PMI(PM) - 2025 Q1 - Quarterly Report

Financial Performance - Net revenues for the three months ended March 31, 2025, were $9.3 billion, an increase of$ 0.5 billion or 5.8% compared to the same period in 2024[264]. - Excluding currency and acquisitions/divestitures, net revenues increased by 10.2%, driven by favorable pricing and higher smoke-free product volume[266]. - Diluted earnings per share (EPS) for the three months ended March 31, 2025, increased to $1.72, representing a 24.6% change from$ 1.38 in the same period of 2024[270]. - Operating income for the three months ended March 31, 2025, was $3.54 billion, compared to$ 3.05 billion in the same period of 2024[280]. - Total PMI net revenues for Q1 2025 reached $9,301 million, a 5.8% increase from$ 8,793 million in Q1 2024[282]. - Net earnings attributable to PMI for the first quarter of 2025 were $2.7 billion, a 25.2% increase compared to the previous year[308]. - Operating income in SSEA, CIS & MEA increased by 19.2% to$ 920 million, with a 14.1% increase excluding currency and acquisitions/divestitures[325]. - Operating income for the first quarter of 2025 increased by 16.4% to $3.544 billion, with an 18.7% increase excluding currency and acquisitions/divestitures[306]. Product Performance - Total shipment volume increased by 3.9% to 187.8 billion equivalent units, with smoke-free products up by 14.4% and cigarette volumes up by 1.1%[300]. - Total smoke-free revenues increased by 15.0% to$ 3,895 million, up from $3,386 million in the same quarter last year[282]. - Heated Tobacco Units (HTUs) shipment volume increased by 11.9% to 37,089 million units, compared to 33,134 million units in Q1 2024[287]. - Nicotine pouches shipment volume surged by 53.3% to 223.4 million cans, up from 145.7 million cans in Q1 2024[287]. - Oral SFP shipments increased by 42.0% to 237 million cans, predominantly driven by ZYN nicotine pouches in the U.S.[343]. Market Trends - The Americas region contributed$ 1.27 billion in net revenues for Q1 2025, up from $996 million in Q1 2024[280]. - The Americas region saw a significant increase in smoke-free revenues, with a 69.4% rise to$ 783 million compared to $462 million in Q1 2024[282]. - The estimated total international industry volume for cigarettes and HTUs decreased by 0.6% during the quarter, with a projected decline of around 1% for the full year 2025[299]. - The estimated total market for cigarettes and HTUs in Europe decreased by 4.8% to 118.3 billion units, with a 6.6% decrease for cigarettes[314]. - Total market for cigarettes and HTUs, excluding the U.S., increased by 1.3% to 45.2 billion units, with Brazil up by 12.7%[339]. Strategic Initiatives - The company acquired Swedish Match AB in 2022, enhancing its portfolio in oral nicotine delivery and supporting its transformation to a smoke-free company[256]. - The company has invested over$ 14 billion since 2008 in developing smoke-free products, aiming to end cigarette sales[249]. - PMI aims to continue developing and expanding its SFP brand portfolio and market positions, exploring new growth opportunities beyond current business[355]. - The company has integrated the production of heated tobacco units into existing manufacturing facilities and is optimizing its manufacturing infrastructure[359]. - The Altria Agreement allows PMI to fully commercialize IQOS in the U.S., providing a clear path to expand its market presence[361]. Regulatory Environment - The WHO's Framework Convention on Tobacco Control has 182 countries and the EU as parties, aiming to reduce tobacco use through various control measures[368]. - The EU's Tobacco Products Directive mandates health warnings covering 65% of cigarette pack surfaces and bans characterizing flavors in certain tobacco products[380]. - The EU banned characterizing flavors in heated tobacco products effective October 23, 2023, impacting a significant portion of SFP products sold in the EU[385]. - The FDA has established a regulatory framework for assessing "New Tobacco Products" and "Modified Risk Tobacco Products," influencing international regulatory approaches[400]. - Significant markets have imposed bans or severe restrictions on the sale of SFPs, including Argentina, Brazil, Canada, and India[375]. Challenges and Risks - Illicit trade may account for up to 15% of global cigarette consumption, with an estimated 8% in the EU for 2023[432]. - The company is investing substantial resources to combat illicit trade, including legal remedies and cooperation with governmental authorities[433]. - The global tariff environment is expected to remain volatile through 2025, with the company actively adapting operations accordingly[446]. - The company continues to monitor developments in new sanctions and trade laws to ensure compliance[447].