid is equivalent to 10 units.
Previous wording
Our shipment volume, including cigarettes and smoke-free products (in equivalent units), decreased by 1.9% with cigarette volumes down by 5.1%, partly offset by smoke-free volumes, up by 9.1%, driven by HTU and E-vapor categories.
Current wording
Our shipment volume, including cigarettes and smoke-free products (in equivalent units), increased by 0.4% with smoke-free volumes, up by 8.3%, driven by HTU and E-vapor categories, partly offset by cigarette volumes, down by 1.9%.
Previous wording
For the full year 2026, we currently expect a broadly stable total PMI cigarette and SFP shipment volume, with high-single digit SFP shipment volume growth, and a cigarette shipment volume decline of around 3%.
Current wording
For the full year 2026, we currently expect a broadly stable to slightly growing (previously broadly stable) total PMI cigarette and SFP shipment volume, with high-single digit SFP shipment volume growth, and a cigarette shipment volume decline of 2% to 3%, (previously around 3%).
Previous wording
(1) Cost variance includes charges in 2026 of $24 million related to restructuring charges. For more details, see Note 15. Restructuring Activities.
Current wording
(1) Cost variance includes charges in 2026 and 2025 of $30 million and $243 million, respectively, related to restructuring charges. For more details, see Note 15. Restructuring Activities.
Previous wording
During the quarter, net revenues increased by 9.1%. Net revenues, excluding currency, increased by 2.7%, mainly reflecting: a favorable pricing variance mainly driven by International Combustibles; partly offset by an unfavorable volume/mix/other, mainly driven by lower International Combustibles and U.S. volumes, notwithstanding higher International Smoke-Free volumes.
Current wording
For the six months ended June 30, 2026, net revenues increased by 9.8%. Net revenues, excluding currency and acquisitions/divestitures, increased by 5.3%, mainly reflecting: a favorable pricing variance mainly driven by international combustibles; partly offset by unfavorable volume/mix, mainly driven by lower international combustibles and U.S. volumes, notwithstanding higher international smoke-free volumes.
Previous wording
The favorable currency impact in net revenues was due primarily to the Euro and Russian ruble.
Current wording
The favorable currency impact in net revenues was due primarily to the Euro and Russian ruble, partly offset by the Japanese yen.
Previous wording
Operating income increased by 9.8%. Operating income, excluding currency, increased by 0.2%, mainly reflecting: the same factors as for net revenues, and higher marketing, administration and research costs.
Current wording
Operating income increased by 16.1%. Operating income, excluding currency and acquisitions/divestitures, increased by 10.4%, mainly reflecting: the same factors as for net revenues and lower restructuring charges in 2026, partially offset by higher marketing, administration and research costs.
Previous wording
Our effective tax rate decreased by 1.5 percentage points to 18.5%. We estimate that our 2026 effective tax rate will be around 21.5%, excluding discrete tax events. For further details, see Note 10. Income Taxes.
Current wording
Our effective tax rate increased by 1.0 percentage point to 20.5%. We estimate that our 2026 effective tax rate will be around 21.5%, excluding discrete tax events. For further details, see Note 10. Income Taxes.
Previous wording
Equity investments and securities (income)/loss net was a loss of $403 million in 2026 compared to income of $(205) million in 2025. The variance was primarily due to the unfavorable fair value adjustments for our equity security investments in India and Sri Lanka. For further details, see Note 13. Related Parties - Equity Investments and Other.
Current wording
Equity investments and securities (income)/loss net was a loss of $244 million in 2026 compared to income of $(581) million in 2025. The variance was primarily due to the unfavorable fair value adjustments for our equity security investments in India and Sri Lanka. For further details, see Note 13. Related Parties - Equity Investments and Other.
Previous wording
Net earnings attributable to PMI of $2.4 billion decreased by $0.3 billion or 9.4%. This decrease was due primarily to unfavorable fair value adjustments for our equity security investments mentioned above, partly offset by a higher operating income. Basic and diluted EPS of $1.56 both decreased by 9.3%. Excluding a favorable currency impact of $0.18, diluted EPS decreased by 19.8%.
Current wording
Net earnings attributable to PMI of $5.3 billion decreased by $0.5 billion or 8.3%. This decrease was primarily due to the unfavorable fair value adjustments for our equity security investments, the non-cash impairment charge related to our RBH equity investment and a higher effective tax rate, partly offset by higher operating income and lower interest expense, net. Basic and diluted EPS of $3.36 both decreased by 8.4%. Excluding a favorable currency impact of $0.22, diluted EPS decreased by 14.4%.
Previous wording
During the quarter, estimated industry volume (excluding China and the U.S.) for cigarettes and HTUs declined by 1.0%.
Current wording
During the quarter, estimated industry volume (excluding China and the U.S.) for cigarettes and HTUs increased by 0.8%.
Previous wording
Segment Operating Results – Three Months Ended March 31, 2026
Current wording
Segment Operating Results – Three Months and Six Months Ended June 30, 2026
Previous wording
The following discussion compares operating results within each of our segments for the three months ended March 31, 2026, with the three months ended March 31, 2025.
