AI Takeaway
PM delivered Q2 FY2026 revenue growth of 10.4% and operating-income growth of 22.0%, led by pricing and smoke-free products, but reported net income and diluted EPS fell 7.3% and 7.7%, respectively, largely reflecting a $511M non-cash RBH investment impairment. Source: 10-Q Item 2 MD&A, pp.45-46, 52-53.
Revenue
$11.19B
++10.37% YoY
EPS (Basic)
$1.80
-7.69% YoY
Gross Margin
68.4%
++0.72% YoY
Operating Income
$4.53B
++22.04% YoY
Filed · Source: SEC EDGAR 10-Q filing
Philip Morris International (PM) reported Q2 FY2026 revenue of $11.19B, up 10.4% year over year. The company posted net income of $2.82B, down 7.3% from a year earlier, with diluted EPS of $1.80. Gross margin was 68.4%.
Q2 FY2026 net revenues rose 10.4% year over year to $11.2B; excluding currency and acquisitions/divestitures, revenue increased 7.6%. Management attributed the increase principally to favorable pricing in international combustibles, supported by favorable volume/mix from international smoke-free volumes.
Source: 10-Q Item 2 MD&A, pp.45, 52-53
Total smoke-free revenue increased 11.7% year over year to $4.6B in Q2 FY2026. International Smoke-Free revenue rose 14.2% to $3.9B, while U.S. smoke-free revenue was essentially flat at $768M, up 0.3%.
Source: 10-Q Item 2 MD&A, p.48
Operating income increased 22.0% to $4.5B in Q2 FY2026, supported by pricing and lower restructuring charges. However, PMI recorded a $511M non-cash impairment on its RBH equity investment, equivalent to a $0.33 per-share reduction in diluted EPS.
Source: 10-Q Item 2 MD&A, pp.45-46, 52-53
Total Q2 shipment volume increased 2.5% to 205.2B equivalent units. Smoke-free product volume grew 7.5%, including a 7.6% increase in heated tobacco units and a 55.1% increase in e-vapor, while cigarette volume increased 1.1%.
Source: 10-Q Item 2 MD&A, p.52
For full-year 2026, management expects broadly stable to slightly growing total cigarette and smoke-free shipment volume, high-single-digit smoke-free shipment-volume growth, and a 2% to 3% decline in cigarette shipment volume. This revised the prior outlook for broadly stable total volume and an approximately 3% cigarette-volume decline.
Source: 10-Q Item 2 MD&A, p.50
Q2 FY2026 net income declined 7.3% to $2.8B despite higher operating income. The period included a $511M non-cash impairment related to the RBH equity investment, illustrating that investment valuations can materially affect reported earnings.
Source: 10-Q Income Statement (XBRL)
Current assets were $26.0B versus current liabilities of $26.5B, producing a current ratio of 0.98. This means reported current assets did not fully cover current liabilities at period end, although cash and equivalents increased to $6.0B.
Source: 10-Q Balance Sheet (XBRL)
Stockholders' equity was negative $8.6B at period end, while total liabilities were $74.9B. As a result, the reported debt-to-equity ratio was negative and is not a meaningful conventional measure of financial leverage; the capital structure remains dependent on sustained cash generation and access to financing.
Source: 10-Q Balance Sheet (XBRL)
For the fiscal year-to-date period, PMI paid $4.6B of dividends, compared with $5.1B of operating cash flow. This leaves a relatively limited operating-cash-flow surplus before capital expenditures and other capital-allocation needs.
Source: 10-Q Cash Flow Statement (XBRL)
Reported EPS of $2.20 versus the $2.11 analyst consensus — a +4.5% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $11.19B | $10.14B | +10.37% |
Cost of Revenue | $3.53B | $3.27B | +7.91% |
Gross Profit | $7.66B | $6.87B | +11.55% |
Operating Income | $4.53B | $3.71B | +22.04% |
Net Income | $2.82B | $3.04B | -7.31% |
EPS (Basic) | $1.80 | $1.95 | -7.69% |
EPS (Diluted) | $1.80 | $1.95 | -7.69% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $68.27B | $68.51B | -0.34% |
Current Assets | $26.01B | $23.36B | +11.31% |
Total Liabilities | $74.93B | $78.52B | -4.57% |
Current Liabilities | $26.54B | $28.15B | -5.71% |
Stockholders' Equity | $-8.58B | $-11.97B | +28.27% |
Cash & Equivalents | $6B | $4.14B | +44.97% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $5.09B | $3.06B | +66.33% |
Investing Cash FlowYTD | $23M | $-2.75B | +100.84% |
Financing Cash FlowYTD | $-3.88B | $-890M | -335.84% |
Dividends PaidYTD | $4.6B | $4.22B | +9.05% |
D&A | $513M | $490M | +4.69% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 68.4% | 67.7% | +0.72% |
Operating Margin | 40.5% | 36.6% | +3.87% |
Net Margin | 25.2% | — | — |
ROE | -32.8% | — | — |
ROA | 4.1% | — | — |
Current Ratio | $0.98 | — | — |
Debt to Equity | $-8.73 | — | — |
Expected release date, analyst estimates & what to watch
Philip Morris International delivered strong Q1 2026 top-line growth with revenue up 9.1% YoY to $10.1B and operating income rising 9.8% to $3.9B, though net income declined 9.4% to $2.4B, likely due to higher below-the-line costs, while the company continues to operate with negative stockholders' equity.
Philip Morris International delivered strong FY2025 results with revenue rising 7.3% to $40.6B and net income surging 60.8% to $11.3B, driven by significant gross margin expansion to 67.1% and robust operating cash flow of $12.2B.
Other companies in Tobacco
PM generated Q2 FY2026 revenue of $11.2B, up 10.4% year over year. Excluding currency and acquisitions/divestitures, revenue rose 7.6%, primarily from favorable international-combustibles pricing and international smoke-free volume growth. Source: 10-Q Item 2 MD&A, pp.45, 52-53.
PM's diluted EPS fell 7.7% to $1.80 even as operating income rose 22.0% to $4.5B. The principal reported item affecting earnings was a $511M non-cash impairment of its RBH equity investment, which reduced diluted EPS by $0.33 per share. Source: 10-Q Item 2 MD&A, pp.45-46, 52-53.
Total smoke-free revenue increased 11.7% to $4.6B, led by a 14.2% increase in International Smoke-Free revenue to $3.9B. Smoke-free shipment volume grew 7.5%, with heated tobacco units up 7.6% and e-vapor volume up 55.1%. Source: 10-Q Item 2 MD&A, pp.48, 52.
PM ended the period with $6.0B of cash and equivalents, up 45.0% year over year, and generated $5.1B of fiscal year-to-date operating cash flow. However, its current ratio was 0.98 and stockholders' equity was negative $8.6B, which limits the usefulness of conventional leverage metrics and indicates a tight reported working-capital position. Source: 10-Q Balance Sheet and Cash Flow Statement (XBRL).
For full-year 2026, PM expects broadly stable to slightly growing total cigarette and smoke-free shipment volume and high-single-digit smoke-free volume growth. It expects cigarette shipment volume to decline 2% to 3%, an improvement from its prior expectation of an approximately 3% decline. Source: 10-Q Item 2 MD&A, p.50.