Philip Morris International Inc
PM · NYSE
Next quarter
Reports Oct 20, 2026.
Consensus is $2.34 EPS for Sep 2026 across 1 estimates, ranging $2.34 to $2.34.
PM Jun 2026
- 7.84%
- -1.64%
- $2.04
- $2.20
- —
- $11.19B
Reported results
- $11.19B
- 68.43%
- $4.53B
- 40.48%
- $2.82B
- $1.80
Highlights
- Adjusted EPS: Second-quarter adjusted diluted EPS was $2.20, 7.8% above the $2.04 consensus and up 15.2% from $1.91 a year ago; excluding currency, adjusted EPS rose 13.6% to $2.17.
- Revenue growth: Net revenue increased 10.4% year over year to $11.19 billion, or 7.6% excluding currency and acquisitions/divestitures, versus $10.14 billion in Q2 2025 and $10.15 billion in Q1 2026.
- International engine: International revenue rose 11.4% to $10.34 billion, with organic growth of 8.4%; International Smoke-Free grew 11.8% organically to $3.88 billion and International Combustibles grew 6.4% to $6.46 billion.
- Smoke-free mix: Total smoke-free revenue increased 11.7% to $4.65 billion, including 9.7% organic growth, while its adjusted gross margin expanded 1.7 percentage points to 70.0%.
- U.S. weakness: U.S. revenue declined 0.9% organically to $855 million, and adjusted Operating Companies Income fell 19.1% to $279 million; U.S. smoke-free revenue was broadly flat organically at $767 million.
- Operating leverage: Operating income grew 22.0% to $4.53 billion, while adjusted operating income rose 12.4% to $4.77 billion; adjusted operating margin expanded 0.7 percentage points to 42.6%.
- RBH charge: GAAP net income attributable to PMI fell 7.3% to $2.82 billion and GAAP diluted EPS declined to $1.80 from $1.95, reflecting a $511 million impairment related to the RBH equity investment.
- Cash generation: Six-month operating cash flow was $5.09 billion, up from $3.06 billion a year earlier, against $733 million of capital spending and $4.60 billion of dividends paid.
Analysis
Philip Morris delivered a strong second quarter on the measure investors were watching: adjusted diluted EPS of $2.20 exceeded the $2.04 consensus by 7.8% and increased 15.2% from $1.91 a year ago. Revenue of $11.19 billion rose 10.4% year over year and 7.6% on a currency-neutral, acquisition-adjusted basis. Operating income reached $4.53 billion, up 22.0%, while adjusted operating income rose 12.4% to $4.77 billion. Sequentially, revenue increased from $10.15 billion in Q1, operating income from $3.89 billion and net income from $2.44 billion.
The print was defined by continued international momentum, improving smoke-free economics and a sharp U.S. contrast. International revenue grew 8.4% organically, led by International Smoke-Free at 11.8%, while total smoke-free revenue rose 9.7% organically and expanded adjusted gross margin by 1.7 percentage points to 70.0%. The U.S. remained the weak spot: revenue declined 0.9% organically and adjusted OCI fell 19.1% to $279 million. GAAP earnings were reduced by a $511 million RBH equity-investment impairment, driving reported EPS down to $1.80 from $1.95 despite the underlying adjusted beat.
Adjusted earnings beat
- Adjusted EPS: Adjusted diluted EPS increased 15.2% to $2.20 from $1.91, beating the $2.04 consensus by $0.16, or 7.8%. Excluding currency, adjusted EPS was $2.17, up 13.6% year over year.
- GAAP bridge: Reported diluted EPS was $1.80 versus $1.95 a year ago. The quarter included a $0.33-per-share impairment related to the RBH equity investment, while $0.13 of amortization and a $0.06 fair-value adjustment also affected the reconciliation.
- Sequential trend: Reported EPS increased from $1.56 in Q1 2026, while net income attributable to PMI rose 15.5% sequentially to $2.82 billion.
International smoke-free
- Smoke-free revenue: International Smoke-Free revenue rose 14.2% to $3.88 billion, or 11.8% excluding currency and acquisitions/divestitures. Adjusted gross profit increased 14.6% to $2.72 billion and adjusted gross margin reached 70.0%, up 1.7 percentage points.
- International portfolio: International revenue grew 11.4% to $10.34 billion, including 8.4% organic growth. International Combustibles revenue rose 9.8% to $6.46 billion, or 6.4% organically.
- Profit contribution: International OCI increased 25.0% to $4.61 billion, or 22.4% excluding currency and acquisitions/divestitures. Adjusted International OCI rose 15.5% to $4.64 billion, with margin supported by $674 million of price and $173 million of volume/mix/other benefits, partly offset by $20 million of higher costs.
U.S. performance
- Revenue: U.S. revenue declined 0.7% to $855 million, or 0.9% on both currency-neutral and acquisition-adjusted bases. U.S. smoke-free revenue increased just 0.1% organically to $767 million, while wellness revenue declined 3.8% organically to $55 million.
- Profitability: U.S. gross profit declined 8.9% to $561 million and adjusted OCI fell 20.8% to $279 million, or 19.1% excluding currency and acquisitions/divestitures.
- Underlying pressure: The U.S. profit decline reflected $65 million of unfavorable volume/mix/other effects and $24 million of higher costs, partly offset by $15 million of pricing benefit. The U.S. includes the wellness business Aspeya under PMI’s 2026 reporting structure.
Margins and cash flow
- Consolidated margins: Adjusted gross profit rose 11.5% to $7.67 billion, lifting adjusted gross margin 0.7 percentage points to 68.5%. Adjusted operating income increased 12.4% to $4.77 billion and adjusted operating margin expanded 0.7 points to 42.6%.
- Cash generation: Operating cash flow for the first six months was $5.09 billion, compared with $3.06 billion in the prior-year period. Working-capital outflows included $690 million from receivables and $284 million from accounts payable.
- Capital returns: Six-month capital expenditures were $733 million and dividends paid were $4.60 billion. Cash and cash equivalents stood at $6.00 billion at June 30, versus $4.87 billion at December 31, 2025.
RBH impairment
- Non-operating charge: PMI recorded a $511 million impairment related to its RBH equity investment in the quarter. The charge reduced net income attributable to PMI to $2.82 billion from $3.04 billion a year earlier despite higher operating income.
- Balance-sheet context: Equity investments declined to $2.13 billion at June 30 from $2.89 billion at year-end, while total liabilities declined to $74.93 billion from $77.21 billion.
