On April 22, Philip Morris International (PMI) released its first-quarter 2026 earnings report, and the numbers tell a clear story: the company’s revenue and profits continued to climb, with its smoke-free products business remaining a key driver of growth—proving once again that its shift toward reduced-risk alternatives is paying off.
Overall Q1 Performance: Beating Expectations Across the Board
For the first quarter of 2026, PMI reported solid top-and bottom-line growth that outpaced its own projections. Here’s a breakdown of the key financials:
- Net Revenue: $10.1 billion, up 9.1% year-over-year (YoY), with organic growth of 2.7%.
- Gross Profit: $6.9 billion, a 10.1% YoY increase—reflecting strong pricing power and operational efficiency.
- Operating Profit: $3.89 billion, rising 9.8% YoY, as the company continues to streamline its operations and focus on high-margin products.
- Earnings Per Share (EPS): Reported EPS stood at $1.56, a 9.3% YoY decline; however, adjusted EPS—excluding one-time items—rose 16% YoY to $1.96, or 5.3% when excluding currency impacts.
PMI executives highlighted that the quarter’s performance exceeded internal expectations, with smoke-free products standing out as the star performer. Today, the company’s smoke-free offerings are available in 108 markets worldwide, accounting for 43% of its total net revenue—a testament to how central these products have become to its long-term strategy.
VEEV: E-Cigarette Shipments Hit 1 Billion Units for the First Time
In the e-cigarette segment, PMI’s VEEV brand continued its impressive growth trajectory, hitting a major milestone this quarter. According to the earnings report, VEEV’s quarterly shipments surpassed 1 billion equivalent units for the first time ever—a significant achievement that underscores its growing popularity in key markets.
Nielsen retail data further supports VEEV’s momentum: the brand is now tied for the top spot in Europe’s closed-pod e-cigarette market. Its growth has been particularly strong across several European countries, including Germany, France, Romania, Italy, Greece, and Bulgaria—markets where consumers are increasingly turning to smoke-free alternatives.
PMI emphasized that it will continue to expand VEEV’s commercial presence “in a responsible and sustainable manner,” aligning with its commitment to reducing the harm caused by tobacco use while meeting consumer demand.
ZYN: Strong Retail Sales Offset by U.S. Channel Inventory Adjustments
In the oral nicotine category, PMI is pushing forward with the global expansion of its ZYN brand. The report shows that modern nicotine pouch sales reached 500 million units this quarter, and ZYN is now available in 58 markets around the world.
In the U.S.—ZYN’s largest market—retail sales rose 10% YoY, a sign that consumer demand remains strong. However, shipment volumes fell 23.5% this quarter to 2.3 billion pouches (approximately 155 million cans). PMI attributed this decline to a normalizational adjustment in channel inventory, noting that it’s a temporary shift rather than a reflection of weakening demand.
Looking ahead, the company is gearing up to launch ZYN ULTRA, a new product currently under review by the U.S. Food and Drug Administration (FDA). If approved, the new offering could further boost ZYN’s position in the competitive U.S. oral nicotine market.
IQOS: Remaining the Core Growth Engine for Smoke-Free Business
When it comes to heated tobacco units (HTU), IQOS—PMI’s flagship heated tobacco product—remains the backbone of its smoke-free growth. The numbers speak for themselves:
- HTU Shipments: Up 11.3% YoY.
- HTU Retail Sales: A 10.9% YoY increase, showing strong consumer adoption.
- Global Market Share: PMI holds approximately 77% of the global HTU category, cementing its dominance in the space.
Notably, PMI stated that IQOS has overtaken Marlboro to become the top nicotine brand in the markets where it operates. In the combined cigarette and HTU market, IQOS now holds a 10.9% share—up 1.7 percentage points YoY.
Key market performance highlights for IQOS include:
- Japan: HTU sales rose 10.4% YoY, with IQOS capturing nearly 70% of the HTU market and 34.9% of the overall nicotine market.
- Europe: HTU sales increased 5.4% YoY, with IQOS holding a 12.6% share of the region’s HTU market.
- Other Markets: HTU sales jumped 19.4% YoY, with standout growth in Taiwan, China—where IQOS has reached nearly 6% market share. PMI called this launch one of its most successful new market entries in recent years.
2026 Full-Year Outlook: Confidence in Smoke-Free Growth
Looking ahead to the full year 2026, PMI provided a positive outlook, with expectations centered on continued growth driven by its smoke-free portfolio. Here’s what the company is projecting:
- Adjusted EPS: $8.36 to $8.51, representing a YoY growth of 10.9% to 12.9%.
- Smoke-Free Product Sales: High single-digit growth, as the company expands its footprint and introduces new products.
- Cigarette Sales: A projected 3% decline, consistent with long-term trends as consumers shift to smoke-free alternatives.
- Capital Expenditures: $1.4 billion to $1.6 billion, with the majority allocated to smoke-free product development and expansion—reinforcing PMI’s commitment to its long-term strategy.
As global tobacco consumers increasingly prioritize reduced-risk options, PMI’s focus on smoke-free products—from VEEV and IQOS to ZYN—positions it well to maintain its growth trajectory in the years ahead. The first quarter’s results, particularly VEEV’s milestone and IQOS’s continued dominance, signal that the company’s transition is not just on track, but accelerating.