Philip Morris International Inc. (PM) Q3 2025 Earnings Call Transcript
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 21 2025
0mins
Should l Buy PM?
Source: SeekingAlpha
Quarterly Smoke-Free Gross Profit More than $3 billion, achieved for the first time, driven by double-digit smoke-free top-line momentum and cost benefits.
Adjusted Group Operating Income Margin Over 43%, the highest in almost 4 years, supported by smoke-free business growth and cost efficiencies.
Adjusted Diluted Earnings Per Share (EPS) $2.24, a 17% year-over-year growth, attributed to strong smoke-free business performance and favorable tax rates.
HTU Adjusted In-Market Sales Growth 9% in Q3, reflecting strong momentum in Europe, Japan, and Global Markets.
Heated Tobacco Unit (HTU) Shipment Growth 15.5% in Q3, driven by strong performance in Europe, Japan, and Global Markets.
ZYN U.S. Offtake Growth 39% in Q3, supported by enhanced marketing and promotional activities.
ZYN U.S. Shipments 37% growth to 205 million cans in Q3, driven by strong performance in the nicotine pouch category.
VEEV Shipments More than doubled year-to-date, with strong performances in Germany, Romania, and Greece.
Organic Top Line Growth 5.9% in Q3, or 7.3% excluding the Indonesia technical impact, driven by positive shipment volumes, strong smoke-free category mix, and pricing.
Adjusted Operating Income (OI) $4.7 billion in Q3, a 7.5% organic growth and 12.4% growth in dollar terms, supported by increasing profitability across smoke-free and combustibles.
Adjusted Diluted EPS Growth 17.3% in Q3, including a currency tailwind of $0.08, reflecting strong financial performance and favorable tax rates.
Organic Net Revenue Growth 7.5% year-to-date, or 9% excluding the Indonesia technical impact, driven by volumes, pricing, and mix.
Adjusted Operating Income Growth 12.5% year-to-date organically, close to 14% in dollar terms, reaching $12.7 billion.
Smoke-Free Volume Growth 16.6% in Q3, driven by strong fundamentals of IQOS, ZYN, and VEEV.
Cigarette Volume Decline 3.2% in Q3, reflecting better-than-expected dynamics in Turkey and Egypt.
Smoke-Free Net Revenue Growth 13.9% organically in Q3, with gross profit growth of 14.8%.
Gross Margin Expansion 170 basis points overall in Q3, reaching 67.9%, a record level since the pandemic recovery of 2021.
Smoke-Free Gross Margin Expansion 360 basis points year-to-date, driven by IQOS, ZYN, and VEEV.
Adjusted Operating Income Margin Expansion 60 basis points organically in Q3, or 120 basis points in dollar terms, reaching 43.1%.
ZYN Global Can Shipment Growth 36% in Q3, with strong growth in the U.S. and international markets.
VEEV Volume Growth 91% in Q3, driven by strong momentum and increasing operating leverage.
Combustible Pricing 8.3% in Q3, contributing to robust performance despite a 3% volume decline.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy PM?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on PM
Wall Street analysts forecast PM stock price to rise
11 Analyst Rating
8 Buy
3 Hold
0 Sell
Moderate Buy
Current: 188.950
Low
175.00
Averages
191.95
High
210.00
Current: 188.950
Low
175.00
Averages
191.95
High
210.00
About PM
Philip Morris International Inc. is an international tobacco company. The Company’s product portfolio primarily consists of cigarettes and smoke-free products. Its smoke-free business (SFB) also includes wellness and healthcare products, as well as consumer accessories, such as lighters and matches. The Company’s segments include Europe Region; South and Southeast Asia, Commonwealth of Independent States, Middle East and Africa Region (SSEA, CIS & MEA); East Asia, Australia & PMI Global Travel Retail (EA, AU & PMI GTR), and Americas Region. The Company's brands include Marlboro, HEETS, IQOS, IQOS ILUMA, TEREA, VEEV and ZYN. Its IQOS smoke-free product brand portfolio includes heated tobacco and nicotine-containing vapor products. Its international cigarette brands are Chesterfield, L&M, and Philip Morris. It also owns a number of local cigarette brands, such as Dji Sam Soe and Sampoerna A in Indonesia, and Fortune and Jackpot in the Philippines.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Consumer Staples Benefit from Market Rotation in 2026
- Sector Performance: In 2026, the consumer staples sector has surged over 15.5% in the S&P 500, becoming the third-best performing sector, indicating a growing investor preference for defensive stocks amid a market rotation.
