Philip Morris International (NYSE: PM) reported a strong second quarter of fiscal year 2026, with adjusted diluted earnings per share rising 15% in dollar terms to $2.20. The company achieved organic net revenue growth of 7.6%, pushing quarterly net revenues past the $11 billion mark for the first time.

This performance was driven by robust international smoke-free product volumes and favorable combustible dynamics, despite strategic decisions to increase U.S. investments in the second half. The company maintained its full-year guidance, citing the need to support ZYN brand equity and portfolio expansion in the United States.

Financial Performance Highlights

The quarter showcased broad-based strength across key metrics. Organic operating income increased close to 11%, while currency-neutral adjusted diluted EPS grew 14%. In dollar terms, the EPS increase reached 15%, aided by a favorable currency impact of $0.03 primarily due to unrealized transactional effects from deferred tax liabilities associated with a weaker Russian ruble.

Smoke-Free Product Momentum

International smoke-free products continued to drive growth, with high single-digit volume growth and double-digit top-line expansion. IQOS adjusted in-market sales volume increased by 5%, excluding transitory headwinds from excise increases in Japan and flavor bans in Poland. Excluding these markets, IQOS growth remained in double digits.

VEEV shipments surged 55% in Q2, with Romania, Greece, and Germany as primary drivers. ZYN shipments in the U.S. increased 2% to 2.9 billion pouches, reflecting stable to slightly growing offtake volumes. The company plans to accelerate U.S. investment in H2 to support ZYN's portfolio expansion, including new variants like ZYN Ultra, and to prepare for the potential launch of IQOS ILUMA.

Combustible Business Resilience

The combustible business outperformed expectations, with shipment volumes increasing 1.1% ahead of forecast. This growth was supported by strong pricing power, with a pricing variance of nearly 10% in Q2, and stable category share at 25.3%. Marlboro maintained its record-high share of 11%. International combustible gross profit grew 8% organically in the quarter.

However, geographic mix remained unfavorable as volume growth skewed toward markets with lower per-unit revenues, such as Indonesia, Turkey, and Egypt, where smoke-free products are banned or limited.

What the Numbers Show

A divergence exists between the reported EPS beat and the underlying operational drivers. While adjusted diluted EPS grew 15% in dollar terms, approximately one-third of the outperformance compared to prior forecasts was attributable to a favorable currency impact linked to unrealized tax effects from the Russian ruble. The remaining two-thirds reflected operational strengths, specifically SG&A phasing where commercial investments shifted to Q3, and stronger-than-expected combustible performance. This suggests that while the core business is robust, a portion of the immediate earnings boost is non-operational and potentially transient.

Guidance and Outlook

Philip Morris Intl maintained its full-year guidance for organic net revenue growth of 5-7% and organic operating income growth of 7-9%. The company now forecasts total shipment volume to be stable to slightly positive for the full year, as high single-digit smoke-free growth offsets cigarette volume declines revised to 2-3%. Adjusted diluted EPS guidance remains at $8.26-$8.41, including an expected currency tailwind of around $0.15.

Philip Morris International Inc. (NYSE: PM) has published its inaugural Taskforce on Nature-related Financial Disclosures (TNFD) report. The document provides a comprehensive assessment of nature-related dependencies, impacts, risks, and opportunities across the company’s global value chain.

This disclosure marks PMI as an early adopter of the TNFD recommendations. The report supports the company’s efforts to integrate natural capital considerations into business resilience and decision-making processes, contributing to emerging practices in nature-related financial reporting.

Strategic alignment with Value Plan 2030+

Nature is identified as one of six strategic priorities within PMI’s Value Plan 2030+, the company’s framework for long-term sustainable value creation. The other priorities include Consumers, Circularity, Climate, Our Workforce, and Workers in Our Value Chain.

The TNFD report follows the release of PMI’s 2025 Climate Transition Plan, prepared in line with the Taskforce on Climate-related Financial Disclosures (TCFD) framework. This sequence represents a broadening of the company’s environmental assessment and disclosure capabilities.

Operational dependencies highlighted

Scott Coutts, Global Chief Operations Officer at PMI, stated that natural capital functions, such as fertile soils, clean water, pollination services, and climate-stabilizing services, support every part of the business. He noted that assessments underpinning the report provide a clear view of where dependencies on ecosystem services could affect agricultural production, manufacturing, and access to key raw materials.

Jennifer Motles, Chief Sustainability Officer at PMI, described the report as a deliberate choice to treat the relationship with nature as a strategic enabler of long-term value creation rather than a compliance exercise. She emphasized that making nature visible in target setting and resource allocation builds understanding that will grow in importance as the reporting landscape matures.

Recognition and broader context

PMI’s environmental stewardship has been recognized recently with its inclusion in Forbes’ 2026 Net Zero Leaders list for the fourth consecutive year, ranking fourth on the list. The company also noted that the TNFD report should be read alongside its annual Value Report, where performance updates are disclosed.

The report includes 'Stories of Impact', highlighting local initiatives in water stewardship, biodiversity, soil restoration, and product circularity. These examples aim to bring the company’s strategy to life through specific projects around the world.

Key disclosures in the inaugural report