Philip Morris International (PMI) $PM (+1,34 %) published its financial results for the second quarter (Q2) and first six months (YTD) of 2025 on July 22, 2025. $PM (+1,34 %) misses the top line for the first time since Q4 2023. IQOS misses the double digit mark in volume growth. Zyn volume growth is also weaker than in Q1, indicating a decline in volume share.
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1. total overview
Volume development
- Q2 2025:
- Total shipment volume200.1 billion units (+1.2%)
- Smoke-free products (SFP)44.8 billion units (+11.8%)
- Heated Tobacco Units (HTU)38.8 billion units (+9.2%), driven by IQOS with adjusted in-market sales (IMS) growth of 11.4%. Strong growth in Japan, Europe and key markets such as Indonesia, Mexico and Saudi Arabia.
- Nicotine pouches (Oral SFP)308.4 million doses (+26.5%), mainly driven by ZYN in the US (+41.6% to 191.3 million doses) and strong international growth (+100% outside the US and Nordics in markets such as Pakistan, South Africa and Poland).
- E-Vapor (VEEV)0.9 billion units (>100%), driven by expansion in 42 markets, with a leading position in six European markets (e.g. Greece, Italy).
- Cigarettes155.2 billion units (-1.5%), declines in Turkey (-8.0%, due to supply chain issues) and Indonesia (-3.7%), partially offset by growth in India (+41.9%) and the Philippines (+8.0%).
- YTD 2025:
- Total volume: 387.9 billion units (+2.5%)
- SFP: 87.9 billion units (+13.1%), HTU: 75.9 billion (+10.5%), nicotine pouches: 626.3 million cans (+28.8%), cigarettes: 300.0 billion (-0.3%).
Sales development
- Q2 2025:
- Net sales10,140 million USD (+7.1%, organic +6.8%)
- Smoke-free products: USD 4,200 million (+15.2%, organically +14.5%), share of total sales: 41% (+2.9 percentage points). IQOS alone generated over USD 3 billion in sales.
- CigarettesUSD 6,000 million (+2.1%, organically +2.0%), driven by price increases (USD +420 million), despite volume decline and unfavorable mix (USD -225 million).
- DriversHigher prices for cigarettes, strong volume growth for SFP, positive currency effects (+71m USD), partially offset by negative effects from acquisitions/divestitures (-39m USD).
- YTD 2025:
- Net sales: USD 19,441m (+6.5%, organically +8.4%)
- SFP: USD 8,100 million (+15.1%, organically +17.3%), Cigarettes: USD 11,400 million (+1.1%, organically +2.9%).
Profit development
- Q2 2025:
- Gross profitUSD 6,900 million (+12.1%, organically +11.2%)
- SFP: USD 2,900 million (+23.3%, organically +21.5%), share of gross profit: 42% (+3.8 percentage points).
- Cigarettes: USD 4,000 million (+5.0%, organically +4.8%).
- Operating income (OI)USD 3,712 million (+7.8%, organically +6.2%)
- Adjusted operating incomeUSD 4,246 million (+16.1%, organically +14.9%).
- Adjusted OI margin41.9% (+3.3 percentage points, organically +3.0 percentage points).
- DriversHigher prices (USD +420 million), volume growth in SFP (USD +301 million), partially offset by higher marketing, administration and research costs (USD -429 million) and restructuring costs (USD -243 million, mainly for the optimization of the production structure in Germany).
- YTD 2025:
- Gross profit: USD 13,100 million (+12.0%, organically +13.5%).
- Operating income: USD 7,256 million (+11.8%, organically +12.1%).
- Adjusted operating profit: USD 8,036 million (+14.5%, organically +15.4%), margin: 41.3% (+2.9 percentage points).
EPS and dividend
- Q2 2025:
- Diluted EPS: USD 1.95 (+26.6%).
- Adjusted diluted EPS: USD 1.91 (+20.1%, excluding currency effects +18.9%).
