PM 8-K: Smart Summary

Philip Morris International reported Q2 2026 results on July 22, 2026, with net revenues surpassing $11B for the first time, driven by growth in both smoke-free and combustibles segments. Reported diluted EPS declined 7.7% to $1.80 due to a non-cash $511M RBH equity investment impairment, while adjusted diluted EPS grew 15.2% to $2.20. PMI updated its 2026 full-year adjusted diluted EPS forecast to $8.26–$8.41, revising only the currency assumption.

• Net revenues: $11.2B in Q2 2026, up 10.4% reported (7.6% organically) vs. Q2 2025; $21.3B for H1 2026, up 9.8% reported (5.3% organically)
• Gross profit: $7.7B in Q2, up 11.5% reported (8.7% organically); adjusted gross profit margin 68.5% (up 0.7pp vs. Q2 2025)
• Operating income: $4.5B in Q2, up 22.0% reported (10.7% organically); $8.4B for H1, up 16.1% reported (6.1% organically)
• Adjusted operating income: $4.8B in Q2, up 12.4%; adjusted OI margin 42.6% (up 0.7pp vs. Q2 2025)
• Reported diluted EPS: $1.80 in Q2 2026, down 7.7% from $1.95 in Q2 2025; $3.36 for H1 2026, down 8.4% from $3.67
• Adjusted diluted EPS: $2.20 in Q2 2026, up 15.2% from $1.91; up 13.6% excluding 3-cent favorable currency impact; $4.16 for H1, up 15.6% from $3.60
• Net cash provided by operating activities: $5.5B in Q2 2026, up 61.0% vs. Q2 2025; $5.1B for H1 2026, up 66.3%
• Net earnings attributable to PMI: $2.8B in Q2, down 7.3%; $5.3B for H1, down 8.3%

• International Smoke-Free: Q2 net revenues $3.9B, up 14.2% reported (11.8% organically); shipment volume up 8.0%; gross profit up 17.1% reported (14.6% organically); adjusted gross profit margin 70.1% (up 1.8pp); adjusted OCI $4.6B, up 15.5%
• International Combustibles: Q2 net revenues $6.5B, up 9.8% reported (6.4% organically); cigarette volume up 1.1%; gross profit up 11.5% reported (8.0% organically); adjusted gross profit margin 67.9% (up 1.0pp)
• U.S.: Q2 net revenues $856M, down 0.7% reported (0.9% organically); gross profit down 9.2% reported (8.9% organically); adjusted gross profit margin 65.4% (down 6.0pp); ZYN shipments up 1.8% to 2.9 billion pouches; adjusted OCI $279M, down 20.8%
• Total Smoke-Free (PMI-wide): Q2 net revenues $4.6B, up 11.7% reported (9.7% organically); accounts for approximately 42% of total Q2 net revenues
• Total Combustible Tobacco (PMI-wide): Q2 net revenues $6.5B, up 9.5% reported (6.1% organically)
• H1 International Smoke-Free: net revenues $7.7B, up 19.2% reported (13.7% organically); volume up 9.9%
• H1 International Combustibles: net revenues $12.1B, up 8.4% reported (3.8% organically); volume down 1.9%
• H1 U.S.: net revenues $1.5B, down 16.1% reported (16.5% organically); volume down 10.0%

• Cash and cash equivalents: $6B as of June 30, 2026 (vs. $4.9B as of December 31, 2025)
• Total debt: $49.1B as of June 30, 2026 (vs. $48.8B as of December 31, 2025); includes short-term borrowings of $3.3B, current portion of long-term debt of $3.4B, and long-term debt of $42.4B
• Net debt: $43.1B as of June 30, 2026 (vs. $44B as of December 31, 2025)
• Net debt to adjusted EBITDA ratio: 2.35x as of June 30, 2026 (vs. 2.53x as of December 31, 2025); targeting close to 2.0x by end of 2026
• Total debt to adjusted EBITDA ratio: 2.68x as of June 30, 2026 (vs. 2.81x as of December 31, 2025)
• Trailing 12-month adjusted EBITDA: $18.4B
• No share repurchases planned for 2026
• Non-cash impairment charge of $511M ($0.33 per diluted share) recorded in Q2 2026 related to the RBH equity investment; remaining carrying value of RBH $51M as of June 30, 2026

• "We delivered outstanding results in the second quarter, driving net revenues to over $11B for the first time with excellent growth across all headline metrics," said Jacek Olczak, Group CEO PMI.
• "With a robust first half under our belt, including continued momentum and strong results in our smoke-free business, we are well positioned to deliver on our full-year targets while investing for future growth," said Jacek Olczak, Group CEO PMI.

• 2026 full-year reported diluted EPS forecast: $7.19–$7.34 at prevailing exchange rates
• 2026 full-year adjusted diluted EPS forecast: $8.26–$8.41, representing growth of 9.5%–11.5% vs. 2025 adjusted diluted EPS of $7.54
• Excluding currency (favorable impact of $0.15), adjusted diluted EPS growth of 7.5%–9.5% vs. $7.54 in 2025 (prior currency assumption was $0.20)
• Q3 2026 adjusted diluted EPS guidance: $2.20–$2.25, including estimated unfavorable currency impact of 8 cents at prevailing exchange rates
• Total PMI shipment volume: broadly stable to slightly growing (previously broadly stable); SFP shipment volume high-single digit growth; cigarette volume decline of 2%–3% (previously around 3%)
• Net revenue growth: 5%–7% on an organic basis
• Organic operating income growth: 7%–9%
• Operating cash flow: around $13.5B at prevailing exchange rates
• Capital expenditures: $1.4–$1.6B, predominantly supporting smoke-free business
• Effective tax rate excluding discrete tax events: around 21.5%
• Net debt to adjusted EBITDA ratio: targeting close to 2.0x by end of 2026
• No share repurchases