Philip Morris International Q4 Earnings Call Highlights

Core Insights - Philip Morris International (PMI) reported strong financial results for 2025, highlighting significant growth in smoke-free products and overall positive shipment volumes [4][6][3] Financial Performance - Organic net revenue increased by 6.5% in 2025, with a 7.9% increase when excluding the "technical Indonesia impact" [1] - Adjusted operating income grew by 11.8% to $16.4 billion, and adjusted diluted EPS rose by 14.2% at constant currency and 15% in dollar terms to $7.54 [1] - Operating cash flow reached a record-matching $12.2 billion [6] Product Performance - Smoke-free product volumes increased by 12.8% in 2025, contributing to organic smoke-free gross profit growth of 18.7% [3][6] - IQOS remained the largest driver of growth, with shipments and adjusted in-market sales rising about 11% for the year [2] - PMI's total net revenues exceeded $40 billion in 2025, with 41.5% generated by the smoke-free business [7] Market Expansion - Smoke-free products are now available in 106 markets, with 52 deploying a multi-category strategy [8] - The company estimated its smoke-free volume share at around 60% across competing markets and categories, with over 70% share of category growth in 2025 [8] Future Outlook - For 2026, PMI targets organic net revenue growth of 5-7% and organic operating income growth of 7-9%, with adjusted diluted EPS projected at $8.39 to $8.54 [5][14] - Management warned of transitory headwinds, including excise hikes in Japan and inventory normalization in the U.S. [5][17] - PMI renewed its medium-term targets, aiming for compound annual growth rates of 6-8% in organic net revenue and 8-10% in organic operating income from 2026 to 2028 [18] Cost Management - PMI has achieved around $1.5 billion in gross cost savings since 2024 and is on track to reach a $2 billion objective for 2024-2026 [20]