Philip Morris International (PMI), the world’s largest tobacco company by market capitalization, reported second-quarter results that fell short of analyst revenue expectations, leading to a 7% drop in its share price during Tuesday’s trading session.
The weaker-than-expected top-line performance was largely attributed to a decline in cigarette shipments and lower-than-forecasted sales of ZYN nicotine pouches, PMI’s fast-growing smoke-free product.
While total revenue rose 7.1% year-over-year to $10.14 billion, it missed the $10.33 billion consensus estimate compiled by LSEG.
Cigarette shipment volumes declined 1.5% in the quarter, underlining ongoing headwinds in the company’s core traditional tobacco business.
Although volumes of nicotine pouches rose 23.8%, ZYN shipments reached only 190 million cans, falling short of the 203 million projected by analysts, according to Bernstein’s Callum Elliot.
“These numbers risk being not quite ‘good enough’ for the higher bar that PMI is likely to be held to today,” Elliot said in a research note, pointing to heightened investor expectations following a strong run of quarterly results. PMI’s shares had gained 50% year-to-date through Monday’s close.
Smoke-free products continue to drive growth
Despite the revenue miss, PMI’s adjusted earnings per share for the second quarter came in ahead of expectations at $1.95, surpassing the consensus forecast of $1.86.
The company raised its full-year adjusted EPS guidance to a range of $7.43 to $7.56, up from the previous range of $7.36 to $7.49.
The upward revision was driven by robust momentum in PMI’s smoke-free portfolio, including IQOS heated tobacco sticks and ZYN oral nicotine pouches.
Sales of oral nicotine products surged 32.5% in the Americas during the quarter, with nearly 225 million cans shipped—primarily driven by ZYN’s performance in the United States.
ZYN has rapidly become a cornerstone of PMI’s transformation strategy, offering consumers a smoke-free alternative that contains nicotine but not tobacco.
The US Food and Drug Administration’s approval of all ZYN pouches currently marketed in the country has further bolstered confidence in the product’s long-term prospects.
Smoke-free products now account for 41% of PMI’s total net revenue.
The company aims to derive over half of its revenue from alternatives to cigarettes by the end of 2025, with a longer-term goal of exceeding two-thirds by 2030.
IQOS expansion gains traction across global markets
In addition to strong US performance, PMI reported continued growth for its flagship IQOS heated tobacco system across multiple international markets.
IQOS generated over $3 billion in quarterly net revenue, with notable market share gains in Japan and solid performance in Germany and Greece.
PMI has also started rolling out IQOS on a limited basis in the United States, a move that signals a broader push to diversify its revenue streams and reduce dependency on traditional combustible products.
Though PMI resolved manufacturing disruptions that caused ZYN shortages last year, the impact of restocking in the first half of 2025 was slightly below expectations.
Nevertheless, the company remains focused on expanding its smoke-free portfolio to navigate regulatory and economic pressures in the tobacco sector.
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