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2Firsts Flash｜PMI Reports 2025 Results as Smoke-Free Products Account for 41.5% of Net Revenues

Feb.06
2Firsts Flash｜PMI Reports 2025 Results as Smoke-Free Products Account for 41.5% of Net Revenues
Philip Morris International reported full-year 2025 results on February 6, with smoke-free products accounting for 41.5% of adjusted net revenues, up from 38.7% a year earlier. Total net revenues rose 7.3% to $40.65 billion, while shipment volumes increased 1.4%, widening the gap between revenue and volume growth. Cigarette shipments declined as smoke-free volumes rose 12.8%, driven by heated tobacco, oral nicotine and e-vapor products. Results were released alongside a 9:00 a.m. EST webcast.

Key Points

 

  • Smoke-free products accounted for 41.5% of PMI’s adjusted net revenues in 2025, up from 38.7% in 2024, according to company disclosures.

 

  • Net revenue growth (+7.3%) outpaced total shipment volume growth (+1.4%), reflecting changes in product mix as cigarette volumes declined and smoke-free shipments increased.

 

  • Smoke-free product shipments rose 12.8%, while cigarette shipments fell 1.5% in 2025, based on PMI earnings materials.

 

  • Combustible products remained the larger revenue base, generating $23.79 billion in net revenues, supported by pricing.

 

 

2Firsts, February 6, 2026

 

2Firsts Flash｜PMI Reports 2025 Results as Smoke-Free Products Account for 41.5% of Net Revenues
Image source: 2Firsts

 

Philip Morris International Inc. (PMI) reported its fourth-quarter and full-year 2025 results on February 6, showing that smoke-free products accounted for 41.5% of the company’s adjusted net revenues, compared with 38.7% in 2024, according to the company’s earnings release and investor presentation.

 

The results were released alongside a webcast scheduled for 9:00 a.m. EST on February 6.

 

PMI defines smoke-free products as including heated tobacco products, oral nicotine products and e-vapor products.

 

 

Revenue Growth Driven by Mix Rather Than Volume

 

PMI reported total net revenues of $40.65 billion in 2025, up from $37.88 billion in 2024. Over the same period, total shipment volumes increased by 1.4% to 786.5 billion units.

 

The contrast between modest total volume growth and higher revenue growth reflects changes in product mix, with smoke-free products expanding both in volume and revenue contribution, based on the company’s disclosures.

 

Cigarette shipment volumes declined 1.5% to 607.4 billion units, while smoke-free product shipments increased 12.8% to 179.1 billion units.

 

 

Smoke-Free Products Approach Half of Revenue While Combustibles Remain the Larger Cash Base

 

Smoke-free product net revenues reached $16.85 billion in 2025, compared with $14.66 billion a year earlier, raising their share of adjusted net revenues to 41.5%.

 

By comparison, combustible product net revenues totaled $23.79 billion in 2025, up from $23.22 billion in 2024, according to the earnings release.

 

The figures indicate that while smoke-free products account for a growing share of revenues, combustible products continue to represent the larger absolute revenue base.

 

 

Profitability Profile Highlights Diverging Margins

 

PMI reported a smoke-free gross margin of 69.5% in 2025, compared with 65.5% for combustible products. Smoke-free products accounted for 42.9% of the company’s adjusted gross profit for the year, according to the presentation.

 

Adjusted operating income margin increased to 40.4% in 2025 from 38.8% in 2024, reflecting changes in revenue mix and pricing, based on PMI’s non-GAAP reconciliation.

 

2Firsts Flash｜PMI Reports 2025 Results as Smoke-Free Products Account for 41.5% of Net Revenues
Pricing and gross profit trends in PMI’s combustible business. The chart compares year-on-year pricing growth and organic gross profit growth across recent fiscal years. The data shows that pricing remained a key contributor to combustible revenues, with pricing growth in FY 2025 below the prior year but above the FY 2021–2023 average. Gross profit growth in combustibles moderated from FY 2024 levels while remaining positive in FY 2025.
Source: PMI Earnings Slides – Q4 2025 [FINAL]

 

 

Product Categories Show Different Scaling Dynamics

 

Heated tobacco products remained the largest smoke-free category by volume, with heated tobacco unit shipments increasing by 11.0% in 2025. PMI reported more than 35 million IQOS users by year-end.

 

In oral nicotine products, U.S. ZYN shipments reached 794 million cans, up from 581 million in 2024, while international nicotine pouch volumes excluding the Nordic markets more than doubled.

 

E-vapor volumes increased to 3.3 billion equivalent units, although they remained smaller in absolute scale compared with heated tobacco and oral products.

 

Regional Data Illustrates Uneven Progress Across Markets

 

In Europe, smoke-free products accounted for more than 50% of PMI’s total regional net revenues in the fourth quarter of 2025, according to the presentation.

 

In Japan, heated tobacco products represented a majority of industry volumes for the year, while in the Americas region, smoke-free net revenues increased 18.1% to $2.69 billion, driven primarily by oral nicotine products.

 

2Firsts Flash｜PMI Reports 2025 Results as Smoke-Free Products Account for 41.5% of Net Revenues
IQOS performance across selected key cities, showing heated tobacco unit (HTU) offtake shares and year-on-year changes in the fourth quarter of 2025. The chart highlights varying levels of HTU penetration across markets, with higher offtake shares observed in several European cities and in global travel retail locations. The data illustrates how heated tobacco products are contributing to PMI’s sales mix in urban markets and specific retail channels.Source: PMI Earnings Slides – Q4 2025 [FINAL]

 

 

Outlook Anchored on Continued Mix Shift

 

For 2026, PMI expects organic net revenue growth of between 5% and 7% and adjusted diluted EPS growth of 11.1% to 13.1%, according to its presentation materials.

 

For the 2026–2028 period, the company targets organic net revenue compound annual growth of 6% to 8% and organic operating income growth of 8% to 10%, with operating cash flow of approximately $45 billion over three years.

 

Cover image source: PMI Earnings Slides – Q4 2025 [FINAL]

 

2FIRSTS | PMI reports full-year 2025 results with net revenues of $40.6 billion and smoke-free net revenues were about $16.9 billion
2FIRSTS | PMI reports full-year 2025 results with net revenues of $40.6 billion and smoke-free net revenues were about $16.9 billion
Philip Morris International (PMI) released its Q4 and full-year 2025 results on February 6, 2026. PMI reported full-year net revenues of $40,648 million ($40.6 billion), reported diluted EPS of $7.26 and adjusted diluted EPS of $7.54. PMI said smoke-free net revenues were $16.9 billion and represented 41.5% of total net revenues, with smoke-free products available in 106 markets and over 43 million estimated adult consumers.
www.2firsts.com

References:
[1] 2025 Fourth-Quarter and Full-Year Results
China Tobacco Regulation Shift：Policy Updates and Market Impact
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