PMI(US:PM)2025-10-21 14:02Financial Data and Key Metrics Changes - The company reported a record adjusted diluted EPS of $2.24, reflecting a 17% growth year-over-year [3][8] - Adjusted operating income grew by 7.5% organically and 12.4% in dollar terms to $4.7 billion, with a margin expansion of 120 basis points [7][11] - Organic net revenue growth was 7.5%, or approximately 9% excluding the Indonesia technical impact, driven by strong smoke-free performance [8][10] Business Line Data and Key Metrics Changes - The global smoke-free business achieved over $3 billion in quarterly gross profit for the first time, with a 16.6% volume growth in smoke-free products [3][4] - IQOS saw a 9% growth in HTU adjusted in-market sales and a 15.5% growth in ET tobacco unit shipments [4][9] - ZYN can shipments grew by 36% globally, with a 39% off-take growth in the U.S. [16][22] Market Data and Key Metrics Changes - The smoke-free product portfolio outpaced the industry with over 12% estimated IMS volume growth year-to-date compared to less than 10% for the industry [14][15] - In Europe, markets like Italy, Greece, and Spain showed excellent growth across all smoke-free categories [18][20] - The U.S. nicotine pouch category has been growing at more than 40% over the last 18 months, with ZYN capturing a significant market share [25][27] Company Strategy and Development Direction - The company is focused on geographic expansion, with smoke-free products now available in 100 markets, and is investing in multi-category strategies [4][14] - Continued investment in marketing and brand equity for ZYN and IQOS is planned, with expectations for sustained growth in the U.S. market [14][63] - The company aims to maintain a premium positioning for ZYN while expanding its market presence [24][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit adjusted operating income and EPS growth for the year, despite anticipated challenges in Q4 [30][32] - The company expects a normalization in promotional activities for ZYN, which may impact short-term performance but is seen as necessary for long-term growth [41][42] - Management highlighted the resilience of the combustible business and the ongoing strong performance of smoke-free products [35][30] Other Important Information - The company raised its dividend for the 18th consecutive year to $5.88 per share, reflecting strong year-to-date performance [36] - A planned $2 billion cost-saving objective over 2024-2026 is on track, with ongoing cost efficiency measures [14][34] Q&A Session Summary Question: Clarification on ZYN's growth and October performance - Management confirmed ZYN's market leadership with over 60% share and noted that promotional activities are returning to normal levels, which may impact short-term growth [39][41] Question: Insights on IQOS shipments versus IMS - Management acknowledged a discrepancy between HTU shipment growth and IMS growth, expecting alignment in Q4 while maintaining strong performance in the long term [45] Question: Investment levels and future expectations for ZYN - Management clarified that the $100 million investment in Q3 was a one-off related to promotional activities, with expectations for ZYN to maintain best-in-class margins moving forward [51][52]