TLDR
- Philip Morris posted Q3 adjusted earnings of $2.24 per share, beating Wall Street’s estimate of $2.09 by $0.15
- Revenue hit $10.8 billion for the quarter, exceeding the $10.6 billion analyst consensus with 5.9% organic growth
- Smoke-free products including Zyn and Iqos now account for 41% of total revenue, up 2.9 percentage points year-over-year
- The company raised its 2025 full-year earnings guidance floor to $7.46-$7.56 from the previous $7.43-$7.56 range
- PM shares fell 7.1% on Tuesday despite the earnings beat, with investors disappointed by Q4 guidance
Philip Morris International reported third quarter results that topped Wall Street expectations on both earnings and revenue. The company posted adjusted earnings of $2.24 per share, beating the consensus estimate of $2.09.
Revenue came in at $10.8 billion for the quarter. That figure surpassed analyst expectations of $10.6 billion and represented 5.9% organic growth compared to the same period last year.
Philip Morris International Inc., PM
Despite the strong results, shares dropped 7.1% on Tuesday. The stock had been up earlier in premarket trading before reversing course.
The company’s smoke-free business continues to gain traction. Products like Zyn nicotine pouches and Iqos heated tobacco devices now make up 41% of total revenue.
That represents a 2.9 percentage point increase from the prior year. The company has set a target for smoke-free products to reach 67% of revenue by 2030.
Philip Morris called out strong performance across its smokeless portfolio. The company said these products are outgrowing the broader industry by a clear margin.
Guidance Disappoints Market
The earnings beat didn’t translate into a stock rally because of the company’s updated guidance. Philip Morris only raised the lower end of its full-year 2025 forecast.
The new range sits at $7.46 to $7.56 per share. The previous guidance had a floor of $7.43 and a ceiling of $7.56.
The updated forecast implies fourth quarter earnings of about $1.67 per share at the midpoint. Wall Street had been expecting $1.80 for the final quarter.
That gap appears to be what sent shares lower. Investors were likely hoping for a more robust guidance increase given the Q3 performance.
Cigarette Business Shows Modest Growth
The traditional cigarette business posted 1% organic revenue growth in the third quarter. That’s a modest figure but still positive.
Philip Morris expects total industry cigarette volume to decline by 1% in 2025. The company is clearly positioning itself for a future where traditional tobacco plays a smaller role.
The shift toward smoke-free products reflects changing consumer preferences. More people are moving away from cigarettes toward alternatives.
Philip Morris has been investing heavily in its smokeless product line. The company views Zyn and Iqos as critical to its long-term growth strategy.
The stock had performed well heading into the earnings report. Shares were up 31% year-to-date through Monday’s close.
The third quarter results showed continued momentum in the smoke-free segment. Revenue from these products is growing faster than the overall tobacco market.
Philip Morris generated strong top-line growth and margin expansion in the quarter. The company’s global smoke-free portfolio is driving positive total volumes.
The company closed at $158.06 per share. The stock has gained 20.28% over the past 12 months but is down 1.87% over the past three months.
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