- Dividend: USD 1.35 per share (USD 5.40 annually).
- YTD 2025:
- Adjusted EPS: USD 3.60 (+16.1%, without currency effects +17.7%).
2. segment analysis
Europe
Volume development
- Q2 2025:
- Total shipment volume55.1 billion units (-2.4%)
- HTU14.3 billion units (+10.5%), adjusted IMS growth +9.1%, driven by Italy (+22.2% to 3.1 billion units), Germany (+16.5%), Greece, Romania, Bulgaria and Spain (+35.3%). Supported by the launch of ILUMA i and new consumables such as DELIA and tobacco-free LEVIA.
- Cigarettes40.8 billion units (-6.2%), declines in France (-17.5%) and Italy (-12.5%) due to unfavorable stock movements.
- Nicotine pouches: 70.8 million cans (stable), decline in snus (-5.9%), growth in ZYN (+31.0% to 15.5 million cans).
- YTD 2025: 103.5 billion units (-1.3%), HTU +12.7%, cigarettes -5.5%, nicotine pouches -1.3% (ZYN +26.9%).
Sales development
- Q2 2025Net sales: USD 4,234 million (+8.7%, organically +7.3%)
- Driven by price increases for cigarettes (USD +211 million) and volume growth for SFP (USD +75 million), despite unfavorable cigarette mix Positive currency effects: USD +92 million.
- YTD 2025USD 7,794 million (+6.0%, organic +7.9%).
Profit development
- Q2 2025:
- Operating profitUSD 1,668 million (+3.2%, organically +13.8%).
- Adjusted operating resultUSD 2,000 million (+19.6%, organically +13.8%).
- Adjusted OI margin47.2% (+4.3 percentage points, organically +2.6 percentage points).
- Drivers: Higher prices, SFP volume growth, partially offset by higher marketing, administration and research costs (USD -308m).
- YTD 2025Adjusted operating income: USD 3,480 million (+10.0%, organically +9.6%), margin: 44.6% (+1.5 percentage points).
Market shares
- HTU market share: +1.2 percentage points to 10.9% (e.g. Italy +1.0 percentage point to 17.7%, Germany +0.8 percentage points to 6.8%, Poland +0.7 percentage points to 9.9%).
- Cigarette market share: Declines in France (-1.0 percentage point to 40.5%) and Germany (-1.1 percentage points to 37.9%), stable in Italy (-0.2 percentage points to 53.4%).
SSEA, CIS & MEA
Volume development
- Q2 2025:
- Total shipment volume95.3 billion units (+1.1%)
- HTU7.9 billion units (+13.3%), adjusted IMS growth +19.8%, driven by broad growth in the region (e.g. Russia +13.9%, Indonesia +50.2%).
- Cigarettes87.5 billion units (+0.1%), growth in India (+41.9%) and the Philippines (+8.0%), declines in Turkey (-8.0%, due to supply chain issues following regulatory changes) and Indonesia (-3.7%).
- Nicotine pouches: 6.0 million cans (+100%), expansion in markets such as Pakistan, South Africa and Poland.
- YTD 2025: 185.6 billion units (+2.8%), HTU +10.4%, cigarettes +2.2%, nicotine pouches +100%.
Sales development
- Q2 2025Net sales: USD 2,926 million (+5.6%, organic +4.9%)
- Driven by price increases for cigarettes (USD +174m), partially offset by unfavorable cigarette mix (USD -34m, mainly Indonesia due to change in business model for lower price segment in Q4 2024)
- YTD 2025USD 5,669 million (+4.4%, organically +5.7%).
Profit development
- Q2 2025:
- Operating profitUSD 1,000 million (+12.2%, organically +17.2%).
- Adjusted operating resultUSD 1,004 million (+12.1%, organically +17.2%).
- Adjusted OI margin34.3% (+2.0 percentage points, organically +3.8 percentage points).
