Philip Morris Raises Full-Year Volume Outlook

The Tip Desk · October 22, 2026 · 4 min read

The company lifted its 2026 shipment-volume assumption to growing from broadly stable to slightly growing, with high single-digit smoke-free shipment growth.

Philip Morris International Inc. (PM) (PM) posted a record $11.4 billion in third-quarter net revenues, up 5.5%, or 7.1% organically, as the tobacco company set a new quarterly high for net revenue, gross profit and operating income.

Adjusted diluted EPS rose 5.4% to $2.36, or 5.8% excluding a one-cent unfavorable currency impact, another quarterly all-time high. Reported diluted EPS fell 4.9% to $2.12, mainly because of a non-cash fair-value adjustment for equity security investments.

Growth slowed from the second quarter. Net revenues had risen 10.4% (7.6% organically) to $11.2 billion in the prior quarter. Adjusted diluted EPS growth had been 15.2% to $2.20. Operating income increased 14.1% (10.5% organically) in the third quarter, after a 22.0% (10.7% organically) rise in the second. Gross profit rose 6.7% (8.3% organically). Total shipments increased 0.6% to 206.2 billion equivalent units, after a 2.5% increase in the second quarter.

Smoke-free products accounted for more than 40% of total net revenues in the third quarter, after about 42% in the second quarter and 43% in the first. PMI smoke-free products are available in 110 markets.

International Smoke-Free net revenues rose 0.7% (3.4% organically), a sharp deceleration from 14.2% (11.8% organically) in the second quarter, on 2.7% volume growth versus 8.0% in the second quarter. The company said the comparison was challenging for heat-not-burn units because of shipment phasing, notably in Japan. Adjusted in-market sales, the closest proxy to consumer offtake, accelerated to 8.0% growth.

IQOS HTU shipment volumes grew 1.5% to 41.5 billion units, at the high end of previously disclosed expectations, after 7.6% growth in the second quarter. HTU adjusted IMS grew 7.1%. IQOS HTUs gained 1.0 percentage points to 9.9% of combined cigarette and HTU industry volumes in markets where present. Excluding Japan and Poland, adjusted IMS grew 10%. In Japan, PMI HTU adjusted IMS grew 3.4%, or 1.3% excluding estimated pantry-loading ahead of an October 1 excise-driven price increase. IQOS held a 68% category share there. In Europe, HTU adjusted IMS growth strengthened to an estimated 6.0%, and adjusted market share rose 0.9 percentage points to 11.6%. Outside Europe and Japan, adjusted IMS grew 12.7%.

Oral SFP volumes turned positive, up 0.5%, as modern oral growth of 20.6% to 0.5 billion pouches more than offset declines in legacy Nordic snus. E-vapor shipments rose 61.6%.

International Combustibles delivered an exceptional quarter, the company said, with cigarette shipments broadly flat. Net revenues grew 6.5% (7.8% organically), driven by 8.9% pricing, partly offset by geographic mix. The quarter also benefited from a favorable restructuring of distribution terms in certain markets, which the company said is not expected to recur at the same level in future quarters. Marlboro reached a record category share of 11.4%.

In the U.S., ZYN shipments grew 4.2% to 3.2 billion pouches. Segment net revenues rose 22.7% and gross profit 24.2% (23.8% organically). Operating companies income decreased 3.3% (increased 1.5% organically), including a significant increase in commercial investments to support the expanded ZYN portfolio. The company said it plans to further increase those investments in the fourth quarter, including an expansion of the “When It Clicks” campaign and a transition of most flagship ZYN products to 20-pouch cans.

The company increased its regular quarterly dividend 8.8% to $1.60 a share, or an annualized $6.40 a share.

For 2026, the company left the adjusted diluted EPS forecast at $8.29 to $8.44, or 9.9% to 11.9% versus $7.54 in 2025, with the currency impact reduced to $0.18 from $0.24. It now assumes growing total cigarette and SFP shipment volume, previously broadly stable to slightly growing, with high single-digit SFP shipment growth and a cigarette shipment decline at a similar level to the year-to-date trend. Organic net revenue growth remains 5% to 7%, with a greater likelihood in the middle or upper half, supported by a fourth-quarter reacceleration in international smoke-free. Organic operating income growth is 7% to 9%, with a greater likelihood in the middle or lower half, given geopolitical cost impacts and the step-up in U.S. growth investments. Operating cash flow is expected around $13.5 billion. The company targets a net debt to adjusted EBITDA ratio of close to 2.0x by year-end and plans no share repurchases.