Philip Morris International Inc. (PM) shares climbed Friday after the tobacco giant reported results that showcase just how dramatically the business is transforming. The company famous for Marlboro cigarettes now generates more than half its revenue from smoke-free alternatives in most of its major markets.
Philip Morris Says Smoke-Free Products Now Power Over Half Its Business

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The Numbers Behind the Smoke-Free Shift
Philip Morris delivered fourth-quarter adjusted earnings of $1.70 per share, matching analyst expectations. Revenue came in at $10.362 billion, up 6.8% from last year but slightly below the $10.440 billion consensus estimate.
Here's the headline story: The company's smoke-free business brought in close to $17 billion in 2025 as part of total net revenues surpassing $40 billion. That's a remarkable transformation for what was once purely a traditional cigarette business.
"We achieved another remarkable year of results in 2025, with a fifth consecutive year of volume growth, net revenues surpassing $40 billion, including close to $17 billion from our smoke-free business, and very good operating margin expansion," said Jacek Olczak, Group CEO.
More Than Half the Business Is Now Smoke-Free
On the earnings call, Olczak explained that 27 markets now generate over 50% of net revenue from smoke-free products. That list includes South Korea, Poland, Italy, Romania, and the United States. Eight markets have already crossed the 75% threshold.
Perhaps most significantly, Europe as a region surpassed 50% smoke-free revenue in the fourth quarter. That means three of the company's four regional segments are now majority smoke-free. The business is "increasingly smoke-free," as Olczak put it.
Regional performance was solid across the board. Europe posted revenue growth of 11.0% to $4.598 billion, while SSEA, CIS & MEA sales jumped 8.4% to $3.109 billion.
Smoke-Free Portfolio Accelerates
The smoke-free segment delivered impressive growth metrics in the quarter. Net revenue grew 12.0% on a reported basis (8.6% organically), while gross profit climbed 12.2% (8.3% organically). The momentum suggests this transformation isn't just happening—it's accelerating.
Traditional Cigarettes Still Performing
Interestingly, the combustibles business hasn't collapsed during this transition. Fourth-quarter net revenues from traditional cigarettes grew 3.2% (up 0.3% organically) with gross profit up 5.5% (2.8% organically). Marlboro actually hit a record high 11.0% category share globally.
Adjusted operating income reached $3.722 billion, up 5.8% year-over-year, though operating margin dipped slightly to 35.9% from 36.3% last year. The company closed the quarter with $4.872 billion in cash and equivalents.
Ambitious Targets Ahead
"With excellent results in 2024 and 2025, we have delivered our three-year CAGR targets on operating income and EPS in just two years," Olczak noted.
For fiscal 2026, Philip Morris expects GAAP earnings of $7.87 to $8.02 per share, in line with the $7.94 analyst consensus. Adjusted earnings are projected at $8.38 to $8.53 per share, beating the $8.33 estimate.
First-quarter adjusted earnings are forecast at $1.80 to $1.85 per share, though that comes in below the $1.89 analyst expectation.
Looking further out, the company raised its long-term targets for 2026-2028. Philip Morris now expects 6% to 8% organic net revenue growth, 8% to 10% organic operating income growth, and 9% to 11% adjusted diluted EPS growth excluding currency impacts.
PM Price Action: Philip Morris shares were up 1.48% at $184.68 at the time of publication Friday, trading near the 52-week high of $186.69.
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