- DriversHigher prices, volume growth in cigarettes and HTU (USD +57m), partially offset by higher marketing, administrative and research costs as well as manufacturing costs (e.g. tobacco leaf, USD -76m).
- YTD 2025Adjusted operating result: USD 1,928 million (+15.2%, organically +15.7%), margin: 34.0% (+3.2 percentage points).
Market shares
- HTU market share: growth in Russia (+0.8 percentage points to 9.0%), Indonesia (+0.3 percentage points to 0.7%), Philippines (+0.3 percentage points to 0.9%).
- Cigarette market share: Decline in Turkey (-5.9 percentage points to 45.8%), stable in the Philippines (-0.2 percentage points to 46.0%), growth in Indonesia (+1.1 percentage points to 31.3%).
East Asia, Australia & PMI Global Travel Retail (EA, AU & PMI GTR)
Volume development
- Q2 2025:
- Total shipment volume28.3 billion units (+3.6%)
- HTU16.5 billion units (+6.3%), adjusted IMS growth +9.6%, driven by Japan (+2.9% to 13.9 billion units) and Global Travel Retail (+23.0%).
- Cigarettes11.9 billion units (+0.1%), decline in Australia (-83.4%, due to delivery phases).
- Nicotine pouches: 6.3 million cans (+100%), expansion in new markets such as the UK and Mexico.
- YTD 2025: 57.1 billion units (+4.7%), HTU +8.8%, cigarettes -0.7%, nicotine pouches +100%.
Sales development
- Q2 2025Net sales: USD 1,708 million (+2.1%, organically +1.6%)
- Driven by volume growth at SFP (+15 million USD), supported by positive currency effects (+9 million USD)
- YTD 2025USD 3,439 million (+2.4%, organically +4.0%).
Profit development
- Q2 2025:
- Operating profitUSD 853 million (+13.3%, organically +9.4%).
- Adjusted operating resultUSD 853 million (+13.3%, organically +9.4%).
- Adjusted OI margin49.9% (+4.9 percentage points, organically +3.5 percentage points).
- DriversHigher SFP volume (USD +49 million), lower cost increases (USD +11 million).
- YTD 2025Adjusted operating result: USD 1,767 million (+16.5%, organically +16.2%), margin: 51.4% (+6.2 percentage points).
Market shares
- HTU market share: Japan +2.3 percentage points to 31.7% (TEREA and SENTIA as #1 and #3), South Korea +1.2 percentage points to 8.9%.
- Cigarette market share: decline in Australia (-8.0 percentage points to 24.8%), growth in Japan (+1.8 percentage points to 42.8%).
Americas
Volume development
- Q2 2025:
- Total shipment volume15.3 billion units (+1.6%)
- HTU: 0.2 billion units (+3.0%), growth in Mexico (+38.8%).
- Cigarettes15.1 billion units (+1.6%), growth in Argentina (+12.3%) and Mexico (+2.3%), declines in Brazil (-2.7%) and Colombia (-7.9%).
- Nicotine pouches225.3 million cans (+32.5%), mainly ZYN in the USA (+41.6% to 191.3 million cans, sales growth +26% in Q2).
- YTD 2025: 29.8 billion units (+0.7%), HTU +12.7%, cigarettes +0.6%, nicotine pouches +37.3% (ZYN +47.8%).
Sales development
- Q2 2025Net sales: USD 1,272 million (+12.7%, organically +17.0%)
- Driven by volume growth in nicotine pouches (USD +169 million) and price increases (USD +24 million), despite negative currency effects (USD -49 million)
- YTD 2025USD 2,539 million (+19.5%, organically +24.0%).
Profit development
- Q2 2025:
- Operating profitUSD 191 million (+4.4%, organically +26.9%).
- Adjusted operating resultUSD 389 million (+16.1%, organically +26.9%).
- Adjusted OI margin30.6% (+0.9 percentage points, organically +2.5 percentage points).
