Philip Morris International Inc. (NYSE: PM) saw its shares appreciate following the release of its fiscal fourth-quarter 2025 results, revealing ongoing progress in transitioning toward smoke-free tobacco products. The company reported adjusted earnings per share (EPS) of $1.70, aligning with analyst forecasts, while quarterly sales totaled $10.362 billion, representing a 6.8% increase compared to the same period the prior year, although slightly below the anticipated $10.440 billion.
In his remarks, Group Chief Executive Officer Jacek Olczak emphasized the company’s achievement of "another remarkable year of results" characterized by the fifth consecutive annual increase in volume and net revenues exceeding $40 billion. Notably, nearly $17 billion of this revenue was attributed to the smoke-free product segment. This growth was accompanied by a favorable expansion in operating margins, reflecting strong operational execution.
Olczak further detailed that the company's evolution toward a predominantly smoke-free business model is gaining momentum, with 27 markets now generating over 50% of net revenue from smoke-free offerings. These markets include South Korea, Poland, Italy, Romania, and the United States, the latter being among eight markets surpassing the 75% threshold. Specifically, in the fourth quarter of 2025, the European region also exceeded 50% net revenue from smoke-free products, resulting in three of Philip Morris’s four global zones now classified as majority smoke-free.
Performance-by-region data indicated that Europe experienced an 11.0% rise in revenue, totaling $4.598 billion, while the combined regions of South and Southeast Asia, the Commonwealth of Independent States, and the Middle East & Africa saw an 8.4% increase amounting to $3.109 billion.
The company's adjusted operating income for the quarter reached $3.722 billion, an uplift of 5.8% year-over-year, although the operating margin receded slightly to 35.9% from 36.3% in the preceding year. Olczak noted the company’s efficiency in surpassing its three-year compound annual growth rate (CAGR) targets in operating income and earnings per share within just two years.
As of the end of the quarter, Philip Morris maintained a solid liquidity position, holding approximately $4.872 billion in cash and equivalents.
Growth Metrics in Smoke-Free Segment
The smoke-free portfolio demonstrated notable performance in the quarter, with net revenues increasing by 12.0%, including an organic growth component of 8.6%. Gross profits rose by 12.2%, with organic gains of 8.3%. Importantly, the company achieved the milestone of having over half of its net revenues come from smoke-free products across three of its four geographic regions, underscoring the success of its strategic product shift.
Traditional Combustible Product Segment
Within the combustible cigarette category, net revenue showed a more modest growth of 3.2%, with organic growth at a marginal 0.3%. Gross profit improved by 5.5%, including a 2.8% organic increase. The Marlboro brand further strengthened, recording an all-time high category share of 11.0% during the quarter.
Financial Outlook
Looking ahead to fiscal year 2026, Philip Morris projects GAAP earnings per share within a range of $7.87 to $8.02, slightly lower than consensus analyst estimates of $7.94. Adjusted EPS estimates for the year stand between $8.38 and $8.53, above analyst expectations of $8.33.
The company anticipates adjusted EPS for the first quarter of 2026 to range from $1.80 to $1.85, though this is below the estimated $1.89. For the longer term, Philip Morris reaffirmed its intention to meet or outperform the upper limits of its three-year growth targets spanning 2024 through 2026.
For the subsequent period, 2026 through 2028, the company set goals of 6% to 8% organic net revenue growth, coupled with 8% to 10% organic growth in operating income. Furthermore, the company intends to achieve 9% to 11% growth annually in adjusted diluted EPS, excluding currency effects.
Stock Market Performance
At the time of the report, Philip Morris International's stock was trading up by approximately 1.48%, priced at $184.68. This positions the stock near its 52-week high of $186.69, reflecting investor confidence in the company’s financial trajectory and strategic outlook.