PMI(US:PM)2025-10-24 11:15Financial Performance - Net revenues for the nine months ended September 30, 2025, reached $30.3 billion, an increase of $2.1 billion or 7.5% compared to the same period in 2024[296]. - Diluted earnings per share (EPS) for the nine months ended September 30, 2025, was $5.89, reflecting a 20.4% increase from $4.89 in the same period of 2024[301]. - Operating income for the nine months ended September 30, 2025, was $11,519 million, up from $10,143 million in 2024, reflecting a 13.6% increase[335]. - Net revenues for Q3 2025 reached $10.8 billion, an increase of $0.9 billion or 9.4% compared to Q3 2024, driven by higher combustible tobacco pricing and increased smoke-free product volumes[315]. - The diluted EPS for Q3 2025 was $2.23, representing a 13.2% increase from $1.97 in Q3 2024, with operational improvements contributing $0.21 to the EPS growth[321]. - Net earnings attributable to PMI for the nine months increased by 20.6% to $9.2 billion, with basic and diluted EPS rising by 20.4% to $5.90 and $5.89 respectively[368]. Revenue Drivers - The increase in net revenues was driven by favorable pricing variance due to higher combustible tobacco pricing and higher smoke-free products volume, despite lower cigarette volumes[298]. - Smoke-free product revenues grew by 16.0% to $12,500 million for the nine months ended September 30, 2025, compared to $10,773 million in 2024[336]. - Total combustible tobacco revenues increased by 2.2% to $17,786 million for the nine months ended September 30, 2025, compared to $17,399 million in 2024[336]. - The favorable pricing and volume/mix in the Europe segment were partly offset by increased marketing, administration, and research costs[318]. Market and Product Insights - As of October 2025, smoke-free products were available for sale in 100 markets, with IQOS, ZYN, and VEEV being the leading brands in the smoke-free products portfolio[286]. - The company’s net revenues from the SSEA, CIS & MEA region reached $8,942 million for the nine months ended September 30, 2025, up from $8,393 million in 2024, reflecting a 6.5% increase[335]. - The total shipment volume for the nine months ended September 30, 2025, was 592.7 billion equivalent units, representing a 1.8% increase compared to the same period in 2024[357]. - The total shipment volume of oral products reached 939.5 million cans for the nine months ended September 30, 2025, a 25.8% increase from 747.0 million cans in 2024[343]. Organizational Changes - The company plans to implement a new organizational model effective January 1, 2026, transitioning from four geographic segments to three new segments: International Smoke-Free, International Combustibles, and U.S.[283]. - The acquisition of Swedish Match AB in 2022 was a key milestone in the company's transformation towards becoming a smoke-free company, enhancing its oral nicotine product portfolio[289]. Impairments and Charges - The company recorded pre-tax restructuring charges of $243 million for the nine months ended September 30, 2025, related to the cessation of combustible tobacco production in two factories in Germany[301]. - The company recorded a goodwill impairment charge of $41 million during the second quarter of 2025, primarily due to a decline in estimated fair value of a reporting unit in the Europe segment[302]. - In Q3 2025, PMI recorded a non-cash after-tax impairment charge of $146 million, resulting in a diluted EPS charge of $0.09 per share, due to a reassessment of an equity investment in the Wellness & Healthcare business[310]. Future Outlook - For the full year 2025, the company expects total cigarette and smoke-free product shipment volume growth of around 1%, with smoke-free product volume growth projected at 12% to 14%[360]. - The estimated international industry volume decline for cigarettes and heated tobacco units (HTUs) is around 1% for 2025, excluding China and the U.S.[356]. - The company expects negligible revenue from cannabinoids in the near to medium term, despite ongoing development in the Wellness and Healthcare business[288]. Regulatory Environment - Legislative and regulatory challenges, including high excise taxes and restrictions on SFPs, are expected to impact PMI's profitability and market access[461]. - The EU is revising its Tobacco Excise Directive to include smoke-free products, with an implementation date proposed for January 1, 2028[476].