Philip Morris Leans Into Smoke-Free to Fuel Growth — Update

By Connor Hart

Consumers craving a nicotine hit increasingly want it without smoke, a trend that is transforming Philip Morris International's business.

The tobacco company on Friday said its smoke-free business last year accounted for about 42% of revenue, or nearly $17 billion. At the same time, the unit has roughly doubled its profitability over the past five years. It made up about 43% of the company's bottom line in 2025.

"Our business is increasingly smoke free," Chief Executive Jacek Olczak said on a call with analysts Friday.

Twenty-seven markets--including South Korea, Poland and Italy--saw more than half of sales come from smoke-free products during the recent quarter. And the U.S. was one of eight markets where smoke-free accounted for more than three-quarters of revenue.

Leading the charge are nicotine pouches. They currently account for a high-single-digit percent of total industry volumes and are the fastest-growing nicotine category, Philip Morris said.

Among nicotine pouches, Zyn is the leading global brand, representing nearly 40% of sales. Zyn shipment volumes reached 196 million cans during the latest quarter, up 19% from a year ago. Full-year shipment volumes totaled 794 million cans.

"The U.S. represents approximately two-thirds of the category today," Chief Financial Officer Emmanuel Babeau said. "The international market, though still relatively small, is growing rapidly."

Continued growth across its smoke-free business helped offset declining cigarette volumes. The Marlboro maker said cigarette volumes declined 1.5% last year, slightly better than its expectation for a 2% drop.

Philip Morris expects its smoke-free portfolio to drive growth for years to come. Its compounded annual growth targets through 2028 call for a 6% to 8% increase in net revenues, an 8% to 10% increase in operating income and a 9% to 11% rise in adjusted per-share earnings.

Shares rose 2%, to $185.68, in recent trading, reversing earlier premarket losses, as investors looked past a slight revenue miss and focused on continued growth in smoke-free products.

The company notched revenue of $10.36 billion, up 6.8% from a year ago but just below the $10.38 billion that analysts surveyed by FactSet expected. Adjusted quarterly earnings came in at $1.70 a share, in line with Wall Street views.

For the current quarter, Philip Morris guided for adjusted earnings of $1.80 to $1.85 a share, compared with analyst forecasts for $1.89 a share. For the year, adjusted earnings are expected to be between $8.38 and $8.53 a share, compared with projections for $8.34 a share.

The company said its outlook assumes net revenue growth of 5% to 7% for the year, as well as organic operating income growth of 7% to 9%.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

February 06, 2026 11:51 ET (16:51 GMT)