I'll research PM (Philip Morris International) before writing the preview. Let me gather recent earnings materials, filings, and news.Let me dig into the most recent earnings materials and recent news around the CFO change and Street expectations.Let me get stock price performance and more news context around the CFO transition and analyst sentiment.Let me look at the CFO transition details and check for a successor announcement.Let me read the June dbAccess guidance-update press release to reconcile the EPS guidance.I have what I need. Let me compute a few performance stats before writing.I now have everything I need to write a comprehensive preview.
PM heads into its Q2 print as one of the few genuine "growth" stories in consumer staples — but expectations are high, the stock is near record levels, and management has already flagged Q2 as a transitional quarter (tough U.S. ZYN and combustible comparisons, Japan excise noise, and an FX drag). The question is less "is the business healthy?" and more "is enough good news already in the price?"
Consensus is looking for EPS of ~$2.07, with total organic growth of approximately 5% for Q2, including SFP growth of approximately 10.3%. Sentiment is described as fairly bullish on PM, especially compared to the rest of the consumer staples space, given relatively robust growth in its Smoke-Free Products (SFP) businesses, which are approaching 50% of total revenue.
Important nuance on the EPS bar: The Street's ~$2.07 sits at the top of management's original range but above the FX-revised range. On the Q1 call PM guided Q2 to adjusted diluted EPS of $2.02 to $2.07, including a higher effective tax rate and a favorable currency variance of $0.02 at prevailing rates. But on June 2 the company cut the Q2 guide for currency: we also update our Q2 adjusted diluted EPS forecast for currency only to a range of $1.97 to $2.02, now including an estimated unfavorable currency impact of 3 cents at prevailing exchange rates. Watch whether consensus has fully digested that ~$0.05 FX haircut — a "$2.07" print vs. a "$1.97–$2.02" guide is the framing to keep in mind.
On the Q1 call, CFO Emmanuel Babeau pre-warned that Q2 would show sequential improvement but carry several optical headwinds. For the second quarter, PMI expects continued strong performance from its international business and a sequential improvement in growth with HTU shipment volume of 40 billion to 42 billion, slower HTU adjusted IMS growth due to the short-term impact of excise-driven pricing in Japan, and a low single-digit cigarette shipment volume decline, with mid-single-digit organic net revenue growth and solid operating income progression, despite another quarter of strong commercial investment.
Three moving parts to watch:
U.S. ZYN comparisons. Babeau explained that Q2 2025 had a little bit of market reloading in Q2, much more moderate than in Q1, plus almost no promotional activity, which means an abnormally high level of revenue per can — so this year's ZYN revenue-per-can and shipment comps are unfavorable in H1 before normalizing in H2.
Japan HTU. Q1 benefited from ~0.5B sticks of pantry-loading ahead of the April 1 price increase; Q2 reverses that. Management said Q2 adjusted in-market sales growth will reflect the reversal of consumer pantry-loading and the price increases which took effect on April 1. Reassuringly, at the June conference PMI said Japan trends were broadly in-line with expectations, with April offtake impacted by consumer pantry de-loading and IQOS maintaining a strong category share.
FX / RBH noise in reported numbers. PM will book a large non-cash charge this quarter. PMI expects to record a non-cash impairment charge of approximately $500 million, representing 33 cents of diluted EPS, in the second quarter of 2026, on its RBH (Canada) investment. This is excluded from adjusted EPS, but it (plus FX) drove the reported-EPS cut. The change in forecasted currency impact primarily reflects unrealized transactional foreign exchange effects from deferred tax liabilities associated with the strengthening Russian ruble.
This is the swing factor for the stock. The bull case rests on a second-half U.S. re-acceleration, and two big catalysts have landed since the Q1 call:
ZYN ULTRA launched in June. The U.S. ZYN portfolio was expanded with the launch of ZYN ULTRA this month in 9mg and 11mg moist variants; available in a 20-pouch can format, ZYN ULTRA is positioned at a lower list price-per-pouch than the 'flagship' dry ZYN portfolio (15-pouch format), marking an important step in optimizing ZYN's price premium, with further extensions planned over the remainder of the year. This directly attacks PM's biggest gap — Babeau admitted with ZYN, we don't have anything above 6 milligrams, and we have a limitation in terms of flavors, which is where the biggest dynamism is in the market today.