- Valuation Surge: Wolfe Research noted that market-weighted valuations for consumer staples have reached their highest levels since the 1990s, reflecting increased investor confidence in the sector despite a lackluster overall market performance.
- Walmart's Market Position: Walmart's stock jumped 20% in 2026, allowing it to join the $1 trillion market cap club, showcasing its adaptability in the AI economy and solidifying its leading position in retail.
- Future Outlook: Analysts predict that as consumer demand rebounds in 2026, the fundamentals for the consumer staples sector are likely to improve, particularly with potential tax relief for lower-income households boosting product demand.
See More
Goldman Sachs Identifies Compelling Stocks Amid Market Volatility
- Teva's Positive Outlook: Goldman Sachs analysts assert that despite Teva's stock doubling over the past year, its current valuation remains attractive, and the company is on a rapidly ascending earnings trajectory, urging investors to remain calm and accumulate shares.
- Philip Morris's Successful Transformation: Goldman highlights that Philip Morris is transforming into a faster-growing and more profitable business, with shares up nearly 18% year-to-date, indicating significant upside potential as it delivers strong earnings growth.
- S&P Global's Strong Positioning: Although S&P Global's stock has declined 22% this year, analysts believe its strong AI positioning and durable long-term earnings power will drive organic revenue growth, with a revised price target lowered from $555 to $498.
- Nvidia's Market Focus: Goldman expects Nvidia to report strong results in its upcoming earnings, with investors keenly watching for insights into 2027 visibility and competitive dynamics, despite high expectations for outperformance.
See More
Analysis of UPRO ETF's 52-Week Price Fluctuations
- Price Range Analysis: UPRO ETF's 52-week low is $45.88 per share and high is $122.85, with the last trade at $113.91, indicating significant volatility over the past year and reflecting varying market expectations for its future performance.
- Technical Analysis Tool: Comparing the current share price to the 200-day moving average can provide investors with valuable insights for technical analysis, aiding in the assessment of market trends and potential buy or sell opportunities.
- ETF Unit Trading Mechanism: Exchange-traded funds (ETFs) trade similarly to stocks, where investors are buying and selling “units” that can be created or destroyed based on investor demand, impacting the ETF's liquidity and market performance.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding for ETFs helps identify those experiencing notable inflows (new units created) or outflows (old units destroyed), allowing for an assessment of their impact on underlying assets and shifts in market sentiment.
See More
India's E-Cigarette Ban Hinders Philip Morris Expansion Plans
- Ban Impacts Expansion: India's steadfast ban on e-cigarettes and heat-not-burn tobacco products has significantly hindered Philip Morris International's plans to launch IQOS in the Indian market, despite years of lobbying efforts.
- Unrealized Market Potential: Although India ranks as the seventh-largest cigarette market globally, Philip Morris executives discussed the long-term value creation potential of IQOS with state officials at Davos, but failed to secure an exemption, highlighting market resistance.
- Growth in Smoke-Free Products: Since 2014, Philip Morris's smoke-free products have attracted over 35 million users, with sales from 27 markets now accounting for over 50% of total revenue, indicating strong momentum in other markets.
- Strong Financial Performance: In fiscal 2025, Philip Morris's cigarette and heated tobacco unit shipment volume rose 1.7% to 379.6 billion units, with India contributing a remarkable 39.2% growth, showcasing the potential market opportunities in the region.
