EPS of $2.23 increased by 12.6% from previous year
Gross margin of 67.8%
Net income of 3.48B
"N/A" - N/A
Philip Morris International Inc (4I1.DE) QQ3 2025 Results Analysis: Resilient Revenue Growth and High Margins Amid Leverage and Regulatory Risk
Executive Summary
Philip Morris International delivered a solid Q3 2025, reporting revenue of USD 10.845 billion, up 9.4% Year-over-Year and 6.95% Quarter-over-Quarter. The company posted gross profit of USD 7.358 billion and operating income of USD 4.263 billion, yielding an operating margin of 39.31% and a net margin of 32.07%. EBITDA stood at USD 5.14 billion, contributing to a robust EBITDA margin of approximately 39.3%. Earnings per share were USD 2.23, up about 12.6% YoY and 14.4% QoQ. These results reflect continued pricing discipline, favorable mix, and underlying strength outside the United States, with a healthy liquidity position and stable current assets versus liabilities.
However, the data also reveal elevated leverage metrics and a challenging balance sheet complexion by accounting conventions, including a debt ratio around 0.75, total and long-term debt capitalization exceeding 1 in the provided figures, and a negative return on equity (-0.32). Cash flow metrics for operating and free cash flow per share are reported as zero in the dataset, suggesting either data gaps or chronic cash flow reporting limitations for this period. Investors should weigh PMI’s durable profitability and cash generation against elevated leverage, potential regulatory pressures, and currency exposures as critical risk factors in the near term.
Key Performance Indicators
Revenue
10.85B
QoQ: 6.95% | YoY:9.42%
Gross Profit
7.36B
67.85% margin
QoQ: 7.24% | YoY:12.42%
Operating Income
4.26B
QoQ: 13.59% | YoY:16.67%
Net Income
3.48B
QoQ: 14.75% | YoY:12.85%
EPS
2.23
QoQ: 14.36% | YoY:12.63%
Revenue Trend
Margin Analysis
Key Insights
Revenue: USD 10,845,000,000 for Q3 2025 (calendar Q3).
Revenue and profitability:
- Revenue: USD 10,845,000,000 for Q3 2025 (calendar Q3).
- Gross Profit: USD 7,358,000,000; Gross Margin: 67.85%.
- Operating Income: USD 4,263,000,000; Operating Margin: 39.31%.
- Net Income: USD 3,478,000,000; Net Margin: 32.07%.
- EBITDA: USD 5,140,000,000; EBITDA Margin: ~39.31%.
- EPS: USD 2.23; Diluted EPS: USD 2.23.
- YoY vs. QoQ growth (as provided in the data): Revenue YoY +9.42%, QoQ +6.95%; Gross Profit YoY +12.42%, QoQ +7.24%; Operating Income YoY +16.67%, QoQ +13.59%; Net Income YoY +12.85%, QoQ +14.75%.
Liquidity and leverage:
- Current Ratio: 2.76; Quick Ratio: 2.00; Cash Ratio: 0.491.
- Debt Ratio: 0.747; Total Debt to Capitalization: 1.279; Long-Term Debt to Capitalization: 1.353.
- Interest Coverage: 18.53x.
- Cash per Share: USD 2.59; Book value per share not provided; Price-to-Book ratio in the data shows a negative value (PBV −23.14), suggesting substantial accounting considerations in the reported book value.
Efficiency and turnover:
- Receivables Turnover: 1.747x; Payables Turnover: 2.55x; Inventory Turnover: 0.562x; Asset Turnover: 0.162x; Days Sales Outstanding: 51.53 days; Days Inventory Outstanding: 160.26 days; CCC: 176.44 days.
Valuation and market metrics:
- Price-to-Earnings (P/E): 18.15x; Price-to-Sales (P/S): 23.29x; Price-to-Book (P/B): negative (−23.14x) indicating abnormal balance sheet metrics or accounting treatment.
- Dividends: Dividend Yield: 0.0% (no payout ratio provided in the data).
- Enterprise Value Multiple: 58.09x; Price/Earnings to Growth (PEG): 1.264x.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
10.85B
9.42%
6.95%
Gross Profit
7.36B
12.42%
7.24%
Operating Income
4.26B
16.67%
13.59%
Net Income
3.48B
12.85%
14.75%
EPS
2.23
12.63%
14.36%
Key Financial Ratios
currentRatio
2.76
grossProfitMargin
67.8%
operatingProfitMargin
39.3%
netProfitMargin
32.1%
returnOnAssets
5.19%
returnOnEquity
-31.9%
debtEquityRatio
-4.59
priceToBookRatio
-23.14
priceEarningsRatio
18.15
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management call transcript data not provided in the supplied input. As a result, there are no verbatim management quotes or theme-by-theme quotes to extract. Key thematic insights typically drawn from calls would include guidance on smokefree product acceleration, regional volume mix, pricing and tax dynamics, and near-term cost trajectory; these cannot be conclusively reported without the transcript.
