Ahead of the Q2 2026 Earnings release
Date: July 22, 2026 (Wednesday), before the bell
Consensus: $10.6 billion revenue (+4.5% year-on-year); $2.03 EPS (+6.3% year-on-year)
PMI FY26 Guidance: Net revenue growth of 5%-7% and adjusted diluted EPS growth of 10.2%-12.2%. For Q2 2026, the company expects EPS in the range of $1.97-$2.02 (midpoint: $1.995), including an estimated unfavorable currency impact of $0.03. Consensus expectations are slightly above the guidance
Key Business Metrics: Q2 2026
– Adjusted net revenue: up +10.4% to $11.2 billion (vs. $10.14 billion in Q2 2025; +7.6% organic); crossed the $11 billion mark for the first time in company history; smoke-free revenue up +11.7% (+9.7% organic)
– Adjusted diluted EPS: up +15.2% to $2.20 (vs. $1.91 in Q2 2025; +13.6% ex-FX)
– Adjusted operating income margin: 42.6% (up +0.7pp vs. Q2 2025; +0.7pp organic); adjusted operating income grew +12.4% reported (+10.6% organic) to $4.77 billion, driven by robust pricing, operational scale, and SFP mix expansion.
– Total volume: up +2.5% to 205.2 billion equivalent units (Heated tobacco volume: +7.6% to 41.8 billion; oral nicotine volume: -1.2% to 5.1 billion; e-vapor volume: +55.1% to 1.3 billion; cigarette volume: +1.1% to 156.9 billion)
– Smoke-free weight: ~42% by revenue (up +0.5pp vs. Q2 2025); 23.5% by volume (48.2 billion SFP units). PMI smoke-free products now available in 109 markets.
Results Summary – International
– Smoke-free products (SFPs): 14.2% net revenue growth (11.8% organic) to $3.88 billion, fueled by 8.0% volume growth to 44.7 billion units. Gross profit growth of 17.1% (14.6% organic) to $2.72 billion, with gross margin expanding 1.8pp to 70.1%, reflecting increasing portfolio profitability. IQOS remains the primary global growth engine.
– Heat-not-burn: Holds ~75% (three-quarters) category volume share globally. IQOS gained +0.2pp to reach 9.2% of combined cigarette and HTU industry volumes in markets where present, with HTU shipment volume up +7.6% to 41.8 billion. HTU adjusted In-Market Sales (IMS) volume grew +5.1% (+10% excluding Japan and Poland). In Japan: HTU adjusted IMS declined by 3.4%, but grew +1.0% excluding consumer pantry de-loading following the April 1 excise-driven price increase. IQOS maintained strong category share, exiting June at 68%, with SENTIA playing a key role in capturing price-sensitive TEREA consumers. The overall heated tobacco category reached 51% of total national nicotine offtake in H1 2026. In Europe: IQOS HTU adjusted IMS grew by an estimated 5.1% and market share increased by +1.0pp to 11.8% despite ongoing disruptions in Ukraine and the Poland characterizing flavor ban. Growth was led by strong performance in Germany, Romania, Greece, Spain, and Italy (+10.8% adjusted IMS). Excluding recent flavor ban markets, adjusted IMS volumes grew by ~8%. Outside Europe and Japan: Adjusted IMS grew by +14.4%, with city-level offtake share gains across Mexico City, Jakarta, Riyadh, Kuala Lumpur, and Taipei. Argentina introduced legislation regulating heat-not-burn commercialization in May 2026.
– Modern oral nicotine: Robust modern oral volume growth of +14.7% (+26.3% outside the Nordics) to 0.6 billion pouches, more than offset by legacy snus declines in the Nordics, resulting in total international oral SFP volume down -7.0% to 1.6 billion pouches. ZYN is now available in 60 markets with strong volume growth in the UK, Poland, Greece, Pakistan and the Philippines.
– E-vapor: VEEV quarterly shipments surged +55.1% to 1.3 billion equivalent units. VEEV holds the clear #1 closed pod position in Europe, with continued strong growth in Germany, Romania, and Greece.
– Combustibles: Volume up +1.1% to 156.9 billion units, driven by growth in Turkey, Indonesia, and Egypt. Net revenue grew +9.8% (+6.4% organic) to $6.46 billion, driven by an exceptional pricing variance of +10.0%, partly offset by geographic mix. Gross profit grew +11.5% (+8.0% organic) to $4.39 billion. Overall cigarette category volume share stood flat at 25.3%. Marlboro gained +0.3pp to match its record category share of 11.0%.
Result Summary – USA
– Delivered a significant sequential improvement over Q1, with net revenue down -0.7% (-0.9% organic) to $856 million, composed of a broadly stable top-line for ZYN, declines in cigars, and unfavorable Wellness phasing dynamics. Adjusted gross profit fell -8.9% organic to $560 million (gross margin down -6.0pp to 65.4% due to manufacturing capacity expansion costs). Adjusted OCI decreased -19.1% organic to $279 million due to the phasing of marketing, administrative, and R&D investments in Wellness.
– ZYN offtake volumes were flat to slightly growing versus prior year in a growing category, largely due to an uneven competitive landscape. ZYN shipment volume increased by +1.8% to 2.9 billion pouches (3.5 billion equivalent units)
– In June, expanded the ZYN portfolio with initial shipments of ZYN ULTRA (9mg and 11mg moist variants at a lower price-per-pouch) and additional flavors within the ZYN dry flagship lineup. Plans remain on track to launch 1.5mg and 8mg dry variants in Q3 2026.