- Drivers: Volume growth in ZYN (USD +154m), partially offset by higher marketing, administration and research costs (USD -134m, especially in the US).
- YTD 2025: Adjusted operating income: USD 861 million (+30.3%, organically +41.5%), margin: 33.9% (+2.8 percentage points).
Market shares
- Cigarette market share: Growth in Argentina (+2.2 percentage points to 63.8%), decline in Mexico (-0.8 percentage points to 57.8%).
- HTU market share: slight growth in Mexico (+0.2 percentage points to 1.0%).
3 Strategic highlights and market trends
- Smoke-free products (SFP):
- SFP are the main growth driver, accounting for 41% of sales and 42% of gross profit. IQOS is the second largest nicotine brand in the markets where it is present, with a market share of 9.2% (+1.0 percentage point). PMI holds ~76% of the global heat-not-burn market.
- ZYN is experiencing strong growth in the US (+26% sales growth in Q2, +36% in June) following improved availability. Internationally, ZYN is growing in 44 markets, with strong performances in Global Travel Retail, the UK and South Africa.
- VEEV is growing profitably in 42 markets, with a leading position in six European markets. New innovations such as VEEV inPrime optimize the consumer experience.
- Cigarettes:
- Despite a decline in volume (-1.5% in Q2), PMI achieves sales growth (+2.1%) through price increases. Marlboro achieves the highest market share since the spin-off in 2008. The overall market share remains stable (29.2% in Q2, +0.4 percentage points).
- Market share and geographical expansion:
- IQOS reaches over 41 million adult users worldwide, including over 10 million in Japan. SFP available in 97 markets, all three main brands (IQOS, ZYN, VEEV) in 20 markets.
- Strong market share gains in Japan (HTU +2.3 percentage points to 31.7%), Europe (HTU +1.2 percentage points to 10.9%) and key markets such as Indonesia, Mexico and Russia.
- Investments and innovation:
- PMI has invested over USD 14 billion in smokeless products since 2008, with a focus on scientific validation and commercialization. Investments of USD 1.6 billion are planned for 2025, almost exclusively for SFP.
- New products such as ILUMA i, DELIA, LEVIA and VEEV inPrime are driving growth.
4. annual forecast and strategic direction
PMI raises its annual forecast for 2025, based on the strong performance in the first half of the year:
- Adjusted EPS: USD 7.43-7.56 (+13-15% vs. 2024), excluding currency effects +11.5-13.5%.
- Organic sales growth: 6-8%.
- Organic operating profit growth: 11-12,5%.
- SFP volume growth12-14%, cigarette volume decline: ~2%.
- Operating cash flow~11.5 billion USD.
- Capital expenditureUSD 1.6 bn, mainly for SFP.
- Q3 guidanceAdjusted EPS of USD 2.08-2.13 (+5 cents currency effect).
PMI remains committed to its goal of creating a smoke-free future, with a long-term goal of expanding the business into wellness and health products. The FDA has authorized versions of IQOS, ZYN and General Snus as Modified Risk Tobacco Products, underscoring the scientific basis of the products.
6 Conclusion
PMI shows strong financial performance in Q2 2025, driven by smokeless products, which account for 41% of sales and 42% of gross profit. IQOS and ZYN are the main drivers of growth, with strong market share gains in Japan, Europe and the US. Despite a slight volume decline in cigarettes, PMI secures sales growth through price increases, while Marlboro gains market share. Regional development shows strengths in Europe (SFP growth), SSEA, CIS & MEA (HTU expansion), EA, AU & PMI GTR (Japan) and the Americas (ZYN). Challenges such as supply chain issues in Turkey and unfavorable inventory movements in Europe are offset by the robust SFP performance. The raised full-year guidance and strategic investments in innovation and sustainability underline PMI's confidence in continuing its growth trajectory and transformation towards a smoke-free portfolio.