Philip Morris 2025 Q2 Earnings Misses Targets as Net Income Rises 24.5%

Philip Morris International (PM) reported its fiscal 2025 Q2 earnings on July 22nd, 2025, showing a revenue increase of 7.1% to $10.14 billion. Despite the growth, the figures fell short of market expectations, which anticipated $10.33 billion. The company raised its full-year adjusted EPS guidance, reflecting confidence in ongoing momentum, especially within its smoke-free product categories. Investors expressed concern over signs of deceleration in cigarette volumes and a less robust operating leverage, which led to a recalibration of expectations.

Revenue

The total revenue for Philip Morris saw a 7.1% increase, reaching $10.14 billion in 2025 Q2 compared to $9.47 billion in 2024 Q2. The smoke-free portfolio contributed significantly to this growth, showcasing strong performance across various markets.

Earnings/Net Income

Philip Morris's EPS climbed 26.6% to $1.95 in 2025 Q2 from $1.54 in 2024 Q2, demonstrating consistent earnings growth. The company's net income for the quarter stood at $3.15 billion, reflecting a substantial 24.5% growth from $2.53 billion in the previous year. These figures highlight a solid financial performance.

Post-Earnings Price Action Review

The strategy of buying PM stocks when revenues exceed expectations and holding them for 30 days yielded a 73.56% return, slightly below the benchmark return of 77.81%. With a Sharpe ratio of 0.82 and a maximum drawdown of 0.00%, the strategy effectively captured market gains while minimizing risk. Despite the less-than-expected revenue figures, the strategy remained robust by leveraging positive revenue surprises to achieve notable returns over the 30-day holding period. However, the market's reaction to the earnings demonstrated investor caution, as shares experienced a downturn amid concerns over cigarette volume declines and overall operating leverage.

CEO Commentary

Emmanuel Babeau, Chief Financial Officer, highlighted Philip Morris's robust performance, emphasizing the smoke-free portfolio's record $4 billion in net revenues. He noted the acceleration in IQOS sales, with a heated tobacco unit growth of 11.4% and ZYN's U.S. consumer offtake growth at 26%. Despite challenges in combustible volumes due to supply chain issues, Babeau expressed optimism about future growth driven by smoke-free products and emphasized their commitment to expanding IQOS, ZYN, and VEEV's market presence.

Guidance

Philip Morris International has raised its adjusted diluted EPS forecast for 2025 to a growth range of 11.5% to 13.5%, with an organic net revenue growth expectation of 6% to 8%. The company anticipates double-digit growth in heated tobacco units for the second half and aims for total volume growth of around 1% for the full year. Capital expenditures are projected to be slightly above $1.6 billion, primarily for smoke-free product capacity investment. The effective corporate tax rate is expected to be around 22% to 23%.

Additional News

Philip Morris International has recently declared a regular quarterly dividend of $1.35 per share, reflecting its ongoing commitment to returning value to shareholders. In addition, the company has announced the launch of a new Investor Relations mobile application, designed to provide users with comprehensive access to stock quotes, press releases, SEC filings, and more. On the M&A front, Philip Morris has participated in the dbAccess Global Consumer Conference, discussing strategic business developments and future growth opportunities. Furthermore, the company has hosted a webcast presentation at this conference, addressing emerging regulatory challenges and innovations in the smoke-free product sector.