Current wording
The following discussion compares operating results within each of our segments for the three months and six months ended June 30, 2026, with the three months and six months ended June 30, 2025.
Previous wording
During the quarter, net revenues increased by 24.7%. Net revenues, excluding currency, increased by 15.8%, reflecting: favorable volume/mix/other driven by higher HTU and e-vapor volumes and a favorable pricing variance due to higher HTU pricing.
Current wording
During the quarter, net revenues increased by 14.2%. Net revenues, excluding currency and acquisitions/divestitures, increased by 11.8%, reflecting: a favorable volume/mix driven by higher HTU and e-vapor volumes and a favorable pricing variance due to HTUs.
Previous wording
The net revenues for 2024, 2025 and 2026 were negatively impacted by the supplemental tax surcharge on heated tobacco products ("HTPs") in Germany, which went into effect in 2022. On March 14, 2024, the Court of Justice of the European Union (the "CJEU") ruled that the German fiscal regulation imposing an additional excise tax on HTPs does not contravene EU law. On May 15, 2024, following the decision issued by CJEU, the Fiscal Court in Dusseldorf (the "FCD") also ruled that the German fiscal regulation imposing an additional excise tax on HTPs does not contravene EU law. The FCD admitted an appeal to the Federal Tax Court. On June 19, 2024, PMI submitted an appeal. The negative impact will continue, at least until the appeal ruling on the legality of the surcharge is concluded. PMI currently accounts for the surcharge as a reduction in net revenues. The amounts withdrawn before May 15, 2024, were under a payment suspension. Despite this payment suspension and, in order to avoid the future addition of interest, PMI elected, on January 14, 2025, to pay the amount outstanding of EUR 721 million (approximately $751 million), excluding accrued interest. An unfavorable outcome to the appeal would negatively impact PMI’s future cash provided by operating activities for the amounts of unpaid interest. A favorable outcome to the appeal would positively impact future PMI’s operating results and future cash provided by operating activities for the amounts paid in January 2025.
Current wording
The net revenues for 2024, 2025 and 2026 were negatively impacted by the supplemental tax surcharge on heated tobacco products ("HTPs") in Germany, which went into effect in 2022. On March 14, 2024, the Court of Justice of the European Union (the "CJEU") ruled that the German fiscal regulation imposing an additional excise tax on HTPs does not contravene EU law. On May 15, 2024, following the decision issued by the CJEU, the Fiscal Court in Dusseldorf (the "FCD") also ruled that the German fiscal regulation imposing an additional excise tax on HTPs does not contravene EU law. The FCD admitted an appeal to the Federal Tax Court. On June 19, 2024, PMI submitted an appeal. The negative impact will continue, at least until the appeal ruling on the legality of the surcharge is concluded. PMI currently accounts for the surcharge as a reduction in net revenues. The amounts withdrawn before May 15, 2024 were under a payment suspension. Despite this payment suspension and, in order to avoid the future addition of interest, PMI elected, on January 14, 2025, to pay the amount outstanding of EUR 721 million (approximately $751 million), excluding accrued interest. An unfavorable outcome to the appeal would negatively impact PMI’s future cash provided by operating activities for the amounts of unpaid interest. A favorable outcome to the appeal would positively impact PMI’s future operating results and future cash provided by operating activities for the amounts paid in January 2025.
Previous wording
In the Oral Smoke-Free category, modern oral volume growth of 0.5 billion pouches was more than offset by snus declines in the Nordics, resulting in a total oral SFP shipment volume decrease of 5.1%.
Current wording
In the Oral Smoke-Free category, modern oral volume growth of 14.7% (26.3% excluding the Nordics) to 0.6 billion pouches was more than offset by continued declines in the legacy snus business in the Nordics, resulting in a total oral SFP volume decrease of 7.0%.
Previous wording
During the quarter, net revenues decreased by 30.8%. Net revenues, excluding currency, decreased by 31.6%, reflecting: lower ZYN volumes due to distributor and trade inventory movements in both the current and prior year periods and an unfavorable price comparison due to low levels of ZYN promotional activity in the prior year.
Current wording
For the six months ended June 30, 2026, net revenues decreased by 16.1%. Net revenues, excluding currency and acquisitions/divestitures, decreased by 16.5%, reflecting: unfavorable dynamics in the first quarter with ZYN volumes impacted by distributor and trade inventory movements and an unfavorable price comparison due to low levels of ZYN promotional activity in the prior year.