Note: In the absence of transcripts, the analysis relies on the disclosed financials and the qualitative context implied by the numbers.
N/A
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N/A
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Forward Guidance
Explicit management guidance for Q4 2025 or full-year 2025 was not included in the provided data. Given PMI’s strong Q3 profitability and the ongoing strategic emphasis on smokefree products (HEETS, Marlboro variants) outside the U.S., the implied trajectory would favor continued revenue growth and margin resilience, assuming mix optimization and price/tax dynamics remain favorable. Investors should monitor: (1) regulatory and tax environment across PMI’s international markets, (2) currency headwinds/tailwinds given USD-based reporting in a largely non-U.S. revenue base, (3) relative performance of smokefree portfolios versus combustible products, and (4) progress on deleveraging if management intends to address elevated leverage metrics. The achievability of any implied guidance hinges on these macro and regulatory factors, as well as ongoing efficiency gains.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
4I1.DE Focus
67.85%
39.30%
-31.90%
18.15%
PHM7.DE
71.30%
59.00%
-66.10%
9.45%
BMT.DE
80.90%
48.40%
-17.50%
-1.57%
4AB.DE
70.90%
26.50%
25.90%
55.38%
PEP.DE
53.00%
14.90%
13.40%
19.25%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Quantitative signals point to PMI delivering solid profitability with a robust gross and operating margin profile, supported by YoY revenue growth and a large international footprint. The Q3 2025 results exhibit resilience in a mature industry, with an EBITDA margin consistent with global tobacco peers and strong earnings per share growth. However, the narrative is tempered by high leverage indicators and a negative ROE in the dataset, which introduce balance-sheet risk and potential equity value concerns.
Investment stance: Neutral to mildly positive. The upside hinges on deleveraging progress, continued execution in the smokefree portfolio (expansion and market penetration outside the U.S.), and favorable regulatory/tax developments. A closer eye on cash flow generation, deleveraging trajectory, and the evolution of balance sheet efficiency will be critical before upgrading to a more bullish stance. For risk-tolerant investors, PMI offers a compelling profitability profile with exposure to the transition toward reduced-risk products; for risk-averse investors, leverage-related considerations and regulatory uncertainty warrant caution.
Key Investment Factors
Growth Potential
Momentum in PMI’s smokefree portfolio and geographic diversification support ongoing revenue growth. The Q3 2025 revenue growth of 9.4% YoY and 6.95% QoQ, along with a high gross margin (~67.8%), suggest pricing power and favorable product mix outside the U.S. that could sustain profitability in a mature category.
Profitability Risk
Regulatory risk across major markets (advertising, flavors, taxation) and currency volatility could impact revenue mix and margins. Leverage indicators in the dataset (debt/capitalization above 1 and negative ROE) imply balance sheet and equity concerns that could constrain financial flexibility. The absence of cash flow per share data also limits visibility into free cash generation and deleveraging capacity.
Financial Position
Liquidity appears solid with a current ratio of 2.76 and cash per share of 2.59, but leverage signals are elevated (debt-to-capitalization around 1.28–1.35 and debt ratio ~0.747). Profitability is strong (gross margin ~67.8%, operating margin ~39.3%), yet negative ROE indicates potential leverage-driven returns or accounting effects. Overall, PMI shows robust operating profitability but a capital structure that warrants attention for risk-adjusted returns.
SWOT Analysis
Strengths
High gross margin around 67.8% and EBITDA margin near 39.3% provide strong profitability resilience.
Global footprint across 71 markets and a diversified portfolio of smokefree products (HEETS, Marlboro variants) support revenue stability and growth potential.
Solid liquidity indicators (current ratio 2.76) contribute to financial flexibility.
Weaknesses
Elevated leverage metrics in the disclosed data (debt ratio ~0.747; total/long-term debt capitalization > 1) and negative ROE (-0.32) raise questions about capital structure and shareholder value creation.
Cash flow metrics for operating and free cash flow per share are reported as zero, indicating potential data gaps or cash flow reporting limitations.
Negative price-to-book value (PBV = −23.14x) suggests the balance sheet carries accounting complexities or significant write-downs.
Opportunities
Acceleration of smokefree product adoption in international markets could sustain top-line growth and margin stability.
Operational efficiency initiatives and cost controls could further improve cash generation and deleverage leverage-sensitive metrics.
Continued pricing discipline in a regulated environment may protect margins.
Threats
Regulatory and policy risks across key markets, including taxation, product restrictions, and advertising limits.
Currency fluctuations and macroeconomic volatility affecting international revenue streams.
Intense competition in the tobacco and reduced-risk product space and potential shifts in consumer preferences.
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