See More
Philip Morris International Conference Presentation Scheduled
- Conference Schedule: Philip Morris International will host a live audio webcast on February 18, 2026, at 10:00 AM ET during the CAGNY Conference, featuring Group CEO Jacek Olczak and CFO Emmanuel Babeau, which is expected to attract significant attention from investors and analysts.
- Portfolio Transformation: The company is committed to delivering a smoke-free future, with its current product portfolio including heat-not-burn, nicotine pouches, and e-vapor products, and by the end of 2025, over 43 million legal-age consumers globally are expected to use these smoke-free products, indicating a gradual shift away from traditional cigarettes.
- Revenue Contribution: As of 2025, the smoke-free business accounted for 41.5% of total net revenues, demonstrating significant financial achievements during the transformation process and laying a solid foundation for future growth.
- R&D Investment: Since 2008, Philip Morris has invested over $16 billion in developing and commercializing innovative smoke-free products, showcasing its strong capabilities in scientific assessment and market research, with the aim of completely ending cigarette sales.
See More
Philip Morris International's Positive Outlook for 2026
- Tobacco Product Growth: Philip Morris's smoke-free portfolio continued to drive performance in Q4, with Zyn nicotine pouch shipments rising 18% year-over-year and 20% in the U.S., indicating strong consumer demand for innovative tobacco products and further solidifying the company's market position in the tobacco industry.
- Robust Financial Performance: The company reported a 3.7% year-over-year organic revenue increase to $10.4 billion in Q4, with overall revenue climbing 6.8% and adjusted EPS rising 9.4% to $1.70, reflecting resilience and profitability amid market challenges.
- Positive Future Outlook: Philip Morris forecasts organic revenue growth of 5% to 7% in 2026, despite pressures from declining traditional cigarette volumes, while smoke-free product volumes are expected to rise by high single digits, showcasing the company's potential during its transformation.
- Strong Cash Flow Projections: The company anticipates generating $45 billion in operating cash flow over the next three years, with growth expected to accelerate in 2027 due to the end of taxation equalization in Japan for heated tobacco units and the launch of Iqos in the U.S., indicating strategic positioning in new market expansions.
See More
Consumer Staples Benefit from Market Rotation in 2026
- Sector Performance: In 2026, the consumer staples sector has surged over 15.5% in the S&P 500, becoming the third-best performing sector, indicating a growing investor preference for defensive stocks amid a market rotation.
- Valuation Surge: Wolfe Research noted that market-weighted valuations for consumer staples have reached their highest levels since the 1990s, reflecting increased investor confidence in the sector despite a lackluster overall market performance.
- Walmart's Market Position: Walmart's stock jumped 20% in 2026, allowing it to join the $1 trillion market cap club, showcasing its adaptability in the AI economy and solidifying its leading position in retail.
- Future Outlook: Analysts predict that as consumer demand rebounds in 2026, the fundamentals for the consumer staples sector are likely to improve, particularly with potential tax relief for lower-income households boosting product demand.
See More
Goldman Sachs Identifies Compelling Stocks Amid Market Volatility
- Teva's Positive Outlook: Goldman Sachs analysts assert that despite Teva's stock doubling over the past year, its current valuation remains attractive, and the company is on a rapidly ascending earnings trajectory, urging investors to remain calm and accumulate shares.
- Philip Morris's Successful Transformation: Goldman highlights that Philip Morris is transforming into a faster-growing and more profitable business, with shares up nearly 18% year-to-date, indicating significant upside potential as it delivers strong earnings growth.
- S&P Global's Strong Positioning: Although S&P Global's stock has declined 22% this year, analysts believe its strong AI positioning and durable long-term earnings power will drive organic revenue growth, with a revised price target lowered from $555 to $498.
- Nvidia's Market Focus: Goldman expects Nvidia to report strong results in its upcoming earnings, with investors keenly watching for insights into 2027 visibility and competitive dynamics, despite high expectations for outperformance.
