The Philip Morris outlook for full-year 2026 adjusted earnings was updated for currency only on October 21, as the company reported higher third-quarter revenue and adjusted profit. Adjusted diluted earnings per share rose 5.4% to $2.36, while reported diluted EPS fell 4.9% to $2.12, mainly because of a non-cash fair-value adjustment for equity investments.
Key Takeaways
- Third-quarter net revenue increased 5.5% to $11.4 billion, with growth in smoke-free products and combustibles.
- Full-year adjusted EPS is forecast at $8.29–$8.44; the currency-neutral growth outlook remains 7.5%–9.5%.
- Higher energy-related costs and additional U.S. ZYN investment are expected to weigh on fourth-quarter profitability.
Table of Contents
- Philip Morris outlook reflects a smaller currency benefit
- Pricing and smoke-free products support quarterly growth
- ZYN expansion brings higher fourth-quarter spending
- Conclusion
Philip Morris outlook reflects a smaller currency benefit
Philip Morris International’s third-quarter results announcement puts the expected full-year currency benefit at $0.18 per share, down from $0.24 previously. The revised adjusted EPS range represents projected growth of 9.9%–11.9% over 2025. Reported diluted EPS is forecast at $7.11–$7.26.
The currency-only revision leaves the underlying earnings-growth forecast unchanged, but management indicated where results are more likely to land within its operating ranges. Organic net revenue growth is expected in the middle or upper half of the 5%–7% range, while organic operating income growth is more likely in the middle or lower half of its 7%–9% range.
That difference reflects cost pressures and spending plans rather than a reduction in the revenue-growth range. The company expects energy-related input inflation to have a slightly larger effect in the fourth quarter as more price increases take effect. It also expects disruptions to supply chains and logistics in Ukraine to affect operating income this year.
| Item | Details |
|---|---|
| First nine months: net revenue | $32.8 billion, up 8.2% year over year |
| First nine months: adjusted diluted EPS | $6.52, up 11.8% year over year |
| 2026 operating cash flow forecast | Around $13.5 billion, subject to year-end working capital requirements |
| 2026 capital expenditure forecast | $1.4 billion–$1.6 billion, predominantly supporting smoke-free products |
| Regular quarterly dividend | Increased 8.8% to $1.60 per share |
Pricing and smoke-free products support quarterly growth
Third-quarter organic revenue growth was 7.1%, exceeding reported growth of 5.5%. Operating income rose 14.1% to $4.9 billion, or 10.5% organically. Adjusted EPS, a non-GAAP measure, increased 5.8% excluding currency.
Total shipments grew 0.6%, with smoke-free product shipments up 2.7% and cigarette shipments broadly flat. Smoke-free products generated more than 40% of quarterly net revenue and were available in 110 markets.
International combustibles revenue rose 6.5%, supported by pricing of 8.9%. The segment also benefited from restructured distribution terms in certain markets, an effect the company does not expect to recur at the same level in future quarters.
IQOS heated-tobacco shipments increased 1.5% to 41.5 billion units. Adjusted in-market sales, which PMI describes as its closest proxy for consumer offtake, grew 7.1%, showing stronger consumer demand growth than the shipment figures alone.
ZYN expansion brings higher fourth-quarter spending
U.S. ZYN shipments increased 4.2% to 3.2 billion pouches. U.S. segment revenue rose 22.7%, helped by volume growth and favorable pricing comparisons against promotional activity a year earlier.
However, U.S. operating companies income declined 3.3% on a reported basis as commercial investment increased. PMI plans to step up brand spending further in the fourth quarter, including consumer communications and support for moving most flagship ZYN products from 15-pouch to 20-pouch cans.
Management also strengthened its full-year shipment assumption from broadly stable to slightly growing volumes to growth in total cigarette and smoke-free shipments. Its capital-allocation assumptions continue to include no share repurchases.
Conclusion
The fourth quarter will test PMI’s expectation of faster international smoke-free growth against higher input costs and increased ZYN spending. Those planned investments and cost pressures are already reflected in management’s full-year forecast.
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