Philip Morris International (NYSE:PM) reported robust financial results for the first quarter of 2026, highlighted by the continued aggressive expansion of its smoke-free portfolio.
The company saw net revenues climb to $10.1 billion, representing a 9.1% increase (2.7% organic) over the prior year.
The results underscore a pivotal shift in the company's business model, as smoke-free products (SFP) now account for 43% of total net revenues.
A major milestone was achieved during the quarter as IQOS officially surpassed Marlboro to become the number-one nicotine brand by volume in the markets where it is present.
IQOS now holds a 10.9% share of the combined cigarette and heated tobacco unit (HTU) industry volumes in those regions.
This growth was supported by an 11.3% increase in HTU shipment volumes, with the company maintaining a dominant 77% volume share of the global heat-not-burn category.
The International Smoke-Free segment remained the primary engine of growth, with net revenues surging 24.7% (15.8% organic).
This top-line momentum translated into significant bottom-line gains, with segment gross profit rising 28.6% (19.4% organic), reflecting the superior margin profile of the smoke-free portfolio compared to traditional combustibles.
While the smoke-free business led the way, the combustible tobacco segment also contributed to the quarter’s success, with revenues up 6.7%.
This was largely driven by strong pricing power, which helped offset a generally flat organic volume environment.
Overall, PMI's gross profit increased by 10.1%, expanding margins through a combination of strategic pricing and operating leverage.