– Accelerating ZYN U.S. commercial investments in H2 2026 to maximize long-term brand value and prepare for the future launch of IQOS ILUMA.
– On June 30, the FDA granted Modified Risk Tobacco Product (MRTP) authorization to 20 variants in the flagship ZYN range – marking the first and only MRTP authorization for a nicotine pouch product.
FY26 Guidance
– Reported diluted EPS: $7.19 – $7.34 (down from $7.56 – $7.71 in Q1 guidance; vs. $7.26 in FY 2025), incorporating the $0.33 RBH impairment charge.
– Adj. EPS: $8.26 – $8.41 (down from $8.36 – $8.51 in Q1 guidance), representing an increase of 9.5% to 11.5% (total projected full-year adjustments updated to $1.07 per share).
– Adj. EPS, ex-FX: $8.11 – $8.26, representing an increase of 7.5% to 9.5% (unchanged on a constant currency basis; favorable FX benefit updated for currency only from +$0.25 to +$0.15 per share, as Q2 transactional gains were offset by USD strengthening translational effects).
| Guidance Metric | FY26 (Initial) | FY26 (Interim) | FY26 (Latest) | Commentary |
| Reported Diluted EPS | $7.56 – $7.71 | $7.18 – $7.33 | $7.19 – $7.34 | Dropped -$0.38 in Interim due to the RBH charge ($0.33) & lower FX ($0.05); recovered +$0.01 in Latest as lower add-backs (-$0.06) slightly offset reduced FX. |
| Adjustments: | ||||
| Amortization of Intangibles | $0.50 | $0.50 | $0.50 | Unchanged across all three guidance releases. |
| Fair Value Equity Adjustments | $0.22 | $0.22 | $0.16 | Constant initially, then reduced by -$0.06 in the Latest guidance. |
| Restructuring Charges | $0.03 | $0.03 | $0.03 | Unchanged across all three guidance releases. |
| Swedish Match Financing Tax Impact | $0.05 | $0.05 | $0.06 | Constant initially, then ticked up by +$0.01 in the Latest guidance. |
| Non-Cash Impairment (RBH) | — | $0.33 | $0.33 | +$0.33 discrete equity charge introduced in Interim; carried forward in Latest. |
| Egypt Sales Tax Settlement | — | — | ($0.01) | -$0.01 tax settlement credit introduced in the Latest guidance. |
| Total Adjustments | $0.80 | $1.13 | $1.07 | Jumped by +$0.33 in Interim (RBH charge), then lowered by -$0.06 in Latest (equity valuation changes). |
| Adjusted Diluted EPS | $8.36 – $8.51 | $8.31 – $8.46 | $8.26 – $8.41 | Stepped down -$0.05 at each revision, driven 1:1 by moderating currency tailwinds. |
| Adjusted EPS Growth vs. 2025 | 10.9% – 12.9% | 10.2% – 12.2% | 9.5% – 11.5% | Growth rate lowered by 0.7 percentage points at each step due to FX shifts. |
| Less: Favorable FX Impact | $0.25 | $0.20 | $0.15 | Currency benefit consistently recalibrated downward by -$0.05 in each update. |
| Adjusted Diluted EPS (Ex-FX) | $8.11 – $8.26 | $8.11 – $8.26 | $8.11 – $8.26 | Identical across all three. Underlying operational trajectory remains completely unchanged. |
| Adjusted Organic Growth (Ex-FX) | 7.5% – 9.5% | 7.5% – 9.5% | 7.5% – 9.5% | Identical across all three. Core business targets remain 100% intact. |
FY26 Assumptions
– PMI volume: Broadly stable to slightly growing (upped from broadly stable), with high-single-digit SFP shipment volume growth, and a cigarette shipment volume decline of 2% to 3% (improved from ~3%).
– Net revenue growth: 5% to 7% on an organic basis (unchanged).
– Operating income growth: 7% to 9% on an organic basis (unchanged).
– Broadly stable net financing costs; effective tax rate of around 21.5% (unchanged).
– Operating cash flow: ~$13.5 billion; CAPEX: $1.4 to $1.6 billion, predominantly supporting the smoke-free business (unchanged).
– Leverage: Net debt to adjusted EBITDA ratio targeted close to 2.0x by year-end 2026 (unchanged). No share repurchases (unchanged).
– Q3 2026 EPS Target: $2.20 to $2.25 (including an estimated unfavorable currency impact of $0.08) => Expected: $2.42
Other Highlights
– Non-Cash Impairment of RBH Equity Investment: Recorded a non-cash impairment charge of $511 million in Q2 2026 ($0.33 per share impact) following updated 5-year projections submitted by Canadian affiliate RBH under its court-approved Plan. RBH remains deconsolidated with a remaining carrying value of $51 million as of June 30, 2026.
– The Middle East Conflict: Operational impact remains minor to date, mainly impacting transport, energy, and input costs. No discernible shift in consumer behavior observed. No prolonged impact assumed in the full-year forecast, though modest input cost increases have been factored in.
Download PMI Q2 2026 – Press Release
Download PMI Q2 2026 – Presentation
Download PMI Q2 2026 – Script