See More
Analysis of UPRO ETF's 52-Week Price Fluctuations
- Price Range Analysis: UPRO ETF's 52-week low is $45.88 per share and high is $122.85, with the last trade at $113.91, indicating significant volatility over the past year and reflecting varying market expectations for its future performance.
- Technical Analysis Tool: Comparing the current share price to the 200-day moving average can provide investors with valuable insights for technical analysis, aiding in the assessment of market trends and potential buy or sell opportunities.
- ETF Unit Trading Mechanism: Exchange-traded funds (ETFs) trade similarly to stocks, where investors are buying and selling “units” that can be created or destroyed based on investor demand, impacting the ETF's liquidity and market performance.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding for ETFs helps identify those experiencing notable inflows (new units created) or outflows (old units destroyed), allowing for an assessment of their impact on underlying assets and shifts in market sentiment.
See More
India's E-Cigarette Ban Hinders Philip Morris Expansion Plans
- Ban Impacts Expansion: India's steadfast ban on e-cigarettes and heat-not-burn tobacco products has significantly hindered Philip Morris International's plans to launch IQOS in the Indian market, despite years of lobbying efforts.
- Unrealized Market Potential: Although India ranks as the seventh-largest cigarette market globally, Philip Morris executives discussed the long-term value creation potential of IQOS with state officials at Davos, but failed to secure an exemption, highlighting market resistance.
- Growth in Smoke-Free Products: Since 2014, Philip Morris's smoke-free products have attracted over 35 million users, with sales from 27 markets now accounting for over 50% of total revenue, indicating strong momentum in other markets.
- Strong Financial Performance: In fiscal 2025, Philip Morris's cigarette and heated tobacco unit shipment volume rose 1.7% to 379.6 billion units, with India contributing a remarkable 39.2% growth, showcasing the potential market opportunities in the region.
See More
Philip Morris International Conference Presentation Scheduled
- Conference Schedule: Philip Morris International will host a live audio webcast on February 18, 2026, at 10:00 AM ET during the CAGNY Conference, featuring Group CEO Jacek Olczak and CFO Emmanuel Babeau, which is expected to attract significant attention from investors and analysts.
- Portfolio Transformation: The company is committed to delivering a smoke-free future, with its current product portfolio including heat-not-burn, nicotine pouches, and e-vapor products, and by the end of 2025, over 43 million legal-age consumers globally are expected to use these smoke-free products, indicating a gradual shift away from traditional cigarettes.
- Revenue Contribution: As of 2025, the smoke-free business accounted for 41.5% of total net revenues, demonstrating significant financial achievements during the transformation process and laying a solid foundation for future growth.
- R&D Investment: Since 2008, Philip Morris has invested over $16 billion in developing and commercializing innovative smoke-free products, showcasing its strong capabilities in scientific assessment and market research, with the aim of completely ending cigarette sales.
See More
Philip Morris International's Positive Outlook for 2026
- Tobacco Product Growth: Philip Morris's smoke-free portfolio continued to drive performance in Q4, with Zyn nicotine pouch shipments rising 18% year-over-year and 20% in the U.S., indicating strong consumer demand for innovative tobacco products and further solidifying the company's market position in the tobacco industry.
- Robust Financial Performance: The company reported a 3.7% year-over-year organic revenue increase to $10.4 billion in Q4, with overall revenue climbing 6.8% and adjusted EPS rising 9.4% to $1.70, reflecting resilience and profitability amid market challenges.
- Positive Future Outlook: Philip Morris forecasts organic revenue growth of 5% to 7% in 2026, despite pressures from declining traditional cigarette volumes, while smoke-free product volumes are expected to rise by high single digits, showcasing the company's potential during its transformation.
- Strong Cash Flow Projections: The company anticipates generating $45 billion in operating cash flow over the next three years, with growth expected to accelerate in 2027 due to the end of taxation equalization in Japan for heated tobacco units and the launch of Iqos in the U.S., indicating strategic positioning in new market expansions.
See More