FDA modified-risk authorization. On June 30, the FDA authorized the company to market 10 flavors of Zyn products with claims they are safer than cigarettes — the first nicotine pouches permitted to carry a modified risk claim. The market shrugged, however: PM shares declined 2.4% on Wednesday and 1.1% the prior day, with analysts attributing the muted reaction to the move being widely expected, feeling like confirmation rather than a surprise. Still, sell-side sees a growth benefit — Deutsche Bank wrote the move "should help the business re-accelerate growth in the U.S." by about 5% in the second quarter and 20% in the second half from an inventory-adjusted base.
What to listen for: (1) ZYN shipment vs. offtake. Management set a clean bar — ZYN shipments should broadly track offtake growth against the estimated underlying 2025 bases of approximately 180 million cans in Q2, 205 million cans in Q3 and 200 million cans in Q4. Recall Q1 was messy: Zyn retail sales rose 10% in Q1 while shipments fell 23.5% to 155 million cans, attributed to supply-chain issues and promotional activities. (2) Whether recent Nielsen offtake, which had slowed to around 5%, 6% growth in the last weeks, shows early signs of ULTRA-driven reacceleration. (3) Commentary on category taxation risk, which is emerging at the state level.
IQOS remains the profit driver and the international multicategory story is firing. In Q1, international smoke-free delivered plus 11.9% volume growth, plus 15.8% net revenue growth and plus 19.4% gross profit growth, driving gross margin expansion of 210 basis points to 70%. Management has repeatedly emphasized IQOS economics: in dollar terms it is significantly above, more than 2x per unit for revenue and also for gross profit, versus combustibles.
Watch for continued momentum in the newer categories and geographies: Taiwan (described as the most successful major IQOS launch market to date with a national exit offtake share of almost 6% in March), the BONDS by IQOS national rollout in Italy targeting entrenched smokers, and VEEV, which became the joint #1 closed-pod brand in Europe in Q4 '25 as estimated by Nielsen, with quarterly shipments exceeding 1 billion equivalent units for the first time. Combustibles, meanwhile, keep funding the transition on pricing: Q1 combustible pricing was plus 8.5% and the full-year pricing outlook was raised to more than 6%.
Currency-neutral, the full-year framework is intact. As of April, PM reaffirmed broadly stable shipment volumes, organic net revenue growth of plus 5% to plus 7%, organic operating income growth of plus 7% to plus 9%, and currency-neutral adjusted diluted EPS growth of plus 7.5% to plus 9.5%. The June update trimmed the dollar EPS range only for FX: adjusted diluted EPS of $8.31 to $8.46 (up 10.2%–12.2% vs. $7.54 in 2025), or +7.5% to +9.5% excluding a $0.20 favorable currency impact. A reaffirmation (or raise) of the organic algorithm — plus any H2 confidence on the U.S. — is what bulls need to hear.
Bottom line: The long-term thesis — smoke-free approaching half of revenue, IQOS compounding at high-teens profit growth, and a pricing-rich combustible base — remains firmly intact. But Q2 is a deliberately "noisy" quarter (Japan reversal, tough U.S. comps, FX/RBH charges, an FX-cut EPS guide), and the stock is priced for good news. The report will likely trade on three things: (1) evidence that U.S. ZYN is inflecting behind ULTRA and the MRTP claim, (2) whether the full-year organic algorithm is reaffirmed or raised, and (3) IQOS/international momentum holding through the Japan excise transition. Given the pre-print rally, the bar for a positive reaction is elevated.
Note: figures above are management guidance, consensus estimates, and reported historicals as of the Q1 print and subsequent disclosures; actual Q2 results were not yet available at the time of writing.