In Q1, we delivered a very strong start to the year with all key elements of the business contributing strongly to deliver double-digit increases in organic net revenue, operating income, and adjusted diluted EPS in both constant currency and dollar terms.
— Emmanuel Babeau
03Detailed Report
PM
Company PM
Period
Q1 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 15, 2026
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Executive Summary
PM reported a very strong start to 2025, led by the smoke-free portfolio. Q1 2025 revenue was $9.31 billion with organic net revenue up about 12% excluding the Indonesia below-tier-one adjustment, and overall revenue up 5.8% year over year. The smoke-free segment again drove earnings vigor: net revenue +20.4%, gross profit +33.1%, and organic gross margin expansion of 670 basis points to above 70% for the segment, while IQOS and ZYN contributed meaningfully to margin improvements across the portfolio. Management highlighted capacity gains and ongoing pricing discipline as key drivers of profitability, with adjusted OI margin up 250 basis points (to 40.7% on an adjusted basis) and adjusted diluted EPS growth of 12.7% in USD terms to $1.69 for the quarter.
Key Performance Indicators
Revenue
Increasing
9.30B
QoQ: -4.17% | YoY: 5.78%
Gross Profit
Increasing
6.26B
67.32% margin
QoQ: -0.35% | YoY: 11.84%
Operating Income
Increasing
3.54B
QoQ: 8.75% | YoY: 30.63%
Net Income
Increasing
2.69B
QoQ: 564.59% | YoY: 25.23%
EPS
Increasing
1.72
QoQ: 564.86% | YoY: 24.64%
Revenue Trend
Margin Analysis
Financial Highlights
Summary of headline metrics and notable trend drivers:
- Revenue: $9.301 billion; YoY +5.8%; QoQ -4.2%; Organic net revenue up approximately +12% excluding Indonesia impact; total volume +3.9% YoY.
- Smoke-free performance: net revenue +20.4%; gross profit +33.1%; organic gross margin expansion +670 bps to >70%; ZYN shipments +53% YoY to 202 million cans; IQOS HTU IMS growth +9.4% (Q1); VEEV shipments more than doubled YoY.
- Margin and profitability: gross margin organic expansion +340 bps; adjusted operating income margin +250 bps; reported operating margin ~38.1%; net income $2.69B; net margin ~28.9%; EPS $1.72 (GAAP) vs. adjusted EPS growth in the call of $1.69 (adjusted).
- Cash flow and balance sheet: operating cash flow negative in Q1 (-$350M) driven by working capital dynamics; free cash flow negative (-$754M); cash and equivalents ~$4.44B; total debt ~$49.58B; net debt ~$45.14B; negative stockholders’ equity of -$10.91B on the balance sheet; interest coverage ~8.1x.
- Guidance and outlook: currency-neutral net revenue growth guided +6% to +8% for 2025; organic OI growth +10.5% to +12.5%; currency-neutral adjusted diluted EPS +10.5% to +12.5%; 2025 adjusted diluted EPS raised to $7.36-$7.49; ZYN U.S. shipments raised to 800–840 million cans; HTU IMS growth targeted at ~+10% in Q2 and +10–12% for the year.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
9.30B
5.78%
-4.17%
Gross Profit
6.26B
11.84%
-0.35%
Operating Income
3.54B
30.63%
8.75%
Net Income
2.69B
25.23%
564.59%
EPS
1.72
24.64%
564.86%
Key Financial Ratios
Gross Profit Margin
Excellent
64.50%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Excellent
40.80%
Operating margin is exceptional, indicating strong pricing power and operational efficiency
Net Profit Margin
Excellent
29.00%
Net profit margin is exceptional, indicating strong pricing power and operational efficiency
Return on Assets
Fair
4.12%
Return on assets is acceptable but below top-tier companies
Return on Equity
Weak
-0.25%
Return on equity suggests inefficient capital allocation
Current Ratio
Concern
0.79
Current ratio below safe levels, potential liquidity risk
Debt to Equity
Conservative
-4.55
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Fair Value
22.99x
P/E ratio in line with market averages
Price to Book
Undervalued
-22.63x
Trading below book value, potential value opportunity or distressed
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