Philip Morris International Inc. (NYSE: PM)

Philip Morris International delivered an exceptionally strong first quarter, with organic net revenue growth of 10.2% driven by favorable pricing and volume/mix. The company's adjusted operating income increased by 16.0% on an organic basis, reflecting the same factors as net revenues, partially offset by higher marketing, administration, and research costs. Adjusted operating income margin expanded by 2.5 percentage points to 40.7%, demonstrating PMI's ability to translate revenue growth into even stronger profit performance. Reported diluted EPS of $1.72 grew by 24.6%, while adjusted diluted EPS of $1.69 increased by 12.7%, or 17.3% excluding unfavorable currency impacts of $0.07. This strong financial performance, particularly in the smoke-free segment, positions PMI well for continued success throughout 2025.

PMI's smoke-free business continues to be the primary growth driver, accounting for 42% of total net revenues and 44% of total gross profit. The segment delivered impressive growth with net revenues up 15.0% (20.4% organically) and gross profit up 27.7% (33.1% organically). This performance reflects the continued strength and consumer adoption of PMI's smoke-free products across all categories, including heat-not-burn, oral products, and e-vapor. Meanwhile, the combustibles business demonstrated resilience with organic net revenue growth of 3.8% and gross profit growth of 5.3%, driven by strong pricing and moderate volume growth of 1.1%, partially offset by unfavorable geographic mix. This balanced performance across both segments underscores PMI's successful strategy of growing its smoke-free business while maintaining strong performance in its traditional products.

PMI's product portfolio showed strong performance across all categories in Q1 2025. Heated Tobacco Units (HTUs) shipment volume grew 11.9% to 37.1 billion units, with IQOS continuing to strengthen its position as the second-largest nicotine brand in markets where present. In Japan, IQOS HTU market share increased to a record 32.2%, with the HTU category exceeding 50% share in 13 major cities. Oral smoke-free products saw impressive growth of 31.0% to 318 million cans, driven primarily by ZYN nicotine pouches in the U.S., which exceeded 200 million cans (53% growth). E-vapor products more than doubled in shipment volume, fueled by growth in Europe and further gross margin expansion. Even the traditional cigarette business showed resilience with 1.1% volume growth and market share increasing by 0.4 percentage points to 24.8%. This balanced growth across all product categories underscores PMI's successful strategy of offering a diverse portfolio of smoke-free alternatives while maintaining its traditional business.

PMI delivered strong performance across all geographic regions in Q1 2025. The Americas region led growth with organic net revenue increase of 32.0% and adjusted operating income growth of 56.4%, primarily driven by the exceptional performance of ZYN nicotine pouches in the U.S. Europe, which represents the largest portion of PMI's business, saw organic revenue growth of 8.6% and adjusted operating income growth of 4.8%, reflecting favorable pricing and higher smoke-free product volumes, partially offset by higher marketing and administrative costs. The EA, AU & PMI GTR region (East Asia, Australia & PMI Global Travel Retail) achieved impressive organic adjusted operating income growth of 22.8%, driven by higher smoke-free products volume. The SSEA, CIS & MEA region (South & Southeast Asia, Commonwealth of Independent States & Middle East and Africa) delivered 13.9% organic growth in adjusted operating income, primarily reflecting favorable pricing and higher cigarette and HTU volumes. This balanced regional performance demonstrates PMI's global strength and effective execution of its smoke-free strategy across diverse markets.

Philip Morris International has raised its 2025 full-year adjusted diluted EPS forecast for currency only, now projecting growth of 12.0% to 14.0% to reach $7.36 to $7.49, compared to $6.57 in 2024. Excluding a favorable currency impact of $0.10, adjusted diluted EPS is expected to grow by 10.5% to 12.5%. The company projects organic net revenue growth of around 6% to 8% and organic operating income growth of 10.5% to 12.5%. PMI expects total shipment volume growth of up to 2%, driven by smoke-free products volume growth of 12% to 14%. The company anticipates that U.S. nicotine pouch shipment volume will accelerate to reach 800 to 840 million cans, representing growth of 38% to 45%. For Q2 2025, PMI forecasts adjusted diluted EPS of $1.80 to $1.85, including an estimated favorable currency impact of 6 cents. The company also expects further improvement in its net debt to adjusted EBITDA ratio as it continues to target a ratio of around 2x by the end of 2026. This strong guidance reflects PMI's confidence in its ability to deliver superior results despite an uncertain and volatile global economic environment.