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Rearranged current paragraphs (20)
Current report — wording carried from elsewhere
•Net Revenues - Net revenues of $21.3 billion for the six months ended June 30, 2026, increased by $1.9 billion, or 9.8%, from the comparable 2025 amount. The change in our net revenues from the comparable 2025 amount was driven by the following (variances not to scale with year-to-date results):
Current report — wording carried from elsewhere
Net revenues by product category for the six months ended June 30, 2026 and 2025 are shown below:
Current report — wording carried from elsewhere
Restructuring charges – During the six months ended June 30, 2025, we recorded pre-tax restructuring charges of $243 million (representing $200 million net of income tax and a diluted EPS charge of $0.13 per share), related to the end of combustible tobacco production in two of our factories in Germany. During the six months ended June 30, 2026, we recorded pre-tax restructuring charges of $30 million(representing $24 millionnet of income tax and a diluted EPS charge of$0.01 per share), related to a series of footprint optimization initiatives in the U.S. For further details, see Note 15. Restructuring Activities.
Current report — wording carried from elsewhere
Income taxes – The income tax impact associated with the Swedish Match acquisition financing that increased our 2025 diluted EPS by $0.24 per share and decreased our 2026 diluted EPS by $0.06 per share in the table above was due to a deferred tax impact for unrealized foreign currency gains and losses on intercompany loans related to the Swedish Match acquisition financing reflected in the condensed consolidated statements of earnings, while the underlying pre-tax foreign currency movements fully offset in the condensed consolidated statements of earnings and were reflected as currency translation adjustments in the condensed consolidated statements of stockholders' (deficit) equity.
Current report — wording carried from elsewhere
The change in the tax rate that increased our diluted EPS by $0.11 per share in the table above was primarily driven by a reduction in tax costs associated with global intangible low-taxed income and discrete tax benefits recognized during the period. For further details, see Note 10. Income Taxes.
Current report — wording carried from elsewhere
•Diluted Earnings Per Share - The changes in our diluted EPS for the three months ended June 30, 2026, from the comparable 2025 amounts, were as follows:
Current report — wording carried from elsewhere
Fair value adjustment for equity security investments –During the second quarter of 2025 and 2026, we recorded fair value adjustments for our equity security investments in India and Sri Lanka of $267 million gain after tax (or $0.17 per share increase in diluted EPS) and $98 million gain after tax (or $0.06 per share increase in diluted EPS), respectively. For further details, see Note 13. Related Parties - Equity Investments and Other.
Current report — wording carried from elsewhere
Currency– The favorable impact of $0.03 per share from currency over the comparable 2025 period primarily results from the fluctuations of the U.S. dollar, especially against the Euro and the Russian ruble. This favorable currency movement has impacted our profitability across our primary revenue markets and local currency cost bases.
Current report — wording carried from elsewhere
Operations – The increase in diluted EPS of $0.19 from our operations in the table above was due primarily to the following:
Current report — wording carried from elsewhere
•International Smoke-Free segment: Favorable volume/mix and favorable pricing; and
Current report — wording carried from elsewhere
•International Combustibles segment: Favorable pricing, partly offset by unfavorable mix;
Current report — wording carried from elsewhere
•Higher marketing, administration and research costs.
Current report — wording carried from elsewhere
Estimated industry volume (excluding China and the U.S.) for cigarettes and HTUs declined by 0.4%.
Current report — wording carried from elsewhere
Our shipment volume for cigarettes and smoke-free products is shown in the table below:
Current report — wording carried from elsewhere
(1) Cost variance includes charges in 2026 and 2025 of $6 million and $243 million, respectively, related to restructuring charges. For more details, see Note 15. Restructuring Activities.
Current report — wording carried from elsewhere
The favorable currency impact in net revenues was due primarily to the Euro and Russian ruble, partly offset by the Japanese yen.
Current report — wording carried from elsewhere
Equity investments and securities (income)/loss net was income of $(159) million in 2026 compared to income of $(376) million in 2025. The variance was primarily due to the fair value adjustments for our equity security investments in India and Sri Lanka. For further details, see Note 13. Related Parties - Equity Investments and Other.
Current report — wording carried from elsewhere
We believe that such tax policies undermine public health by encouraging consumers to turn to illicit trade or negatively impact the transition of adult smokers to SFPs, and ultimately undercut government revenue objectives, disrupt the competitive environment, and encourage criminal activity. Other jurisdictions have imposed, or are seeking to impose, levies or other taxes specifically on tobacco companies, such as taxes on revenues and/or profits.
Current report — wording carried from elsewhere
EU law, which, if allowed, could lead to a de facto ban on manufactured cigarettes in the Netherlands and, potentially, in other EU countries. In addition, at its meeting in November 2016, the CoP adopted non-binding guidelines recommending that countries regulate product design features that increase the attractiveness of tobacco products, such as the diameter of cigarettes and the use of flavor capsules.
Current report — wording carried from elsewhere
The outcomes of these matters may affect our SFP commercialization and public communication activities and performance in one or more markets. Also, see Note 9. Contingencies to our condensed consolidated financial statements for a discussion of pending litigation.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
This publication indicates that significant reductions in the levels of selected toxicants are likely to reduce toxicant exposure, which BfR stated might be regarded as a discrete benefit compared to combustible cigarettes.
Previous report — wording carried elsewhere
(1) On April 14, 2026, Moody’s revised PMI's outlook from "Stable" to "Positive".
Previous report — wording carried elsewhere
for a description of certain intellectual property proceedings.