Summary of PM Q1 2026 Earnings Call

1Key Financial Results and Metrics

Net Revenues: Over $10 billion, a 9% increase reported and 2.7% organic growth.

Adjusted Operating Income (OI): Grew by 10% to $4.2 billion, with close to 1% organic growth.

Adjusted Diluted Earnings Per Share (EPS): Increased by 16% to $1.96, benefiting from an $0.18 currency tailwind.

Adjusted Gross Profit: Rose by 10% to $6.9 billion, with 3.8% organic growth and a 70 basis points organic gross margin expansion.

International Smoke-Free Business: Achieved 11.9% volume growth, 15.8% net revenue growth, and 19.4% gross profit growth.

2Strategic Updates and Business Highlights

Strong performance in the international smoke-free segment, particularly from IQOS, which saw nearly 11% adjusted in-market sales growth.

ZYN reached a joint #1 position in Europe, contributing to the multi-category strategy.

Combustible business showed resilience with low single-digit organic growth despite cigarette volume declines.

Continued investment in innovation and marketing for ZYN and IQOS, with plans for new product launches in the U.S. and international markets.

Significant growth in e-vapor category VEEV, which became a leading brand in Europe.

3Forward Guidance and Outlook

Reaffirmed full-year expectations for organic net revenue growth of 5% to 7% and organic operating income growth of 7% to 9%.

Adjusted diluted EPS forecasted at $8.36 to $8.51, reflecting a 10.9% to 12.9% growth in dollar terms.

Anticipated sequential improvement in U.S. performance as comparisons normalize and new innovations are launched.

4Bad News, Challenges, or Points of Concern

U.S. nicotine pouch segment faced challenges with shipment declines due to inventory normalization and increased competition.

Cigarette volume declines were at the higher end of expectations, reflecting a challenging economic environment and increased illicit consumption in some markets.

Regulatory uncertainties surrounding nicotine pouches and potential excise tax increases in various states could impact future growth.

Competitive pressures in the U.S. market, particularly for ZYN, as pricing strategies evolve.

5Notable Q&A Insights

Management expressed confidence in the U.S. ZYN segment's recovery, citing normalization of comparisons and anticipated innovations.

Concerns were raised about the competitive landscape and pricing dynamics, with management emphasizing the importance of maintaining ZYN's premium positioning.

Discussion on IQOS highlighted its strong brand equity and market share gains, particularly in Taiwan and Japan, despite potential disruptions from excise tax increases.

Management acknowledged the impact of macroeconomic factors, including energy prices and geopolitical tensions, but maintained a positive long-term outlook for growth and transformation. Overall, PM demonstrated a strong start to 2026, driven by robust international smoke-free performance, while navigating challenges in the U.S. market and regulatory landscape.