Philip Morris Q3 adjusted EPS rises 5.4% to $2.36 as shipments rise

Philip Morris International Inc. (PM) reported third-quarter 2026 net revenues of $11.4 billion on Wednesday, up 5.5% from a year earlier. The company said the quarter set a new record for net revenue, gross profit and operating income.

Reported diluted earnings per share fell 4.9% to $2.12, mainly because of a non-cash fair value adjustment for equity security investments, the company said in a regulatory filing.

Adjusted diluted EPS grew 5.4% to $2.36, or 5.8% excluding a one-cent unfavorable currency impact.

Group CEO Jacek Olczak said: “We delivered another excellent quarter, with growing total volumes, double-digit organic operating income growth and robust margin expansion.”

The company also raised its regular quarterly dividend by 8.8% to $1.60 per share, or an annualized $6.40 per share.

Here's how the company did:

• Adjusted diluted EPS: $2.36 vs. $2.24 a year earlier

• Reported diluted EPS: $2.12 vs. $2.23 a year earlier

• Net revenues: $11,438 million vs. $10,845 million a year earlier

• Operating income: $4,866 million vs. $4,263 million a year earlier

Excluding currency and acquisitions and divestitures, organic net revenue growth was 7.1%, and organic operating income growth was 10.5%.

Shipments rose 0.6% to 206.2 billion equivalent units, with smoke-free product shipments up 2.7%.

Smoke-free products accounted for more than 40% of total net revenues in the quarter, and around 42% for the first nine months. The company said its smoke-free products are now available in 110 markets.

Gross profit rose 6.7% to $7.9 billion. Operating cash flow was $5.35 billion, up 19.9% from a year earlier.

For the first nine months, net revenues were $32.8 billion, up 8.2%. Adjusted diluted EPS rose 11.8% to $6.52, while reported diluted EPS fell 7.0% to $5.48.

Segment results

International Smoke-Free net revenues were $3.9 billion, up 0.7% from a year earlier and up 3.4% organically. Shipments in the segment rose 2.7%.

IQOS heated tobacco unit shipments grew 1.5% to 41.5 billion units. Adjusted in-market sales of heated tobacco units grew 7.1%.

E-vapor shipments rose 61.6%, led by growth in Europe, the company said.

International Combustibles net revenues were $6.7 billion, up 6.5% from a year earlier and up 7.8% organically. Cigarette volume was broadly flat, and pricing contributed 8.9%.

The company said a favorable restructuring of distribution terms in certain markets benefited the quarter and is not expected to recur at the same level in future quarters.

U.S. net revenues were $845 million, up 22.7%. Total ZYN shipments grew 4.2% to 3.2 billion pouches.

U.S. operating companies income fell 3.3%, or rose 1.5% organically, including higher commercial investments. The company plans to increase investments in the fourth quarter and move most ZYN flagship products to 20-pouch cans from 15-pouch cans.

On Aug. 21, the FDA granted PMTA authorization to 11 variants of ZYN ULTRA. ZYN now has PMTA authorization for 31 variants in total.

Full-year outlook

The company now forecasts 2026 reported diluted EPS of $7.11 to $7.26. It forecasts adjusted diluted EPS of $8.29 to $8.44, up 9.9% to 11.9% from $7.54 in 2025.

The currency impact in the forecast is now $0.18, down from $0.24 previously. Excluding currency, the adjusted forecast is $8.11 to $8.26.

The company expects organic net revenue growth of 5% to 7%, with a greater likelihood of landing in the middle or upper half of the range. It expects organic operating income growth of 7% to 9%, with a greater likelihood of landing in the middle or lower half.

The forecast also assumes operating cash flow of around $13.5 billion and capital expenditures of $1.4 billion to $1.6 billion. The company assumes no share repurchases.

The company targets a net debt to adjusted EBITDA ratio close to 2.0x by the end of 2026, from 2.17 at September 30. Olczak said the company is “firmly on track for a sixth consecutive year of volume growth.”

The company said the Middle East conflict has had an increasing effect on its business, with energy-related inflation driving higher costs in the third quarter. It also said strikes tied to the situation in Ukraine disrupted its supply chain and logistics and will affect operating income this year.