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 growth of +17% year-over-year [3][8] - Adjusted operating income grew by +7.5% organically and +12.4% in dollar terms to $4.7 billion, with an adjusted operating income margin of over 43% [7][8] - Organic net revenue growth was +7.5%, or around +9% excluding the Indonesia technical impact, driven by strong smoke-free performance and robust pricing [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 smoke-free net revenues growing organically by +13.9% [3][10] - IQOS saw a +9% adjusted in-market sales growth and +15.5% growth in tobacco unit shipments, reflecting strong momentum in Europe, Japan, and global markets [4][9] - ZYN can shipments grew by +36% globally, with a notable +39% off-take growth in the U.S. [16][20] Market Data and Key Metrics Changes - The company’s smoke-free products are now commercialized in 100 markets, with a significant presence in the U.S., Europe, and Japan [4][15] - The overall smoke-free category is estimated to have grown by over +12% year-to-date, compared to less than 10% for the industry [14][15] - In Japan, IQOS continues to grow robustly, with Q3 adjusted IMS growth of +6% [19] Company Strategy and Development Direction - The company is focused on geographic expansion and deploying a multi-category strategy to enhance growth, with all smoke-free brands now commercialized together in 25 markets [4][14] - Continued investment in marketing and brand equity for ZYN and IQOS is planned, with expectations for sustained growth in the nicotine pouch category [14][25] - The company aims to maintain a premium positioning for ZYN while expanding its market share in the nicotine pouch category [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving another year of double-digit adjusted operating income and EPS growth, despite anticipated challenges in Q4 [28][30] - The company expects a slower quarter in Q4 due to inventory adjustments and a higher tax rate, but maintains a positive long-term growth outlook [31][32] - Management highlighted the resilience of the combustible business and the strong performance of the smoke-free portfolio as key drivers for future growth [34] Other Important Information - The company raised its dividend by +8.9% to $5.88 per share, marking the 18th consecutive year of dividend increases [35] - A planned $2 billion cost-saving objective over 2024-2026 is on track, supported by ongoing cost efficiency measures [14][33] Q&A Session Summary Question: Clarification on ZYN's growth and October performance - Management confirmed ZYN's leadership in the nicotine pouch market and noted that promotional activities are returning to normal levels, which may impact growth rates [38][41] Question: Insights on IQOS shipments versus IMS - Management acknowledged a discrepancy between HTU shipments and IMS growth, expecting alignment in Q4 while maintaining a positive outlook for IQOS performance [45] Question: Future investment levels in the U.S. market - Management clarified that the recent $100 million investment was a one-off related to promotional activities, with ongoing investments planned for ZYN and IQOS [51][60] Question: Impact of promotional strategies on new consumer acquisition - Management indicated that the recent free can promotion successfully attracted new consumers, although specific metrics on new customer acquisition were not disclosed [66][68]