Philip Morris Q3 Earnings Beat Estimates, Revenues Increase 9% Y/Y

Philip Morris International Inc. (PM) reported third-quarter 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year. Results were fueled by continued investment in the growth of smoke-free business, which delivered record quarterly smoke-free gross profit. The company’s global smoke-free portfolio continues to outperform the industry, driving positive total volumes, strong top-line growth and significant margin expansion. Philip Morris posted quarterly adjusted earnings of $2.24, which increased 17.3% year over year. Excluding currency effects, the adjusted earnings jumped 13.1%. The bottom line beat the Zacks Consensus Estimate of $2.10.Philip Morris International Inc. Price, Consensus and EPS Surprise Philip Morris International Inc. price-consensus-eps-surprise-chart | Philip Morris International Inc. QuoteNet revenues of $10,845 million increased 9.4% on a reported basis and 5.9% on an organic basis. Revenues came ahead of the Zacks Consensus Estimate of $10,704 million. The increase in organic revenues was backed by positive pricing variance (mainly driven by elevated combustible tobacco pricing) and favorable volume/mix (attributable to increased smoke-free product volumes), partially offset by lower cigarette volumes and an unfavorable cigarette mix.PM’s Quarterly Performance: Key Metrics and InsightsDuring the third quarter, Philip Morris’ net revenues from combustible products grew 4.3% year over year and increased 1% organically, despite a return to expected volume declines. Growth was driven by high single-digit pricing, partially offset by unfavorable mix dynamics.Revenues from the smoke-free business increased 17.7% (up 13.9% on an organic basis) and formed 41% of the company’s total revenues.Total shipment volumes increased 0.7% to 204.9 billion units in the third quarter.The adjusted operating income ascended 12.4% (up 7.5% on an organic basis) to $4,670 million, driven by improved pricing variance and a positive volume/mix, somewhat negated by increased marketing, administration and research costs.Decoding PM’s Region-Wise PerformanceNet revenues in the European region grew 12.4% (up 6.4% on an organic basis) to $4,719 million. This was a result of positive pricing variance and favorable volume/mix, partially offset by lower cigarette volumes and an unfavorable cigarette mix. Total HTU and cigarette shipment volumes in the region decreased 2.6% to 56.4 billion units.In the SSEA, CIS & MEA regions, net revenues increased 10.4% (up 7.8% organically) to $3,273 million, primarily driven by favorable pricing, largely from higher combustible tobacco prices. This growth was partially offset by an unfavorable cigarette mix. Total cigarette and HTU shipment volume in the region rose 0.6% to 99.2 billion units.In the EA, AU & PMI GTR regions, net revenues grew 10.4% (up 8.9% organically) to $1,768 million on favorable volume/mix. Total cigarette and HTU shipment volume in the region rose 6.8% to 28.5 billion units.Revenues in the Americas fell 5.5% (down 5% on an organic basis) to $1,085 million primarily due to an unfavorable price variance in the United States. This decline was partially offset by higher SFP volumes. Total cigarette and HTU shipment volumes in the Americas decreased 4.5% to 14.7 billion units.Philip Morris: Other UpdatesThe company ended the quarter with cash and cash equivalents of $4,037 million, long-term debt of $41,863 million and a total shareholder deficit of $8,984 million.Philip Morris announced an 8.9% increase in its regular quarterly dividend to $1.47 per share ($5.88 on an annualized basis). However, the company stated that it would not make share repurchases in 2025.Here's What to Expect From PM in 2025Adjusted EPS for 2025 is now envisioned in the $7.46-$7.56 range, indicating 13.5-15.1% growth. Earlier, the metric was expected in the $7.43-$7.56 per share range, implying 13-15% growth. Adjusted EPS, excluding currency, is likely to be in the $7.36-$7.46 band, indicating a year-over-year increase of 12-13.5%. For 2025, PM now expects reported EPS in the band of $7.39-$7.49 compared with $4.52 in 2024. Earlier, the metric was expected in the $7.24-$7.37 per share range.The total international industry volume for cigarettes and HTUs (excluding China and the United States) is likely to decline nearly 1% in 2025. The total cigarette and smoke-free product shipment volume for Philip Morris is expected to be around 1%, driven by a smoke-free product volume increase of 12-14%, partly offset by cigarette volume declines, which are now forecasted to be around 2%.For 2025, PM expects net revenues to increase 6-8% on an organic basis. The operating income on an organic basis is likely to rise 10-11.5%, reflecting the impact of higher investments in the U.S. market.Management expects an operating cash flow of more than $11.5 billion in 2025. Capital expenditures are likely to be nearly $1.6 billion, primarily implying investments to support the smoke-free business.Shares of this Zacks Rank #3 (Hold) company have lost 7.7% in the past three months compared with the industry’s decline of 3.6%.Image Source: Zacks Investment ResearchStocks to ConsiderUnited Natural Foods, Inc. (UNFI) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 2.5% and 167.6%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.Lamb Weston Holdings, Inc. (LW) engages in the production, distribution and marketing of frozen potato products in the United States, Canada, Mexico and internationally. It sports a Zacks Rank #1 at present. LW delivered a trailing four-quarter earnings surprise of 16%, on average. The Zacks Consensus Estimate for Lamb Weston's current fiscal-year sales indicates growth of 1.3% from the prior-year levels.Vital Farms (VITL) packages, markets and distributes shell eggs, butter and other products in the United States. It flaunts a Zacks Rank #1 at present. Vital Farms delivered a trailing four-quarter earnings surprise of 35.8%, on average. The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales and earnings implies an increase of 27.2% and 16.1%, respectively, from the prior-year levels.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Philip Morris International Inc. (PM): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Lamb Weston (LW): Free Stock Analysis Report Vital Farms, Inc. (VITL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks